What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-02-20 compared with 2024-02-22 · 462 added, 312 removed, 1368 unchanged (36% of the section changed)

5 unchanged sentences

Consolidated Statements of Operations

C onsolidated Statements of Comprehensive Income

Consolidated Statements of Comprehensive Income

Consolidated Balance Sheets

12 unchanged sentences

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for convertible instruments and earnings per share in 2022.

As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for convertible instruments in 2022.

Basis for Opinions

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We believe that our audits provide a reasonable basis for our opinions.

As described in Management’s Report on Internal Control over Financial Reporting, management has excluded EBS Spółka z ograniczoną odpowiedzialnością ("EBS") from its assessment of internal control over financial reporting as of December 31, 2023, because it was acquired by the Company in a purchase business combination during 2023.

We have also excluded EBS from our audit of internal control over financial reporting.

EBS is a wholly-owned subsidiary whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting represent less than 1% and 1%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2023.

Definition and Limitations of Internal Control over Financial Reporting

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A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit

preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

39 unchanged sentences

Interest income 47,359 29,801 8,759

Other income / (expense), net 4,624 ( 59 ) ( 134 )

Other (expense) / income, net ( 2,674 ) 4,624 ( 59 )

Income before income taxes 141,807 97,825 56,593

Provision for / (benefit from) income taxes 17,485 962 ( 5,106 )

Provision for income taxes 19,294 17,485 962

Net income 122,513 80,340 55,631

2 unchanged sentences

Per share information attributable to common stockholders:

Net income per share:

Net income attributable to common stockholders per share:

Basic $ 2.50 $ 1.63 $ 1.13

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Net income $ 122,513 $ 80,340 $ 55,631

Other comprehensive income

Other comprehensive (loss) / income

Foreign currency translation adjustment ( 583 ) 1,398 —

Total other comprehensive income 1,398 — —

Total other comprehensive (loss) / income ( 583 ) 1,398 —

Comprehensive income 121,930 81,738 55,631

58 unchanged sentences

Adjustments to reconcile net income to net cash flows from operating activities:

Provision for / (recovery of) credit losses on accounts receivable

Provision for credit losses on accounts receivable

950 1,508 1,156

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Amortization and depreciation 29,131 31,424 30,870

Amortization of debt issuance costs and debt discount

Amortization of debt issuance costs

4,796 3,145 3,126

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Stock-based compensation 41,242 47,283 52,654

(Gain on) / impairment of investment or intangible assets — ( 140 ) 86

Loss on early extinguishment of debt — — 185

Gain from investment in unconsolidated entity

( 127 ) — ( 140 )

Changes in operating assets and liabilities (net of business acquisitions):

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Receipt of payments on notes receivable 51 55 61

Purchase of investment in unconsolidated entity ( 1,700 ) ( 5,150 ) ( 5,000 )

Purchase of investment in unconsolidated entities ( 11,025 ) ( 1,700 ) ( 5,150 )

Proceeds from sale of investment — — 140

Purchases of developed technology and other assets ( 5,915 ) — ( 4,362 )

Purchases of intangible assets and other assets

( 1,431 ) ( 5,915 ) —

Cash flows used in investing activities ( 24,681 ) ( 25,966 ) ( 68,319 )

Cash flows (used in) / from financing activities:

Repayments of credit facility — — ( 110,000 )

Cash flows from / (used in) financing activities:

Proceeds from issuance of convertible senior notes 500,000 — —

Payments of debt issuance costs ( 14,834 ) — —

Purchases of capped calls related to convertible senior notes

( 63,050 ) — —

Payments of deferred consideration for acquisitions ( 7,269 ) ( 1,672 ) ( 1,500 )

Purchases of treasury stock, including transaction costs

( 75,000 ) ( 27,298 ) ( 78,844 )

Purchases of redeemable noncontrolling interest — ( 832 ) —

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Issuances of common stock from equity-based plans 9,984 3,598 4,020

Cash flows (used in) / from financing activities ( 31,865 ) ( 76,324 ) 374,370

Cash flows from / (used in) financing activities 346,430 ( 31,865 ) ( 76,324 )

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 109 ) 66 —

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Redeemable Noncontrolling Interests Common Stock Additional

Capital Treasury Stock Accumulated Other Comprehensive Income Retained Earnings Total

Capital Treasury Stock Accumulated Other Comprehensive Income / (Loss) Retained Earnings Total

Stockholders’

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Balance as of December 31, 2021 $ 12,888 50,407 $ 504 $ 498,979 147 $ ( 5,149 ) $ — $ 118,833 $ 613,167

Common stock issued in connection with equity-based plans — 776 8 5,696 — — — — 5,704

Tax withholding related to vesting of restricted stock units — — — ( 4,476 ) — — — — ( 4,476 )

Stock-based compensation expense — — — 38,694 — — — — 38,694

Equity component of convertible senior notes, net — — — 56,515 — — — — 56,515

Accretion adjustments of redeemable noncontrolling interest to redemption value 3,281 — — ( 3,281 ) — — — — ( 3,281 )

Net income / (loss) attributable to common stockholders ( 1,084 ) — — — — — — 52,259 52,259

Balance as of December 31, 2021 $ 12,888 50,407 $ 504 $ 498,979 147 $ ( 5,149 ) $ — $ 118,833 $ 613,167

Adoption of accounting standard on debt with conversion and other options — — — ( 56,515 ) — — — 9,972 ( 46,543 )

8 unchanged sentences

Common stock issued in connection with equity-based plans — 904 9 3,589 — — — — 3,598

Purchase of treasury stock — — — — 488 ( 27,298 ) — — ( 27,298 )

Purchases of treasury stock — — — — 488 ( 27,298 ) — — ( 27,298 )

Tax withholdings related to vesting of restricted stock units — — — ( 2,621 ) — — — — ( 2,621 )

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Balance as of December 31, 2023 $ 36,308 51,889 $ 519 $ 531,734 2,021 $ ( 111,291 ) $ 1,398 $ 266,186 $ 688,546

Redeemable Noncontrolling Interests Common Stock Additional

Capital Treasury Stock Accumulated Other Comprehensive Income / (Loss) Retained Earnings Total

Stockholders’

Shares Amount Shares Amount

Balance as of December 31, 2023 $ 36,308 51,889 $ 519 $ 531,734 2,021 $ ( 111,291 ) $ 1,398 $ 266,186 $ 688,546

Common stock issued in connection with equity-based plans — 867 9 9,975 — — — — 9,984

Purchase of treasury stock, including transaction costs and excise tax — — — ( 394 ) 1,117 ( 75,000 ) — — ( 75,394 )

Tax withholdings related to vesting of restricted stock units — — — ( 3,401 ) — — — — ( 3,401 )

Stock-based compensation expense — — — 41,397 — — — — 41,397

Accretion adjustments of redeemable noncontrolling interest to redemption value 10,042 — — ( 10,042 ) — — — — ( 10,042 )

Purchases of capped calls related to convertible senior notes, net of tax — — — ( 48,077 ) — — — — ( 48,077 )

Net income / (loss) attributable to common stockholders ( 1,603 ) — — — — — — 124,116 124,116

Other comprehensive loss — — — — — — ( 583 ) — ( 583 )

Balance as of December 31, 2024 $ 44,747 52,756 $ 528 $ 521,192 3,138 $ ( 186,291 ) $ 815 $ 390,302 $ 726,546

See accompanying notes to the consolidated financial statements.

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(referred to herein as Alarm.com, the Company, or we) is the leading platform for the intelligently connected property.

Our cloud-based platform offers an expansive suite of Internet of Things, or IoT, solutions addressing opportunities in the residential, multi-family, small business and enterprise commercial markets.

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.

Our cloud-based platform offers an expansive suite of Internet of Things, or IoT, solutions addressing global opportunities in the residential, multi-family, small business and enterprise commercial markets.

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.

Our solutions are delivered through an established network of trusted service provider partners, who are experts at selling, installing and supporting our solutions.

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We make a separate election to use the measurement alternative for each eligible investment, and reassess whether an investment qualifies for the alternative at each reporting period.

Adjustments resulting from impairment, fair value or observable price changes are recorded in other income / (expense), net in our consolidated statements of operations.

Adjustments resulting from impairment, fair value or observable price changes are recorded in other (expense) / income, net in our consolidated statements of operations.

Use of Estimates

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However, our estimates, judgments and assumptions are continually evaluated based on available information and experience and may change as new events occur and additional information is obtained.

The global economy, credit markets and financial markets have and may continue to experience significant volatility as a result of significant worldwide events, including public health crises, and geopolitical upheaval, such as Russia’s incursion into Ukraine and the war between Israel and Hamas, disruptions to global supply chains, rising interest rates, risk of recession and inflation (collectively, the Macroeconomic Conditions).

The global economy, credit markets and financial markets have and may continue to experience significant volatility as a result of significant worldwide events, including public health crises, and geopolitical upheaval (including the ongoing conflicts in Ukraine, and in Israel and surrounding areas), disruptions to global supply chains, fluctuations in interest rates, risk of recession and inflation (collectively, the Macroeconomic Conditions).

Because of the use of estimates inherent in the financial reporting process and in light of the continuing uncertainty arising from the Macroeconomic Conditions, actual results could differ from those estimates and any such differences may be material.

Estimates are used when accounting for revenue recognition, allowances for credit losses, allowance for hardware returns, estimates of obsolete inventory, long-term incentive compensation, the lease term and incremental borrowing rates for leases, stock-based compensation, income taxes, legal reserves, goodwill, intangible assets and other long-lived assets.

Reclassifications

Certain previously reported amounts in the income taxes footnote for the year ended December 31, 2022 have been reclassified to conform to our current presentation, including the reclassification for income tax underpayment interest, net of tax benefit, within the reconciliation between the federal statutory rate and the effective income tax rate.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2023, 2022 and 2021

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.

As of December 31, 2023 and 2022, we have invested $ 679.7 million and $ 510.3 million in cash equivalents in the form of money market funds with a number of financial institutions, respectively.

As of December 31, 2024 and 2023, we have invested $ 1.21 billion and $ 679.7 million in cash equivalents in the form of money market funds with a number of financial institutions, respectively.

We consider these money market funds to be Level 1 financial instruments (see Note 10).

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2024, 2023 and 2022

Accounts Receivable

Accounts receivable are principally derived from sales to customers located in the United States and Canada.

The majority of our sales in Canada are transacted in U.S.

Revenue in countries outside of North America accounted for 6 %, 4 % and 4 % of our total revenue for the years ended December 31, 2024, 2023 and 2022, respectively.

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We consider all cash reserved for a specific use and not available for immediate or general business use to be restricted cash.

As of December 31, 2023, we had a total of $ 4.1 million of restricted cash, of which less than $ 0.1 million was included in other current assets and $ 4.1 million was included in other assets within our consolidated balance sheets.

As of December 31, 2024, we had a total of $ 8.4 million of restricted cash, of which $ 2.2 million was included in other current assets and $ 6.2 million was included in other assets within our consolidated balance sheets.

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Factors considered in determining impairment include payment status, collateral value and the probability of collecting payments when due.

See Note 9 for further details on loans provided to one of our distribution partners, technology partners and service provider partners.

See Note 9 for further details on loans provided to distribution partners, technology partners and service provider partners.

Credit Losses

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These risk characteristics are relevant to accounts receivable and notes receivable.

Expected credit losses are estimated over the contractual term of the financial assets and we adjust the term for expected prepayments when appropriate.

For the years ended December 31, 2024, 2023 and 2022 we recorded credit loss expense of $ 4.7 million, $ 1.0 million and $ 0.8 million in general and administrative expense in our consolidated statements of operations, respectively.

The contractual term excludes expected extensions, renewals and modifications because extension and renewal options are unconditionally cancelable by us.

Write-offs of the amortized cost basis are recorded to the allowance for credit losses.

Any subsequent recoveries of previously written off balances are recorded as a reduction to credit loss expense.

Credit Losses - Accounts Receivable

We identified the following two portfolio segments for our accounts receivable:

(i) outstanding accounts receivable balances within Alarm.com and certain subsidiaries and (ii) outstanding accounts receivable balances within all other subsidiaries.

We identified the following two portfolio segments for our notes receivable:

(i) loan receivables and (ii) hardware financing receivables.

There were no changes to our portfolio segments during the years ended December 31, 2023 and 2022, and no changes to our policies or practices involving the issuance of notes receivable, customer acquisitions or any other factors that influenced our estimate of expected credit losses.

Additionally, there were no significant changes in the amount of accounts receivable or notes receivable write-offs during the year ended December 31, 2023 as compared to historical periods other than a partial accounts receivable write-off of $ 0.7 million related to one of our distribution partners' outstanding balance during the year ended December 31, 2021.

There were no purchases or sales of financial assets during the years ended December 31, 2023 and 2022.

There were no hardware financing receivables outstanding as of December 31, 2023 and 2022.

Expected credit losses are estimated over the contractual term of the financial assets and we adjust the term for expected prepayments when appropriate.

For the years ended December 31, 2023 and 2022 we recorded credit loss expense of $ 1.0 million and $ 0.8 million in general and administrative expense in our consolidated statements of operations, respectively.

For the year ended December 31, 2021, we recorded a reduction to credit loss expense of $ 1.0 million in general and administrative expense in our consolidated statements of operations.

The contractual term excludes expected extensions, renewals and

There were no changes to our portfolio segments for our accounts receivable during the years ended December 31, 2024, 2023 and 2022, and no changes to our policies or practices that influenced our estimate of expected credit losses for accounts receivable.

Additionally, there were no significant changes in the amount of accounts receivable write-offs during the year ended December 31, 2024, as compared to historical periods.

Credit Losses - Notes Receivable

We identified one portfolio segment, loan receivables, for our notes receivable.

We previously disclosed a hardware financing receivable portfolio segment;

however, there has been no activity within that portfolio segment since 2022.

There were no changes to our policies or practices involving the issuance of notes receivable, customer acquisitions or any other factors that influenced our estimate of expected credit losses.

During the year ended December 31, 2024, we wrote off $ 4.0 million related to a note receivable that originated in 2017 with an affiliate entity of one of our distribution partners, or the Affiliate, and reversed the

ALARM.COM HOLDINGS, INC.

1 unchanged sentence

December 31, 2024, 2023 and 2022

modifications because extension and renewal options are unconditionally cancelable by us.

Write-offs of the amortized cost basis are recorded to the allowance for credit losses.

Any subsequent recoveries of previously written off balances are recorded as a reduction to credit loss expense.

previously allowance for credit losses recorded earlier in 2024.

There were no purchases or sales of financial assets during the years ended December 31, 2024 and 2023.

There were no hardware financing receivables outstanding as of December 31, 2024 and 2023.

We do not accrue interest on notes receivable that are considered impaired or are 90 days or greater past due based on their contractual payment terms.

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We write-off any accrued interest on notes receivable that are considered impaired or are 90 days or greater past due based on their contractual payment terms by reversing interest income.

The accrued interest receivable as of December 31, 2023 and 2022 was $ 0.1 million and less than $ 0.1 million, respectively, and is reflected in other current assets and other assets within our consolidated balance sheets and excluded from the amortized cost basis of the notes receivable .

The accrued interest receivable as of December 31, 2024 and 2023 was $ 0.2 million and $ 0.1 million, respectively, and is reflected in other current assets and other assets within our consolidated balance sheets and excluded from the amortized cost basis of the notes receivable .

During the year ended December 31, 2024, we recorded a reduction to our interest income of $ 0.5 million related to the reversal of payable in kind interest associated with a subordinated credit agreement with the Affiliate.

We did not write-off any accrued interest receivable during the years ended December 31, 2023 and 2022.

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For all other classes of underlying assets, if separate lease and non-lease components are identified, we allocate the consideration in the contract to the lease and non-lease components using the relative stand-alone selling price method at the lease inception.

Many of our leases include options to renew at our sole discretion.

Some of our leases include options to renew at our sole discretion.

We also have several leases that provide us an option to terminate the lease prior to the end of the lease term.

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Short-term leases are not recorded on our consolidated balance sheets.

Expenses associated with short-term leases are recognized on a straight-line basis over the term of the lease and are recorded in general and administrative expense.

Short-term lease costs were immaterial for the years ended December 31, 2023 and 2022.

Expenses associated with short-term leases are recognized on a

ALARM.COM HOLDINGS, INC.

1 unchanged sentence

December 31, 2024, 2023 and 2022

straight-line basis over the term of the lease and are recorded in general and administrative expense.

Short-term lease costs were immaterial for the years ended December 31, 2024 and 2023.

Convertible Senior Notes

On January 20, 2021, we issued $ 500.0 million aggregate principal amount of 0 % convertible senior notes due January 15, 2026, in a private placement to qualified institutional buyers, or the 2026 Notes.

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.

Prior to the January 1, 2022 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):

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We also removed the temporary difference between the book and tax treatment of the debt discount and adjusted the temporary difference between the book and tax treatment of the debt issuance costs of the 2026 Notes.

The issuance costs are presented as a deduction from the outstanding principal balance of the 2026 Notes and are amortized to interest expense using the effective interest method over the contractual term of the 2026 Notes.

The issuance costs are presented as a deduction from the outstanding principal balance of the 2026 Notes and 2029 Notes and are amortized to interest expense using the effective interest method over the contractual term of the 2026 Notes and 2029 Notes.

Capped Call Transactions

On May 31, 2024, we issued the 2029 Notes.

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.

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.

As the capped call options are both legally detachable and separately exercisable from the 2029 Notes, we account for the capped call options separately from the 2029 Notes.

The capped call options are indexed to our own common stock and classified in stockholders’ equity.

As such, the premiums paid for the capped call options were included as a net reduction to additional paid-in capital in the consolidated balance sheets.

The capped call transactions will not be remeasured as long as they continue to meet the conditions for equity classification.

We elected to integrate the capped call options with the 2029 Notes for federal income tax purposes pursuant to applicable U.S.

Treasury Regulations.

Accordingly, the $ 63.1 million cost of the purchased capped calls will be deductible for income tax purposes.

The original issue discount is accreted over the term of the 2029 Notes.

Comprehensive Income

Comprehensive income consists of net income and other comprehensive income.

Other comprehensive income refers to gains and losses that are recorded as an element of stockholders' equity and excluded from net income.

Our other comprehensive income consists of foreign currency translation adjustments.

Comprehensive income consists of net income and other comprehensive (loss) / income.

Other comprehensive (loss) / income refers to gains and losses that are recorded as an element of stockholders' equity and excluded from net income.

Our other comprehensive (loss) / income consists of foreign currency translation adjustments.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2024, 2023 and 2022

Foreign Currency

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For these foreign operations, assets and liabilities are translated at period-end exchange rates and revenue and expense items are translated at average exchange rates prevailing during the periods being reported.

The effects of translating financial statements of foreign operations into our reporting currency are recognized as a cumulative translation adjustment within accumulated other comprehensive (loss) / income, a separate component of stockholders’ equity.

The effects of translating financial statements of foreign operations into our reporting currency are recognized as a cumulative translation adjustment within accumulated other comprehensive income, a separate component of stockholders’ equity.

Gains or losses from foreign currency remeasurements that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in our results of operations.

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The aggregate redemption values of the of the noncontrolling interest was $ 44.7 million and $ 36.3 million as of December 31, 2024 and 2023, respectively.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2023, 2022 and 2021

Internal-Use Software

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Such costs primarily include payroll and payroll-related costs for engineers and product development employees directly associated with the development project.

Our internal-use software is reported at cost less accumulated depreciation.

Depreciation begins once the project is ready for its intended use, which is usually when the code goes into production in weekly software builds on our platforms.

We depreciate the asset on a straight-line basis over a period of three years , which is the estimated useful life.

Our internal-use software is reported at cost less accumulated amortization.

Amortization begins once the project is ready for its intended use, which is usually when the code goes into production in weekly software builds on our platforms.

We amortize the asset on a straight-line basis over the estimated useful life, which is typically a three to five-year period.

We update our software for our SaaS multi-tenant platforms on a weekly basis utilizing continuous agile development methods, which primarily consists of bug-fixes and user interface changes.

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Agile development results in a short duration between completion of the detailed program design and beta release.

As of December 31, 2023, our capitalized software development costs included in the consolidated balance sheets were $ 0.9 million.

There were no capitalized software development costs included in the consolidated balance sheets as of December 31, 2022.

As of December 31, 2024 and 2023, our capitalized software development costs for internal-use software and external software included in the consolidated balance sheets were $ 2.4 million and $ 0.9 million, respectively.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2024, 2023 and 2022

Revenue Recognition

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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.

Our hardware includes cellular radio modules that enable access to our cloud-based platforms, as well as video cameras, video recorders, smart thermostats, image sensors, gunshot detection sensors and other peripherals.

Our hardware sales includes connected devices that enable our services, such as video cameras, video recorders, smart thermostats, image sensors, gunshot detection sensors, gateway modules and peripherals.

Our service provider partners may purchase our hardware in anticipation of installing the hardware in a residential or commercial property when they create a new subscriber account, or for use in existing subscriber properties.

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Our performance obligation related to providing our platform solutions is satisfied on a daily basis as the subscriber uses the platform services.

The purchase of platform solutions and the purchase of hardware are separate transactions as revenue is recognized when control of the promised goods or services are transferred to our customers, in an amount that reflects the consideration that we expect to receive in exchange for those goods or services.

The purchase of platform solutions and the purchase of hardware are separate transactions as revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration that we expect to receive in exchange for those goods or services.

We generate all of our revenue from contracts with customers.

SaaS and license revenue associated with our contracts is invoiced and revenue is recognized at an amount that corresponds directly with the value of the performance completed to date.

SaaS and license revenue associated with our contracts is recognized at an amount that corresponds directly with the value of the performance completed to date.

Additionally, the consideration received from hardware sales corresponds directly with the stand-alone selling price of the hardware.

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The significant inputs related to our estimates of variable consideration include the volume and amount of products and services sold historically and expected to be sold in the future, the availability and performance of our services and the historical and expected number of returns.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2023, 2022 and 2021

on the type of variable consideration and its predictability, we may apply an "expected value" approach or a "most likely amount" approach.

Depending on the type of variable consideration and its predictability, we may apply an "expected value" approach or a "most likely amount" approach.

We estimate the variable consideration at the onset of a contract and include the variable consideration within the transaction price if it is probable that a significant reversal of the variable consideration would not occur in the future.

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For our standard service provider agreements, we have used a portfolio approach for purposes of revenue recognition, as each agreement has similar characteristics and we do not expect the effects of applying this approach would have a material impact on our financial statements as compared to assessing each agreement individually.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2024, 2023 and 2022

SaaS and License Revenue

We generate the majority of our SaaS and license revenue primarily from monthly fees charged to our service provider partners sold on a per subscriber basis for access to our cloud-based intelligently connected property platform and related solutions.

We generate the majority of our SaaS and license revenue primarily from monthly fees charged to our service provider partners on a per subscriber basis for access to our cloud-based intelligently connected property platform and related solutions.

Our fees per subscriber vary based upon the service plan and features utilized.

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Under the usage-based royalty exception, we recognize revenue on a monthly basis over the period during which the services are expected to be performed.

Under the terms of our contractual arrangements with our service provider partners, we are entitled to payment of a

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2023, 2022 and 2021

monthly fee that is billed per subscriber for the month of service.

Under the terms of our contractual arrangements with our service provider partners, we are entitled to payment of a monthly fee that is billed per subscriber for the month of service.

Our software license revenue during the years ended December 31, 2024, 2023 and 2022 was $ 20.3 million, $ 23.2 million and $ 26.8 million, respectively.

Hardware and Other Revenue

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 other peripherals.

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.

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We record a reserve against revenue for hardware returns based on historical returns.

For each of the years ended December 31, 2023, 2022 and 2021, our reserve against revenue for hardware returns was 1 % of hardware and other revenue.

For each of the years ended December 31, 2024, 2023 and 2022, our reserve against revenue for hardware

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2024, 2023 and 2022

returns was 1 % of hardware and other revenue.

We evaluate our hardware reserve on a quarterly basis or if there is an indication of significant changes in return experience.

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The balance of deferred revenue for activation fees was $ 4.3 million and $ 4.8 million as of December 31, 2024 and 2023, respectively, which combines current and long-term balances.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2023, 2022 and 2021

Cost of Revenue

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We do not have any assets from contracts containing conditional rights and we do not have any assets from satisfied performance obligations that have not been invoiced.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2024, 2023 and 2022

We recognize an asset related to the costs incurred to obtain a contract only if we expect to recover those costs and we would not have incurred those costs if the contract had not been obtained.

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When calculating the incremental cost of obtaining a contract, we exclude any commission costs related to metrics that could be satisfied without obtaining a contract, including training-related metrics.

We amortize our commission costs over a period of three years , which is consistent with the period over which the products and services related to the commission are transferred to the customer.

We amortize our commission costs to sales and marketing expense on our consolidated statements of operations over a period of three years , which is consistent with the period over which the products and services related to the commission are transferred to the customer.

The three-year period was determined based on our review of historical enhancements and upgrades to our products and services.

9 unchanged sentences

We invest substantial resources in research and development to enhance our platforms and applications, support our technology infrastructure, develop new capabilities and conduct quality assurance testing.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2023, 2022 and 2021

Fair Value Measurements

8 unchanged sentences

The carrying amount of financial assets, including cash and cash equivalents and accounts receivable, as well as accounts payable approximates fair value because of the short maturity and liquidity of those instruments.

Assets and Liabilities Measured at Fair Value on a Recurring Basis - In 2023 and 2022, we recorded assets for our money market accounts.

In 2023, we recorded liabilities for a contingent consideration liability related to acquisitions at fair value on a recurring basis.

Assets and Liabilities Measured at Fair Value on a Recurring Basis - In 2024 and 2023, we recorded assets for our money market accounts and liabilities for a contingent consideration liability related to acquisitions at fair value on a recurring basis.

In 2024 we recorded assets for our equity securities with readily determinable fair values on a recurring basis.

Prior to the termination of the long-term incentive plan with one of our subsidiaries in May 2022, we recorded liabilities for the long-term incentive plan at fair value on a recurring basis.

2 unchanged sentences

Additionally, equity investments without readily determinable fair values are recognized at fair value on a nonrecurring basis when observable price changes from orderly transactions for identical or similar investments become available.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2024, 2023 and 2022

Concentration of Credit Risk

17 unchanged sentences

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.

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.

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.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2023, 2022 and 2021

Our Employee Stock Purchase Plan, or 2015 ESPP, allows eligible employees to purchase shares of our common stock at 90 % of the fair market value of the closing price on the purchase date.

16 unchanged sentences

Significant estimates and assumptions in valuing acquired trade name intangible assets include estimates about future expected cash flows, royalty rates and discount rates.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2024, 2023 and 2022

During the measurement period, we may record adjustments to the assets acquired and liabilities assumed.

16 unchanged sentences

Our assessment was performed as of October 1, 2024, and we have determined there has been no triggering events that resulted in goodwill impairment from our assessment date through December 31, 2024.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2023, 2022 and 2021

Intangible Assets and Long-lived Assets

5 unchanged sentences

For the years ended December 31, 2024, 2023 and 2022, we determined there were no impairments of our intangible assets with definite lives or other long-lived assets.

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 impairments of any other long-lived assets for the year ended December 31, 2021.

Advertising Costs

1 unchanged sentence

Advertising costs totaled $ 6.6 million, $ 2.9 million and $ 6.1 million for the years ended December 31, 2024, 2023 and 2022, respectively.

Advertising costs are included within sales and marketing expenses on our consolidated statements of operations.

Advertising costs are primarily included within sales and marketing expenses on our consolidated statements of operations.

Accounting for Income Taxes

4 unchanged sentences

In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies and results of recent operations.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2024, 2023 and 2022

We are subject to income taxes in the United States and foreign jurisdictions based upon our business operations in those jurisdictions.

12 unchanged sentences

We use the treasury stock method when calculating the dilutive impact of the stock options and restricted stock units on net income per share.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2023, 2022 and 2021

On January 20, 2021, we issued the 2026 Notes.

Prior to the adoption of ASU 2020-06, since we expected to settle the principal amount on our outstanding 2026 Notes in cash and any excess in cash or shares of our common stock, we used the treasury stock method for calculating any potential dilutive effect of the conversion spread on diluted net income per share, if applicable.

The conversion spread had a dilutive impact on diluted net income per share of common stock when the average market price of our common stock for a given period exceeded the conversion price of $ 147.19 per share for the 2026 Notes.

Upon adoption of ASU 2020-06 on January 1, 2022, we began using the if-converted method when calculating the dilutive impact of the 2026 Notes on net income per share.

As a result, we included 3,396,950 shares related to the 2026 Notes within the weighted average shares outstanding when calculating the diluted net income per share.

Additionally, we included debt issuance cost amortization, net of tax, within the numerator of the diluted net income per share.

We use the if-converted method when calculating the dilutive impact of the 2026 Notes and 2029 Notes on net income per share.

As a result, we included 3,396,950 shares related to the 2026 Notes and 3,365,132 shares related to the 2029 Notes within the weighted average shares outstanding when calculating the diluted net income per share.

Additionally, we included interest expense and debt issuance cost amortization, net of tax, within the numerator of the diluted net income per share.

Our redeemable noncontrolling interests are related to our 86 % equity ownership interest in OpenEye and our 85 % equity ownership interest in Noonlight.

When calculating net income attributable to the common stockholders, net loss attributable to our redeemable noncontrolling interests should be excluded from net income.

As a result, net income attributable to the common stockholders is equal to the net income less (i) dividends paid on unvested shares with any remaining earnings allocated in accordance with the bylaws between the outstanding common and preferred stock and (ii) net loss attributable to redeemable noncontrolling interests as of the end of each period.

As a result, net income attributable to the common stockholders is equal to the net income less the net loss attributable to redeemable noncontrolling interests as of the end of each period.

Recent Accounting Pronouncements

During the year ended December 31, 2023, we did not adopt any new accounting pronouncements.

Not Yet Adopted

On November 27, 2023, the Financial Accounting Standards Board, or FASB, issued ASU 2023-07, "Segment Reporting (Topic 280),” which revises the disclosure requirements about a public entity’s reportable segments and a reportable segment’s expenses.

This amendment requires a public entity to (i) disclose significant segment expense that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, (ii) disclose an amount for other segment items by reportable segment and a description of its composition and (iii) provide annual disclosures about a reportable segment’s profit or loss and assets currently required by Topic 280 in interim periods.

The amendment is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

This amendment is required to be applied retrospectively to all prior periods presented.

We are currently assessing the impact this pronouncement will have on our consolidated financial statement disclosures.

We adopted ASU 2023-07 during the fiscal year ended December 31, 2024, which increased the amount of disclosures within Note 19 related to segment expenses.

Not Yet Adopted

On December 14, 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740)," which requires additional annual disclosures regarding specific categories in the income tax rate reconciliation as well additional information for reconciling items that meet a quantitative threshold.

2 unchanged sentences

The amendment is effective for annual periods beginning after December 15, 2024, and early adoption is permitted.

This amendment should be applied on a prospective basis, but retrospective application is permitted.

This amendment

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2024, 2023 and 2022

should be applied on a prospective basis, but retrospective application is permitted.

We are currently assessing the impact this pronouncement will have on our consolidated financial statement disclosures.

On November 5, 2024, the FASB issued ASU 2024-03, "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40)," which requires more detailed information about the types of expenses included in certain expense captions presented on the consolidated statements of operations, including purchases of inventory, employee compensation, depreciation, amortization and depletion.

Additionally, this amendment requires the disclosure of a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively and the disclosure of the total amount of selling expenses and, on an annual basis, an entity's definition of selling expenses.

The amendment is effective for annual periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027.

Early adoption is permitted.

This amendment should be applied either on a prospective basis or a retrospective basis to any or all prior periods presented.

We are currently assessing the impact this pronouncement will have on our consolidated financial statement disclosures.

Revenue from Contracts with Customers

6 unchanged sentences

We did no t record an impairment loss on our contract assets during the years ended December 31, 2024, 2023 and 2022.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2023, 2022 and 2021

The changes in our contract assets are as follows (in thousands):

19 unchanged sentences

The revenue recognized from amounts included in contract liabilities primarily relates to prepayment contracts with customers as well as payments of activation fees.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2024, 2023 and 2022

Accounts Receivable, Net

4 unchanged sentences

Accounts receivable, net $ 126,082 $ 130,626

For the years ended December 31, 2023 and 2022, we recorded a provision for credit losses on our accounts receivable of $ 1.5 million and $ 1.2 million, respectively.

For the year ended December 31, 2021, we recorded a reduction to the provision for credit losses on our accounts receivable of $ 0.8 million.

For the years ended December 31, 2024, 2023 and 2022 we recorded a provision for credit losses on our accounts receivable of $ 1.0 million, $ 1.5 million and $ 1.2 million, respectively.

For the years ended December 31, 2024, 2023 and 2022, we recorded a $ 3.2 million, $ 4.4 million and $ 4.7 million reserve for product returns in our hardware and other revenue, respectively.

Historically, we have not experienced write-offs for uncollectible accounts or sales returns that have differed significantly from our estimates.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2023, 2022 and 2021

Allowance for Credit Losses - Accounts Receivable

13 unchanged sentences

Total inventory $ 87,435 $ 96,140

Inventory values include a write-down of $ 1.4 million during the year ended December 31, 2023, which is reflected in cost of hardware and other revenue within our consolidated statements of operations.

The inventory write-down is the result of a lower of cost or net realizable value adjustment for finished goods.

Inventory values are net of a write-down of $ 1.4 million during the year ended December 31, 2023, which is reflected in cost of hardware and other revenue within our consolidated statements of operations.

The inventory write-down was the result of a lower of cost or net realizable value adjustment for finished goods.

Property and Equipment, Net

1 unchanged sentence

We record land at historical cost.

Furniture, fixtures and office equipment and computer software and hardware are depreciated on a straight-line basis over lives ranging from three to five years .

Internal-use software is amortized on a straight-line basis over a three-year period.

Furniture, fixtures and office equipment and computer software and hardware are depreciated on a straight-line basis over lives generally ranging from three to five years .

Internal-use software included in fixed assets is amortized on a straight-line basis over a three-year period.

Leasehold improvements are amortized on a straight-line basis over the shorter of the lease terms or the asset lives.

Real property is amortized on a straight-line basis over lives ranging from 15 to 39 years and the improvements related to real property are amortized on a straight-line basis over the shorter of the life of the underlying real property or the asset lives.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2024, 2023 and 2022

The components of property and equipment, net are as follows (in thousands):

10 unchanged sentences

Depreciation expense related to property and equipment for the years ended December 31, 2024, 2023 and 2022 was $ 10.3 million, $ 11.2 million and $ 11.6 million, respectively.

Amortization expense related to internal-use software of zero , $ 0.6 million

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2023, 2022 and 2021

and $ 2.0 million was included in those expenses for the years ended December 31, 2023, 2022 and 2021, respectively.

Amortization expense related to internal-use software included in fixed assets of zero , zero and $ 0.6 million was included in depreciation expenses for the years ended December 31, 2024, 2023 and 2022, respectively.

We had no disposals and write-offs of property and equipment that impacted the consolidated statements of operations during the years ended December 31, 2024, 2023 and 2022.

Asset Acquisitions

On November 22, 2024, EnergyHub International, Inc., one of our wholly-owned subsidiaries, acquired certain assets of Finland-based Kapacity.io Solutions Oy.

Substantially all of the acquired assets consisted of developed technology.

We believe the acquisition of the developed technology will help accelerate deployment of a cloud-based demand response platform internationally for our EnergyHub subsidiary.

In consideration for the purchase of the developed technology, we paid $ 1.3 million in cash in November 2024, after deducting $ 0.2 million related to an agreed holdback provision.

Additionally, we incurred $ 0.1 million in direct transaction costs related to legal fees during 2024 that were capitalized as a component of the consideration transferred.

The $ 1.6 million purchase price consideration related to developed technology was recorded as an intangible asset at the time of the asset acquisition and is being amortized on a straight-line basis over an estimated useful life of seven years .

The asset acquisition was recorded within our Other segment.

On April 21, 2023, Alarm.com Incorporated, one of our wholly-owned subsidiaries, acquired certain assets of Vintra, Inc., or Vintra.

2 unchanged sentences

In consideration for the purchase of the acquired assets, we paid $ 5.5 million in cash on April 21, 2023, after deducting $ 0.3 million related to the settlement of an outstanding loan issued to Vintra during March 2023 and $ 1.0 million related to an agreed holdback provision.

The holdback is expected to be paid by the third quarter of 2024, subject to offset for any indemnification obligations.

The holdback was fully paid by the third quarter of 2024.

Additionally, we incurred $ 0.4 million in direct transaction costs related to legal fees during 2023 that were capitalized as a component of the consideration transferred.

1 unchanged sentence

The remaining $ 0.1 million purchase price consideration was allocated to property and equipment.

On December 16, 2021, EnergyHub, Inc., one of our wholly-owned subsidiaries, acquired certain assets of an unrelated third party.

Substantially all of the acquired assets consisted of developed technology.

We believe the acquisition of the developed technology will continue to advance our load-shaping energy management solution allowing additional devices to participate in utility programs that reduce or shift power consumption during peak demand periods.

In consideration for the purchase of the developed technology, we paid $ 4.2 million in cash in December 2021, with the remaining $ 0.9 million paid in June 2023.

Additionally, we incurred $ 0.2 million in direct transaction costs related to legal fees during 2021 that were capitalized as a component of the consideration transferred.

The combined $ 5.3 million consideration related to developed technology was recorded as an intangible asset at the time of the asset acquisition and is being amortized on a straight-line basis over an estimated useful life of seven years .

The asset acquisition was recorded within our Alarm.com segment.

Acquisition of a Business – EBS

1 unchanged sentence

We believe this acquisition will assist in the continued expansion of our international operations as well as benefit our supply chain operations.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2024, 2023 and 2022

In consideration for the purchase of EBS, we paid $ 9.8 million in cash on January 18, 2023, after deducting $ 2.2 million related to agreed holdback provisions.

The holdback was fully paid by the third quarter of 2024.

An earn-out up to an additional $ 2.5 million is payable if certain performance targets are met, which was initially recorded at the acquisition date fair value of $ 2.0 million.

1 unchanged sentence

The purchase price allocation was finalized during the third quarter of 2023.

The overall impacts to our consolidated financial statements were not considered material for the year ended December 31, 2023.

The overall impacts to our consolidated financial statements were not considered material during the year of the acquisition.

Acquisition of a Business – Noonlight

4 unchanged sentences

The working capital adjustment was finalized during the first quarter of 2023 and $ 0.4 million was paid during the second quarter of 2023.

The remaining amount of the holdback of $ 4.6 million is expected to be paid to the stockholders of Noonlight by the end of the first q uarter of 2024, subject to offset for any indemnification obligations.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2023, 2022 and 2021

The holdback was fully paid to the stockholders of Noonlight by the second quarter of 2024.

The table below sets forth the purchase consideration and the fair value allocation of the tangible and intangible net assets acquired (in thousands):

22 unchanged sentences

Fair Value of Net Assets Acquired and Intangibles

The acquired activities and assets in the purchase of Noonlight constituted a business and with the exception of contract liabilities accounted for under Topic 606, in accordance with ASC 805, " Business Combinations ," the assets and liabilities were recorded at their respective fair values as of September 23, 2022.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2024, 2023 and 2022

recorded at their respective fair values as of September 23, 2022.

We developed the fair value of intangible net assets using a multi-period excess earnings method for developed technology and the relief from royalty method for the trade name.

7 unchanged sentences

We are amortizing the trade names, valued at $ 0.2 million, on an attribution basis derived from the discounted cash flows of the model over an estimated useful life of five years .

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2023, 2022 and 2021

Redeemable Noncontrolling Interests

4 unchanged sentences

This redeemable noncontrolling interest is considered temporary equity and we report it between liabilities and stockholders’ equity in the consolidated balance sheets.

The redemption value of the Noonlight noncontrolling interest was $ 6.8 million as of September 23, 2022 and $ 6.4 million as of December 31, 2023.

The redemption value of the Noonlight noncontrolling interest was $ 5.2 million and $ 6.4 million as of December 31, 2024 and 2023, respectively.

Business Combinations in Operations - Noonlight

8 unchanged sentences

Measurement period adjustment ( 1,509 ) — ( 1,509 )

Foreign currency translation adjustment

Balance as of December 31, 2023 154,498 — 154,498

Goodwill acquired - initial measurement 7,200 — 7,200

Measurement period adjustment ( 1,509 ) — ( 1,509 )

Foreign currency translation adjustment ( 287 ) — ( 287 )

2 unchanged sentences

The 2023 measurement period adjustments related to the Noonlight and EBS working capital and tax adjustments during the year ended December 31, 2023.

On September 23, 2022, we acquired 85 % of the issued and outstanding shares of capital stock of Noonlight and initially recorded $ 37.9 million of goodwill in the Alarm.com segment.

Additionally, during 2022, we recorded a measurement period adjustment related to the assessment of the net operating losses acquired, which resulted in us recording a decrease to goodwill of $ 2.6 million.

There were no impairments of goodwill recorded during the years ended December 31, 2024, 2023 or 2022.

As of December 31, 2024, the accumulated balance of goodwill impairments was $ 4.8 million, which is related to our acquisition of EnergyHub in 2013.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2024, 2023 and 2022

The following table reflects changes in the net carrying amount of the components of intangible assets (in thousands):

Relationships Developed

Technology Trade Name Capitalized Software Development Costs Total

Technology Trade Name Capitalized Software Development Costs Other

Balance as of January 1, 2023 $ 47,522 $ 33,553 $ 1,383 $ — $ — $ 82,458

Intangible assets acquired 2,395 11,583 537 — — 14,515

Capitalized software development costs

— — — 882 — 882

Amortization ( 10,623 ) ( 7,962 ) ( 703 ) ( 3 ) — ( 19,291 )

4 unchanged sentences

Balance as of December 31, 2024 $ 29,625 $ 30,543 $ 500 $ 2,445 $ 46 $ 63,159

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2023, 2022 and 2021

During the year ended December 31, 2024, we paid less than $ 0.1 million for the purchase of domain names.

We recorded $ 18.6 million, $ 19.3 million and $ 18.4 million of amortization related to our intangible assets for the years ended December 31, 2024, 2023 and 2022, respectively.

There were no impairments of long-lived intangible assets during the years ended December 31, 2024, 2023 and 2022.

We determined there was an impairment of $ 0.1 million for the remaining value of an intangible asset in the Alarm.com segment that was acquired in 2014 related to customer relationships that no longer existed after December 31, 2021, which was included in other income / (expense), net in our consolidated statements of operations for the year ended December 31, 2021.

During the year ended December 31, 2024, $ 0.3 million of fully amortized developed technology intangible assets previously acquired were written-off in the Alarm.com segment as the technology was no longer in use.

During the year ended December 31, 2022, we wrote-off $ 0.7 million in fully amortized intangible assets in the Alarm.com segment that were acquired in 2014 related to customer relationships, developed technology, trade name and other intangible assets that no longer existed as of January 1, 2022.

18 unchanged sentences

Trade name 4,474 ( 3,257 ) 1,217 2.6

Capitalized software development costs 882 ( 3 ) 879 3.3

Total intangible assets $ 203,697 $ ( 125,133 ) $ 78,564 5.4

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2024, 2023 and 2022

The following table reflects the future estimated amortization expense for intangible assets (in thousands):

4 unchanged sentences

Loan to a Distribution Partner

In December 2022, we amended a subordinated credit agreement with the affiliated entity of one of our distribution partners.

The amended subordinated credit agreement with the affiliated entity of the distribution partner matures on June 18, 2027 and interest on the outstanding principal balance accrues at a rate of 12.0 % per annum and is payable in kind.

Under the amended terms, the distribution partner paid us $ 1.0 million in paid-in-kind interest in December 2022.

As of December 31, 2023 and 2022, $ 4.5 million and $ 4.0 million of the notes receivable balance related to the subordinated credit agreement was included in other assets in our consolidated balance sheets, respectively.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2023, 2022 and 2021

In December 2022, we amended a subordinated credit agreement with the Affiliate.

The amended subordinated credit agreement with the Affiliate matures on June 18, 2027, and interest on the outstanding principal balance accrues at a rate of 12.0 % per annum and is payable in kind.

In March 2024, the Affiliate was in default on a loan arrangement with one of its third party secured lenders.

Based on this information, during the three months ended March 31, 2024, we recorded a credit loss expense of $ 4.0 million in general and administrative expense and recorded a reduction to our interest income of $ 0.5 million related to the reversal of payable in kind interest associated with the subordinated credit agreement.

We placed this loan in nonaccrual status and recorded a full allowance for credit losses for this note receivable as of March 31, 2024.

During the three months ended June 30, 2024, we wrote off the entire $ 4.0 million outstanding note receivable balance that originated in 2017 and reversed the previously recorded allowance for credit losses.

As of December 31, 2023, $ 4.5 million of the notes receivable balance related to the subordinated credit agreement was included in other assets in our consolidated balance sheet.

For the years ended December 31, 2024, 2023 and 2022, we recognized $ 2.6 million, $ 3.0 million and $ 2.7 million of revenue from the distribution partner associated with these loans, respectively.

3 unchanged sentences

The maturity date of the loan is July 24, 2025.

As of December 31, 2023 and 2022, $ 1.0 million and $ 1.1 million of principal was outstanding from the service provider partner under the loan agreement, respectively.

As of December 31, 2024 and 2023, $ 1.0 million of principal was outstanding from the service provider partner under the loan agreement.

For each of the years ended December 31, 2024, 2023 and 2022, we recognized $ 0.2 million of revenue from the service provider partner associated with this loan.

9 unchanged sentences

We concluded that the $ 5.6 million equity investment, which is included in the Alarm.com segment, does not meet the criteria for consolidation and will be accounted for using the measurement alternative.

Under the alternative, we measure investments without readily determinable fair values at cost, less impairment, adjusted for observable price changes from orderly transactions for identical or similar investments.

Under the alternative, we measure investments without readily determinable fair values at cost, less impairment, adjusted for observable price changes

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2024, 2023 and 2022

from orderly transactions for identical or similar investments.

As of December 31, 2024 and 2023, our investment in the hardware supplier was $ 5.6 million.

7 unchanged sentences

As of December 31, 2024 and 2023, our investment in the technology partner was $ 5.1 million.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2023, 2022 and 2021

In December 2023, we paid $ 1.5 million to another technology partner as part of a Simple Agreement for Future Equity, or SAFE.

We paid an additional $ 1.5 million during both May 2024 and December 2024 in the same technology partner via a SAFE for a total investment of $ 4.5 million.

The SAFE provides us the right to be issued certain shares of the technology partner's stock in connection with a qualified equity financing or liquidity event.

Our investment, which is included in the Alarm.com segment, does not meet the criteria for consolidation and is accounted for using the measurement alternative.

As of December 31, 2024 and 2023, our investment in the privately-held company was $ 4.5 million and $ 1.5 million, respectively.

Allowance for Credit Losses - Notes Receivable

1 unchanged sentence

Year Ended December 31, 2024 Year Ended December 31, 2023

Receivables Loan

Receivables Hardware

Beginning of period balance $ ( 5 ) $ ( 2 )

(Provision for) / recovery of expected credit losses ( 3 ) 77 1

Provision for expected credit losses

( 3,996 ) ( 3 )

Write-offs 4,000 —

11 unchanged sentences

Total $ 500 $ 146 $ 1,500 $ — $ 993 $ — $ 3,139

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2024, 2023 and 2022

December 31, 2023

13 unchanged sentences

As of December 31, 2024 and 2023, $ 16.1 million and $ 14.6 million of prepaid expenses were included in other current assets, respectively, primarily related to software licenses, long lead-time parts related to our inventory and insurance.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2023, 2022 and 2021

Fair Value Measurements

4 unchanged sentences

$ 1,209,474 $ — $ — $ 1,209,474

Equity securities with readily determinable fair value as of December 31, 2024

7,425 — — 7,425

Money market accounts as of December 31, 2023

2 unchanged sentences

$ — $ — $ 2,169 $ 2,169

Contingent consideration liability from acquisition as of December 31, 2023

— — 2,061 2,061

The following table summarizes the change in fair value of the Level 3 liabilities with significant unobservable inputs (in thousands):

2 unchanged sentences

Contingent Consideration Liability from Acquisition

Subsidiary Long-Term Incentive Plan

Contingent Consideration Liability from Acquisition

Subsidiary Long-Term Incentive Plan

5 unchanged sentences

End of period balance $ 2,169 $ 2,061 $ —

As of December 31, 2023, $ 675.6 million of our money market accounts was included in cash and cash equivalents and $ 4.1 million was included in other assets in our consolidated balance sheets.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2024, 2023 and 2022

As of December 31, 2024, $ 1.20 billion of our money market accounts was included in cash and cash equivalents, $ 6.2 million was included in other assets and $ 1.9 million was included in other current assets in our consolidated balance sheets.

As of December 31, 2023, $ 675.6 million of our money market accounts was included in cash and cash equivalents and $ 4.1 million was included in other assets in our consolidated balance sheets.

Our money market accounts are valued using quoted prices in active markets.

See Note 13 for the carrying amount and estimated fair value of the 2026 Notes as of December 31, 2023 and 2022.

Our assets from money market accounts are valued using quoted prices in active markets.

Our equity securities with readily determinable fair value represent our investments in publicly traded companies, which are valued using quoted prices in active markets.

During the year ended December 31, 2024, we recorded an unrealized loss on equity securities of less than $ 0.1 million.

Our investments in public entities are recorded at fair value within other current assets in our consolidated balance sheets and changes in fair value of the investments are recorded within other (expense) / income, net within our consolidated statements of operations.

See Note 13 for the carrying amount and estimated fair value of our convertible senior notes as of December 31, 2024 and 2023.

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.

11 unchanged sentences

Additionally, we recorded $ 1.2 million in incremental compensation costs as additional stock-based compensation expense to the applicable operating expense category based on the respective employee’s function (sales and marketing, general and administrative or research and development) during the three months ended June 30, 2022.

The incremental compensation costs represented the excess of the fair value of the

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2023, 2022 and 2021

performance-based restricted stock units over the fair value of the subsidiary long-term incentive plan as of the modification date of the subsidiary long-term incentive plan.

The incremental compensation costs represented the excess of the fair value of the performance-based restricted stock units over the fair value of the subsidiary long-term incentive plan as of the modification date of the subsidiary long-term incentive plan.

The contingent consideration liability consists of the potential earn-out payment related to our acquisition of 100 % of the issued and outstanding capital stock of EBS on January 18, 2023.

4 unchanged sentences

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.

The fair value of the contingent consideration liability is included within accounts payable, accrued expenses and other current liabilities within our consolidated balance sheets.

Changes in fair value resulting from information that existed subsequent to the acquisition date are recorded in general and administrative expense in the consolidated statements of operations.

In 2023, the contingent consideration liability did not materially change from the acquisition date fair value of $ 2.0 million as there were minor changes in the expected probability of achievement for the performance targets.

In 2024 and 2023, the contingent consideration liability did not materially change from the acquisition date fair value of $ 2.0 million as there were minor changes in the expected probability of achievement for the performance targets.

The unobservable inputs used in the valuation as of December 31, 2024 included a weighted average expected achievement percentage of 89.5 %, weighted by the potential payout of the performance targets, including a range of 80.0 % to 99.0 %.

The valuation also included a weighted average discount rate of 5.5 %, which also represented the low and high range of the discount rates.

The valuation also included a weighted average discount rate of 6.1 %, weighted by the probability of achievement of the performance targets at various dates, including a range of 6.0 % to 6.2 %.

Selecting another probability of expected achievement or discount rate within an acceptable range would not result in a significant change to the fair value of the contingent consideration liability.

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Changes in economic conditions or model-based valuation techniques may require the transfer of financial instruments from one fair value level to another.

There were no transfers into Level 3 or reclassifications between levels of the fair value hierarchy during the years ended December 31, 2023, 2022 and 2021.

There were no transfers into or out of Level 3 during the years ended December 31, 2024 and 2023, and no transfers into Level 3 during the year ended December 31, 2022.

There were no reclassifications between levels of the fair value hierarchy during the years ended December 31, 2024, 2023 and 2022.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2024, 2023 and 2022

As of December 31, 2024, we leased office space, data centers and office equipment under non-cancelable operating leases with various expiration dates through 2034.

In August 2014, we signed a lease for office space in Tysons, Virginia, where we relocated our headquarters to in February 2016.

We have subsequently entered into amendments to this lease to provide us with additional office space.

The lease term ends in 2026, includes a five-year renewal option and includes a cumulative tenant improvement allowance of $ 12.1 million as of December 31, 2023.

In August 2014, we signed a lease for office space in Tysons, Virginia where we relocated our corporate headquarters to in February 2016.

We have subsequently entered into amendments to this lease to provide us with additional office space as well as tenant improvement allowances.

In August 2024, we entered into an amendment to the lease for our corporate headquarters, which extends the term of our existing leased office space to 2034 and includes two successive five-year renewal options.

Additionally, the amendment provides for additional office space, parking spaces and tenant improvement allowances.

Supplemental information related to leases is presented in the table below (in thousands, except weighted-average term and discount rate):

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Weighted-average discount rate — operating leases 8.2 % 4.9 %

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2023, 2022 and 2021

Maturities of lease liabilities are as follows (in thousands):

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_______________

(1) Operating lease payments exclude $ 5.1 million of legally binding minimum lease payments for leases executed but not yet commenced and do no t include any options to extend lease terms that were reasonably certain of being exercised.

(1) Operating lease payments exclude $ 13.6 million of legally binding minimum lease payments for leases executed but not yet commenced.

There are no options to extend lease terms that were reasonably certain of being exercised included in these balances.

(2) Imputed interest was calculated using the incremental borrowing rate applicable for each lease.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2024, 2023 and 2022

The components of accounts payable, accrued expenses and other current liabilities are as follows (in thousands):

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Holdback liability from business combinations and asset acquisitions — 7,340

Contingent consideration liability from acquisition

Other current liabilities 15,108 14,037

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2024 December 31,

Holdback liability from business combination $ — $ 4,560

Contingent consideration liability from acquisition $ 953 $ 2,061

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The debt, commitments and contingencies described below would require us, or our subsidiaries, to make payments to third parties under certain circumstances.

Convertible Senior Notes

On January 20, 2021, we issued $ 500.0 million aggregate principal amount of 0 % convertible senior notes due January 15, 2026 in a private placement to qualified institutional buyers.

Convertible Senior Notes - 2026 Notes

The terms of the 2026 Notes are governed by an Indenture, or the 2026 Indenture, by and between Alarm.com Holdings, Inc.

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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.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2023, 2022 and 2021

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.

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or (4) upon the occurrence of specified corporate events as set forth in the 2026 Indenture.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2024, 2023 and 2022

On or after August 15, 2025, until the close of business on the second scheduled trading day immediately preceding the maturity date of the 2026 Notes, holders of the 2026 Notes may convert all or any portion of their 2026 Notes at any time, regardless of the foregoing conditions.

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The equity component was recorded in additional paid-in capital and was not remeasured as it continued to meet the conditions for equity classification.

The debt discount for conversion option, debt issuance costs and net carrying amount of the equity component was $ 77.2 million, $ 2.4 million and $ 74.8 million, respectively, as of December 31, 2021.

The excess of the principal amount of the liability component over its carrying amount was amortized to interest expense over the contractual term of the 2026 Notes at an effective interest rate of 4.0 %.

Prior to the adoption of ASU 2020-06, the difference between the book and tax treatment of the debt discount and debt issuance costs of the 2026 Notes resulted in a difference between the carrying amount and tax basis of the 2026 Notes.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2023, 2022 and 2021

taxable temporary difference resulted in the recognition of a $ 18.3 million net deferred tax liability which was recorded as an adjustment to additional paid-in capital during the three months ended March 31, 2021.

The difference between the book and tax treatment of the debt discount and debt issuance costs of the 2026 Notes resulted in a difference between the carrying amount and tax basis of the 2026 Notes.

Upon adoption of ASU 2020-06 on January 1, 2022, we recombined the liability and equity components of the 2026 Notes assuming that the instrument was accounted for as only a liability from inception to the date of adoption.

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Upon adoption of ASU 2020-06 on January 1, 2022, we also removed the temporary difference between the book and tax treatment of the debt discount and adjusted the temporary difference between the book and tax treatment of the debt issuance costs of the 2026 Notes.

As of December 31, 2024 and 2023, the fair value of our 2026 Notes was $ 473.8 million and $ 444.8 million, respectively.

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Net carrying amount $ 496,681 $ 493,515

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2024, 2023 and 2022

Interest expense related to the 2026 Notes is as follows (in thousands):

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2024 2023 2022

Amortization of debt discount $ — $ — $ 13,678

Amortization of debt issuance costs $ 3,166 $ 3,145 $ 3,126

Total interest expense $ 3,166 $ 3,145 $ 3,126

Convertible Senior Notes - 2029 Notes

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.

The terms of the 2029 Notes are governed by an Indenture, or the 2029 Indenture, by and between Alarm.com Holdings, Inc.

Bank Trust Company, National Association, as trustee.

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.

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.

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 on, and including, the trading day immediately preceding the date on which we provide notice of redemption.

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.

No sinking fund is provided for the 2029 Notes.

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:

(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;

(2) during the five business day period immediately after any 10 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;

(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;

or (4) upon the occurrence of specified corporate events as set forth in the 2029 Indenture.

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.

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.

It is our current intent to settle the principal amount of the 2029 Notes with cash.

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.

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.

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.

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.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2024, 2023 and 2022

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.

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.

We account for the 2029 Notes as a liability.

The debt issuance costs are presented as a deduction from the outstanding principal balance of the 2029 Notes and are amortized to interest expense using the effective interest method over the contractual term of the 2029 Notes at a rate of 2.9 %.

As of December 31, 2024, the fair value of our 2029 Notes was $ 496.7 million.

The fair value was determined based on the quoted price of the 2029 Notes in an inactive market on the last traded day of the quarter and has been classified as Level 2 in the fair value hierarchy.

Based on the closing price of our common stock of $ 60.80 on the last trading day of the quarter, the if-converted value of the 2029 Notes did not exceed the principal amount of $ 500.0 million as of December 31, 2024.

The net carrying amount of the liability component of the 2029 Notes is as follows (in thousands):

Principal $ 500,000

Unamortized debt issuance costs ( 13,204 )

Net carrying amount $ 486,796

Interest expense related to the 2029 Notes is as follows (in thousands):

Year Ended December 31,

Interest expense

Amortization of debt issuance costs 1,630

Total interest expense $ 8,223

Capped Call – 2029 Notes

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.

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.

We elected to integrate the capped call options with the 2029 Notes for federal income tax purposes pursuant to applicable U.S.

Treasury Regulations.

Accordingly, the $ 63.1 million cost of the purchased capped calls will be deductible for income tax purposes.

The original issue discount is accreted over the term of the 2029 Notes.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2024, 2023 and 2022

The capped call transactions are generally expected to reduce the potential dilution to holders of our common stock upon any conversion of the 2029 Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted 2029 Notes, as the case may be, with such reduction and/or offset subject to a cap.

As the capped call options are both legally detachable and separately exercisable from the 2029 Notes, we account for the capped call options separately from the 2029 Notes.

The capped call options are indexed to our own common stock and classified in stockholders’ equity.

As such, the premiums paid for the capped call options were included as a net reduction to additional paid-in capital in the consolidated balance sheets.

The capped call transactions will not be remeasured as long as they continue to meet the conditions for equity classification.

Acquired Debt - EBS

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Legal Proceedings

On June 2, 2015, Vivint, Inc., or Vivint, filed a lawsuit against us in U.S.

District Court, District of Utah, alleging that our technology directly and indirectly infringes six patents that Vivint purchased.

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.

Vivint had stopped paying license fees to Alarm.com under the agreement.

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.

Quarterly earnings and cash flow through December 31, 2023 were also impacted by the aforementioned $ 6.0 million, plus additional legal fees.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2023, 2022 and 2021

We also filed a lawsuit against Vivint on January 4, 2023 in U.S.

District Court, Eastern District of Texas, alleging that Vivint infringed 15 of our patents.

On March 8, 2023, Vivint filed counterclaims in the action alleging that Alarm.com’s products and services directly and indirectly infringed 14 patents owned by Vivint.

Most of Vivint’s counterclaims also named our service provider ADT LLC as a defendant.

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.

On January 10, 2022, EcoFactor, Inc., or EcoFactor, filed a lawsuit against us in U.S.

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We moved to dismiss the Oregon case for failure to state a claim on March 28, 2022.

Three of the asserted patents are in ex parte reexamination proceedings at the PTO, and ex parte reexamination of a fourth patent concluded on August 23, 2023 after the claims were amended.

On April 18, 2022, the district court stayed the case at the request of the parties pending the disposition of other proceedings involving the asserted patents.

These proceedings include four ex parte reexamination proceedings at the U.S.

Patent and Trademark Office and one inter partes review.

Two of the patents were found unpatentable in reexamination, and EcoFactor appealed the decision with respect to one of the patents to the United States Court of Appeals for the Federal Circuit on July 9, 2024, while its time to appeal the second decision has not yet expired.

The ex parte reexamination of a third patent is still ongoing, and ex parte reexamination of a fourth patent concluded on August 23, 2023 after the claims were amended.

On April 18, 2022, all claims of a fifth patent were found unpatentable by the U.S.

Patent Trial and Appeal Board, or PTAB, in an inter partes review, and the parties expect that all claims of that patent will be canceled because EcoFactor's appeal of that PTAB decision was dismissed.

On April 18, 2022, the district court stayed the case at the request of the parties pending the disposition of PTAB and other proceedings involving the asserted patents, and the parties filed a joint status report on January 2, 2024.

Patent Trial and Appeal Board, or PTAB, in inter partes review, and all claims were canceled on February 1, 2024.

Should EcoFactor prevail in its lawsuit we could be required to pay damages and/or a reasonable royalty for sales of our solution, we could be enjoined from making, using and selling our solution if a license or other right to continue selling such elements is not made available to us, and we could be required to pay ongoing royalties and comply with unfavorable terms if such a license is made available to us.

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Causam did not appeal the ITC decision with respect to Alarm.com and EnergyHub.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2024, 2023 and 2022

Should Causam prevail in its district court lawsuit we could be required to pay damages and/or a reasonable royalty for sales of our solution, we could be enjoined from making, using and selling our solution if a license or other right to continue selling such elements is not made available to us, and we could be required to pay ongoing royalties and comply with unfavorable terms if such a license is made available to us.

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In addition to the matters described above, we may be required to provide indemnification to certain of our service provider partners for certain claims regarding our solutions.

For example, we incurred costs associated with the indemnification of our service provider ADT, LLC.

On February 25, 2021, Vivint filed a lawsuit against ADT LLC a/k/a ADT LLC of Delaware d/b/a ADT Security Services in U.S.

District Court, District of Utah, alleging that ADT Pulse, Control, and Blue each infringe one or more patents owned by Vivint.

Vivint is seeking damages and attorneys’ fees.

Vivint filed a second amended complaint on March 8, 2022.

Pursuant to the December 21, 2023 settlement agreement between Alarm.com and Vivint, the allegations regarding ADT Pulse and Control will be dismissed, ending Alarm.com’s indemnification obligations in this matter.

We also incurred costs associated with the indemnification of our service provider Monitronics International, Inc.

d/b/a Brinks in patent infringement suits.

On November 4, 2022, January 13, 2023 and April 18, 2023, IOT Innovations LLC, or IOT, sued

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2023, 2022 and 2021

Monitronics in U.S.

District Court, Eastern District of Texas, alleging patent infringement of certain products and services sold by Monitronics.

Together, IOT asserted infringement of 26 patents and sought permanent injunctions, enhanced damages and attorneys' fees.

On October 3, 2023, IOT filed a stipulation of dismissal of all three cases, ending the cases and the Company's involvement therein.

We also incur costs associated with the indemnification of our service provider, Central Security Group – Nationwide, Inc.

For example, we incurred costs associated with the indemnification of our service provider Central Security Group – Nationwide, Inc.

(d/b/a Alert 360), or CSG, in an ongoing patent litigation.

In 2018, Ubiquitous Connectivity, LP, or Ubiquitous, brought suit against CSG in U.S.

District Court, Northern District of Oklahoma, alleging infringement of two US patents.

District Court, Northern District of Oklahoma, alleging infringement of two U.S.

The case was stayed by agreement of the parties for several years while the patents in suit were challenged before the PTAB.

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As a result, only four patent claims remain at issue and the Northern District of Oklahoma case is no longer stayed.

A claim construction hearing is scheduled for December 12, 2024.

The case is currently in the discovery phase.

The court held a claim construction hearing on December 12, 2024, but has not yet rendered a claim construction opinion.

A hearing on dispositive motions, including for summary judgment, is scheduled for April 15, 2026.

A trial is scheduled for June 22, 2026.

A trial is scheduled for July 6, 2026.

Should Ubiquitous prevail on its infringement claims, we could be required to indemnify CSG for damages in the form of a reasonable royalty or of Ubiquitous’s lost profits.

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December 31, 2024, 2023 and 2022

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.

We did not repurchase any shares of our common stock under these programs in 2021.

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.

The full repurchase balance for this program of $ 100.0 million was available as of December 31, 2024.

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.

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.

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No tax withholdings related to the vesting of restricted stock units were paid during the year ended December 31, 2022.

We also utilize 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.

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.

We may utilize either the withholding method or sell-to-cover method in the future.

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Total stock-based compensation expense $ 41,242 $ 47,283 $ 52,654

Tax (shortfall) / windfall benefit from stock-based awards $ ( 508 ) $ 2,022 $ 10,063

Tax windfall benefit / (shortfall) from stock-based awards

$ 1,829 $ ( 508 ) $ 2,022

2015 Equity Incentive Plan

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The 2015 Plan allows for the grant of stock options to employees and for the grant of nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, or RSUs, performance-based stock awards, and other forms of equity compensation to our employees, directors and non-employee directors.

In June 2015, our board of directors adopted and our stockholders approved our 2015 Plan pursuant to which we initially reserved a total of 4,700,000 shares of common stock for issuance under the 2015 Plan, which included shares of our common stock previously reserved for issuance under our Amended and Restated 2009 Stock Incentive Plan, or the 2009 Plan.

The number of shares of common stock reserved for issuance under the 2015 Plan will automatically increase on January 1 each year, for a period of not more than 10 years, commencing on January 1, 2016 through January 1, 2024, by 5.0 % of the total number of shares of common stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares as may be determined by the board of directors.

As a result of the adoption of the 2015 Plan, no further grants may be made under the 2009 Plan.

As of December 31, 2023, 9,526,427 shares remained available for future grant under the 2015 Plan.

In December 2023, our board of directors determined that the January 1, 2024 increase in the number of shares reserved for

ALARM.COM HOLDINGS, INC.

1 unchanged sentence

December 31, 2024, 2023 and 2022

issuance under the 2015 Plan would be 5.0 % of the total number of shares of common stock outstanding on December 31, 2023, or 2,493,408 shares.

In November 2022, our board of directors determined that the January 1, 2023 increase in the number of shares reserved for issuance under the 2015 Plan would be 5.0 % of the total number of shares of common stock outstanding on December 31, 2022, or 2,472,635 shares.

stock previously reserved for issuance under our Amended and Restated 2009 Stock Incentive Plan, or the 2009 Plan.

The number of shares of common stock reserved for issuance under the 2015 Plan automatically increased on January 1 each year, commencing on January 1, 2016 through January 1, 2024, by 5.0 % of the total number of shares of common stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares as may be determined by the board of directors.

As a result of the adoption of the 2015 Plan, no further grants may be made under the 2009 Plan.

As of December 31, 2024, 11,533,781 shares remained available for future grant under the 2015 Plan.

In December 2023, our board of directors determined that the January 1, 2024 increase in the number of shares reserved for issuance under the 2015 Plan would be 5.0 % of the total number of shares of common stock outstanding on December 31, 2023, or 2,493,408 shares.

Stock Options

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Treasury securities consistent with the expected term of our stock options.

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.

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.

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There was an aggregate of 628,394 , 558,747 and 1,123,076 RSUs without performance conditions granted to certain of our employees and directors during the years ended December 31, 2024, 2023 and 2022, respectively.

There were no RSUs with performance conditions granted during the year ended December 31, 2023.

There was an aggregate of 168,223 and 120,314 RSUs with performance conditions granted to certain of our employees during the years ended December 31, 2022 and 2021, respectively.

There were no RSUs with performance conditions granted during the years ended December 31, 2024 and 2023.

There was an aggregate of 168,223 RSUs with performance conditions granted to certain of our employees during the year ended December 31, 2022.

The time-based RSUs vest over a five-year period from the vesting commencement date, which is generally the grant date.

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The weighted average grant date fair value for our RSUs without performance conditions granted during the years ended December 31, 2024, 2023 and 2022 was $ 65.29 , $ 55.40 and $ 63.76 , respectively.

The weighted average grant date fair value for our RSUs with performance conditions granted during the years ended December 31, 2022 and 2021 was $ 71.64 and $ 87.53 , respectively.

The weighted average grant date fair value for our RSUs with performance conditions granted during the year ended December 31, 2022 was $ 71.64 .

The total fair value of RSUs without performance conditions vested during the years ended December 31, 2024, 2023 and 2022 was $ 37.0 million, $ 45.3 million and $ 24.3 million, respectively.

The total fair value of RSUs with performance conditions vested during the years ended December 31, 2023, 2022 and 2021 was $ 3.2 million, zero and $ 1.1 million, respectively.

The total fair value of RSUs with performance conditions vested during the years ended December 31, 2024, 2023 and 2022 was $ 2.0 million, $ 3.2 million and zero , respectively.

Employee Stock Purchase Plan

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As of December 31, 2024, 1,866,044 shares have been reserved for future grant under the 2015 ESPP, with provisions established to increase the number of shares available on January 1 of each subsequent year for nine years .

The annual automatic increase in the number of shares available for issuance under the 2015 ESPP is the lesser of 1 % of each class of common stock outstanding as of December 31 of the preceding fiscal year, 1,500,000 shares of common stock, or such lesser number as determined by the board of directors.

There was no increase to the number of shares of common stock reserved for issuance under the 2015 ESPP in any of 2021, 2022 or 2023 nor will the number of shares be increased in 2024.

The annual automatic increase in the number of shares available for issuance under the 2015 ESPP was the lesser of 1 % of each class of common stock outstanding as of December 31 of the preceding fiscal year, 1,500,000 shares of common stock, or such lesser number as determined by the board of directors.

There was no increase to the number of shares of common stock reserved for issuance under the 2015 ESPP in 2022, 2023 or 2024.

The 2015 ESPP allows eligible employees to purchase shares of our common stock at 90 % of the fair market value, rounded up to the nearest cent, based on the closing price of our common stock on the purchase date.

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The 2015 ESPP is considered compensatory for purposes of share-based compensation expense due to the 10 % discount on the fair market value of the common stock.

An aggregate of 33,639 , 24,994 and 19,628 shares were purchased by employees for the years ended December 31, 2023, 2022 and 2021, respectively, for which we recognized $ 0.2 million of compensation

An aggregate of 29,946 , 33,639 and 24,994 shares were purchased by employees for the years ended December 31, 2024, 2023 and 2022, respectively, for which we recognized $ 0.2 million of compensation expense during each of those years.

Compensation expense is recognized for the amount of the discount, net of actual forfeitures and voluntary withdrawals, over the six-month purchase period.

ALARM.COM HOLDINGS, INC.

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December 31, 2024, 2023 and 2022

expense during each of those years.

Compensation expense is recognized for the amount of the discount, net of actual forfeitures and voluntary withdrawals, over the six-month purchase period.

Earnings Per Share

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Net income attributable to common stockholders - basic (A) 124,116 81,043 56,338

Add back interest expense, net of tax, attributable to convertible senior notes 2,367 2,352 —

Add back total interest expense, net of tax, attributable to convertible senior notes

8,573 2,367 2,352

Net income attributable to common stockholders - diluted (B)

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Weighted average common shares outstanding — diluted (D) 57,993,019 54,625,434 54,932,757

Net income per share:

Net income attributable to common stockholders per share:

Basic (A/C) $ 2.50 $ 1.63 $ 1.13

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See Note 2 for details on the put options and call options contained in the OpenEye and Noonlight stockholder agreements.

Based on the initial conversion price and the average market price of our common stock for the year ended December 31, 2021, there was no dilutive effect of the 2026 Notes on our earnings per share during the year ended December 31, 2021.

Upon adoption of ASU 2020-06 on January 1, 2022, we began using the if-converted method when calculating the dilutive impact of the 2026 Notes on net income per share.

As a result, we included 3,396,950 shares related to the 2026 Notes within the weighted average shares outstanding when calculating the diluted net income per share for the years ended December 31, 2023 and 2022.

Additionally, we included $ 2.4 million of debt issuance cost amortization, net of tax, within the numerator of the diluted net income per share for each of the years ended December 31, 2023 and 2022.

We use the treasury stock method when calculating the dilutive impact of the stock options and restricted stock units on net income per share.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2023, 2022 and 2021

We use the if-converted method when calculating the dilutive impact of the 2026 Notes and 2029 Notes on net income per share.

We included 3,365,132 shares related to the 2029 Notes within the weighted averages shares outstanding when calculating the diluted net income per share for the year ended December 31, 2024.

Additionally, we included $ 8.6 million, $ 2.4 million and $ 2.4 million of interest expense and debt issuance cost amortization, net of tax, within the numerator of the diluted net income per share for the years ended December 31, 2024, 2023 and 2022, respectively.

Significant Service Providers and Distributors

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One of our service provider partners within the Alarm.com segment individually represented greater than 15 % but not more than 20 % of our revenue for the years ended December 31, 2024, 2023 and 2022.

No service provider partners represented more than 10% of accounts receivable as of December 31, 2024.

One of our service provider partners in the Alarm.com segment represented more than 10% of accounts receivable as of December 31, 2023.

Two of our service provider partners in the Alarm.com segment represented more than 10% of accounts receivable as of December 31, 2022.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2024, 2023 and 2022

The components of our income before income taxes are as follows (in thousands):

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Total $ 19,294 $ 17,485 $ 962

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2023, 2022 and 2021

The difference between the income tax expense at the federal statutory rate and income tax expense in the consolidated statements of operations is as follows:

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Research and development tax credits ( 10.0 ) ( 7.2 ) ( 16.5 )

Tax shortfall / (windfall benefits)

Tax (windfall benefits) / shortfall

( 1.1 ) 0.4 ( 3.0 )

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Capitalized research and development expenditures 135,619 99,799

Capped call premium

Other 3,430 2,873

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Other deferred tax liabilities

( 510 ) ( 487 )

Total deferred tax liabilities, non-current ( 24,103 ) ( 15,927 )

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Decreases based on tax positions of prior year ( 2 ) ( 205 ) ( 51 )

Decreases for tax positions taken in the prior year due to settlement

( 2,220 ) — —

Decreases due to lapse of applicable statute of limitations ( 312 ) ( 121 ) —

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Our effective income tax rates were 13.6 %, 17.9 % and 1.7 % for the years ended December 31, 2024, 2023 and 2022, respectively.

For the year ended December 31, 2023, the effective tax rate was 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 a stock-based compensation tax shortfall.

For the years ended December 31, 2022 and 2021, the effective tax rates were below the 21.0% statutory rate primarily due to research and development tax credits claimed, foreign derived intangible income deductions and tax windfall benefits from employee stock-based payment transactions, partially offset by the impact of nondeductible expenses, foreign withholding taxes and state taxes.

For the year ended December 31, 2024, the 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.

For the year ended December 31, 2023, the effective tax rate was below the 21.0% statutory rate

ALARM.COM HOLDINGS, INC.

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December 31, 2024, 2023 and 2022

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 a stock-based compensation tax shortfall.

For the year ended December 31, 2022, the effective tax rate was below the 21.0% statutory rate primarily due to research and development tax credits claimed, foreign derived intangible income deductions and tax windfall benefits from employee stock-based compensation, partially offset by the impact of nondeductible expenses, foreign withholding taxes and state taxes.

We recognize a valuation allowance if, based on the weight of available evidence, both positive and negative, it is more likely than not that some portion, or all, of net deferred tax assets will not be realized.

Our valuation allowance for state research and development tax credit carryforwards and net deferred tax assets of our EBS subsidiary were $ 3.8 million, $ 2.6 million and $ 1.9 million as of December 31, 2023, 2022 and 2021, respectively.

Our valuation allowance for state research and development tax credit carryforwards and net deferred tax assets of our EBS subsidiary was $ 5.0 million, $ 3.8 million and $ 2.6 million as of December 31, 2024, 2023 and 2022, respectively.

We apply guidance for uncertainty in income taxes that requires the application of a more likely than not threshold to the recognition and de-recognition of uncertain tax positions.

If the recognition threshold is met, this guidance permits us to recognize a tax benefit measured at the largest amount of the tax benefit that, in our judgment, is more likely than not to be realized upon settlement.

We recorded a net increase to the unrecognized tax benefits liability of $ 1.5 million, $ 2.1 million and $ 1.4 million primarily for research and development tax credits claimed during the years ended December 31, 2023, 2022 and 2021, respectively.

We recorded a net increase to the unrecognized tax benefits liability of $ 0.1 million, primarily due to a liability for research and development tax credits claimed, partially offset by the closure of the 2018 and 2019 Internal Revenue Service federal income tax return examination and the release of a state unrecognized tax benefit liability due to the statute of limitations expiration during the year ended December 31, 2024.

We recorded a net increase to the unrecognized tax benefits liability of $ 1.5 million and $ 2.1 million primarily for research and development tax credits claimed during the years ended December 31, 2023 and 2022, respectively.

We believe it is reasonably possible within the next 12 months that a decrease of up to $ 1.3 million in unrecognized tax benefits may be recognized as a result of a lapse of the statute of limitations.

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As of December 31, 2024, we had gross U.S.

federal net operating loss carryforwards of $ 10.0 million, which will begin to expire in 2031, Canadian federal net operating loss carryforwards of $ 0.4 million, which are scheduled to begin to expire in 2034 and Polish federal net operating loss carryforwards of $ 0.7 million, which are scheduled to begin to expire in 2025.

federal net operating loss carryforwards of $ 5.9 million, which will begin to expire in 2031, and Canadian federal net operating loss carryforwards of $ 0.1 million, which are scheduled to begin to expire in 2034.

As of December 31, 2024, we had state net operating loss carryforwards of $ 4.6 million, which will begin to expire in 2031.

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On January 25, 2024, the Internal Revenue Service notified us that the income tax examination of our 2018 and 2019 federal income tax returns has been closed.

As a result, we expect to pay approximately $ 1.5 million in additional federal taxes and recognize an income tax benefit of approximately $ 0.9 million during the three months ending March 31, 2024.

As a result, we paid $ 0.6 million in additional federal taxes, including interest, during the three months ended June 30, 2024, and recognized a net income tax benefit of $ 1.7 million during the three months ended March 31, 2024.

As of December 31, 2024, we did not have material undistributed foreign earnings.

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In August 2022, the Inflation Reduction Act of 2022 was enacted in the United States which, among other provisions, includes a minimum 15.0% tax on companies that have a three-year average annual adjusted financial statement income of more than $1.0 billion and a 1.0% excise tax on the value of net corporate stock repurchases.

Both provisions became effective on January 1, 2023 and the provisions did not have a material impact on our financial condition or results of operations as of December 31, 2023.

Both provisions became effective on January 1, 2023 and the provisions did not have a material impact on our financial condition or results of operations for the periods presented.

Segment Information

1 unchanged sentence

• Alarm.com segment

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2024, 2023 and 2022

• Other segment

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Management bases strategic goals and decisions on these segments and the data presented below is used to measure financial results.

Our Alarm.com segment represents our cloud-based and Software platforms for the intelligently connected property and related solutions that contributed 93 %, 94 % and 95 % of our revenue, net of intersegment eliminations, for the years ended

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2023, 2022 and 2021

December 31, 2023, 2022 and 2021, respectively.

Our Alarm.com segment represents our cloud-based and Software platforms for the intelligently connected property and related solutions that contributed 92 %, 93 % and 94 % of our revenue, net of intersegment eliminations, for the years ended December 31, 2024, 2023 and 2022, respectively.

Our Other segment is focused on researching, developing and offering residential and commercial automation solutions and energy management products and services in adjacent markets.

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Total revenue

870,587 72,664 ( 2,769 ) ( 655 ) 939,827

Cost of SaaS and license revenue

68,666 20,809 329 ( 292 ) 89,512

Cost of hardware and other revenue

234,414 5,414 ( 2,630 ) ( 561 ) 236,637

Total cost of revenue

303,080 26,223 ( 2,301 ) ( 853 ) 326,149

Selling and marketing expense

88,899 22,343 — — 111,242

General and administrative expense

101,401 7,478 — — 108,879

Research and development expense

227,559 28,319 — — 255,878

Amortization and depreciation expense

28,107 1,024 — — 29,131

Total operating expenses

445,966 59,164 — — 505,130

Operating income / (loss) $ 121,541 $ ( 12,723 ) $ ( 468 ) $ 198 $ 108,548

Assets $ 2,081,214 $ 85,468 $ ( 128,465 ) $ ( 9 ) $ 2,038,208

Reconciliation of operating income to income before income taxes

Operating income $ 108,548

Interest expense ( 11,426 )

Interest income 47,359

Other (expense) / income, net ( 2,674 )

Income before income taxes $ 141,807

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2024, 2023 and 2022

Year Ended December 31, 2023

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Total revenue 824,451 61,028 ( 3,201 ) ( 596 ) 881,682

Cost of SaaS and license revenue 71,639 17,852 ( 2,967 ) ( 626 ) 85,898

Cost of hardware and other revenue 237,660 5,760 ( 3,771 ) ( 388 ) 239,261

Total cost of revenue 309,299 23,612 ( 6,738 ) ( 1,014 ) 325,159

Selling and marketing expense 82,672 17,554 — — 100,226

General and administrative expense 107,475 5,935 ( 480 ) — 112,930

Research and development expense 220,106 25,008 — — 245,114

Amortization and depreciation expense 30,337 1,087 — — 31,424

Total operating expenses 440,590 49,584 ( 480 ) — 489,694

Operating income / (loss) $ 74,562 $ ( 12,168 ) $ 4,017 $ 418 $ 66,829

Assets $ 1,477,674 $ 73,621 $ ( 111,725 ) $ ( 7 ) $ 1,439,563

Reconciliation of operating income to income before income taxes

Operating income $ 66,829

Interest expense ( 3,429 )

Interest income 29,801

Other (expense) / income, net 4,624

Income before income taxes $ 97,825

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2024, 2023 and 2022

Year Ended December 31, 2022

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Total revenue

796,071 51,340 ( 4,067 ) ( 785 ) 842,559

Cost of SaaS and license revenue

59,725 14,172 415 ( 415 ) 73,897

Cost of hardware and other revenue

265,828 7,776 ( 4,419 ) ( 501 ) 268,684

Total cost of revenue

325,553 21,948 ( 4,004 ) ( 916 ) 342,581

Selling and marketing expense

76,927 15,821 — — 92,748

General and administrative expense

99,081 8,087 ( 480 ) — 106,688

Research and development expense

198,127 20,508 — — 218,635

Amortization and depreciation expense

29,639 1,231 — — 30,870

Total operating expenses

403,774 45,647 ( 480 ) — 448,941

Operating income / (loss) $ 66,744 $ ( 16,255 ) $ 417 $ 131 $ 51,037

Reconciliation of operating income to income before income taxes

Operating income $ 51,037

Interest expense ( 3,144 )

Interest income 8,759

Other (expense) / income, net ( 59 )

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.

Amortization and depreciation expense was $ 30.3 million, $ 29.6 million and $ 29.3 million for the Alarm.com segment for the years ended December 31, 2023, 2022 and 2021, respectively.

Amortization and depreciation expense was $ 1.1 million, $ 1.2 million and $ 0.4 million for the Other segment for the years ended December 31, 2023, 2022 and 2021, respectively.

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.

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Substantially all of our long-lived assets were in North America as of December 31, 2024 and 2023.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2023, 2022 and 2021

Quarterly Financial Data (unaudited)

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However, the global economy, credit markets and financial markets have and may continue to experience significant volatility as a result of Macroeconomic Conditions.

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.

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.

Additionally, increases in freight shipment and inventory component costs resulted in an increase to our cost of hardware revenue during portions of 2022.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2024, 2023 and 2022

Information about current and prior period acquisitions that may affect the comparability of the selected financial information presented below is included in Note 7, and information about current and prior period legal matters that may affect the comparability of the selected financial information presented below is included in Note 13.

Information about the 2029 Notes issued in May 2024 and the related interest expense, which may affect the comparability of the quarterly financial data presented below, is included in Note 13.

The selected consolidated statements of operation data in amounts are presented below (in thousands, except per share data):

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Diluted $ 0.28 $ 0.30 $ 0.37 $ 0.58 $ 0.44 $ 0.62 $ 0.67 $ 0.56

Subsequent Events

Loan to a Service Provider Partner

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.

Quarterly principal payments begin in the second quarter of 2027.

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 %.

For the first two years of the loan, monthly interest payments can be payable in kind at the election of the borrower.

The maturity date of the loan is January 30, 2030.

On February 10, 2025, Alarm.com Incorporated, one of our wholly-owned subsidiaries, acquired 81 % of the issued and outstanding shares of capital stock of CHeKT, Inc., or CHeKT.

CHeKT provides a remote video monitoring service for central station operators that is compatible with a variety of cameras.

We believe the acquisition of CHeKT will help to expand our opportunity to provide remote video monitoring solutions in the commercial and residential markets.

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.

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.

Schedule II – Valuation and Qualifying Accounts and Reserves

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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.

What changed 10-K

Item 8. Financial Statements and Supplementary Data