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Alarm.com is the leading platform for the intelligently connected property.
−Removed: Our cloud-based platform offers an expansive suite of IoT solutions addressing opportunities in the residential, multi-family, small business and enterprise commercial markets.
−Removed: Alarm.com’s solutions include security, video and video analytics, energy management, access control, electric utility grid management, indoor gunshot detection, water management, health and wellness and data-rich emergency response.
+Added: Our cloud-based platform offers an expansive suite of IoT solutions addressing global opportunities in the residential, multi-family, small business and enterprise commercial markets.
+Added: Alarm.com’s solution suite includes security, video and video analytics, energy management, access control, electric utility grid management, indoor gunshot detection, water management, health and wellness, personal safety and data-rich emergency response.
During 2024 , our platforms processed more than 345 billion data points generated by over 160 million connected devices.
We believe this scale of subscribers, connected devices and data operations makes us the leader in the connected property market.
−Removed: Our solutions are delivered through an established network of trusted service providers, who are experts at selling, installing and supporting our solutions.
−Removed: We primarily generate SaaS and license revenue through our service provider partners, who resell these services and pay us monthly fees.
−Removed: These service provider contracts typically have an initial term of one year, with subsequent renewal terms of one year.
+Added: Alarm.com has established a global network of trusted service provider partners who distribute our solutions to their customers.
+Added: Our service provider partners represent a diverse range of independent businesses, and are experts at selling, installing and supporting our technology.
+Added: They depend on the Alarm.com platform for connected property technology and to operate and manage their businesses efficiently.
+Added: Alarm.com primarily generates SaaS and license revenue through our service provider partners, who resell our services and pay us monthly fees.
+Added: Contracts with our service provider partners typically have an initial term of one year, with subsequent renewal terms of one year.
Our service provider partners have indicated that they typically have three to five-year service contracts with residential and commercial property owners who use our solutions.
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Our technology platforms support property owners who subscribe to our services, the hardware partners who manufacture devices that integrate with our platforms and the service provider partners who install and maintain our solutions.
−Removed: The Alarm.com platform enables our service provider partners to deploy our interactive security, video monitoring, intelligent automation, access control, energy management and wellness solutions as stand-alone offerings or as combined solutions to address the needs of a broad range of customers.
+Added: The Alarm.com platform enables our service provider partners to address the needs of a broad range of residential and commercial customers.
+Added: They can deploy interactive security, video monitoring, property automation, access control, energy management, gunshot detection, water management, vehicle and fleet management, and wellness and personal safety solutions as stand-alone offerings or as integrated solutions.
Executive Overview and Highlights of 2024 and 2023 Results
−Removed: We primarily generate SaaS and license revenue, our largest source of revenue, through our service provider partners who resell our services and pay us monthly fees.
+Added: Alarm.com primarily generates SaaS and license revenue, our largest source of revenue, through our service provider partners, who resell our services and pay us monthly fees.
Our service provider partners sell, install and support Alarm.com solutions that enable residential and commercial property owners to intelligently secure, connect, control and automate their properties.
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Non-GAAP adjusted EBITDA increased to $154.0 million in 2023 from $146.8 million in 2022.
−Removed: Please see Non-GAAP Measures below in this section of this Annual Report for a discussion of the limitations of non-GAAP adjusted EBITDA (a non-GAAP measure) and a reconciliation of non-GAAP adjusted EBITDA from net income, the most directly comparable GAAP measure, for the years ended December 31, 2023, 2022 and 2021.
+Added: Please see Non-GAAP Measures below in this section of this Annual Report for a discussion of the limitations of non-GAAP adjusted EBITDA (a non-GAAP measure) and a reconciliation of non-GAAP adjusted EBITDA from net income, the most directly comparable measurement in accordance with GAAP, for the years ended December 31, 2024, 2023 and 2022.
Historical Trends within the Financial Results
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Business – Governance – Corporate Information.
−Removed: Information about the 2026 Notes issued in January 2021 and the related interest expense as well as changes in costs for freight shipments and inventory component costs, which may affect the comparability of historical financial information, is disclosed in the Comparison of Years Ended December 31, 2023 to December 31, 2022 section below within Item 7.
+Added: Information about the 2029 Notes and the related interest expense as well as changes in legal costs, which may affect the comparability of historical financial information, is disclosed in the Comparison of Years Ended December 31, 2024 to December 31, 2023 section below within Item 7.
"Management’s Discussion and Analysis of Financial Condition and Results of Operations."
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Our products are currently localized and available in over 50 countries outside of North America.
−Removed: On January 18, 2023, we acquired 100% of the issued and outstanding shares of capital stock of EBS, an international producer of universal smart communicator devices, headquartered in Warsaw, Poland.
−Removed: We believe this acquisition will assist in the continued expansion of our international operations as well as benefit our supply chain operations.
+Added: On November 22, 2024, we acquired certain assets of Kapacity.io to help accelerate deployment of a cloud-based demand response platform internationally for our EnergyHub subsidiary.
Recent Developments
+Added: On January 30, 2025, we entered into a senior secured loan agreement with a service provider partner, under which a term loan was provided to the service provider partner in the original principal amount of $21.5 million, which loan is collateralized by the assets of the service provider partner.
+Added: Quarterly principal payments begin in the second quarter of 2027.
+Added: Interest on the outstanding principal accrues at a rate per annum equal to the overnight financing rate published by the Federal Reserve Bank of New York for a period of three months, plus 3.0%.
+Added: For the first two years of the loan, monthly interest payments can be payable in kind at the election of the borrower.
+Added: The maturity date of the loan is January 30, 2030.
+Added: On February 10, 2025, Alarm.com Incorporated acquired 81% of the issued and outstanding shares of capital stock of CHeKT.
+Added: CHeKT provides a remote video monitoring service for central station operators that is compatible with a variety of cameras.
+Added: We believe the acquisition of CHeKT will help to expand our opportunity to provide remote video monitoring solutions in the commercial and residential markets.
+Added: In consideration for the purchase of 81% of the issued and outstanding shares of capital stock of CHeKT, we paid $23.6 million in cash on February 10, 2025, after deducting $3.7 million related to agreed holdback provisions.
+Added: We are currently evaluating the accounting treatment of this acquisition and are in the process of completing the preliminary purchase price allocation of the assets acquired and liabilities assumed.
The global economy, credit markets and financial markets have and may continue to experience significant volatility as a result of the Macroeconomic Conditions.
−Removed: These Macroeconomic Conditions have and may continue to create supply chain disruptions, inventory disruptions, and fluctuations in economic growth, including fluctuations in employment rates, inflation, energy prices and consumer sentiment.
+Added: These Macroeconomic Conditions have and may continue to create tariffs, supply chain disruptions, inventory disruptions, and fluctuations in economic growth, including fluctuations in employment rates, inflation, energy prices and consumer sentiment.
It remains difficult to assess or predict the ultimate duration and economic impact of the Macroeconomic Conditions.
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Non-GAAP Adjusted EBITDA
−Removed: Non-GAAP adjusted EBITDA is a non-GAAP measure that represents our net income before interest expense, interest income, certain activity within other income / (expense), net, provision for / (benefit from) income taxes, amortization and depreciation expense, stock-based compensation expense, acquisition-related expense, legal costs and settlement fees incurred and received in connection with non-ordinary course litigation and other disputes, particularly costs involved in ongoing intellectual property litigation.
+Added: Non-GAAP adjusted EBITDA is a non-GAAP measure that represents our net income before interest expense, interest income, certain activity within other (expense) / income, net, provision for income taxes, amortization and depreciation expense, stock-based compensation expense, acquisition-related expense, legal costs and settlement fees incurred and received in connection with non-ordinary course litigation and other disputes, particularly costs involved in ongoing intellectual property litigation.
We do not consider these items to be indicative of our core operating performance.
−Removed: The non-cash items include amortization and depreciation expense, amortization of debt discount and debt issuance costs for the 2026 Notes included in interest expense and stock-based compensation expense related to restricted stock units and other forms of equity compensation, including, but not limited to, the sale of common stock.
+Added: The non-cash items include amortization and depreciation expense;
+Added: amortization of debt issuance costs for the January 20, 2021 issuance of $500.0 million aggregate principal amount of 0% convertible senior notes due January 15, 2026, or the 2026 Notes, included in interest expense;
+Added: amortization of debt issuance costs for the May 31, 2024 issuance of $500.0 million aggregate principal amount of 2.25% convertible senior notes due June 1, 2029, or the 2029 Notes, included in interest expense;
+Added: and stock-based compensation expense related to restricted stock units and other forms of equity compensation, including, but not limited to, the sale of common stock.
We do not adjust for ordinary course legal expenses resulting from maintaining and enforcing our intellectual property portfolio and license agreements.
−Removed: We record interest expense primarily related to our 2026 Notes.
+Added: We record interest expense primarily related to our 2026 Notes and 2029 Notes.
We exclude interest expense in calculating non-GAAP adjusted EBITDA because we believe the exclusion of interest expense will provide for more meaningful information about our financial performance.
−Removed: We exclude interest income and certain activity within other income / (expense), net including gains, losses or impairments on investments and other assets, gains on settlement fees and losses on the early extinguishment of debt, when applicable, from non-GAAP adjusted EBITDA because we do not consider it part of our ongoing results of operations.
−Removed: We exclude the impact related to our provision for / (benefit from) income taxes from non-GAAP adjusted EBITDA because we do not consider this tax adjustment to be part of our ongoing results of operations.
+Added: We exclude interest income and certain activity within other (expense) / income, net including gains, losses or impairments on investments without readily determinable fair values and other assets, gains and losses from equity method investments, gains on settlement fees and losses on the early extinguishment of debt, when applicable, from non-GAAP adjusted EBITDA because we do not consider it part of our ongoing results of operations.
+Added: We exclude the impact related to our provision for income taxes from non-GAAP adjusted EBITDA because we do not consider this tax adjustment to be part of our ongoing results of operations.
GAAP requires that operating expenses include the amortization of acquired intangible assets, which principally include acquired customer relationships, developed technology and trade names.
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In addition, in certain markets, our EnergyHub subsidiary sells its demand response service for an annual service fee, with pricing based on the number of subscribers or amount of aggregate electricity demand made available for a utility’s or market’s control.
−Removed: On October 27, 2022, we filed a demand for arbitration of a dispute arising under the Patent Cross License Agreement between Alarm.com and Vivint executed in November 2013.
−Removed: Vivint had stopped paying license fees to Alarm.com under the agreement.
−Removed: Vivint had been paying the required license fees to Alarm.com since the agreement was executed in November 2013.
−Removed: As a result of Vivint’s refusal to pay license fees under the agreement, which began during the fourth quarter of 2022, SaaS and license revenue and total revenue through December 31, 2023 were lower by approximately $6.0 million on a quarterly basis.
−Removed: Quarterly earnings and cash flow through December 31, 2023 were also impacted by the aforementioned $6.0 million, plus additional legal fees.
−Removed: On December 21, 2023, Alarm.com and Vivint agreed to settle all outstanding litigation between the parties and to enter into a long-term intellectual property license agreement under which Alarm.com will license to Vivint its intellectual property portfolio.
Software License Revenue .
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We generate hardware and other revenue primarily from the sale of video cameras, video recorders, smart thermostats and cellular radio modules that provide access to our cloud-based platforms and, to a lesser extent, the sale of other devices, including image sensors, gunshot detection sensors and peripherals.
−Removed: We primarily transfer hardware to our customers upon delivery to the customer, which corresponds with the time at which the customer obtains control of the hardware.
+Added: We primarily transfer hardware to
+Added: our customers upon delivery to the customer, which corresponds with the time at which the customer obtains control of the hardware.
We record a reserve against revenue for hardware returns based on historical returns.
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Our cost of SaaS and license revenue also includes our cost of software license revenue, which primarily includes the payroll and payroll-related costs of the department dedicated to providing service exclusively to those service providers that host the Software platform.
+Added: As of December 31, 2024 and 2023, we had 74 and 77 employees who manufacture hardware for our suite of IoT solutions, respectively.
Our cost of hardware and other revenue primarily includes cost of raw materials, tooling, freight shipments and amounts paid to our third-party manufacturer for production and fulfillment of our cellular radio modules and image sensors, and procurement costs for our video cameras, video recorders, smart thermostats and gunshot detection sensors, which we purchase from an original equipment manufacturer, and other devices.
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The amount of the import tariff and the number of products subject to tariffs have changed numerous times based on action by the U.S.
−Removed: Approximately one-fifth to one-half of the hardware products that we sell to our service provider partners are imported from China and could be subject to increased tariffs.
+Added: Less than one-third of the hardware products that we sell to our service provider partners are imported from China and could be subject to increased tariffs.
While the additional import duties resulted in an increase to our cost of hardware revenue, these import duties had a modest impact on hardware revenue margins.
1 unchanged sentence
We continue to monitor the changes in tariffs.
−Removed: Our costs of hardware revenue increased during the second half of 2021 primarily due to an increase in costs for freight shipments, including expedited shipping costs, as well as an increase in inventory component costs.
We currently expect our hardware revenue margins in 2025 to approximate the hardware revenue margins experienced during 2024.
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We include stock-based compensation expense in connection with the grant of restricted stock units and other forms of equity compensation, including equity compensation with performance conditions, in the applicable operating expense category based on the respective equity award recipient’s function (sales and marketing, general and administrative or research and development).
−Removed: We grew from 1,733 employees as of January 1, 2023 to 1,989 employees as of December 31, 2023, including 77 employees who manufacture hardware for our suite of IoT solutions.
+Added: We grew from 1,989 employees as of January 1, 2024 to 2,010 employees as of December 31, 2024 .
W e expect to continue to hire new employees to support the projected future growth of our business.
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Sales and marketing expense consists primarily of personnel and related expenses for our sales and marketing teams, including salaries, bonuses, stock-based compensation, benefits, travel, and commissions.
−Removed: Our sales and marketing teams engage in sales, account management, service provider partner support, advertising, promotion of our products and services and marketing.
+Added: sales and marketing teams engage in sales, account management, service provider partner support, advertising, promotion of our products and services and marketing.
The number of employees in sales and marketing functions increased from 565 as of January 1, 2024 to 572 as of December 31, 2024.
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Interest Expense
−Removed: We record interest expense associated with our 2026 Notes and acquired debt.
−Removed: Interest expense in 2024 is expected to remain relatively consistent with the interest expense in 2023.
+Added: We record interest expense associated with our 2026 Notes, 2029 Notes and acquired debt.
+Added: Interest expense in 2025 is expected to increase as compared to 2024 due to the issuance of the 2029 Notes.
Interest Income
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Interest income in 2025 will depend, in part, on our use of cash and fluctuations in interest rates.
−Removed: Other Income / (Expense), Net
−Removed: Other income / (expense), net primarily consists of non-operating and miscellaneous expense and income.
−Removed: Provision for / (Benefit from) Income Taxes
+Added: Other (Expense) / Income, Net
+Added: Other (expense) / income, net primarily consists of non-operating and miscellaneous expense and income.
+Added: Provision for Income Taxes
We are subject to U.S.
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As a result, we recognize tax liabilities based on estimates of whether additional taxes will be due.
−Removed: Our effective tax rates were below the 21.0% statutory rate primarily due to research and development tax credits claimed and the foreign derived intangible income deduction, partially offset by the impact of state taxes, foreign withholding taxes, federal estimated tax payment interest expense, other nondeductible expenses and, for 2023, a stock-based compensation tax shortfall.
+Added: For the year ended December 31, 2024, our effective tax rate was below the 21.0% statutory rate primarily due to research and development tax credits claimed, the foreign derived intangible income deduction and tax windfall benefits from employee stock-based compensation, partially offset by the impact of state taxes, foreign withholding taxes and other nondeductible expenses.
We recognize stock-based compensation tax shortfalls and excess tax windfall benefits on a discrete basis during the quarter in which they occur, and we anticipate our effective tax rate will vary from quarter to quarter depending on our stock price as well as the vesting and exercises of various forms of equity compensation under our equity incentive plans each period, including restricted stock units and stock options.
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Interest income 47,359 5 29,801 3 8,759 1
−Removed: Other income / (expense), net 4,624 1 (59) — (134) —
+Added: Other (expense) / income, net (2,674) — 4,624 1 (59) —
Income before income taxes 141,807 15 97,825 11 56,593 7
−Removed: Provision for / (benefit from) income taxes 17,485 2 962 — (5,106) (1)
+Added: Provision for income taxes 19,294 2 17,485 2 962 —
Net income $ 122,513 13 % $ 80,340 9 % $ 55,631 7 %
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Our software license revenue included within SaaS and license revenue decreased $2.9 million to $20.3 million in 2024 as compared to $23.2 million during 2023, primarily due to the result of the continuing transition of customers from non-hosted software to our cloud based hosted platform.
−Removed: The SaaS and license revenue for the Alarm.com segment increased $36.5 million in 2023 as compared to 2022 primarily due to growth in our subscriber base, including the revenue impact from subscribers we added in 2022.
−Removed: The increase in SaaS and license revenue for the Alarm.com segment includes the impact from Vivint license revenue of $16.6 million in 2022 that did not occur in 2023.
+Added: The SaaS and license revenue for the Alarm.com segment increased $49.8 million in 2024 as compared to 2023 primarily due to growth in our subscriber base, including the revenue impact from subscribers we added in 2023, as well as an increase in our license revenue.
The SaaS and license revenue for our Other segment increased $12.2 million in 2024 as compared to 2023 primarily due to an increase in sales of our energy management and demand response solutions as well as our property management solution.
−Removed: The decrease in hardware and other revenue in 2023 as compared to 2022 was primarily from the $7.3 million decrease in hardware and other revenue, net of intersegment eliminations, for the Alarm.com segment arising from a decrease in the volume of cellular radio modules sold due to the shut down of 3G and CDMA wireless networks in 2022 by certain cellular carriers, as well as a decrease in the volume of thermostats and video cameras sold.
−Removed: Hardware and other revenue, net of intersegment eliminations, in our Other segment decreased $2.4 million, in 2023 as compared to 2022 primarily due to an decreased sales related to our property management and Heating, Ventilation and Air Conditioning solutions.
+Added: The decrease in hardware and other revenue in 2024 as compared to 2023 was primarily from the $3.3 million decrease in hardware and other revenue, net of intersegment eliminations, for the Alarm.com segment arising from a decrease in the volume of cameras sold.
+Added: Hardware and other revenue, net of intersegment eliminations, in our Other segment decreased $0.6 million, in 2024 as compared to 2023 primarily due to decreased sales related to our property management solution.
Cost of Revenue
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(1) Excludes amortization and depreciation shown in operating expenses.
−Removed: The $17.4 million decrease in cost of revenue in 2023 as compared to 2022 was the result of a $29.4 million, or 11%, decrease in cost of hardware and other revenue and a $12.0 million, or 16%, increase in cost of SaaS and license revenue.
−Removed: Our cost of software license revenue included within cost of SaaS and license revenue increased $0.1 million to $0.6 million during 2023 as compared to $0.5 million during 2022.
−Removed: The cost of hardware and other revenue for the Alarm.com segment decreased $27.5 million in 2023 as compared to 2022 primarily due to a decrease in the number of hardware units shipped, a decrease in inventory component costs and a decrease in costs for freight shipments.
−Removed: The cost of SaaS and license revenue for the
−Removed: Alarm.com segment increased $8.5 million in 2023 as compared to 2022 primarily due to the growth in our subscriber base, which drove a corresponding increase in amounts paid to wireless network providers.
−Removed: The cost of hardware and other revenue for the Other segment decreased $1.9 million in 2023 as compared to 2022 primarily due to a decrease in the number of hardware units shipped, a decrease in inventory component costs and a decrease in costs for freight shipments.
−Removed: The cost of SaaS and license revenue for the Other segment increased $3.5 million in 2023 as compared to 2022 primarily due to an increase in sales of our energy management and demand response solutions, which drove a corresponding increase in amounts paid to distributed energy resource providers.
−Removed: Cost of hardware and other revenue as a percentage of hardware and other revenue was 77% in 2023 and 83% in 2022.
−Removed: The decrease in cost of hardware and other revenue as a percentage of hardware and other revenue in 2023 as compared to 2022 is primarily due to a decrease in inventory component and freight shipment costs, price increases we have implemented on some of our products as well as a reflection of the mix of product sales during the periods.
+Added: The $1.0 million increase in cost of revenue in 2024 as compared to 2023 was the result of a $3.6 million, or 4%, increase in cost of SaaS and license revenue and a $2.6 million, or 1%, decrease in cost of hardware and other revenue.
+Added: Our cost of software license revenue included within cost of SaaS and license revenue remained relatively consistent at $0.6 million during 2024 and 2023.
+Added: The cost of SaaS and license revenue for the Alarm.com segment increased $0.3 million in 2024 as compared to 2023 primarily due to the growth in our subscriber base, which drove a corresponding increase in amounts paid to wireless network providers.
+Added: The cost of SaaS and license revenue for the Other segment increased $3.3 million in 2024 as compared to 2023 primarily due to an increase in sales of our energy management and demand response solutions, which drove a corresponding increase in amounts paid to distributed energy resource providers.The cost of hardware and other revenue for the Alarm.com segment decreased $2.1 million in 2024 as compared to 2023 primarily due to a decrease in the number of hardware units shipped.
+Added: The cost of hardware and other revenue for the Other segment decreased $0.5 million in 2024 as compared to 2023 primarily due to a decrease in the number of hardware units shipped.
+Added: Cost of hardware and other revenue as a percentage of hardware and other revenue was 77% in 2024 and 2023.
Cost of SaaS and license revenue as a percentage of SaaS and license revenue was 14% and 15% in 2024 and 2023, respectively.
−Removed: The increase in cost of SaaS and license revenue as a percentage of SaaS and license revenue in 2023 as compared to 2022 is a reflection of the mix of sales of services during the periods.
−Removed: Cost of software license revenue as a percentage of software license revenue was 3% and 2% in 2023 and 2022, respectively.
+Added: The decrease in cost of SaaS and license revenue as a percentage of SaaS and license revenue in 2024 as compared to 2023 is a reflection of the mix of sales and services during the periods.
+Added: Cost of software license revenue as a percentage of software license revenue was 3% in 2024 and 2023.
Sales and Marketing Expense
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% of total revenue 12 % 11 %
−Removed: The $7.5 million increase in sales and marketing expense in 2023 as compared to 2022 was primarily due to a $7.2 million increase in personnel and related costs for our Alarm.com segment, attributable in part to increases in the headcount for our sales team to support our growth, partially offset by a $3.1 million decrease in marketing expense, including advertising cost.
−Removed: Personnel and related costs includes salary, benefits, stock-based compensation and travel expenses.
−Removed: Sales and marketing expense for our Alarm.com segment also increased by $1.0 million in 2023 as compared to 2022 due to an increase in our expenses for external consultants.
+Added: The $11.0 million increase in sales and marketing expense in 2024 as compared to 2023 was primarily due to a $3.7 million increase in personnel and related costs for our Alarm.com segment, attributable in part to increases in the headcount for our sales team to support our growth, and a $3.5 million increase in marketing expense for our Alarm.com segment.
+Added: These increases in sales and marketing expense for our Alarm.com segment were partially offset by a $0.7 million decrease in our expenses for external consultants in 2024 as compared to 2023.
Sales and marketing expense from our Other segment increased $4.8 million in 2024 as compared to 2023, primarily due to increases in personnel and related costs, attributable in part to increases in the headcount for our sales team.
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% of total revenue 12 % 13 %
−Removed: The $6.2 million increase in general and administrative expense in 2023 as compared to 2022 was primarily due to a $2.4 million increase in personnel and related costs for our Alarm.com segment and a $2.0 million increase in our expenses for external consultants.
−Removed: Additionally, the provision for credit losses increased $1.6 million, rent expense increased $0.9 million and insurance-related costs increased $0.4 million for our Alarm.com segment in 2023 as compared to 2022.
−Removed: General and administrative expenses from our Other segment decreased by $2.1 million during 2023 as compared to 2022, primarily due to a $1.3 million decrease in the provision for credit losses and a $0.7 million decrease in personnel and related costs.
+Added: The $4.1 million decrease in general and administrative expense in 2024 as compared to 2023 was primarily due to a $16.1 million decrease in legal costs for our Alarm.com segment related to intellectual property litigation.
+Added: This decrease in general and administrative expense was partially offset by a $4.0 million increase in the provision for credit losses related to a loan we previously provided to an affiliated entity of one of our distribution partners, a $3.9 million increase in expenses related to a program to help our service providers resell our solutions and hardware to our subscribers, a $1.1 million increase in personnel and related costs, a $0.9 million increase in rent expense and a $0.7 million increase in recruiting costs and in 2024 as compared
+Added: General and administrative expenses from our Other segment increased by $1.5 million during 2024 as compared to 2023, primarily due to an increase in personnel and related costs.
The overall number of employees in general and administrative functions increased from 229 as of December 31, 2023 to 237 as of December 31, 2024.
12 unchanged sentences
% of total revenue 3 % 4 %
−Removed: Amortization and depreciation increased $0.6 million in 2023 as compared to 2022, primarily due to the intangible assets that were acquired in connection with the purchase of EBS on January 18, 2023.
+Added: Amortization and depreciation decreased $2.3 million in 2024 as compared to 2023, primarily due to changes in amortization expense related to the intangible assets we previously acquired.
Interest Expense
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% of total revenue (1) % — %
−Removed: Interest expense increased $0.3 million in 2023 as compared to 2022, primarily due to the interest expense incurred on the assumed debt from the acquisition of EBS on January 18, 2023.
+Added: Interest expense increased $8.0 million in 2024 as compared to 2023, primarily due to the interest expense and amortization of the debt issuance costs related to the 2029 Notes.
Interest Income
3 unchanged sentences
% of total revenue 5 % 3 %
−Removed: Interest income increased $21.0 million in 2023 as compared to 2022, primarily due to an increase in interest income earned on cash and cash equivalents from higher interest rates during the year ended December 31, 2023.
−Removed: Other Income / (Expense), Net
+Added: Interest income increased $17.6 million in 2024 as compared to 2023, primarily due to an increase in interest income earned on cash and cash equivalents from higher amounts of cash and cash equivalents and higher average interest rates during 2024 as compared to 2023.
+Added: The increase in interest income was partially offset by a $0.5 million reduction to interest income for the reversal of payable in kind interest associated with a subordinated credit agreement with an affiliated entity of one of our distribution partners during 2024, which did not occur during 2023 .
+Added: Other (Expense) / Income, Net
Year Ended December 31, % Change
2024 2023 2024 vs.
−Removed: Other income / (expense), net $ 4,624 $ (59) (7,937) %
+Added: Other (expense) / income, net $ (2,674) $ 4,624 (158) %
% of total revenue — % 1 %
−Removed: Other income / (expense), net increased $4.7 million in 2023 as compared to 2022, primarily due to a gain recorded from the settlement of a legal matter, partially offset by an increase in non-operating and miscellaneous expenses.
−Removed: Provision for / (Benefit from) Income Taxes
+Added: Other (expense) / income, net decreased $7.3 million in 2024 as compared to 2023, primarily due to a gain recorded from the settlement of a legal matter in 2023 that did not occur in 2024 as well as an increase in non-operating and miscellaneous expenses.
+Added: Provision for Income Taxes
Year Ended December 31, % Change
2024 2023 2024 vs.
−Removed: Provision for / (benefit from) income taxes $ 17,485 $ 962 1,718 %
+Added: Provision for income taxes $ 19,294 $ 17,485 10 %
% of total revenue 2 % 2 %
−Removed: The provision for / (benefit from) income taxes increased $16.5 million in 2023 as compared to 2022.
+Added: The provision for income taxes increased $1.8 million in 2024 as compared to 2023.
Our effective tax rate was 13.6% in 2024 as compared to 17.9% in 2023.
−Removed: The increase in the provision for / (benefit from) income taxes was primarily
−Removed: due to an increase in income before income taxes, foreign withholding taxes, a stock-based compensation tax shortfall and a decrease in research and development tax credits.
+Added: The increase in the provision for income taxes was primarily due to the increase in income before income taxes, partially offset by an increase in our research and development income tax credits and windfall benefits from employee stock-based compensation.
Comparison of Years Ended December 31, 2023 to December 31, 2022
−Removed: A comparison of the years ended December 31, 2022 and 2021 has been omitted from this Form 10-K, but may be found in “Item 7.
−Removed: Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 24, 2023.
+Added: A comparison of the years ended December 31, 2023 and 2022 has been omitted from this Annual Report on Form 10-K, but may be found in “Item 7.
+Added: Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 22, 2024.
Segment Information
4 unchanged sentences
The consolidated subsidiaries that make up our Other segment are in the investment stage and have incurred significant operating expenses relative to their revenue.
−Removed: Our Alarm.com segment increased from 1,563 employees as of January 1, 2023 to 1,776 employees as of December 31, 2023.
+Added: Our Alarm.com segment decreased from 1,776 employees as of January 1, 2024 to 1,773 employees as of December 31, 2024.
Our Other segment increased from 213 employees as of January 1, 2024 to 237 employees as of December 31, 2024.
Inter-segment revenue includes sales of hardware between our segments.
−Removed: The following table presents our revenue, inter-segment revenue and operating expenses by segment (in thousands):
+Added: Management evaluates the performance of its segments and allocates resources to them based on operating income / (loss) as compared to prior periods and current performance levels.
+Added: The reportable segment operational data is presented in the tables below (in thousands):
Year Ended December 31, 2024
+Added: Alarm.com Other Intersegment Alarm.com Intersegment Other Total
+Added: SaaS and license revenue $ 564,513 $ 66,685 $ — $ — $ 631,198
+Added: Hardware and other revenue 306,074 5,979 (2,769) (655) 308,629
+Added: Total revenue
870,587 72,664 (2,769) (655) 939,827
−Removed: SaaS and License Revenue Hardware and Other Revenue Operating Expenses SaaS and License Revenue Hardware and Other Revenue Operating Expenses SaaS and License Revenue Hardware and Other Revenue Operating Expenses
−Removed: Alarm.com $ 514,673 $ 309,778 $ 440,590 $ 478,134 $ 317,937 $ 403,774 $ 426,823 $ 284,721 $ 348,700
−Removed: Other 54,527 6,501 49,584 42,243 9,097 45,647 33,549 9,275 33,214
−Removed: Intersegment Alarm.com — (3,201) (480) — (4,067) (480) — (3,089) (416)
−Removed: Intersegment Other — (596) — — (785) — — (2,310) —
−Removed: Total $ 569,200 $ 312,482 $ 489,694 $ 520,377 $ 322,182 $ 448,941 $ 460,372 $ 288,597 $ 381,498
+Added: Cost of SaaS and license revenue
+Added: 68,666 20,809 329 (292) 89,512
+Added: Cost of hardware and other revenue
+Added: 234,414 5,414 (2,630) (561) 236,637
+Added: Total cost of revenue
+Added: 303,080 26,223 (2,301) (853) 326,149
+Added: Selling and marketing expense
+Added: 88,899 22,343 — — 111,242
+Added: General and administrative expense
+Added: 101,401 7,478 — — 108,879
+Added: Research and development expense
+Added: 227,559 28,319 — — 255,878
+Added: Amortization and depreciation expense
+Added: 28,107 1,024 — — 29,131
+Added: Total operating expenses
+Added: 445,966 59,164 — — 505,130
+Added: Operating income / (loss) $ 121,541 $ (12,723) $ (468) $ 198 $ 108,548
+Added: Assets $ 2,081,214 $ 85,468 $ (128,465) $ (9) $ 2,038,208
+Added: Reconciliation of operating income to income before income taxes
+Added: Operating income $ 108,548
+Added: Interest expense (11,426)
+Added: Interest income 47,359
+Added: Other (expense) / income, net (2,674)
+Added: Income before income taxes $ 141,807
+Added: Year Ended December 31, 2023
+Added: Alarm.com Other Intersegment Alarm.com Intersegment Other Total
+Added: SaaS and license revenue $ 514,673 $ 54,527 $ — $ — $ 569,200
+Added: Hardware and other revenue 309,778 6,501 (3,201) (596) 312,482
+Added: Total revenue
+Added: 824,451 61,028 (3,201) (596) 881,682
+Added: Cost of SaaS and license revenue
+Added: 71,639 17,852 (2,967) (626) 85,898
+Added: Cost of hardware and other revenue
+Added: 237,660 5,760 (3,771) (388) 239,261
+Added: Total cost of revenue
+Added: 309,299 23,612 (6,738) (1,014) 325,159
+Added: Selling and marketing expense
+Added: 82,672 17,554 — — 100,226
+Added: General and administrative expense
+Added: 107,475 5,935 (480) — 112,930
+Added: Research and development expense
+Added: 220,106 25,008 — — 245,114
+Added: Amortization and depreciation expense
+Added: 30,337 1,087 — — 31,424
+Added: Total operating expenses
+Added: 440,590 49,584 (480) — 489,694
+Added: Operating income / (loss) $ 74,562 $ (12,168) $ 4,017 $ 418 $ 66,829
+Added: Assets $ 1,477,674 $ 73,621 $ (111,725) $ (7) $ 1,439,563
+Added: Reconciliation of operating income to income before income taxes
+Added: Operating income $ 66,829
+Added: Interest expense (3,429)
+Added: Interest income 29,801
+Added: Other (expense) / income, net 4,624
+Added: Income before income taxes $ 97,825
+Added: Year Ended December 31, 2022
+Added: Alarm.com Other Intersegment Alarm.com Intersegment Other Total
+Added: SaaS and license revenue $ 478,134 $ 42,243 $ — $ — $ 520,377
+Added: Hardware and other revenue 317,937 9,097 (4,067) (785) 322,182
+Added: Total revenue
+Added: 796,071 51,340 (4,067) (785) 842,559
+Added: Cost of SaaS and license revenue
+Added: 59,725 14,172 415 (415) 73,897
+Added: Cost of hardware and other revenue
+Added: 265,828 7,776 (4,419) (501) 268,684
+Added: Total cost of revenue
+Added: 325,553 21,948 (4,004) (916) 342,581
+Added: Selling and marketing expense
+Added: 76,927 15,821 — — 92,748
+Added: General and administrative expense
+Added: 99,081 8,087 (480) — 106,688
+Added: Research and development expense
+Added: 198,127 20,508 — — 218,635
+Added: Amortization and depreciation expense
+Added: 29,639 1,231 — — 30,870
+Added: Total operating expenses
+Added: 403,774 45,647 (480) — 448,941
+Added: Operating income / (loss) $ 66,744 $ (16,255) $ 417 $ 131 $ 51,037
+Added: Reconciliation of operating income to income before income taxes
+Added: Operating income $ 51,037
+Added: Interest expense (3,144)
+Added: Interest income 8,759
+Added: Other (expense) / income, net (59)
+Added: Income before income taxes $ 56,593
Our SaaS and license revenue for the Alarm.com segment included software license revenue of $20.3 million, $23.2 million and $26.8 million for the years ended December 31, 2024, 2023 and 2022, respectively.
There was no software license revenue recorded for the Other segment during the years ended December 31, 2024, 2023 and 2022.
+Added: Additions to property and equipment were $20.1 million, $8.9 million and $28.4 million for the Alarm.com segment for the years ended December 31, 2024, 2023 and 2022, respectively.
+Added: Additions to property and equipment were $0.1 million, $0.2 million and $0.3 million for the Other segment for the years ended December 31, 2024, 2023 and 2022, respectively.
Critical Accounting Estimates
15 unchanged sentences
Historically, our returns of hardware have not significantly differed from our estimated reserve.
−Removed: If we enter into contracts that contain multiple promised services, we evaluate which of the promised services represent separate performance obligations based on whether or not the promised services are distinct and whether or not the services are separable from other promises in the contract.
−Removed: If these criteria are met, then we allocate the transaction price to the performance obligations using the relative stand-alone selling price method at contract inception.
−Removed: In determining the relative estimated selling prices, we consider market conditions, entity-specific factors and information about the customer or class of customer.
−Removed: Any discount within the contract is allocated proportionately to all of the separate performance obligations in the contract unless the terms of discount relate specifically to the entity’s efforts to satisfy some but not all of the performance obligations.
−Removed: While variable consideration assumptions and assumptions regarding the relative stand-alone selling price are specific to each contract, we did not make any material changes to these assumptions for the year ended December 31, 2023.
+Added: While variable consideration assumptions are specific to each contract, we did not make any material changes to these assumptions for the year ended December 31, 2024.
We do not expect any material changes in the near term to the underlying assumptions used to recognize revenue during the year ended December 31, 2024.
However, if changes in these assumptions occur, and, should those changes be significant, they could have a material impact on our SaaS and license revenue as well as our hardware and other revenue.
−Removed: Fair Value Measurements
−Removed: The accounting standard for fair value measurements provides a framework for measuring fair value and requires disclosures regarding fair value measurements.
−Removed: Fair value is defined as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date.
−Removed: We previously maintained a subsidiary long-term incentive plan and recorded a liability based on the potential cash payment contingent upon meeting certain financial milestones related to the agreement established with certain employees of one of our subsidiaries.
−Removed: During 2021 and until the termination of the subsidiary long-term incentive plan in May of 2022, we estimated the fair value of the liability by using a Monte Carlo simulation model which involves several Level 3 unobservable inputs.
−Removed: Concurrent with the termination of the subsidiary long-term incentive plan, we granted performance-based restricted stock units to those employees who previously participated in the subsidiary long-term incentive plan.
−Removed: We accounted for the termination of the subsidiary long-term incentive plan and concurrent grant of performance-based restricted stock units as a modification of the original subsidiary long-term incentive plan.
−Removed: As a result, no further estimates related to the subsidiary long-term incentive plan were necessary as of December 31, 2023.
−Removed: See the Stock-Based Compensation section below for details on the judgment required in determining the probable outcome of performance conditions related to performance-based restricted stock units.
−Removed: Accounting estimates are also used for the contingent consideration liability related to the potential earn-out payment from our acquisition of 100% of the issued and outstanding capital stock of EBS on January 18, 2023.
−Removed: The earn-out payment is contingent on the satisfaction of certain performance targets related to the integration of EBS's hardware into the Alarm.com platform by December 31, 2025 and has a maximum potential payment of up to $2.5 million.
−Removed: We account for the contingent consideration using fair value and established a liability for the future earn-out payment based on an estimation of the probability of the future achievement of the performance targets.
−Removed: The contingent consideration liability was valued with Level 3 unobservable inputs, including the probability of expected achievement of the performance targets.
−Removed: At each reporting date until December 31, 2025, or the achievement of the performance targets, we will remeasure the liability, using the same valuation approach.
−Removed: We did not make any material changes in the accounting methodology used to determine the fair value of the contingent consideration liability for the year ended December 31, 2023.
−Removed: We do not expect any material changes in the near term to the underlying assumptions used to determine the significant unobservable inputs used to calculate the fair value of the contingent consideration and, if changes in these assumptions occur, we do not expect those changes to have a material impact on our general and administrative operating expenses.
Business Combinations
5 unchanged sentences
We did not make any material changes to the underlying assumptions used as of the acquisition date to calculate the purchase price of the business combinations that occurred during 2023 and 2022.
−Removed: We do not expect any material changes in the near term to the underlying assumptions used to calculate the purchase price of those business combinations.
−Removed: However, if changes in these assumptions occur, and, should those changes be significant, they could have a material impact on our purchase price allocation for the business combinations.
+Added: We do not expect any changes to the underlying assumptions used to calculate the purchase price of those business combinations as the purchase price allocation was finalized for these business combinations.
Goodwill, Intangible Assets and Long-lived Assets
6 unchanged sentences
There were no triggering events that occurred between our qualitative annual impairment test performed as of October 1, 2024 and December 31, 2024.
−Removed: If triggering events arise in the future that require changes in the underlying assumptions used in our assessment of our goodwill, and, should those changes be significant, they could have a material impact on our goodwill and potentially our other income / (expense), net, if those significant changes result in an impairment.
+Added: If triggering events arise in the future that require changes in the underlying assumptions used in our assessment of our goodwill, and, should those changes be significant, they could have a material impact on our goodwill and potentially our other (expense) / income, net, if those significant changes result in an impairment.
Intangible Assets and Long-lived Assets
4 unchanged sentences
If the asset is considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset.
−Removed: For the year ended December 31, 2021, we determined there was an impairment of $0.1 million for an intangible asset acquired in 2014 related to customer relationships that no longer existed after December 31, 2021.
There were no indicators of impairment of our intangible assets with definite lives or long-lived assets during the years ended December 31, 2024, 2023 and 2022.
−Removed: If triggering events arise in the future, depending on the significance of the underlying assumptions in the impairment analysis, they could have a material impact on our intangible assets and long-lived assets and potentially our other income / (expense), net, if those significant changes result in an impairment.
+Added: If triggering events arise in the future, depending on the significance of the underlying assumptions in the impairment analysis, they could have a material impact on our intangible assets and long-lived assets and potentially our other (expense) / income, net, if those significant changes result in an impairment.
Accounting for Income Taxes
4 unchanged sentences
Significant judgment is required in evaluating uncertain tax positions.
−Removed: We record uncertain tax positions in accordance with ASC 740-10 on the basis of a two-step process whereby (1) we determine whether it is more likely than not that
−Removed: the tax positions will be sustained based on the technical merits of the position, and (2) with respect to those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is greater than 50% likely to be realized upon ultimate settlement with the related tax authority.
+Added: We record uncertain tax positions in accordance with ASC 740-10 on the basis of a two-step process whereby (1) we determine whether it is more likely than not that the tax positions will be sustained based on the technical merits of the position, and (2) with respect to those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is greater than 50% likely to be realized upon ultimate settlement with the related tax authority.
We did not make any material changes to the underlying assumptions used to calculate deferred tax assets and liabilities as well as uncertain tax positions for the year ended December 31, 2024, and we do not expect any material changes in the near term to the underlying assumptions used to calculate deferred tax assets and liabilities as well as uncertain tax positions for the year ended December 31, 2024.
−Removed: However, if changes in these assumptions occur, and, should those changes be significant, they could have a material impact on our deferred tax assets and liabilities as well as our provision for / (benefit from) income taxes.
+Added: However, if changes in these assumptions occur, and, should those changes be significant, they could have a material impact on our deferred tax assets and liabilities as well as our provision for income taxes.
Stock-Based Compensation
−Removed: We compensate our executive officers, board of directors and employees with stock-based compensation plans under our 2015 Equity Incentive Plan.
−Removed: We record stock-based compensation expense related to performance-based restricted stock units based on management’s determination of the probable outcome of the performance conditions, which requires considerable judgment.
+Added: We compensate our executive officers, board of directors and employees with stock-based compensation plans under our 2015 Plan.
+Added: We record stock-based compensation expense related to performance-based restricted stock units based on
+Added: management’s determination of the probable outcome of the performance conditions, which requires considerable judgment.
We estimate the fair value of each option granted on the date of the grant using the Black-Scholes option-pricing model, which contains uncertainties and requires us to estimate the risk-free interest rate, expected term, expected stock price volatility and dividend yield.
−Removed: In 2021 and years prior to 2021, we used the "simplified method" to calculate the expected term, which was presumed to be the mid-point between the vesting date and the end of the contractual term.
−Removed: Beginning upon the first grant of options in 2022, the expected term for options granted is estimated using our historical experience, including information related to options we have granted.
+Added: The expected term for options granted is estimated using our historical experience, including information related to options we have granted.
Recent Accounting Pronouncements
12 unchanged sentences
Liquidity and Capital Resources
−Removed: As of December 31, 2023, we had $697.0 million in cash and cash equivalents.
+Added: As of December 31, 2024, we had $1.22 billion in cash and cash equivalents.
We consider all highly liquid instruments purchased with an original maturity from the date of purchase of three months or less to be cash equivalents.
To date, we have principally financed our operations through cash generated by operating activities and through private and public equity and debt financings.
−Removed: We mitigate the risk of loss for our cash and cash equivalents by depositing funds with a number of reputable financial institutions and monitoring risk profiles and investment strategies of money market funds.
−Removed: On October 27, 2022, we filed a demand for arbitration of a dispute arising under the Patent Cross License Agreement between Alarm.com and Vivint executed in November 2013.
−Removed: Vivint had stopped paying license fees to Alarm.com under the agreement.
−Removed: Vivint had been paying the required license fees to Alarm.com since the agreement was executed in November 2013.
−Removed: As a result of Vivint’s refusal to pay license fees under the agreement, which began during the fourth quarter of 2022, cash flows from operating activities through December 31, 2023 were lowered by approximately $6.0 million on a quarterly basis, plus additional legal fees.
−Removed: On December 21, 2023, Alarm.com and Vivint agreed to settle all outstanding litigation between the parties and to enter into a long-term intellectual property license agreement under which Alarm.com will license to Vivint its intellectual property portfolio.
+Added: We mitigate the risk of loss for our cash and cash equivalents by depositing funds with a number of reputable financial institutions and monitoring both the risk profiles and investment strategies of money market funds.
Beginning in 2022, the Tax Cuts and Jobs Act of 2017 amended Internal Revenue Code Section 174, or Section 174, to eliminate the option to immediately deduct research and development expenditures in the year incurred, requiring these expenditures to be capitalized and amortized over five years for domestic expenditures and over 15 years for foreign expenditures.
−Removed: While we calculated the 2022 federal and state cash tax increase from Section 174 to be $38.1 million, we did not pay this additional cash tax liability as part of our 2022 estimated tax payments due to the possible deferral, modification or repeal of Section 174.
−Removed: The additional 2022 federal cash tax liability was included in current income taxes payable as of December 31, 2022, and was paid in February 2023.
−Removed: The increased 2022 state tax liability was paid in April 2023 in the amount of $7.5 million.
−Removed: We calculated the 2023 federal and state cash tax increase from Section 174 to be $43.5 million, which we expect to pay in April 2024 if Section 174 is not deferred, modified or repealed.
+Added: We calculated the 2022 federal and state cash tax increase from Section 174 to be $38.1 million, which was paid in early 2023, the 2023 federal and state cash tax increase from Section 174 to be $43.5 million, which we paid in April 2024, and we have estimated the 2024 federal and state cash tax increase from Section 174 to be approximately $33.5 million, which we expect to pay in April 2025.
The Section 174 impact on 2025 cash flows from operating activities will depend on, among other factors, our 2025 operating results and the level of 2025 research and development activity.
−Removed: Based on information currently available to us, we estimate the increased 2024 Section 174 federal and state cash tax payable for our 2024 taxable income to be in the range of $35.0 million to $40.0 million if the requirement to capitalize and amortize research and development expenditures is not deferred, modified or repealed.
+Added: Based on information currently available to us, we estimate the 2025 Section 174 federal and state cash tax payable for our 2025 taxable income to be in the range of $25.0 million to $30.0 million if the requirement to capitalize and amortize research and development expenditures is not deferred, modified or repealed.
This estimate is based on the limited information that is currently available and is subject to change.
−Removed: While the largest impact will be to cash flow from operating activities, the impact for domestic research and development expenditures would continue over the five-year amortization period, but would decrease over that period and is expected to be immaterial beginning in year six.
−Removed: On January 31, 2024, the U.S.
−Removed: House of Representatives passed H.R.
−Removed: 7024, which, among other provisions, would retroactively change the effective date of the requirement to capitalize Section 174 domestic research and development expenditures from January 1, 2022 to January 1, 2026.
−Removed: Foreign research and development expenditures would continue to be capitalized and amortized over 15 years as of January 1, 2022.
−Removed: If the bill is passed by the Senate and signed into law by the President as currently drafted, the bill would allow us to receive a partial refund of the 2022 Section 174 federal income tax paid, the amount and timing of which cannot be estimated at this time.
−Removed: Any state impact would depend on the relevant individual state laws.
+Added: While the largest impact has been to cash flow from operating activities, the impact for domestic research and development expenditures would continue over the five-year amortization period beginning in 2022, but has decreased over that period and is expected to be immaterial beginning in year six.
+Added: There is discussion of prospectively repealing the requirement to capitalize domestic research and development costs, but there is no assurance such legislation will be enacted.
We believe our existing cash and cash equivalents and our future cash flows from operating activities will be sufficient to meet our anticipated operating cash needs for at least the next 12 months.
2 unchanged sentences
$13.1 million in 2025, $11.8 million in 2026, $12.1 million in 2027, $11.5 million in 2028, $11.1 million in 2029 and $43.5 million in 2030 and thereafter.
+Added: On January 30, 2025, we entered into a senior secured loan agreement with a service provider partner, under which a term loan was provided to the service provider partner in the original principal amount of $21.5 million, which loan is collateralized by the assets of the service provider partner.
+Added: Quarterly principal payments begin in the second quarter of 2027.
+Added: Interest on the outstanding principal accrues at a rate per annum equal to the overnight financing rate published by the Federal Reserve Bank of New York for a period of three months, plus 3.0%.
+Added: For the first two years of the loan, monthly interest payments can be payable in kind at the election of the borrower.
+Added: The maturity date of the loan is January 30, 2030.
+Added: In consideration for the purchase of 81% of the issued and outstanding shares of capital stock of CHeKT, we paid $23.6 million in cash on February 10, 2025, after deducting $3.7 million related to agreed holdback provisions.
+Added: We are currently evaluating the accounting treatment of this acquisition and are in the process of completing the preliminary purchase price allocation of the assets acquired and liabilities assumed.
Our future working capital, capital expenditure and cash requirements will depend on many factors, including the impact of the Macroeconomic Conditions on the economy and our operations, the rate of our revenue growth, the amount and timing of our investments in human resources and capital equipment, future acquisitions and investments, and the timing and extent of our introduction of new solutions and platform and solution enhancements.
9 unchanged sentences
Principal payments $ — $ 500,000 $ 500,000 $ — $ 1,000,000
−Removed: Special interest — — — — —
+Added: Special interest - 2026 Notes
+Added: Contractual interest - 2029 Notes
+Added: 11,250 22,500 16,875 — 50,625
Operating lease commitments 13,563 26,836 25,643 50,540 116,582
21 unchanged sentences
We received proceeds from the issuance of the 2026 Notes of $484.3 million, net of $15.7 million of transaction fees and other debt issuance costs.
−Removed: We may not redeem the 2026 Notes prior to January 20, 2024.
We may redeem for cash, all or any portion of the 2026 Notes, at our option, on or after January 20, 2024, at a redemption price equal to 100% of the principal amount of the 2026 Notes to be redeemed, plus accrued and unpaid special interest, if any, to, but excluding, the redemption date, if the last reported sale price of our common stock has been at least 130% of the conversion price for the 2026 Notes then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption.
7 unchanged sentences
Upon conversion, we may satisfy our conversion obligation by paying or delivering, as the case may be, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election.
−Removed: our current intent to settle the principal amount of the 2026 Notes with cash.
+Added: It is our current intent to settle the principal amount of the 2026 Notes with cash.
The initial conversion rate for the 2026 Notes is 6.7939 shares of our common stock per $1,000 principal amount of 2026 Notes, which is equivalent to an initial conversion price of $147.19 per share of our common stock, subject to adjustment under certain circumstances in accordance with the terms of the 2026 Indenture.
4 unchanged sentences
We are using the remaining net proceeds from the issuance of the 2026 Notes for working capital and other general corporate purposes, which may include acquisitions or strategic investments in complementary businesses or technologies.
+Added: Convertible Senior Notes - 2029 Notes
+Added: On May 31, 2024, we issued $500.0 million aggregate principal amount of 2.25% convertible senior notes due June 1, 2029, in a private placement to qualified institutional buyers, or the 2029 Notes.
+Added: The terms of the 2029 Notes are governed by an Indenture, or the 2029 Indenture, by and between Alarm.com Holdings, Inc.
+Added: Bank Trust Company, National Association, as trustee.
+Added: The 2029 Notes are senior unsecured obligations that bear interest at a rate of 2.25% per annum, payable semiannually in arrears on June 1 and December 1 of each year, beginning on December 1, 2024, and the principal amount of the 2029 Notes will not accrete.
+Added: We received proceeds from the issuance of the 2029 Notes of $485.2 million, net of $14.8 million of transaction fees and other debt issuance costs.
+Added: We may redeem for cash, all or any portion of the 2029 Notes (subject to the partial redemption limitation described below), at our option, on or after June 7, 2027, at a redemption price equal to 100% of the principal amount of the 2029 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, if the last reported sale price of our common stock has been at least 130% of the conversion price for the 2029 Notes then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending
+Added: on, and including, the trading day immediately preceding the date on which we provide notice of redemption.
+Added: If we redeem less than all the 2029 Notes, at least $75.0 million aggregate principal amount of the 2029 Notes must be outstanding and not subject to redemption as of the relevant redemption notice date.
+Added: No sinking fund is provided for the 2029 Notes.
+Added: The 2029 Notes will be convertible at the option of the holders at any time prior to the close of business on the business day immediately preceding January 1, 2029, only under the following circumstances:
+Added: (1) during any calendar quarter commencing after the calendar quarter ending on September 30, 2024 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price for the 2029 Notes on each applicable trading day;
+Added: (2) during the five business day period immediately after any ten consecutive trading day period in which, for each trading day of that period, the trading price per $1,000 principal amount of 2029 Notes for such trading day was less than 98% of the product of the last reported sale price of our common stock and the conversion rate for the 2029 Notes on each such trading day;
+Added: (3) if we call any or all of the 2029 Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date, but only with respect to the 2029 Notes called (or deemed called) for redemption;
+Added: or (4) upon the occurrence of specified corporate events as set forth in the 2029 Indenture.
+Added: On or after January 1, 2029, until the close of business on the second scheduled trading day immediately preceding the maturity date of the 2029 Notes, holders of the 2029 Notes may convert all or any portion of their 2029 Notes at any time, regardless of the foregoing conditions.
+Added: Upon conversion, we may satisfy our conversion obligation by paying or delivering, as the case may be, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election.
+Added: It is our current intent to settle the principal amount of the 2029 Notes with cash.
+Added: The initial conversion rate for the 2029 Notes is 11.4571 shares of our common stock per $1,000 principal amount of 2029 Notes, which is equivalent to an initial conversion price of $87.28 per share of our common stock, subject to adjustment under certain circumstances in accordance with the terms of the 2029 Indenture.
+Added: In addition, following certain corporate events that occur prior to the maturity date of the 2029 Notes or if we deliver a notice of redemption in respect of some or all of the 2029 Notes, we will, under certain circumstances, increase the conversion rate of the 2029 Notes for a holder who elects to convert its 2029 Notes (or any portion thereof) in connection with such a corporate event or convert its 2029 Notes called (or deemed called) for redemption during the related redemption period (as defined in the 2029 Indenture), as the case may be.
+Added: If we undergo a fundamental change (as defined in the 2029 Indenture), subject to certain exceptions and except as described in the 2029 Indenture, holders may require us to repurchase for cash all or any portion of their 2029 Notes at a fundamental change repurchase price equal to 100% of the principal amount of the 2029 Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date.
+Added: The 2029 Indenture includes customary covenants and sets forth certain events of default after which the 2029 Notes may be declared immediately due and payable and sets forth certain types of bankruptcy or insolvency events of default involving us after which the 2029 Notes become automatically due and payable.
+Added: We used $63.1 million of the net proceeds from the 2029 Notes to pay the cost of the capped call transactions described below and used $75.0 million to repurchase 1,117,068 shares of our common stock concurrently with the pricing of the 2029 Notes, which was separately authorized by our board of directors.
+Added: We are using the remaining net proceeds from the issuance of the 2029 Notes for general corporate purposes, which may include acquisitions or strategic investments in complementary businesses or technologies, other repurchases of our common stock, repurchases of our 2026 Notes and for working capital, operating expenses and capital expenditures.
+Added: Capped Call – 2029 Notes
+Added: In connection with the offering of the 2029 Notes, we entered into privately negotiated capped call transactions with one of the initial purchasers and certain other financial institutions, at a cost of $63.1 million.
+Added: The capped call transactions cover, subject to customary adjustments substantially similar to those applicable to the 2029 Notes, the number of shares of our common stock initially underlying the 2029 Notes.
+Added: The cap price of the capped call transactions is initially $134.28 per share of our common stock, which represents a premium of 100% over the closing price of our common stock on the Nasdaq Global Select Market on May 28, 2024, and is subject to certain adjustments under the terms of the capped call transactions.
+Added: The exercise price is $87.28 per share of common stock, subject to customary anti-dilution adjustments that mirror corresponding adjustments for the 2029 Notes.
Sources of Liquidity
1 unchanged sentence
The 2026 Notes are discussed in more detail above under “Convertible Senior Notes - 2026.”
+Added: On May 31, 2024, we issued $500.0 million aggregate principal amount of 2.25% convertible senior notes due June 1, 2029, in a private placement to qualified institutional buyers and received proceeds of $485.2 million, net of $14.8 million of transaction fees and other debt issuance costs.
+Added: The 2029 Notes are discussed in more detail above under "Convertible Senior Notes - 2029 Notes."
We did not declare or pay dividends during the years ended December 31, 2024, 2023 or 2022.
3 unchanged sentences
Stock Repurchase Programs
−Removed: On December 3, 2020, our board of directors authorized a stock repurchase program, under which we were authorized to purchase up to an aggregate of $100.0 million of our outstanding common stock during the three-year period ending December 3, 2023.
−Removed: On February 15, 2023, our board of directors authorized the cancellation of the balance under the stock repurchase program ending December 3, 2023 and also authorized a stock repurchase program, effective February 23, 2023, under which we are authorized to purchase up to an aggregate of $100.0 million of our outstanding common stock during the two-year period ending February 23, 2025.
−Removed: During the years ended December 31, 2023 and 2022, we repurchased 487,918 and 1,385,592 shares of our common stock under these programs for $27.3 million and $78.8 million, respectively, which includes applicable commissions and fees.
−Removed: We did not repurchase any shares of our common stock under these programs in 2021.
+Added: On February 15, 2023, our board of directors authorized a stock repurchase program, effective February 23, 2023, under which we were authorized to purchase up to an aggregate of $100.0 million of our outstanding common stock during the two-year period ending February 23, 2025.
+Added: On May 24, 2024, our board of directors authorized the repurchase of our common stock in connection with the issuance of the 2029 Notes, the cancellation of the balance under the stock repurchase program ending February 23, 2025, and also authorized a stock repurchase program, effective May 31, 2024, under which we are authorized to purchase up to an aggregate of $100.0 million of our outstanding common stock during the two-year period ending May 31, 2026.
+Added: The full repurchase balance for this program of $100.0 million was available as of December 31, 2024.
+Added: During the year ended December 31, 2024, we repurchased 1,117,068 shares of our common stock for $75.0 million concurrently with the pricing of the 2029 Notes, which was separately authorized by our board of directors.
+Added: During the years ended December 31, 2023 and 2022, we repurchased 487,918 and 1,385,592 shares of our common stock under our stock repurchase programs that were subsequently canceled effective May 31, 2024 and February 15, 2023, for $27.3 million and $78.8 million, respectively, which includes applicable commissions and fees.
As of January 1, 2023, we are subject to a 1.0% excise tax on the value of net corporate stock repurchases under the Inflation Reduction Act of 2022.
4 unchanged sentences
We paid $3.4 million and $2.6 million of tax withholdings related to vesting of restricted stock units during the years ended December 31, 2024 and 2023, respectively.
−Removed: No tax withholdings related to the
−Removed: vesting of restricted stock units were paid during the year ended December 31, 2022.
+Added: No tax withholdings related to the vesting of restricted stock units were paid during the year ended December 31, 2022.
We also utilized the sell-to-cover method in which shares of our restricted stock unit awards were sold into the market on behalf of the employee upon vesting to cover tax withholding liabilities.
6 unchanged sentences
Cash flows used in investing activities (24,681) (25,966) (68,319)
−Removed: Cash flows (used in) / from financing activities (31,865) (76,324) 374,370
+Added: Cash flows from / (used in) financing activities 346,430 (31,865) (76,324)
Operating Activities
−Removed: Cash flows from operating activities have typically been generated from our net income and by changes in our operating assets and liabilities, particularly from accounts receivable and inventory, adjusted for non-cash expense items such as amortization and depreciation, deferred income taxes and stock-based compensation.
+Added: Cash flows from operating activities have typically been generated from our net income and by changes in our operating assets and liabilities, particularly from accounts receivable, accounts payable and inventory, adjusted for non-cash expense items such as amortization and depreciation, deferred income taxes and stock-based compensation.
For 2024, cash flows from operating activities were $206.4 million, compared to $136.0 million for 2023.
+Added: This $70.4 million increase in cash flows from operating activities was due to a $42.2 million increase in net income, a $19.7 million increase in cash from operating assets and liabilities and a $8.5 million increase in non-cash and other reconciling items.
+Added: The $19.7 million increase in cash from operating assets and liabilities was primarily due to differences in the timing of disbursements and the collection of receipts, partially offset by a $12.4 million change in inventory purchased in 2024 as compared to 2023.
+Added: The $8.5 million increase in non-cash and other reconciling items was primarily due to a $13.2 million change in deferred income taxes, which was primarily driven by the capitalization and amortization of research and development expenditures under Section 174, as well as a $4.0 million increase in the provision for credit losses on notes receivable related to a loan we provided to an affiliated entity of one of our distribution partners in 2024.
+Added: These increases in non-cash and other reconciling items were partially offset by a $6.0 million decrease in stock-based compensation and a $2.3 million decrease in amortization and depreciation expense in 2024 as compared to 2023 as well as a $1.4 million inventory write-down in 2023 that did not occur in 2024.
+Added: For 2023, cash flows from operating activities were $136.0 million, compared to $56.9 million for 2022.
This $79.1 million increase in cash flows from operating activities was due to a $49.3 million increase in cash from operating assets and liabilities, a $24.7 million increase in net income and a $5.1 million increase in non-cash and other reconciling items.
−Removed: The $49.3 million increase in cash from operating assets and liabilities was primarily due to a $61.3 million change in inventory resulting from a decrease in purchased inventory following prior year purchase activity to reduce risks and uncertainties in our supply chain as well as differences in the timing of disbursements and the collection of receipts in 2023 as compared to 2022.
+Added: The $49.3 million increase in cash from operating assets and liabilities was primarily due to a $61.3 million change in inventory resulting from a decrease in purchased inventory following 2022 purchase activity to reduce risks and uncertainties in our supply chain as well as differences in the timing of disbursements and the collection of receipts in 2023 as compared to 2022.
The $5.1 million increase in non-cash and other reconciling items was primarily due to a $7.3 million change in deferred income taxes, which was primarily driven by the capitalization and amortization of research and development expenditures under Section 174, as well as a $1.4 million inventory write-down during 2023, which did not occur in 2022.
These increases in non-cash and other reconciling items were partially offset by a $5.4 million decrease in stock-based compensation in 2023 as compared to 2022.
−Removed: For 2022, cash flows from operating activities were $56.9 million, compared to $103.2 million for 2021.
−Removed: This $46.3 million decrease in cash flows from operating activities was due to a $38.3 million decrease in non-cash and other reconciling items and a $12.4 million decrease in cash from operating assets and liabilities, partially offset by a $4.4 million increase in net income.
−Removed: The $38.3 million decrease in non-cash and other reconciling items was primarily due to a $44.9 million change in deferred income taxes, which was driven by an increase in estimated taxable income during 2022 pursuant to the capitalization requirements under Section 174 of the Internal Revenue Code, as compared to 2021.
−Removed: The decrease in non-cash and other reconciling items during 2022 as compared to 2021 was also due to a $12.7 million decrease in amortization of the debt discount and debt issuance costs related to the adoption of Accounting Standards Update, or ASU, 2020-06, " Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):
−Removed: Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity ," for the 2026 Notes.
−Removed: These decreases in non-cash and other reconciling items were partially offset by a $14.0 million increase in stock-based compensation resulting from additional grants of restricted stock units during 2022 as well as an increase in the changes to the provision for credit losses and reserve for product returns of $4.1 million during 2022 as compared to 2021.
−Removed: The $12.4 million decrease in cash from operating assets and liabilities was primarily due to a $8.9 million change in inventory resulting from an increase in purchased inventory as we seek to reduce risks and uncertainties in our supply chain as well as a $6.5 million change in accounts payable, accrued expenses and other liabilities primarily due to differences in the timing of disbursements during 2022 as compared to 2021.
Investing Activities
2 unchanged sentences
For 2024, cash flows used in investing activities was $24.7 million, compared to $26.0 million in 2023.
−Removed: The $42.3 million decrease in cash used in investing activities was primarily due to the $31.9 million paid to purchase 85% of the issued
−Removed: and outstanding shares of capital stock of Noonlight and the $21.8 million paid for developable land during 2022, which did not occur during 2023.
−Removed: These decreases in cash used in investing activities were partially offset by $9.7 million paid to purchase 100% of the issued and outstanding shares of capital stock of EBS, net of cash acquired, and the $5.9 million paid to purchase certain assets from Vintra, including direct transaction costs, in 2023, which did not occur in 2022.
+Added: The $1.3 million decrease in cash used in investing activities was primarily due to the $9.7 million paid to purchase 100% of the issued and outstanding shares of capital stock of EBS Spółka z ograniczoną odpowiedzialnością, or EBS, net of cash acquired, and the $5.9 million paid to purchase certain assets from Vintra, Inc., or Vintra, including direct transaction costs, in 2023 which did not occur in 2024.
+Added: These decreases in cash used in investing activities were partially offset by a $9.3 million increase in purchases of investments in unconsolidated entities, a $2.6 million increase in purchases of equipment, $1.4 million paid to purchase certain assets of Kapacity.io in 2024 which did not occur in 2023 as well as a $0.9 million increase in payments related to capitalized software development costs in 2024 as compared to 2023.
For 2023, cash flows used in investing activities was $26.0 million, compared to $68.3 million in 2022.
−Removed: The $47.9 million increase in cash used in investing activities was primarily due to the $31.9 million paid to purchase 85% of the issued and outstanding shares of capital stock of Noonlight and the $21.8 million paid for developable land during 2022, which did not occur during 2021.
−Removed: These increases in cash used in investing activities were partially offset by $4.4 million paid for developed technology in 2021, which did not occur during 2022.
+Added: The $42.3 million decrease in cash used in investing activities was primarily due to the $31.9 million paid to purchase 85% of the issued and outstanding shares of capital stock of Noonlight and the $21.8 million paid for developable land during 2022, which did not occur during 2023.
+Added: These decreases in cash used in investing activities were partially offset by $9.7 million paid to purchase 100% of the issued and outstanding shares of capital stock of EBS, net of cash acquired, and the $5.9 million paid to purchase certain assets from Vintra, including direct transaction costs, in 2023, which did not occur in 2022.
Financing Activities
−Removed: Cash generated by financing activities includes proceeds from the 2026 Notes and proceeds from the issuance of common stock from employee stock option exercises and from our employee stock purchase plan.
−Removed: Cash used in financing activities typically includes repurchases of common stock and repayments of debt.
+Added: Cash generated by financing activities includes proceeds from the 2026 Notes, 2029 Notes and proceeds from the issuance of common stock from employee stock option exercises and from our employee stock purchase plan.
+Added: Cash used in financing activities typically includes repurchases of common stock, repayments of debt, payments of debt issuance costs and purchases of capped calls related to the 2029 Notes.
+Added: For 2024, cash flows from financing activities was $346.4 million, compared to cash flows used in financing activities of $31.9 million in 2023.
+Added: The $378.3 million increase in cash flows from in financing activities was primarily due to $485.2 million in proceeds from the issuance of the 2029 Notes, net of issuances costs paid in 2024, which did not occur in 2023.
+Added: These increases in cash flows from financing activities were partially offset by a $47.7 million increase in purchases of shares of our common stock and $63.1 million purchases of capped calls related to the 2029 Notes in 2024, which did not occur in 2023.
For 2023, cash flows used in financing activities was $31.9 million, compared to $76.3 million in 2022.
The $44.4 million decrease in cash flows used in financing activities was primarily due to the $51.5 million decrease in purchases of shares of our common stock in 2023 as compared to 2022, partially offset by $3.0 million in debt payments related to the debt assumed in the acquisition of EBS as well as $2.6 million of tax withholdings paid related to vesting of restricted stock units in 2023, which did not occur in 2022.
−Removed: For 2022, cash flows used in financing activities was $76.3 million, compared to cash flows from financing activities of $374.4 million in 2021.
−Removed: The $450.7 million decrease in cash flows from financing activities was primarily due to $484.3 million in proceeds from the issuance of the 2026 Notes, net of issuance costs paid during 2021 that did not occur during 2022.
−Removed: The decrease in cash flows from financing activities was also due to the repurchase of 1,385,592 shares of our common stock for $78.8 million during 2022 that did not occur during 2021.
−Removed: These decreases in cash flows from financing activities were partially offset by the repayment of $110.0 million to terminate our credit facility in 2021 that did not occur in 2022.
Non-GAAP Measures
−Removed: We define non-GAAP adjusted EBITDA as our net income before interest expense, interest income, certain activity within other income / (expense), net, provision for / (benefit from) income taxes, amortization and depreciation expense, stock-based compensation expense, acquisition-related expense, legal costs and settlement fees incurred and received in connection with non-ordinary course litigation and other disputes, particularly costs involved in ongoing intellectual property litigation.
+Added: We define non-GAAP adjusted EBITDA as our net income before interest expense, interest income, certain activity within other (expense) / income, net, provision for income taxes, amortization and depreciation expense, stock-based compensation expense, acquisition-related expense, legal costs and settlement fees incurred and received in connection with non-ordinary course litigation and other disputes, particularly costs involved in ongoing intellectual property litigation.
We do not consider these items to be indicative of our core operating performance.
−Removed: The non-cash items include amortization and depreciation expense, amortization of debt discount and debt issuance costs for the 2026 Notes included in interest expense, stock-based compensation expense related to restricted stock units and other forms of equity compensation, including, but not limited to, the sale of common stock.
+Added: The non-cash items include amortization and depreciation expense, amortization of debt issuance costs for the 2026 Notes and 2029 Notes included in interest expense, stock-based compensation expense related to restricted stock units and other forms of equity compensation, including, but not limited to, the sale of common stock.
We do not adjust for ordinary course legal expenses resulting from maintaining and enforcing our intellectual property portfolio and license agreements.
18 unchanged sentences
Net income $ 122,513 $ 80,340 $ 55,631
−Removed: Interest expense, interest income and certain activity within other income / (expense), net (32,229) (5,768) 15,503
−Removed: Provision for / (benefit from) income taxes 17,485 962 (5,106)
+Added: Interest expense, interest income and certain activity within other (expense) / income, net (36,066) (32,229) (5,768)
+Added: Provision for income taxes 19,294 17,485 962
Amortization and depreciation expense 29,131 31,424 30,870
5 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.