What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-09 compared with 2024-11-07 · 203 added, 288 removed, 330 unchanged (60% of the section changed)

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This Quarterly Report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act.

These statements are often identified by the use of words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “objective,” “ongoing,” “plan,” “predict,” “project,” “potential,” “should,” “will,” “would,” or the negative or plural of these words or similar expressions or variations and such forward-looking statements include, but are not limited to, statements with respect to the anticipated impact of the global economic uncertainty and financial market conditions caused by significant worldwide events, including public health crises, and geopolitical upheaval, such as Russia’s incursion into Ukraine and the conflict between Israel and regional adversaries, disruptions to global supply chains, rising interest rates, risk of recession and inflation (collectively, the Macroeconomic Conditions) on our business, results of operations and financial condition, including on our hardware sales and our Software-as-a-Service, or SaaS, and license revenue growth rate;

These statements are often identified by the use of words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “objective,” “ongoing,” “plan,” “predict,” “project,” “potential,” “should,” “will,” “would,” or the negative or plural of these words or similar expressions or variations and such forward-looking statements include, but are not limited to, statements with respect to the anticipated impact of the global economic uncertainty and financial market conditions caused by significant worldwide events, including public health crises, and geopolitical upheaval (including the ongoing conflicts in Ukraine and in the Middle East and surrounding areas), disruptions to global supply chains, fluctuations in interest rates, tariffs, risk of recession and inflation (collectively, the Macroeconomic Conditions) on our business, results of operations and financial condition, including on our hardware sales and our Software-as-a-Service, or SaaS, and license revenue growth rate;

our business strategy, plans and objectives for future operations;

continued enhancements of our platform and offerings;

the potential impact of trade policies and related tariffs on our cost of hardware revenue and hardware revenue margins;

the potential impact of trade policies and new or increased tariffs on our cost of hardware revenue and hardware revenue margins;

and our future financial and business performance.

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Alarm.com is the leading platform for the intelligently connected property.

Our cloud-based platform offers an expansive suite of Internet of Things, or IoT, solutions a ddressing 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 a ddressing 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.

During 2024, our platforms processed more than 345 billion data points generated by over 160 million connected devices.

We believe this scale of subscribers, connected devices and data operations makes us the leader in the connected property market.

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

We primarily generate SaaS and license revenue through our service provider partners, who resell these services and pay us monthly fees.

These service provider contracts typically have an initial term of one year, with subsequent renewal terms of one year.

Alarm.com has established a global network of trusted service provider partners who distribute our solutions to their customers.

Our service provider partners represent a wide range of independent businesses, and are experts at selling, installing and supporting our technology.

They depend on the Alarm.com platform for connected property technology and to operate and manage their businesses efficiently.

Alarm.com primarily generates SaaS and license revenue through our service provider partners, who resell our services and pay us monthly fees.

Contracts with our service provider partners typically have an initial term of one year, with subsequent renewal terms of one year.

O ur service provider partners have indicated that they typically have three to five -year service contracts with residential and commercial property owners who use our solutions.

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We believe our network of service providers and the length of our service relationships with residential and commercial property owners, combined with our robust SaaS platforms and over 20 years of operating experience, contribute to a compelling business model.

Our Solutions and Integrated Platforms

Our solutions are designed to make both residential and commercial properties safer, smarter and more efficient.

Our technology platforms support property owners who subscribe to our services, the hardware partners who manufacture devices that integrate with our platforms and the service provider partners who install and maintain our solutions.

The Alarm.com platform enables our service provider partners to deploy our interactive security, video monitoring, intelligent automation, access control, energy management and wellness solutions as stand-alone offerings or as combined solutions to address the needs of a broad range of customers.

Highlights of Third Quarter Results

The Alarm.com platform enables our service provider partners to address the needs of a broad range of residential and commercial customers.

They can deploy interactive security, video monitoring, property automation, access control, energy management, gunshot detection, water management, vehicle and fleet management, and wellness and personal safety solutions as stand-alone offerings or as integrated solutions.

Highlights of First Quarter Results

We primarily generate SaaS and license revenue, our largest source of revenue, through our service provider partners, who resell our services and pay us monthly fees.

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Our subscribers consist of all of the properties maintained by those residential and commercial property owners to which we are delivering at least one of our solutions.

We derive a portion of our revenue from licensing our intellectual property to third parties

on a per customer basis.

SaaS and license revenue represented 66% and 67% of our revenue during the three and nine months ended September 30, 2024, respectively, as compared to 65% and 64% in the same periods in the prior year.

We derive a portion of our revenue from licensing our intellectual property to third parties on a per customer basis.

SaaS and license revenue represented 69% of our revenue during the three months ended March 31, 2025, as compared to 67% in the same period in the prior year.

We also generate SaaS and license revenue from monthly fees charged to service providers on a per subscriber basis for access to our non-hosted software platform, or Software platform.

The non-hosted software for interactive security, automation and related solutions is typically deployed and operated by the service provider in its own network operations center.

Software license revenue represented 2% of our revenue during each of the three and nine months ended September 30, 2024, as compared to 3% in the same periods in the prior year.

Software license revenue represented 2% of our revenue during each of the three months ended March 31, 2025 and 2024.

We also generate revenue from the sale of many types of hardware, including video cameras, video recorders, cellular radio modules, smart thermostats, image sensors, gunshot detection sensors and other peripherals, that enable our solutions.

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Additionally, our hardware and other revenue includes our revenue from the sale of licenses that provide our customers the right to use our gunshot detection solution in exchange for license fees.

Hardware and other revenue represented 34% and 33% of our revenue during the three and nine months ended September 30, 2024, respectively, as compared to 35% and 36% in the same periods in the prior year.

Hardware and other revenue represented 31% of our revenue during the three months ended March 31, 2025, as compared to 33% in the same period in the prior year.

We typically expect hardware and other revenue to fluctuate as a percentage of total revenue.

Highlights of our financial performance for the periods covered in this Quarterly Report include:

• SaaS and license revenue increased 10% to $159.3 million during the three months ended September 30, 2024 from $145.0 million during the three months ended September 30, 2023.

SaaS and license revenue increased 11% to $465.5 million in the nine months ended September 30, 2024 from $420.9 million in the nine months ended September 30, 2023.

Included in SaaS and license revenue was software license revenue, which decreased to $5.0 million during the three months ended September 30, 2024 from $5.7 million during the three months ended September 30, 2023.

Software license revenue decreased to $15.4 million in the nine months ended September 30, 2024 from $17.8 million in the nine months ended September 30, 2023.

• Total revenue increased 8% to $240.5 million during the three months ended September 30, 2024 from $221.9 million during the three months ended September 30, 2023.

Total revenue increased 6% to $697.6 million in the nine months ended September 30, 2024 from $655.4 million in the nine months ended September 30, 2023.

• Net income increased to $36.5 million during the three months ended September 30, 2024, as compared to $19.4 million during the three months ended September 30, 2023.

Net income increased to $92.4 million in the nine months ended September 30, 2024, as compared to $49.2 million in the nine months ended September 30, 2023.

Net income attributable to common stockholders increased to $36.7 million during the three months ended September 30, 2024, as compared to $19.5 million during the three months ended September 30, 2023.

Net income attributable to common stockholders increased to $93.8 million in the nine months ended September 30, 2024, as compared to $49.7 million in the nine months ended September 30, 2023.

• Non-GAAP adjusted EBITDA, a non-GAAP measurement of operating performance, increased to $50.0 million during the three months ended September 30, 2024 from $41.4 million during the three months ended September 30, 2023.

Non-GAAP adjusted EBITDA increased to $129.9 million in the nine months ended September 30, 2024 from $108.4 million in the nine months ended September 30, 2023.

Please see Non-GAAP Measures below in this section of this Quarterly Report for a discussion of the limitations of non-GAAP adjusted EBITDA (a non-GAAP measure) and a reconciliation of non-GAAP adjusted EBITDA from net income, the most directly comparable measurement in accordance with accounting principles generally accepted in the United States, or GAAP, for the three and nine months ended September 30, 2024 and 2023.

• SaaS and license revenue increased 9% to $163.8 million during the three months ended March 31, 2025 from $150.3 million during the three months ended March 31, 2024.

Included in SaaS and license revenue was software license revenue, which decreased to $4.7 million during the three months ended March 31, 2025 from $5.2 million during the three months ended March 31, 2024.

• Total revenue increased 7% to $238.8 million during the three months ended March 31, 2025 from $223.3 million during the three months ended March 31, 2024.

• Net income increased to $27.7 million during the three months ended March 31, 2025, as compared to $23.4 million during the three months ended March 31, 2024.

Net income attributable to common stockholders increased to $28.0 million during the three months ended March 31, 2025, as compared to $23.6 million during the three months ended March 31, 2024.

• Non-GAAP adjusted EBITDA, a non-GAAP measurement of operating performance, increased to $43.5 million during the three months ended March 31, 2025 from $37.0 million during the three months ended March 31, 2024.

Recent Developments

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.

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.

Pursuant to the terms of the stock purchase agreement, following the preliminary determination of the working capital of CHeKT as of the closing date, the purchase price decreased by $0.2 million.

The purchase price allocation was not finalized as of the filing date of this Quarterly Report on Form 10-Q and is pending the final determination of the working capital adjustment as well as tax adjustments, including the assessment of any net operating losses acquired and the related limitations on any identified net operating losses.

On April 28, 2025, we paid $29.1 million in cash to purchase 24.7% of the outstanding shares of Safe Streets USA, LLC.

We are still evaluating the accounting treatment for this investment, which will be finalized during the second quarter of 2025.

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

It remains difficult to assess or predict the ultimate duration and economic impact of the Macroeconomic Conditions.

The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the results that can be expected for our entire fiscal year ending December 31, 2024, which is increasingly true in periods of extreme uncertainty, such as the uncertainty caused by the Macroeconomic Conditions.

The results of operations for the three months ended March 31, 2025 are not necessarily indicative of the results that can be expected for our entire fiscal year ending December 31, 2025, which is increasingly true in periods of extreme uncertainty, such as the uncertainty caused by the Macroeconomic Conditions.

Prolonged uncertainty with respect to the Macroeconomic Conditions could cause further economic slowdown or cause other unpredictable events, each of which could adversely affect our business, results of operations or financial condition.

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Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

SaaS and license revenue $ 163,800 $ 150,344

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Twelve Months Ended

September 30,

SaaS and license revenue renewal rate 95 % 94 %

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We exclude interest expense in calculating non-GAAP adjusted EBITDA because we believe the exclusion of interest expense will provide for more meaningful information about our financial performance.

We exclude interest income and certain activity within other expense, net including gains, losses or impairments on investments without readily determinable fair values and other assets, gains on settlement fees and losses on the early extinguishment of debt, when applicable, from non-GAAP adjusted EBITDA because we do not consider it part of our ongoing results of operations.

We exclude interest income and certain activity within other expense, net including gains, losses or impairments on investments without readily determinable fair values and other assets, gains and losses from equity method investments, gains on settlement fees and losses on the early extinguishment of debt, when applicable, from non-GAAP adjusted EBITDA because we do not consider it part of our ongoing results of operations.

We exclude the impact related to our provision for income taxes from non-GAAP adjusted EBITDA because we do not consider this tax adjustment to be part of our ongoing results of operations.

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Non-GAAP adjusted EBITDA is not a measure calculated in accordance with GAAP and should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.

Please see Non-GAAP Measures in this section for a discussion of the limitations of non-GAAP adjusted EBITDA and a reconciliation of non-GAAP adjusted EBITDA from net income, the most directly comparable GAAP measurement, for the three and nine months ended September 30, 2024 and 2023.

SaaS and License Revenue Renewal Rate

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Our cost of SaaS and license revenue also includes our cost of software license revenue, which primarily includes the payroll and payroll-related costs of the department dedicated to providing service exclusively to those service providers that host the Software platform.

As of September 30, 2024 and 2023, we had 76 and 77 employees who manufacture hardware for our suite of IoT solutions, respectively .

As of March 31, 2025 and 2024, we had 76 and 75 employees who manufacture hardware for our suite of IoT solutions, respectively .

Our cost of hardware and other revenue primarily includes cost of raw materials, tooling, freight shipments and amounts paid to our third-party manufacturer for production and fulfillment of our cellular radio modules and image sensors, and procurement costs for our video cameras, video recorders, smart thermostats and gunshot detection sensors, which we purchase from an original equipment manufacturer, and other devices.

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Our cost of revenue excludes amortization and depreciation shown in operating expenses.

Since 2019, the U.S.

government has implemented and imposed significant changes to U.S.

trade policy with respect to China.

Tariffs have subjected certain Alarm.com products manufactured overseas to additional import duties of up to 25%.

The amount of the import tariff and the number of products subject to tariffs have changed numerous times based on action by the U.S.

Less than one-third of the hardware products that we sell to our service provider partners are imported from China and could be subject to increased tariffs.

While the additional import duties resulted in an increase to our cost of hardware revenue, these import duties had a modest impact on hardware revenue margins.

If tariffs are increased or are expanded to apply to more of our products, such actions may increase our cost of hardware revenue and reduce our hardware revenue margins in the future.

We continue to monitor the changes in tariffs.

We currently expect our hardware revenue margins in 2024 to approximate the hardware revenue margins from 2023.

In April 2025, the U.S.

government announced a baseline tariff of 10% on all products imported into the United States (with certain limited exceptions) and additional individualized tariffs based on country of origin at different rates per country.

Certain of these tariffs have been subsequently paused or modified, and the situation remains fluid.

The United States and/or countries into which we import products may, in the future, adjust and/or impose new quotas, duties, tariffs or reciprocal tariffs or other restrictions.

A significant portion of our hardware is produced outside the United States, including in Vietnam, Thailand and Taiwan.

The ultimate impact of any tariffs will depend on various factors, including how long such tariffs remain in place, the ultimate levels of such tariffs and how other countries respond to the U.S.

Given these tariffs did not become effective until April 2025, there was no impact to our cost of hardware revenue for these new tariffs during the three months ended March 31, 2025.

As we look forward, we continue to monitor the changes in tariffs and consider whether we will pass through some or all of the cost of the tariffs to our customers consistent with our contractual rights.

Depending on how much, if any, of the cost of tariffs we pass through to our customers, our hardware revenue margins may be impacted.

If tariffs are increased through reinstatement of the previously announced tariffs or are expanded to apply to more of our products, such actions may increase our cost of hardware revenue and reduce our hardware revenue margins further.

We continue to closely monitor changes in tariff policy and retain flexibility in response.

Operating Expenses

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We include stock-based compensation expense in connection with the grant of restricted stock units and other forms of equity compensation, including equity compensation with performance conditions, in the applicable operating expense category based on the respective equity award recipient’s function (sales and marketing, general and administrative or research and development).

We grew from 1,986 employees as of September 30, 2023 to 2,055 employees as of September 30, 2024 , and grew from 2,033 employees as of June 30, 2024.

We grew from 2,002 employees as of March 31, 2024 to 2,020 employees as of March 31, 2025 , and grew from 2,010 employees as of December 31, 2024.

We expect to continue to hire new employees to support the projected future growth of our business.

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Sales and marketing expense consists primarily of personnel and related expenses for our sales and marketing teams, including salaries, bonuses, stock-based compensation, benefits, travel, and commissions.

Our sales and marketing teams engage in sales, account management, service provider partner support, advertising, promotion of our products and services and marketing.

The number of employees in sales and marketing functions increased from 566 as of September 30, 2023 to 583 as of September 30, 2024 and increased from 576 as of June 30, 2024.

sales and marketing teams engage in sales, account management, service provider partner support, advertising, promotion of our products and services and marketing.

The number of employees in sales and marketing functions increased from 564 as of March 31, 2024 to 579 as of March 31, 2025 and increased from 572 as of December 31, 2024.

We expect to continue to invest in our sales and marketing activities to expand our business both domestically and internationally and we expect to increase our marketing expense in 2025 as compared to 2024.

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Also included in general and administrative expenses are credit losses and acquisition-related expenses, which consist primarily of legal, accounting and professional service fees directly related to acquisitions and valuation gains or losses on acquisition-related contingent liabilities.

The number of employees in general and administrative functions increased from 227 as of September 30, 2023 to 232 as of September 30, 2024 and increased from 223 as of June 30, 2024.

The number of employees in general and administrative functions increased from 224 as of March 31, 2024 to 236 as of March 31, 2025 and decreased from 237 as of December 31, 2024.

Excluding intellectual property litigation and acquisition-related expense, we expect general and administrative costs to increase prospectively as our business grows.

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Also included are non-personnel costs such as consulting and professional fees paid to third-party development resources.

The number of employees in research and development functions increased from 1,116 as of September 30, 2023 to 1,164 as of September 30, 2024 and increased from 1,155 as of June 30, 2024.

The number of employees in research and development functions decreased from 1,139 as of March 31, 2024 to 1,129 as of March 31, 2025 and increased from 1,127 as of December 31, 2024.

Our research and development efforts are focused on innovating new features and enhancing the functionality of our platforms and the solutions we offer to our service provider partners and subscribers.

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Interest Expense

We record interest expense associated with our 2026 Notes, 2029 Notes and acquired debt.

We record interest expense associated with our 2026 Notes and 2029 Notes.

Interest expense in 2025 is expected to increase as compared to 2024 due to the issuance of the 2029 Notes.

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As a result, we recognize tax liabilities based on estimates of whether additional taxes will be due.

For the three months ended September 30, 2024, our effective tax rate was below the 21.0% statutory rate primarily due to 2024 research and development tax credits claimed, the foreign derived intangible income deduction and a favorable true-up adjustment of our 2023 income tax provision estimate and amended prior year state income tax returns, partially offset by the impact of state taxes, foreign withholding taxes and other nondeductible expenses.

For the nine months ended September 30, 2024, our effective tax rate was below the 21.0% statutory rate primarily due to a favorable true-up adjustment of our 2023 income tax provision estimate, the foreign derived intangible income deduction, 2024 research and development tax credits claimed, the release of an unrecognized tax benefit liability due to the closure of the 2018 and 2019 Internal Revenue Service federal income tax examination and tax windfall benefits from employee stock-based compensation, partially offset by the impact of state taxes, federal estimated tax payment interest expense and other nondeductible expenses.

For the three months ended March 31, 2025, our effective tax rate was below the 21.0% statutory rate primarily due to 2025 research and development tax credits claimed and the foreign derived intangible income deduction, partially offset by the impact of state taxes, foreign withholding taxes and other nondeductible expenses.

We recognize stock-based compensation tax shortfalls and excess tax windfall benefits on a discrete basis during the quarter in which they occur, and we anticipate our effective tax rate will vary from quarter to quarter depending on our stock price as well as the vesting and exercises of various forms of equity compensation under our equity incentive plans each period, including restricted stock units and stock options.

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Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

SaaS and license revenue $ 163,800 69 % $ 150,344 67 %

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Cost of hardware and other revenue (2)

56,666 24 56,087 25

Total cost of revenue 78,234 33 76,515 34

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(1) Excludes amortization and depreciation shown in operating expenses below.

(2) Operating expenses include stock-based compensation expense as follows (in thousands):

(2) Expenses include stock-based compensation expense as follows (in thousands):

Three Months Ended

September 30, Nine Months Ended

September 30,

Stock-based compensation expense data:

2024 2023 2024 2023

Cost of hardware and other revenue

$ — $ 3 $ 2 $ 3

Sales and marketing 480 755

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Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Components of cost of revenue as a percentage of revenue:

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Total cost of revenue as a percentage of total revenue 33 % 34 %

Comparison of the Three and Nine Months Ended September 30, 2024 to September 30, 2023

The following tables in this section set forth our selected condensed consolidated statements of operations (in thousands), data for the percentage change and data as a percentage of revenue for the three and nine months ended September 30, 2024 and September 30, 2023.

Comparison of the Three Months Ended March 31, 2025 to March 31, 2024

Three Months Ended

September 30, %

Change Nine Months Ended

September 30, %

2024 2023 2024 2023

SaaS and license revenue $ 163,800 $ 150,344 9 %

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Total revenue $ 238,822 $ 223,283 7 %

The $18.6 million increase in total revenue for the three months ended September 30, 2024 as compared to the same period in the prior year was primarily the result of a $14.2 million, or 10%, increase in our SaaS and license revenue, and a $4.4 million, or 6%, increase in our hardware and other revenue.

Our software license revenue included within SaaS and license revenue decreased $0.7 million to $5.0 million during the three months ended September 30, 2024 as compared to $5.7 million during the same period in the prior year primarily due to the result of the continuing transition of customers from non-hosted software to our cloud based hosted platform.

The SaaS and license revenue for the Alarm.com segment increased $10.6 million for the three months ended September 30, 2024 as compared to the same period in the prior year primarily due to growth in our subscriber base, including the revenue impact from subscribers we added in 2023.

The SaaS and license revenue for our Other segment increased $3.6 million for the three months ended September 30, 2024 as compared to the same period in the prior year primarily due to an increase in sales of our energy management and demand response solutions as well as our property management solution.

The increase in hardware and other revenue for the three months ended September 30, 2024 as compared to the same period in the prior year was primarily from the $4.5 million increase in hardware and other revenue, net of intersegment eliminations, in the Alarm.com segment arising from an increase in the volume of commercial video devices sold.

Hardware and other revenue, net of intersegment eliminations, in our Other segment decreased $0.1 million for the three months ended September 30, 2024 as compared to the same period in the prior year primarily due to decreased sales related to our property management solution.

The $42.1 million increase in total revenue for the nine months ended September 30, 2024 as compared to the same period in the prior year was primarily the result of a $44.7 million, or 11%, increase in our SaaS and license revenue, partially offset by a $2.6 million, or 1%, decrease in our hardware and other revenue.

Our software license revenue included within SaaS and license revenue decreased $2.4 million to $15.4 million during the nine months ended September 30, 2024, as compared to $17.8 million during the same period in the prior year primarily due to the result of the continuing transition of customers from non-hosted software to our cloud based hosted platform.

The SaaS and license revenue for the Alarm.com segment increased $35.9 million for the nine months ended September 30, 2024 as compared to the same period in the prior year primarily due to growth in our subscriber base, including the revenue impact from subscribers we added in 2023, as well as an increase in our license revenue.

The SaaS and license revenue for our Other segment increased $8.8 million for the nine months ended September 30, 2024 as compared to the same period in the prior year primarily due to an increase in sales of our energy management and demand response solutions as well as our property management solution.

The decrease in hardware and other revenue for the nine months ended September 30, 2024 as compared to the same period in the prior year was primarily from the $1.7 million decrease in hardware and other revenue, net of intersegment eliminations, in the Alarm.com segment arising from a decrease in the volume of cameras sold.

Hardware and other revenue, net of intersegment eliminations, in our Other segment decreased $0.9 million for the nine months ended September 30, 2024 as compared to the same period in the prior year, primarily due to decreased sales related to our property management solution.

The $15.5 million increase in total revenue for the three months ended March 31, 2025 as compared to the same period in the prior year was primarily the result of a $13.5 million, or 9%, increase in our SaaS and license revenue, and a $2.1 million, or 3%, increase in our hardware and other revenue.

Our software license revenue included within SaaS and license revenue decreased $0.5 million to $4.7 million during the three months ended March 31, 2025 as compared to $5.2 million during the same period in the prior year primarily due to the result of the continuing transition of customers from non-hosted software to our cloud based hosted platform.

The SaaS and license revenue for the Alarm.com segment increased $9.8 million for the three months ended March 31, 2025 as compared to the same period in the prior year primarily due to growth in our subscriber base, including the revenue impact from subscribers we added in 2024.

The SaaS and license revenue for our Other segment increased $3.7 million for the three months ended March 31, 2025 as compared to the same period in the prior year primarily due to an increase in sales of our energy management and demand response solutions as well as our property management solution.

The increase in hardware and other revenue for the three months ended March 31, 2025 as compared to the same period in the prior year was primarily from the $1.7 million increase in hardware and other revenue, net of intersegment eliminations, in the Alarm.com segment arising from an increase in the average selling price of cameras sold.

Hardware and other revenue, net of intersegment eliminations, in our Other segment increased $0.4 million for the three months ended March 31, 2025 as compared to the same period in the prior year primarily due to increased sales related to our property management solution.

Cost of Revenue

Three Months Ended

September 30, %

Change Nine Months Ended

September 30, %

2024 2023 2024 2023

Cost of revenue (1)

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(1) Excludes amortization and depreciation shown in operating expenses.

The $3.3 million increase in cost of revenue for the three months ended September 30, 2024 as compared to the same period in the prior year was the result of a $2.1 million, or 4%, increase in cost of hardware and other revenue, and a $1.2 million, or 5%, increase in cost of SaaS and license revenue.

Our cost of software license revenue included within cost of SaaS and license revenue was $0.2 million and $0.1 million for the three months ended September 30, 2024 and 2023, respectively.

The cost of hardware and other revenue for the Alarm.com segment increased $2.3 million during the three months ended September 30, 2024 as compared to the same period in the prior year primarily due to a change in the mix of product sales to more hardware with higher costs as well as an increase in the number of hardware units shipped.

The cost of hardware and other revenue for the Other segment decreased $0.2 million during the three months ended September 30, 2024 as compared to the same period in the prior year primarily due to a change in the mix of product sales.

The cost of SaaS and license revenue for the Alarm.com segment increased $0.4 million during the three months ended September 30, 2024 as compared to the same period in the prior year primarily due to the growth in our subscriber base, which drove a corresponding increase in amounts paid to wireless network providers.

The cost of SaaS and license revenue for the Other segment increased $0.8 million during the three months ended September 30, 2024 as compared to the same period in the prior year primarily due to an increase in sales of our energy management and demand response solutions, which drove a corresponding increase in amounts paid to distributed energy resource providers.

Cost of hardware and other revenue as a percentage of hardware and other revenue was 76% for the three months ended September 30, 2024 and 77% for the same period in the prior year.

The decrease in cost of hardware and other revenue as a percentage of hardware and other revenue for the three months ended September 30, 2024 as compared to the same period in the prior year is primarily a reflection of the mix of product sales during the periods.

Cost of SaaS and license revenue as a percentage of SaaS and license revenue was 15% for each of three months ended September 30, 2024 and 2023.

Cost of software license revenue as a percentage of software license revenue was 3% for the three months ended September 30, 2024 and 2% for the same period in the prior year.

The $1.4 million decrease in cost of revenue for the nine months ended September 30, 2024 as compared to the same period in the prior year was the result of a $3.9 million, or 2%, decrease in cost of hardware and other revenue, partially offset by a $2.5 million, or 4%, increase in cost of SaaS and license revenue.

Our cost of software license revenue included within cost of SaaS and license revenue was $0.5 million and $0.4 million for the nine months ended September 30, 2024 and 2023, respectively.

The cost of hardware and other revenue for the Alarm.com segment decreased $3.2 million during the nine months ended September 30, 2024 as compared to the same period in the prior year primarily due to a decrease in the number of hardware units shipped.

The cost of hardware and other revenue for the Other segment decreased $0.7 million during the three months ended September 30, 2024 as compared to the same period in the prior year primarily due to a decrease in the number of hardware units shipped.

The cost of SaaS and license revenue for the Alarm.com segment increased $0.5 million during the nine months ended September 30, 2024 as compared to the same period in the prior year primarily due to the growth in our subscriber base, which drove a corresponding increase in amounts paid to wireless network providers.

The cost of SaaS and license revenue for the Other segment increased $2.0 million during the nine months ended September 30, 2024 as compared to the same period in the prior year primarily due to an increase in sales of our energy management and demand response solutions, which drove a corresponding increase in amounts paid to distributed energy resource providers.

Cost of hardware and other revenue as a percentage of hardware and other revenue was 76% for the nine months ended September 30, 2024 and 77% for the same period in the prior year.

The decrease in cost of hardware and other revenue as a percentage of hardware and other revenue for the nine months ended September 30, 2024 as compared to the same period in the prior year is primarily a reflection of the mix of product sales during the periods.

Cost of SaaS and license revenue as a percentage of SaaS and license revenue was 14% for the nine months ended September 30, 2024 and 15% for the same period in the prior year.

Cost of software license revenue as a percentage of software license revenue was 3% for the nine months ended September 30, 2024 and 2% for the same period in the prior year.

The $1.7 million increase in cost of revenue for the three months ended March 31, 2025 as compared to the same period in the prior year was the result of a $1.1 million, or 6%, increase in cost of SaaS and license revenue, and a $0.6 million, or 1%, increase in cost of hardware and other revenue.

Our cost of software license revenue included within cost of SaaS and

license revenue was $0.1 million and $0.2 million for the three months ended March 31, 2025 and 2024, respectively.

The cost of SaaS and license revenue for the Other segment increased $0.8 million during the three months ended March 31, 2025 as compared to the same period in the prior year primarily due to an increase in sales of our energy management and demand response solutions, which drove a corresponding increase in amounts paid to distributed energy resource providers.

The cost of SaaS and license revenue for the Alarm.com segment increased $0.3 million during the three months ended March 31, 2025 as compared to the same period in the prior year primarily due to the growth in our subscriber base, which drove a corresponding increase in amounts paid to wireless network providers.

The cost of hardware and other revenue for the Alarm.com segment increased $0.3 million during the three months ended March 31, 2025 as compared to the same period in the prior year primarily due to a change in the mix of product sales to more hardware with higher costs.

The cost of hardware and other revenue for the Other segment increased $0.3 million during the three months ended March 31, 2025 as compared to the same period in the prior year primarily due to an increase in the number of hardware units shipped related to our property management solution.

Cost of hardware and other revenue as a percentage of hardware and other revenue was 76% for the three months ended March 31, 2025 and 77% for the same period in the prior year.

The decrease in cost of hardware and other revenue as a percentage of hardware and other revenue for the three months ended March 31, 2025 as compared to the same period in the prior year is primarily a reflection of the mix of product sales during the periods.

Cost of SaaS and license revenue as a percentage of SaaS and license revenue was 13% for three months ended March 31, 2025 as compared to 14% for the same period in the prior year.

Cost of software license revenue as a percentage of software license revenue was 3% for each of the three months ended March 31, 2025 and 2024.

Sales and Marketing Expense

Three Months Ended

September 30, %

Change Nine Months Ended

September 30, %

2024 2023 2024 2023

Sales and marketing $ 28,549 $ 25,454 12 %

% of total revenue 12 % 12 %

The $3.1 million increase in sales and marketing expense for the three months ended September 30, 2024 as compared to the same period in the prior year was primarily due to a $1.7 million increase in personnel and related costs for our Alarm.com segment, attributable in part to increases in the headcount for our sales team to support our growth, and a $0.5 million increase in marketing expense for our Alarm.com segment.

The $3.1 million increase in sales and marketing expense for the three months ended March 31, 2025 as compared to the same period in the prior year was primarily due to a $1.5 million increase in personnel and related costs for our Alarm.com segment, attributable in part to increases in the headcount for our sales team to support our growth, and a $0.6 million increase in marketing expense for our Alarm.com segment.

Personnel and related costs includes salary, benefits, stock-based compensation and travel expenses.

These increases in sales and marketing expense for our Alarm.com segment were partially offset by a $0.2 million decrease in our expenses for external consultants for the three months ended September 30, 2024 as compared to the same period in the prior year.

Sales and marketing expense from our Other segment increased $1.0 million for the three months ended September 30, 2024 as compared to the same period in the prior year, primarily due to an increase in personnel and related costs, attributable in part to increases in the headcount for our sales team.

The $6.0 million increase in sales and marketing expense for the nine months ended September 30, 2024 as compared to the same period in the prior year was primarily due to a $2.7 million increase in personnel and related costs for our Alarm.com segment, attributable in part to increases in the headcount for our sales team to support our growth, and a $1.0 million increase in marketing expense for our Alarm.com segment.

These increases in sales and marketing expense for our Alarm.com segment were partially offset by a $0.5 million decrease in our expenses for external consultants and recruiting for the nine months ended September 30, 2024 as compared to the same period in the prior year.

Sales and marketing expense from our Other segment increased $3.0 million for the three months ended September 30, 2024 as compared to the same period in the prior year, primarily due to an increase in personnel and related costs, attributable in part to increases in the headcount for our sales team.

The number of employees in sales and marketing functions increased from 566 as of September 30, 2023 to 583 as of September 30, 2024.

Sales and marketing expense from our Other segment increased $1.0 million for the three months ended March 31, 2025 as compared to the same period in the prior year, primarily due to an increase in personnel and related costs, attributable in part to increases in the headcount for our sales team.

The number of employees in sales and marketing functions increased from 564 as of March 31, 2024 to 579 as of March 31, 2025.

General and Administrative Expense

Three Months Ended

September 30, %

Change Nine Months Ended

September 30, %

2024 2023 2024 2023

General and administrative $ 27,001 $ 29,296 (8) %

% of total revenue 11 % 13 %

The $5.7 million decrease in general and administrative expense for the three months ended September 30, 2024 as compared to the same period in the prior year was primarily due to a $6.9 million decrease in legal costs for our Alarm.com segment related to intellectual property litigation.

This decrease in general and administrative expense was partially offset by a $0.7 million increase in personnel and related costs, a $0.5 million increase in consulting and recruiting costs and a $0.3 million increase in rent expense for our Alarm.com segment.

General and administrative expenses from our Other segment decreased by $0.4 million for the three months ended September 30, 2024 as compared to the same period in the prior year, primarily due to a decrease in the provision for credit losses.

The $7.6 million decrease in general and administrative expense for the nine months ended September 30, 2024 as compared to the same period in the prior year was primarily due to a $14.5 million decrease in legal costs for our Alarm.com segment related to intellectual property litigation.

This decrease in general and administrative expense was partially offset by a $4.0 million increase in the provision for credit losses related to a loan we previously provided to an affiliated entity of one of our distribution partners, a $0.5 million increase in rent expense, a $0.4 million increase in recruiting costs and a $0.4 million increase in personnel and related costs for the nine months ended September 30, 2024 as compared to the same period in the prior year.

General and administrative expenses from our Other segment decreased $0.4 million primarily due to a decrease in the provision for credit losses for the nine months ended September 30, 2024 as compared to the same period in the prior year.

The overall number of employees in general and administrative functions increased from 227 as of September 30, 2023 to 232

as of September 30, 2024.

The $2.3 million decrease in general and administrative expense for the three months ended March 31, 2025 as compared to the same period in the prior year was primarily due to a $4.3 million decrease in the provision for credit losses for our Alarm.com segment, driven by a $4.0 million loan we provided to an affiliated entity of one of our distribution partners.

This decrease in general and administrative expense was partially offset by a $1.0 million increase in consulting costs.

General and administrative expenses from our Other segment increased by $1.2 million for the three months ended March 31, 2025 as compared to the same period in the prior year, primarily due to an increase in the provision for credit losses.

The number of employees in general and administrative functions increased from 224 as of March 31, 2024 to 236 as of March 31, 2025.

Research and Development Expense

Three Months Ended

September 30, %

Change Nine Months Ended

September 30, %

2024 2023 2024 2023

Research and development $ 68,367 $ 65,956 4 %

% of total revenue 28 % 30 %

The $1.2 million increase in research and development expense for the three months ended September 30, 2024 as compared to the same period in the prior year was primarily due to a $0.5 million increase in personnel and related costs for our Alarm.com segment, attributable in part to an increase in headcount of employees in research and development functions as well as a $0.4 million increase in our expenses for external consultants.

Research and development expense from our Other segment increased by $0.5 million for the three months ended September 30, 2024 as compared to the same period in the prior year, primarily due to an increase in personnel and related costs.

The $10.1 million increase in research and development expense for the nine months ended September 30, 2024 as compared to the same period in the prior year was primarily due to a $6.5 million increase in personnel and related costs for our Alarm.com segment, attributable in part to an increase in headcount of employees in research and development functions as well as a $1.7 million increase in our expenses for external consultants.

Research and development expense from our Other segment increased by $2.8 million for the nine months ended September 30, 2024 as compared to the same period in the prior year, primarily due to an increase in personnel and related costs.

The overall number of employees in research and development functions increased from 1,116 as of September 30, 2023 to 1,164 as of September 30, 2024.

The $2.4 million increase in research and development expense for the three months ended March 31, 2025 as compared to the same period in the prior year was primarily due to a $0.7 million increase in our expenses for external consultants, a $0.7 million increase in expenses for software licenses and a $0.2 million increase in personnel and related costs for our Alarm.com segment.

Research and development expense from our Other segment increased by $0.6 million for the three months ended March 31, 2025 as compared to the same period in the prior year, primarily due to an increase in personnel and related costs attributable in part to an increase in headcount of employees in research and development functions.

The overall number of employees in research and development functions decreased from 1,139 as of March 31, 2024 to 1,129 as of March 31, 2025.

Amortization and Depreciation

Three Months Ended

September 30, %

Change Nine Months Ended

September 30, %

2024 2023 2024 2023

Amortization and depreciation $ 7,024 $ 7,337 (4) %

% of total revenue 3 % 3 %

Amortization and depreciation decreased $0.3 million and $1.5 million for the three and nine months ended September 30, 2024, respectively, as compared to the same periods in the prior year, primarily due to changes in amortization expense related to the intangible assets we previously acquired.

Amortization and depreciation decreased $0.3 million for the three months ended March 31, 2025, as compared to the same period in the prior year, primarily due to changes in amortization expense related to the intangible assets we previously acquired, partially offset by the intangible assets that were acquired in connection with the purchase of 81% of the issued and outstanding shares of capital stock of CHeKT on February 10, 2025.

Interest Expense

Three Months Ended

September 30, %

Change Nine Months Ended

September 30, %

2024 2023 2024 2023

Interest expense $ (4,314) $ (796) 442 %

% of total revenue (2) % — %

Interest expense increased $3.4 million and $4.5 million for the three and nine months ended September 30, 2024, respectively, as compared to the same periods in the prior year, primarily due to the interest expense and amortization of the debt issuance costs related to the 2029 Notes.

Interest expense increased $3.5 million for the three months ended March 31, 2025, as compared to the same period in the prior year, primarily due to the interest expense and amortization of the debt issuance costs related to the 2029 Notes.

Interest Income

Three Months Ended

September 30, %

Change Nine Months Ended

September 30, %

2024 2023 2024 2023

Interest income $ 12,371 $ 8,540 45 %

% of total revenue 5 % 4 %

Interest income increased $5.9 million and $12.7 million for the three and nine months ended September 30, 2024, respectively, as compared to the same periods in the prior year, primarily due to an increase in interest income earned on cash and cash equivalents from higher amounts of cash and cash equivalents and higher average interest rates during the nine months ended September 30, 2024 as compared to the same period in the prior year.

The increase in interest income was partially offset by a $0.5 million reduction to interest income for the reversal of payable in kind interest associated with a subordinated credit agreement with an affiliated entity of one of our distribution partners during the nine months ended September 30, 2024, which did not occur during the nine months ended September 30, 2023.

Interest income increased $3.8 million for the three months ended March 31, 2025, as compared to the same period in the prior year, primarily due to an increase in interest income earned on cash and cash equivalents from higher amounts of cash and cash equivalents during the three months ended March 31, 2025 as compared to the same period in the prior year.

Other Expense, Net

Three Months Ended

September 30, %

Change Nine Months Ended

September 30, %

2024 2023 2024 2023

Other expense, net $ (2,685) $ (318) 744 %

% of total revenue (1) % — %

Other expense, net decreased $0.3 million for the three months ended September 30, 2024 and increased $0.5 million for the nine months ended September 30, 2024, as compared to the same periods in the prior year, primarily due to changes in non-operating and miscellaneous expenses.

Other expense, net increased $2.4 million for the three months ended March 31, 2025, as compared to the same period in the prior year, primarily due to a $2.3 million unrealized loss on equity securities during the three months ended March 31, 2025, which did not occur during the three months ended March 31, 2024.

Provision for Income Taxes

Three Months Ended

September 30, %

Change Nine Months Ended

September 30, %

2024 2023 2024 2023

Provision for income taxes $ 7,307 $ 2,747 166 %

% of total revenue 3 % 2 %

The provision for income taxes increased by $2.7 million and $1.1 million for the three and nine months ended September 30, 2024, respectively, as compared to the same periods in the prior year.

Our effective tax rate was 15.6% and 10.1% for the three and nine months ended September 30, 2024, respectively, as compared to 17.0% and 15.8% for the same periods in the prior year.

The increase in the provision for income taxes for the three months ended September 30, 2024 as compared to the same periods in the prior year was primarily due to the increase in income before income taxes.

The increase in the provision for income taxes for the nine months ended September 30, 2024 as compared to the same period in the prior year was also due to the increase in income before income taxes, partially offset by a favorable true-up adjustment of our 2023 income tax provision estimate as compared to an unfavorable true-up adjustment of our 2022 income tax provision estimate and the release of an unrecognized tax benefit liability due to the closure of the 2018 and 2019 Internal Revenue Service federal income tax examination during the nine months ended September 30, 2024, which did not occur during the nine months ended September 30, 2023.

The provision for income taxes increased by $4.6 million for the three months ended March 31, 2025, as compared to the same period in the prior year.

Our effective tax rate was 20.9% for the three months ended March 31, 2025, as compared to 10.5% for the same period in the prior year.

The increase in the provision for income taxes for the three months ended March 31, 2025 as compared to the same period in the prior year was primarily due to the increase in income before income taxes, an increase in foreign withholding taxes, a tax shortfall in employee stock-based compensation during the three months ended March 31, 2025 as opposed to a windfall tax benefit recognized during the three months ended March 31, 2024 and an increase in other nondeductible expenses, partially offset by an increase in our research and development income tax credits.

Further, the net $1.7 million tax benefit recognized during the three months ended March 31, 2024 from the closure of the 2018 and 2019 Internal Revenue Service examination did not recur during the three months ended March 31, 2025.

Segment Information

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Alarm.com and Other.

Our Alarm.com segment represents our cloud-based and Software platforms for the intelligently connected property and related solutions that c ontributed 92% and 93% of our revenue, net of intersegment eliminations, for the three and nine months ended September 30, 2024, respectively, as compared to 93% and 94% for the same periods in the prior year.

Our Alarm.com segment represents our cloud-based and Software platforms for the intelligently connected property and related solutions that c ontributed 93% of our revenue, net of intersegment eliminations, for the three months ended March 31, 2025, as compared to 94% for the same period in the prior year.

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

The consolidated subsidiaries that make up our Other segment are in the investment stage and have incurred significant operating expenses relative to their revenue.

Our Alarm.com segment increased from 1,778 employees as of September 30, 2023 to 1,815 employees as of September 30, 2024 and increased from 1,801 employees as of June 30, 2024.

Our Other segment increased from 208 employees as of September 30, 2023 to 240 employees as of September 30, 2024 and increased from 232 employees as of June 30, 2024.

Our Alarm.com segment decreased from 1,780 employees as of March 31, 2024 to 1,774 employees as of March 31, 2025 and increased from 1,773 employees as of December 31, 2024.

Our Other segment increased from 222 employees as of March 31, 2024 to 246 employees as of March 31, 2025 and increased from 237 employees as of December 31, 2024.

Inter-segment revenue includes sales of hardware between our segments.

The following table presents our revenue, inter-segment revenue and operating expenses by segment (in thousands):

Three Months Ended

September 30,

SaaS and license revenue Hardware and other revenue

Operating expenses SaaS and license revenue Hardware and other revenue

Operating expenses

Alarm.com $ 141,319 $ 80,597 $ 108,614 $ 130,711 $ 76,336 $ 111,477

Other 17,957 1,610 13,941 14,316 1,685 12,921

Intersegment Alarm.com — (817) — — (1,021) (120)

Intersegment Other — (169) — — (173) —

Total $ 159,276 $ 81,221 $ 122,555 $ 145,027 $ 76,827 $ 124,278

Nine Months Ended

September 30,

SaaS and license revenue Hardware and other revenue

Operating expenses SaaS and license revenue Hardware and other revenue

Operating expenses

Alarm.com $ 420,032 $ 230,424 $ 335,037 $ 384,116 $ 232,464 $ 333,684

Other 45,515 4,472 42,312 36,737 5,263 37,028

Intersegment Alarm.com — (2,362) — — (2,678) (360)

Intersegment Other — (494) — — (457) —

Total $ 465,547 $ 232,040 $ 377,349 $ 420,853 $ 234,592 $ 370,352

Our SaaS and license revenue for the Alarm.com segment included software license revenue of $5.0 million and $15.4 million for the three and nine months ended September 30, 2024, respectively, as compared to $5.7 million and $17.8 million for the same periods in the prior year.

There was no software license revenue recorded for the Other segment during the three and nine months ended September 30, 2024 and 2023.

Management evaluates the performance of its segments and allocates resources to them based on operating income / (loss) as compared to prior periods and current performance levels.

The reportable segment operational data is presented in the tables below (in thousands):

Three Months Ended March 31, 2025

Alarm.com Other Intersegment Alarm.com Intersegment Other Total

SaaS and license revenue $ 147,647 $ 16,153 $ — $ — $ 163,800

Hardware and other revenue

74,050 1,889 (674) (243) 75,022

Total revenue

221,697 18,042 (674) (243) 238,822

Cost of SaaS and license revenue 16,784 4,784 83 (83) 21,568

Cost of hardware and other revenue 55,885 1,766 (658) (327) 56,666

Total cost of revenue 72,669 6,550 (575) (410) 78,234

Selling and marketing expense 22,467 6,082 — — 28,549

General and administrative expense 24,837 2,164 — — 27,001

Research and development expense 60,684 7,683 — — 68,367

Amortization and depreciation expense 6,728 296 — — 7,024

Total operating expenses 114,716 16,225 — — 130,941

Operating income / (loss)

$ 34,312 $ (4,733) $ (99) $ 167 $ 29,647

Assets $ 2,133,644 $ 73,148 $ (129,250) $ (111) $ 2,077,431

Reconciliation of operating income to income before income taxes

Operating income $ 29,647

Interest expense (4,314)

Interest income 12,371

Other expense, net (2,685)

Income before income taxes $ 35,019

Three Months Ended March 31, 2024

Alarm.com Other Intersegment Alarm.com Intersegment Other Total

SaaS and license revenue $ 137,859 $ 12,485 $ — $ — $ 150,344

Hardware and other revenue

72,364 1,398 (686) (137) 72,939

Total revenue

210,223 13,883 (686) (137) 223,283

Cost of SaaS and license revenue 16,458 3,933 104 (67) 20,428

Cost of hardware and other revenue 55,570 1,270 (655) (98) 56,087

Total cost of revenue 72,028 5,203 (551) (165) 76,515

Selling and marketing expense 20,410 5,044 — — 25,454

General and administrative expense 28,285 1,011 — — 29,296

Research and development expense 58,842 7,114 — — 65,956

Amortization and depreciation expense 7,084 253 — — 7,337

Total operating expenses 114,621 13,422 — — 128,043

Operating income / (loss)

$ 23,574 $ (4,742) $ (135) $ 28 $ 18,725

Assets $ 1,538,429 $ 64,350 $ (115,786) $ (11) $ 1,486,982

Reconciliation of operating income to income before income taxes

Operating income $ 18,725

Interest expense (796)

Interest income 8,540

Other expense, net (318)

Income before income taxes $ 26,151

Our SaaS and license revenue for the Alarm.com segment included software license revenue of $4.7 million for the three months ended March 31, 2025, as compared to $5.2 million for the same period in the prior year.

There was no software license revenue recorded for the Other segment during the three months ended March 31, 2025 and 2024.

Additions to property and equipment were $8.0 million for the Alarm.com segment for the three months ended March 31, 2025, as compared to $3.9 million for the same period in the prior year.

Additions to property and equipment were less than $0.1 million for the Other segment for each of the three months ended March 31, 2025 and 2024.

Critical Accounting Estimates

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The following table summarizes our cash and cash equivalents, accounts receivable, net and working capital, for the periods indicated (in thousands):

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Cash and cash equivalents $ 1,186,195 $ 1,220,701

2 unchanged sentences

We define working capital as current assets minus current liabilities.

Our cash and cash equivalents as of September 30, 2024 are available for working capital purposes.

Our cash and cash equivalents as of March 31, 2025 are available for working capital purposes.

Our investment policy defines allowable investments and establishes guidelines relating to credit quality, diversification and maturities of our investments to preserve capital, maintain liquidity and limit the amount of credit risk exposure.

As of September 30, 2024, our cash and cash equivalents were primarily held in money market accounts.

As of March 31, 2025, our cash and cash equivalents were primarily held in money market accounts.

Liquidity and Capital Resources

As of September 30, 2024, we had $1.17 billion in cash and cash equivalents.

As of March 31, 2025, we had $1.19 billion in cash and cash equivalents.

We consider all highly liquid instruments purchased with an original maturity from the date of purchase of three months or less to be cash equivalents.

2 unchanged sentences

Beginning in 2022, the Tax Cuts and Jobs Act of 2017 amended Internal Revenue Code Section 174, or Section 174, to eliminate the option to immediately deduct research and development expenditures in the year incurred, requiring these expenditures to be capitalized and amortized over five years for domestic expenditures and over 15 years for foreign expenditures.

While we calculated the 2022 federal and state cash tax increase from Section 174 to be $38.1 million, we did not pay this additional cash tax liability as part of our 2022 estimated tax payments due to the possible deferral, modification or repeal of Section 174.

The additional 2022 federal cash tax liability was included in current income taxes payable as of December 31, 2022, and was paid in February 2023.

The increased 2022 state tax liability was paid in April 2023 in the amount of $7.5 million.

We calculated the 2023 federal and state cash tax increase from Section 174 to be $43.5 million, which we paid in April 2024.

We calculated the 2023 federal and state cash tax increase from Section 174 to be $43.5 million, which we paid in April 2024, and we calculated the 2024 federal and state cash tax increase from Section 174 to be $33.5 million, which we paid in April 2025.

The Section 174 impact on 2025 cash flows from operating activities will depend on, among other factors, our 2025 operating results and the level of 2025 research and development activity.

Based on information currently available to us, we estimate the increased 2024 Section 174 federal and state cash tax payable for our 2024 taxable income to be in the range of $33.0 million to $38.0 million if the requirement to capitalize and amortize research and development expenditures is not deferred, modified or repealed.

Based on information currently available to us, we estimate the 2025 Section 174 federal and state cash tax payable for our 2025 taxable income to be in the range of $25.0 million to $30.0 million if the requirement to capitalize and amortize research and development expenditures is not modified or repealed.

This estimate is based on the limited information that is currently available and is subject to change.

While the largest impact will be to cash flow from operating activities, the impact for domestic research and development expenditures would continue over the five-year amortization period, but would decrease over that period and is expected to be immaterial beginning in year six.

On January 31, 2024, the U.S.

House of Representatives passed H.R.

7024, which, among other provisions, would retroactively change the effective date of the requirement to capitalize Section 174 domestic research and development expenditures from January 1, 2022 to January 1, 2026.

Foreign research and development expenditures would continue to be capitalized and amortized over 15 years as of January 1, 2022.

If the bill is passed by the Senate and signed into law by the President as currently drafted, the bill would allow us to receive a partial refund of the 2022 and 2023 Section 174 federal income tax paid, the amount and timing of which cannot be estimated at this time.

Any state impact would depend on the relevant individual state laws.

While the largest impact has been to cash flow from operating activities, the impact for domestic research and development expenditures would continue over the five-year amortization period beginning in 2022, but has decreased over that period and is expected to continue to decrease in the upcoming years.

There is discussion of prospectively repealing the requirement to capitalize domestic research and development costs, but there is no assurance such legislation will be enacted.

We believe our existing cash and cash equivalents and our future cash flows from operating activities will be sufficient to meet our anticipated operating cash needs for at least the next 12 months.

Over the final three months of fiscal year 2024, we expect our capital expenditure requirements to be between $1.0 million and $3.0 million, primarily related to the continued build out of our leased and owned office space as well as purchases of computer software and equipment.

Maturities of lease liabilities for our various office, data center and equipment leases as of September 30, 2024 are as follows:

Over the final nine months of fiscal year 2025, we expect our capital expenditure requirements to be between $10.0 million and $13.0 million, primarily related to purchases of computer software and equipment as well as the continued build out of our leased and owned office space, excluding any leasehold improvements related to tenant improvement allowances.

Maturities of lease liabilities for our various office, data center and equipment leases as of March 31, 2025 are as follows:

$10.2 million for the remainder of 2025, $13.0 million in 2026, $13.2 million in 2027, $12.6 million in 2028, $12.2 million in 2029 and $48.6 million in 2030 and thereafter.

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.

Pursuant to the terms of the stock purchase agreement, following the preliminary determination of the working capital of CHeKT as of the closing date, the purchase price decreased by $0.2 million.

The working capital adjustment is expected to be finalized by the second quarter of 2025 and $0.5 million of the holdback is expected to be paid to stockholders of CHeKT at that time.

The remaining $3.0 million of the holdback is expected to be paid to the stockholders of CHeKT by the end of the second quarter of 2026, subject to offset for any indemnification obligations.

On April 28, 2025, we paid $29.1 million in cash to purchase 24.7% of the outstanding shares of Safe Streets USA, LLC.

We are still evaluating the accounting treatment for this investment, which will be finalized during the second quarter of 2025.

Our future working capital, capital expenditure and cash requirements will depend on many factors, including the impact of the Macroeconomic Conditions on the economy and our operations, the rate of our revenue growth, the amount and timing of our investments in human resources and capital equipment, future acquisitions and investments, and the timing and extent of our introduction of new solutions and platform and solution enhancements.

As the impact of the Macroeconomic Conditions on the

economy and our operations evolves, we will continue to assess our liquidity needs.

As the impact of the Macroeconomic Conditions on the economy and our operations evolves, we will continue to assess our liquidity needs.

To the extent our cash and cash equivalents and cash flows from operating activities are insufficient to fund our future activities, we may need to borrow additional funds or raise funds from public or private equity or debt financings.

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Material Cash Requirements

As of September 30, 2024, there were no material changes in our cash requirements from those disclosed in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report, other than the $500.0 million issuance of the 2029 Notes on May 31, 2024, and the additional rent payments from the amendment to the lease for our corporate headquarters executed in August 2024.

See “Convertible Senior Notes – 2029 Notes” below for further details on our 2029 Notes and see "Liquidity and Capital Resources" above for the maturities of lease liabilities.

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 ten consecutive trading day period in which, for each trading day of that period, the trading price per $1,000 principal amount of 2029 Notes for such trading day was less than 98% of the product of the last reported sale price of our common stock and the conversion rate for the 2029 Notes on each such trading day;

(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.

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.

Capped Call – 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.

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.

As of March 31, 2025, there were no material changes in our cash requirements from those disclosed in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report.

Our 2026 Notes are due January 15, 2026 and are presented as a current liability in the condensed consolidated balance sheets as of March 31, 2025.

Sources of Liquidity

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 and received proceeds of $484.3 million, net of $15.7 million of transaction fees and other debt issuance costs.

The 2026 Notes are discussed in more detail above in Note 12 to the condensed consolidated financial statements.

On May 31, 2024, we issued $500.0 million aggregate principal amount of 2.25% convertible senior notes due June 1, 2029 in a private placement to qualified institutional buyers and received proceeds of $485.2 million, net of $14.8 million of transaction fees and other debt issuance costs.

The 2029 Notes are discussed in more detail above under "Convertible Senior Notes - 2029 Notes."

We did not declare or pay dividends during the three and nine months ended September 30, 2024 or 2023.

The 2026 Notes and 2029 Notes are discussed in more detail in Note 12 of our notes to the condensed consolidated financial statements.

We did not declare or pay dividends during the three months ended March 31, 2025 or 2024.

We cannot provide any assurance that we will declare or pay cash dividends on our common stock in the future.

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Stock Repurchase Programs

On February 15, 2023, our board of directors authorized a stock repurchase program, effective February 23, 2023, under which we were authorized to purchase up to an aggregate of $100.0 million of our outstanding common stock during the two-year period ending February 23, 2025.

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 September 30, 2024.

No shares were repurchased under our stock repurchase program during the three months ended September 30, 2024.

During the nine months ended September 30, 2024, 1,117,068 shares were repurchased for $75.0 million under our stock repurchase program.

During the three and nine months ended September 30, 2023, 105,285 and 239,540 shares of our common stock were repurchased for $6.2 million and $12.9 million under our stock repurchase program that was subsequently canceled effective May 31, 2024.

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.

When applicable, the excise tax will be included as part of the cost basis of shares acquired and

is presented within stockholders’ equity in the condensed consolidated balance sheets.

Shares Withheld

As permitted under the terms of the 2015 Equity Incentive Plan, in 2021 the Compensation Committee authorized the withholding of shares of common stock in connection with the vesting of restricted stock unit awards issued to employees to satisfy applicable tax withholding requirements.

These withheld shares are not issued or considered common stock repurchases under our stock repurchase program.

No payments of tax withholdings were made related to vesting of restricted stock units during the three months ended September 30, 2024.

We paid $3.4 million of tax withholdings related to vesting of restricted stock units during the nine months ended September 30, 2024.

No tax withholdings related to the vesting of restricted stock units were paid during the three and nine months ended September 30, 2023.

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.

On May 24, 2024, our board of directors authorized the repurchase of our common stock in connection with the issuance of the 2029 Notes 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.

During the three months ended March 31, 2025, we repurchased 86,400 shares of our common stock under this program for $5.1 million, which includes applicable commissions and fees.

No shares were repurchased under our stock repurchase programs during the three months ended March 31, 2024.

We are subject to a 1.0% excise tax on the value of net corporate stock repurchases under the Inflation Reduction Act of 2022.

When applicable, the excise tax will be included as part of the cost basis of shares acquired and is presented within stockholders’ equity in the condensed consolidated balance sheets.

Historical Cash Flows

The following table sets forth our cash flows for the periods indicated (in thousands):

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities $ 24,057 $ 49,853

Cash flows used in investing activities (55,179) (3,961)

Cash flows from / (used in) financing activities 344,286 (15,245)

Cash flows (used in) / from financing activities (3,476) 6,356

Operating Activities

Cash flows from operating activities have typically been generated from our net income and by changes in our operating assets and liabilities, particularly from accounts receivable and inventory, adjusted for non-cash expense items such as amortization and depreciation, deferred income taxes and stock-based compensation.

For the nine months ended September 30, 2024, cash flows from operating activities were $150.2 million, compared to $96.1 million for the same period in the prior year.

This $54.1 million increase in cash flows from operating activities was due to a $43.2 million increase in net income, a $7.1 million increase in non-cash and other reconciling items and a $3.8 million increase in cash from operating assets and liabilities.

The $7.1 million increase in non-cash and other reconciling items was primarily due to a $9.9 million change in deferred income taxes, which was primarily driven by the capitalization and amortization of research and development expenditures under Section 174, as well as a $4.0 million increase in the provision for credit losses on notes receivable related to a loan we provided to an affiliated entity of one of our distribution partners.

These increases in non-cash and other reconciling items were partially offset by a $4.7 million decrease in stock-based compensation during the nine months ended September 30, 2024 as compared to the same period in the prior year as well as a $1.2 million inventory write-down during the nine months ended September 30, 2023 that did not occur during the nine months ended September 30, 2024.

The $3.8 million increase in cash from operating assets and liabilities was primarily due to a $18.4 million change in inventory resulting from a decrease in purchased inventory during the nine months ended September 30, 2024 as compared to the same period in the prior year, partially offset by a $6.9 million reimbursement of previously capitalized upfront payments to a customer received during the nine months ended September 30, 2023 that did not occur during the nine months ended September 30, 2024, as well as differences in the timing of disbursements.

Cash flows from operating activities have typically been generated from our net income and by changes in our operating assets and liabilities, particularly from accounts receivable, accounts payable and inventory, adjusted for non-cash expense items such as amortization and depreciation, deferred income taxes and stock-based compensation.

For the three months ended March 31, 2025, cash flows from operating activities were $24.1 million, compared to $49.9 million for the same period in the prior year.

This $25.8 million decrease in cash flows from operating activities was due to a $32.2 million decrease in cash from operating assets and liabilities, partially offset by a $4.3 million increase in net income and a $2.1 million increase in non-cash and other reconciling items.

The $32.2 million decrease in cash from operating assets and liabilities was primarily due to a $12.2 million change in inventory resulting from an increase in purchased inventory during the three months ended March 31, 2025 as compared to the same period in the prior year, as well as differences in the timing of disbursements and the collection of receipts.

The $2.1 million increase in non-cash and other reconciling items was primarily due to a $4.7 million change in deferred income taxes, which was primarily driven by the capitalization and amortization of research and development expenditures under Section 174, as well as a $2.3 million unrealized loss on equity securities that did not occur during the three months ended March 31, 2025.

These increases in non-cash and other reconciling items were partially offset by a $4.0 million decrease in the provision for credit losses on notes receivable related to a loan we provided to an affiliated entity of one of our distribution partners during the three months ended March 31, 2024 that did not occur during the three months ended March 31, 2025 as well as a $1.8 million decrease in stock-based compensation during the three months ended March 31, 2025 as compared to the same period in the prior year.

Investing Activities

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Our capital expenditures have primarily been for general business use, including leasehold improvements as we have expanded our office space to accommodate our growth in headcount, computer equipment used internally and expansion of our network operations centers.

For the nine months ended September 30, 2024, cash flows used in investing activities were $16.6 million, compared to $21.7 million for the same period in the prior year.

The $5.1 million decrease in cash flows used in investing activities was primarily due to the $9.7 million paid to purchase 100% of the issued and outstanding shares of capital stock of EBS Spółka z ograniczoną odpowiedzialnością, or EBS, net of cash acquired, and the $5.9 million paid to purchase certain assets from Vintra, Inc., or Vintra, including direct transaction costs, during the nine months ended September 30, 2023, which did not occur during the nine months ended September 30, 2024.

The decrease in cash flows used in investing activities was partially offset by a $6.9 million increase in purchases of investments in unconsolidated entities, a $2.5 million increase in purchases of equipment as well

as a $0.8 million increase in payments related to capitalized software development costs during the nine months ended September 30, 2024 as compared to the same period in the prior year.

For the three months ended March 31, 2025, cash flows used in investing activities were $55.2 million, compared to $4.0 million for the same period in the prior year.

The $51.2 million increase in cash flows used in investing activities was primarily due to the $23.6 million paid to purchase 81% of the issued and outstanding shares of capital stock of CHeKT on February 10, 2025 and the $21.5 million note receivable issued to a service provider partner during the three months ended March 31, 2025.

Additionally, the increase in cash flows used in investing activities was due to $3.8 million purchases of investments in unconsolidated entities during the three months ended March 31, 2025 that did not occur during the same period in the prior year as well as a $3.0 million increase in purchases of equipment during the three months ended March 31, 2025 as compared to the same period in the prior year.

Financing Activities

Cash generated by financing activities includes proceeds from the 2026 Notes, 2029 Notes and proceeds from the issuance of common stock from employee stock option exercises and from our employee stock purchase plan.

Cash used in financing activities includes repurchases of common stock, repayments of debt, payments of debt issuance costs and purchases of capped calls related to the 2029 Notes.

For the nine months ended September 30, 2024, cash flows from financing activities were $344.3 million, compared to cash flows used in financing activities of $15.2 million for the same period in the prior year.

The $359.5 million increase in cash flows from financing activities was primarily due to $485.2 million in proceeds from the issuance of the 2029 Notes, net of issuances costs paid during the nine months ended September 30, 2024, which did not occur during the nine months ended September 30, 2023.

These increases in cash flows from financing activities were partially offset by a $62.1 million increase in purchases of shares of our common stock and $63.1 million purchases of capped calls related to the 2029 Notes during the nine months ended September 30, 2024, which did not occur during the nine months ended September 30, 2023.

Cash generated by financing activities has historically included proceeds from the 2026 Notes, the 2029 Notes and the issuance of common stock from employee stock option exercises and from our employee stock purchase plan.

Cash used in financing activities has historically included repurchases of common stock, repayments of debt, payments of debt issuance costs and purchases of capped calls related to the 2029 Notes.

For the three months ended March 31, 2025, cash flows used in financing activities were $3.5 million, compared to cash flows from financing activities of $6.4 million for the same period in the prior year.

The $9.9 million decrease in cash flows from financing activities was primarily due to $5.1 million in purchases of shares of our common stock during the three months ended March 31, 2025 that did not occur during the same period in the prior year as well as a $4.8 million decrease in issuances of common stock under our 2015 Equity Incentive Plan during the three months ended March 31, 2025 as compared to the same period in the prior year.

Non-GAAP Measures

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Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Non-GAAP adjusted EBITDA:

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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-Q

Item 2. Management’s Discussion and Analysis