Alarm.com Holdings, Inc. 10-Q

Item 1. FINANCIAL STATEMENTS (unaudited) ALARM.COM HOLDINGS, INC. Condensed Consolidated Statements of Operations (in thousands, except share and per share data) (unaudited) Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Revenue: SaaS and license revenue $ 169,993 $ 155,927 $ 333,793 $ 306,271 Hardware and other revenue 84,315 77,880 159,337 150,819 Total revenue 254,308 233,807 493,130 457,090 Cost of revenue (1) : Cost of SaaS and license revenue 23,653 22,094 45,221 42,522 Cost of hardware and other revenue 63,809 59,188 120,475 115,275 Total cost of revenue 87,462 81,282 165,696 157,797 Operating expenses: Sales and marketing 31,136 27,837 59,685 53,291 General and administrative 27,084 26,104 54,085 55,400 Research and development 69,070 65,730 137,437 131,686 Amortization and depreciation 7,534 7,080 14,558 14,417 Total operating expenses 134,824 126,751 265,765 254,794 Operating income 32,022 25,774 61,669 44,499 Interest expense ( 4,321 ) ( 1,968 ) ( 8,635 ) ( 2,764 ) Interest income 11,808 10,856 24,179 19,396 Other expense, net ( 150 ) ( 1,258 ) ( 2,835 ) ( 1,576 ) Income before income taxes 39,359 33,404 74,378 59,555 Provision for income taxes 5,458 884 12,765 3,631 Income from equity method investments, net ( 316 ) — ( 316 ) — Net income 34,217 32,520 61,929 55,924 Net loss attributable to redeemable noncontrolling interests 335 991 573 1,182 Net income attributable to common stockholders $ 34,552 $ 33,511 $ 62,502 $ 57,106 Per share information attributable to common stockholders: Net income attributable to common stockholders per share: Basic $ 0.69 $ 0.67 $ 1.26 $ 1.14 Diluted $ 0.63 $ 0.62 $ 1.15 $ 1.06 Weighted average common shares outstanding: Basic 49,806,105 49,832,503 49,733,328 49,897,884 Diluted 60,137,204 56,680,355 60,159,849 55,868,047 _______________ (1) Exclusive of amortization and depreciation shown in operating expenses below. See accompanying notes to the condensed consolidated financial statements. 2 ALARM.COM HOLDINGS, INC. Condensed Consolidated Statements of Comprehensive Income (in thousands) (unaudited) Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Net income $ 34,217 $ 32,520 $ 61,929 $ 55,924 Other comprehensive income / (loss) Foreign currency translation adjustment 959 ( 156 ) 1,788 ( 303 ) Total other comprehensive income / (loss) 959 ( 156 ) 1,788 ( 303 ) Comprehensive income 35,176 32,364 63,717 55,621 Comprehensive loss attributable to redeemable noncontrolling interests 335 991 573 1,182 Comprehensive income attributable to common stockholders $ 35,511 $ 33,355 $ 64,290 $ 56,803 See accompanying notes to the condensed consolidated financial statements. 3 ALARM.COM HOLDINGS, INC. Condensed Consolidated Balance Sheets (in thousands, except share and per share data) (unaudited) June 30, 2025 December 31, 2024 Assets Current assets: Cash and cash equivalents $ 1,024,862 $ 1,220,701 Accounts receivable, net of allowance for credit losses of $ 5,142 and $ 3,870 , and net of allowance for product returns of $ 1,890 and $ 2,448 as of June 30, 2025 and December 31, 2024, respectively 122,254 126,082 Inventory 90,027 87,435 Other current assets, net of allowance for credits losses of $ 749 and $ 0 as of June 30, 2025 and December 31, 2024, respectively 55,413 47,374 Total current assets 1,292,556 1,481,592 Property and equipment, net 70,839 63,205 Intangible assets, net 66,158 63,159 Goodwill 178,657 154,211 Deferred tax assets 195,270 181,284 Operating lease right-of-use assets 53,167 53,425 Investments in unconsolidated entities 198,609 17,170 Other assets, net of allowance for credit losses of $ 1 as of June 30, 2025 and December 31, 2024 42,798 24,162 Total assets $ 2,098,054 $ 2,038,208 Liabilities, redeemable noncontrolling interests and stockholders’ equity Current liabilities: Accounts payable, accrued expenses and other current liabilities $ 114,632 $ 139,427 Accrued compensation 26,594 28,739 Deferred revenue 13,744 12,940 Convertible senior notes, net 498,271 — Operating lease liabilities 9,015 7,700 Total current liabilities 662,256 188,806 Deferred revenue 13,497 13,619 Convertible senior notes, net, noncurrent 488,208 983,477 Operating lease liabilities 67,662 65,534 Other liabilities 14,498 15,479 Total liabilities 1,246,121 1,266,915 Commitments and contingencies (Note 13) Redeemable noncontrolling interests 54,588 44,747 Stockholders’ equity Preferred stock, $ 0.001 par value, 10,000,000 shares authorized; no shares issued and outstanding as of June 30, 2025 and December 31, 2024 — — Common stock, $ 0.01 par value, 300,000,000 shares authorized; 53,146,668 and 52,756,077 shares issued; and 49,834,537 and 49,618,346 shares outstanding as of June 30, 2025 and December 31, 2024, respectively 531 528 Additional paid-in capital 537,865 521,192 Treasury stock, at cost; 3,312,131 and 3,137,731 shares as of June 30, 2025 and December 31, 2024, respectively ( 196,458 ) ( 186,291 ) Accumulated other comprehensive income 2,603 815 Retained earnings 452,804 390,302 Total stockholders’ equity 797,345 726,546 Total liabilities, redeemable noncontrolling interests and stockholders’ equity $ 2,098,054 $ 2,038,208 See accompanying notes to the condensed consolidated financial statements. 4 ALARM.COM HOLDINGS, INC. Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited) Six Months Ended June 30, Cash flows from operating activities: 2025 2024 Net income $ 61,929 $ 55,924 Adjustments to reconcile net income to net cash flows from operating activities: Provision for credit losses on accounts receivable 1,552 357 Reserve for product returns 1,111 2,022 Provision for credit losses on notes receivable 749 3,996 Amortization on patents and tooling 357 417 Amortization and depreciation 14,558 14,417 Amortization of debt issuance costs 3,002 1,811 Amortization of operating leases 7,829 5,953 Deferred income taxes ( 15,673 ) ( 24,992 ) Change in fair value of contingent liability ( 290 ) 44 Stock-based compensation 18,392 22,481 Loss from investments in unconsolidated entities 3,454 23 Changes in operating assets and liabilities (net of business acquisitions): Accounts receivable 1,574 4,668 Inventory ( 1,544 ) 16,484 Other current and non-current assets ( 4,732 ) 601 Accounts payable and other current liabilities ( 39,711 ) ( 30,437 ) Deferred revenue 682 3,022 Operating lease liabilities ( 6,393 ) ( 6,751 ) Other liabilities ( 73 ) 2,776 Cash flows from operating activities 46,773 72,816 Cash flows used in investing activities: Business acquisition, net of cash acquired ( 23,412 ) — Additions to property and equipment ( 10,667 ) ( 5,058 ) Issuances of notes receivable ( 23,500 ) ( 500 ) Receipt of payments on notes receivable 49 26 Capitalized software development costs ( 758 ) ( 632 ) Purchase of investments in unconsolidated entities ( 174,700 ) ( 2,950 ) Purchases of other intangible assets — ( 45 ) Cash flows used in investing activities ( 232,988 ) ( 9,159 ) Cash flows (used in) / from financing activities: Proceeds from issuance of convertible senior notes — 500,000 Payments of debt issuance costs — ( 13,946 ) Purchases of capped calls related to convertible senior notes — ( 63,050 ) Payments of deferred consideration for acquisitions ( 1,741 ) ( 4,569 ) Purchases of treasury stock, including transaction costs ( 10,167 ) ( 75,000 ) Payments of tax withholdings related to vesting of restricted stock units — ( 3,401 ) Issuances of common stock from equity-based plans 2,314 6,734 Cash flows (used in) / from financing activities ( 9,594 ) 346,768 Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 184 ) ( 133 ) Net (decrease) / increase in cash, cash equivalents and restricted cash ( 195,993 ) 410,292 Cash, cash equivalents and restricted cash at beginning of the period 1,229,132 701,079 Cash, cash equivalents and restricted cash at end of the period $ 1,033,139 $ 1,111,371 Reconciliation of cash, cash equivalents and restricted cash: Cash and cash equivalents $ 1,024,862 $ 1,104,539 Restricted cash included in other current assets and other assets 8,277 6,832 Total cash, cash equivalents and restricted cash $ 1,033,139 $ 1,111,371 See accompanying notes to the condensed consolidated financial statements. 5 ALARM.COM HOLDINGS, INC. Condensed Consolidated Statements of Equity (in thousands) (unaudited) Redeemable Noncontrolling Interests Additional Paid-In Capital Accumulated Other Comprehensive Income Retained Earnings Total Stockholders’ Equity Common Stock Treasury Stock Shares Amount Shares Amount Balance as of December 31, 2024 $ 44,747 52,756 $ 528 $ 521,192 3,138 $ ( 186,291 ) $ 815 $ 390,302 $ 726,546 Common stock issued in connection with equity-based plans — 148 1 1,582 — — — — 1,583 Purchase of treasury stock, including transaction costs and excise tax — — — ( 3 ) 86 ( 5,059 ) — — ( 5,062 ) Stock-based compensation expense — — — 9,481 — — — — 9,481 Noncontrolling interest assumed through acquisition 6,352 — — — — — — — — Accretion adjustments of redeemable noncontrolling interest to redemption value 1,724 — — ( 1,724 ) — — — — ( 1,724 ) Net income / (loss) attributable to common stockholders ( 238 ) — — — — — — 27,950 27,950 Other comprehensive income — — — — — — 829 — 829 Balance as of March 31, 2025 $ 52,585 52,904 $ 529 $ 530,528 3,224 $ ( 191,350 ) $ 1,644 $ 418,252 $ 759,603 Common stock issued in connection with equity-based plans — 243 2 729 — — — — 731 Purchase of treasury stock, including transaction costs and excise tax — — — 3 88 ( 5,108 ) — — ( 5,105 ) Stock-based compensation expense — — — 8,943 — — — — 8,943 Accretion adjustments of redeemable noncontrolling interest to redemption value 2,338 — — ( 2,338 ) — — — — ( 2,338 ) Net income / (loss) attributable to common stockholders ( 335 ) — — — — — — 34,552 34,552 Other comprehensive income — — — — — — 959 — 959 Balance as of June 30, 2025 $ 54,588 53,147 $ 531 $ 537,865 3,312 $ ( 196,458 ) $ 2,603 $ 452,804 $ 797,345 6 ALARM.COM HOLDINGS, INC. Condensed Consolidated Statements of Equity — (Continued) (in thousands) (unaudited) Redeemable Noncontrolling Interests Common Stock Additional Paid-In Capital Treasury Stock Accumulated Other Comprehensive Income Retained Earnings Total Stockholders’ Equity Shares Amount Shares Amount Balance as of December 31, 2023 $ 36,308 51,889 $ 519 $ 531,734 2,021 $ ( 111,291 ) $ 1,398 $ 266,186 $ 688,546 Common stock issued in connection with equity-based plans — 224 2 6,354 — — — — 6,356 Stock-based compensation expense — — — 11,339 — — — — 11,339 Accretion adjustments of redeemable noncontrolling interest to redemption value 1,595 — — ( 1,595 ) — — — — ( 1,595 ) Net income / (loss) attributable to common stockholders ( 191 ) — — — — — — 23,595 23,595 Other comprehensive income — — — — — — ( 147 ) — ( 147 ) Balance as of March 31, 2024 $ 37,712 52,113 $ 521 $ 547,832 2,021 $ ( 111,291 ) $ 1,251 $ 289,781 $ 728,094 Common stock issued in connection with equity-based plans — 209 2 376 — — — — 378 Purchase of treasury stock, including transaction costs and excise tax — — — ( 559 ) 1,117 ( 75,000 ) — — ( 75,559 ) Tax withholding related to vesting of restricted stock units — — — ( 3,401 ) — — — ( 3,401 ) Stock-based compensation expense — — — 11,250 — — — — 11,250 Accretion adjustments of redeemable noncontrolling interest to redemption value 1,212 — — ( 1,212 ) — — — — ( 1,212 ) Purchases of capped calls related to convertible senior notes, net of tax — — — ( 47,436 ) — — — — ( 47,436 ) Net income / (loss) attributable to common stockholders ( 991 ) — — — — — — 33,511 33,511 Other comprehensive loss — — — — — — ( 156 ) — ( 156 ) Balance as of June 30, 2024 $ 37,933 52,322 $ 523 $ 506,850 3,138 $ ( 186,291 ) $ 1,095 $ 323,292 $ 645,469 See accompanying notes to the condensed consolidated financial statements. 7 ALARM.COM HOLDINGS, INC. Notes to the Condensed Consolidated Financial Statements (Unaudited) June 30, 2025 and 2024 Note 1. Organization Alarm.com Holdings, Inc. (referred to herein as Alarm.com, the Company, or we) is the leading platform for intelligently connected properties. Our cloud-based platform offers an expansive suite of Internet of Things, or IoT, solutions addressing global opportunities in the residential, multi-family, small business and enterprise commercial markets. Alarm.com’s solution suite includes security, video surveillance and video analytics, energy management, access control, electric utility grid management, active shooter detection, water management, health and wellness, personal safety and data-rich emergency response. Our solutions are delivered through an established network of trusted service provider partners, who are experts at selling, installing and supporting our solutions. We derive revenue from the sale of our cloud-based Software-as-a-Service, or SaaS, services, license fees, software, hardware, activation fees and other revenue. Our fiscal year ends on December 31. Note 2. Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited condensed consolidated financial statements include our accounts and those of our majority-owned and controlled subsidiaries after elimination of intercompany accounts and transactions. These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP, for interim financial information and the applicable rules and regulations of the Securities and Exchange Commission, or SEC. Accordingly, they do not include all the information and footnotes required by GAAP for annual financial statements. They should be read together with our audited consolidated financial statements and related notes thereto for the year ended December 31, 2024 included in our Annual Report on Form 10-K filed with the SEC on February 20, 2025, or the Annual Report. The condensed consolidated balance sheet as of December 31, 2024 was derived from our audited financial statements but does not include all disclosures required by GAAP for annual financial statements. In the opinion of management, these condensed consolidated financial statements include all normal recurring adjustments necessary for a fair statement of the results of operations, financial position and cash flows for the periods presented. However, the global economy, credit markets and financial markets have and may continue to experience significant volatility as a result of significant worldwide events, including public health crises, and geopolitical upheaval (including the ongoing conflicts in Ukraine, and in 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). 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, tariffs, 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 six months ended June 30, 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 uncertainties could cause further economic slowdown or cause other unpredictable events, each of which could adversely affect our business, results of operations or financial condition. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. As of the date of issuance of these financial statements, we are not aware of any specific event or circumstance that would require us to update our estimates, assumptions and judgments or revise the carrying value of our assets or liabilities. However, our estimates, judgments and assumptions are continually evaluated based on available information and experience and may change as new events occur and additional information is obtained. Because of the use of estimates inherent in the financial reporting process and in light of the continuing uncertainty arising from the Macroeconomic Conditions, actual results could differ from those estimates and any such differences may be material. Estimates are used when accounting for revenue recognition, allowances for credit losses, allowance for hardware returns, estimates of obsolete inventory, long-term incentive compensation, the lease term and incremental borrowing rates for leases, stock-based compensation, income taxes, legal reserves, equity method investments, goodwill, intangible assets and other long-lived assets. Reclassifications Certain previously reported amounts in the condensed consolidated balance sheets for the year ended December 31, 2024 have been reclassified to conform to our current presentation, including the addition of the investments in unconsolidated entities as a separate line item. 8 ALARM.COM HOLDINGS, INC. Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued) June 30, 2025 and 2024 Significant Accounting Policies Other than those disclosed herein, there have been no other material changes to our significant accounting policies during the three and six months ended June 30, 2025 from those disclosed in our Annual Report. Equity Method Investments We account for equity investments where we can exercise significant influence over, but not control, an investee using the equity method of accounting. Equity method investments are initially recorded at cost in investments in unconsolidated entities in the condensed consolidated balance sheets. Under the equity method of accounting, investments are adjusted to recognize our proportionate share of net income or losses of the investees and are recorded in income from equity method investments, net in our condensed consolidated statements of operations. The equity method investments are also adjusted by contributions to and distributions from the investees as well as any impairments resulting from other-than-temporary declines in fair value that is less than its carrying value. Depending on the timing of the availability of the financial statements of the investees, we may apply a three-month lag period based on when financial information is received. When applying a lag period, we adjust for any known significant changes from the lag period to our reporting date. In cases where our equity method investments provide for a disproportionate allocation of the profits and losses of the investees, our share of income or losses from equity method investments is determined using a balance sheet approach referred to as the hypothetical liquidation at book value, or HLBV, method. Under the HLBV method, at the end of each reporting period, a calculation is prepared to determine the amount that we would receive if an equity investment entity were to liquidate its net assets and distribute that cash to the investors based on the contractually defined liquidation priorities. The difference between the calculated liquidation distribution amounts at the beginning and the end of the reporting period, after adjusting for capital contributions and distributions as well as the amortization of basis differences, is the amount we recognize for our share of the income or losses from the equity investments for the period. We have certain investments in unconsolidated entities accounted for under the equity method of accounting in which our carrying value exceeds our proportionate share of net assets of the unconsolidated entity. We record our proportionate share of amortization expense related to basis differences in income from equity method investments, net in our condensed consolidated statements of operations. Recent Accounting Pronouncements Adopted During the three and six months ended June 30, 2025, we did not adopt any new accounting pronouncements. Not Yet Adopted On December 14, 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740)," which requires additional annual disclosures regarding specific categories in the income tax rate reconciliation as well additional information for reconciling items that meet a quantitative threshold. This amendment also requires annual disclosures regarding the amount of income taxes paid, including income taxes paid disaggregated by (i) federal, state and foreign taxes as well as (ii) individual jurisdictions in which income taxes paid is equal to or greater than five percent of total income taxes paid. Additionally, this amendment requires annual disclosures for income from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign as well as income tax expense (or benefit) disaggregated between federal, state and foreign. The amendment is effective for annual periods beginning after December 15, 2024, and early adoption is permitted. This amendment should be applied on a prospective basis, but retrospective application is permitted. We are currently assessing the impact this pronouncement will have on our consolidated financial statement disclosures. On November 5, 2024, the FASB issued ASU 2024-03, "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40)," which requires more detailed information about the types of expenses included in certain expense captions presented on the consolidated statements of operations, including purchases of inventory, employee compensation, depreciation, amortization and depletion. Additionally, this amendment requires the disclosure of a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively and the disclosure of the total amount of selling expenses and, on an annual basis, an entity's definition of selling expenses. The amendment is effective for annual periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. This amendment should be applied either on a prospective basis or a retrospective basis to any or all prior periods presented. We are currently assessing the impact this pronouncement will have on our consolidated financial statement disclosures. 9 ALARM.COM HOLDINGS, INC. Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued) June 30, 2025 and 2024 Note 3. Revenue from Contracts with Customers Contract Assets Our assets related to costs incurred to obtain a contract primarily consist of capitalized commission costs and upfront payments made to customers. The current portion of capitalized commission costs and upfront payments made to customers is included in other current assets within our condensed consolidated balance sheets. The non-current portion of capitalized commission costs and upfront payments made to customers is reflected in other assets within our condensed consolidated balance sheets. The changes in our contract assets are as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Beginning of period balance $ 13,147 $ 10,466 $ 12,088 $ 9,099 Commission costs and upfront payments to a customer capitalized in period 2,589 2,235 5,773 5,347 Amortization of contract assets ( 2,262 ) ( 1,796 ) ( 4,387 ) ( 3,541 ) End of period balance $ 13,474 $ 10,905 $ 13,474 $ 10,905 Contract Liabilities Contract liabilities include payments received in advance of performance under the contract and are realized with the associated revenue recognized under the contract. The changes in our contract liabilities are as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Beginning of period balance $ 27,524 $ 24,212 $ 26,559 $ 22,885 Revenue deferred in period 7,445 7,549 15,711 13,973 Revenue recognized from amounts included in contract liabilities ( 7,728 ) ( 5,854 ) ( 15,029 ) ( 10,951 ) End of period balance $ 27,241 $ 25,907 $ 27,241 $ 25,907 Note 4. Accounts Receivable, Net The components of accounts receivable, net are as follows (in thousands): June 30, 2025 December 31, 2024 Accounts receivable $ 129,286 $ 132,400 Allowance for credit losses ( 5,142 ) ( 3,870 ) Allowance for product returns ( 1,890 ) ( 2,448 ) Accounts receivable, net $ 122,254 $ 126,082 For the three and six months ended June 30, 2025, we recorded a provision for credit losses of $ 0.6 million and $ 1.6 million, respectively, as compared to $ 0.1 million and $ 0.4 million for the same periods in the prior year. For the three and six months ended June 30, 2025, we recorded a reserve for product returns of $ 0.7 million and $ 1.1 million in our hardware and other revenue, respectively, as compared to $ 0.9 million and $ 2.0 million for the same periods in the prior year. Historically, we have not experienced write-offs for uncollectible accounts or sales returns that have differed significantly from our estimates. 10 ALARM.COM HOLDINGS, INC. Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued) June 30, 2025 and 2024 Allowance for Credit Losses The allowance for credit losses is a valuation account that is deducted from the accounts receivable and notes receivable amortized cost basis (see Note 9) to present the net amount expected to be collected. We estimate the allowance balance by applying the loss-rate method using relevant available information from internal and external sources, including historical write-off activity, current conditions and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for changes in economic conditions, such as changes in unemployment rates. We use projected economic conditions over a period no more than twelve months based on data from external sources. For periods beyond the twelve-month reasonable and supportable forecast period, we revert to historical loss information immediately. The allowance for credit losses is measured on a pooled basis when similar risk characteristics exist. When assessing whether to measure certain financial assets on a pooled basis, we considered various risk characteristics, including the financial asset type, size and the historical or expected credit loss pattern. These risk characteristics are relevant to accounts receivable and notes receivable. Expected credit losses are estimated over the contractual term of the financial assets and we adjust the term for expected prepayments when appropriate. For the three and six months ended June 30, 2025, we recorded credit loss expense for accounts receivable and notes receivable of $ 1.1 million and $ 1.8 million, respectively, in general and administrative expense in our condensed consolidated statements of operations. For the three and six months ended June 30, 2024, we recorded credit loss expense for accounts receivable and notes receivable of $ 0.2 million and $ 4.2 million, respectively, in general and administrative expense in our condensed consolidated statements of operations. The contractual term excludes expected extensions, renewals and modifications because extension and renewal options are unconditionally cancelable by us. Write-offs of the amortized cost basis are recorded to the allowance for credit losses. Any subsequent recoveries of previously written off balances are recorded as a reduction to credit loss expense. Allowance for Credit Losses - Accounts Receivable We identified the following two portfolio segments for our accounts receivable: (i) outstanding accounts receivable balances within Alarm.com and certain subsidiaries and (ii) outstanding accounts receivable balances within all other subsidiaries. There were no changes to our portfolio segments for our accounts receivable during the three and six months ended June 30, 2025, and no changes to our policies or practices that influenced our estimate of expected credit losses for accounts receivable. Additionally, there were no significant changes in the amount of accounts receivable write-offs during the three and six months ended June 30, 2025, as compared to historical periods. The changes in our allowance for credit losses for accounts receivable are as follows (in thousands): Three Months Ended June 30, 2025 Three Months Ended June 30, 2024 Six Months Ended June 30, 2025 Six Months Ended June 30, 2024 Alarm.com and Certain Subsidiaries All Other Subsidiaries Alarm.com and Certain Subsidiaries All Other Subsidiaries Alarm.com and Certain Subsidiaries All Other Subsidiaries Alarm.com and Certain Subsidiaries All Other Subsidiaries Beginning of period balance $ ( 4,600 ) $ ( 121 ) $ ( 3,966 ) $ ( 88 ) $ ( 3,777 ) $ ( 93 ) $ ( 3,723 ) $ ( 141 ) (Provision for) / recovery of expected credit losses ( 456 ) ( 119 ) ( 101 ) ( 2 ) ( 1,402 ) ( 150 ) ( 388 ) 31 Write-offs 138 16 390 1 261 19 434 21 End of period balance $ ( 4,918 ) $ ( 224 ) $ ( 3,677 ) $ ( 89 ) $ ( 4,918 ) $ ( 224 ) $ ( 3,677 ) $ ( 89 ) Note 5. Inventory The components of inventory are as follows (in thousands): June 30, 2025 December 31, 2024 Raw materials $ 21,597 $ 23,881 Work-in-process 491 595 Finished goods 67,939 62,959 Total inventory $ 90,027 $ 87,435 11 ALARM.COM HOLDINGS, INC. Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued) June 30, 2025 and 2024 Note 6. Acquisitions Asset Acquisition On November 22, 2024, EnergyHub International, Inc., one of our wholly-owned subsidiaries, acquired certain assets of Finland-based Kapacity.io Solutions Oy. Substantially all of the acquired assets consisted of developed technology. We believe the acquisition of the developed technology will help accelerate deployment of a cloud-based demand response platform internationally for our EnergyHub subsidiary. In consideration for the purchase of the developed technology, we paid $ 1.3 million in cash in November 2024, after deducting $ 0.2 million related to an agreed holdback provision. Additionally, we incurred $ 0.1 million in direct transaction costs related to legal fees during 2024 that were capitalized as a component of the consideration transferred. The $ 1.6 million purchase price consideration related to developed technology was recorded as an intangible asset at the time of the asset acquisition and is being amortized on a straight-line basis over an estimated useful life of seven years . The asset acquisition was recorded within our Other segment. Acquisition of a Business – CHeKT 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 working capital adjustment was finalized during the second quarter of 2025 and $ 0.5 million of the holdback was 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. As a result of the acquisition of CHeKT, we recorded approximately $ 0.3 million in acquisition-related costs for the three and six months ended June 30, 2025. These costs include expenses directly related to acquiring CHeKT, are expensed as incurred and are included in general and administrative expense in our condensed consolidated statements of operations. The purchase price allocation was not finalized as of the filing date of this Quarterly Report on Form 10-Q and is primarily pending additional tax adjustments, including the assessment of any net operating losses acquired and the related limitations on any identified net operating losses. 12 ALARM.COM HOLDINGS, INC. Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued) June 30, 2025 and 2024 The table below sets forth the purchase consideration and the preliminary allocation used to estimate the fair value of the tangible and intangible net assets acquired (in thousands): February 10, 2025 Calculation of Purchase Consideration: Cash paid, net of working capital adjustment $ 23,382 Holdback consideration 3,700 Total consideration $ 27,082 Estimated Tangible and Intangible Net Assets: Cash $ 195 Accounts receivable 308 Inventory 645 Other current assets 4 Customer relationships 486 Developed technology 9,412 Trade names 814 Accounts payable ( 150 ) Accrued expenses and other current liabilities ( 276 ) Deferred tax liability ( 1,583 ) Redeemable noncontrolling interest ( 6,352 ) Goodwill 23,579 Total estimated tangible and intangible net assets $ 27,082 Goodwill of $ 23.6 million reflects the value of acquired workforce and synergies we expect to achieve from integrating CHeKT's remote video monitoring services into our existing solutions in the commercial and residential markets. None of the goodwill recognized is expected to be deductible for income tax purposes in future periods. We allocate goodwill to reporting units based on expected benefit from synergies and have allocated the goodwill to the Alarm.com segment. Fair Value of Net Assets Acquired and Intangibles The acquired activities and assets in the purchase of CHeKT constituted a business and in accordance with ASC 805, " Business Combinations ," the assets and liabilities were recorded at their respective fair values as of February 10, 2025. We developed the fair value of intangible net assets using the multi-period excess earnings method for developed technology, the with-and-without method for customer relationships and the relief from royalty method for the trade name. Developed Technology Developed technology primarily consists of intellectual property of proprietary software that is marketed for sale. We valued the developed technology using the multi-period excess earnings method, an income approach. The significant assumptions used in the income approach include estimates about future expected cash flows from the developed technology, the obsolescence factor and the discount rate. We are amortizing the CHeKT developed technology, valued at $ 9.4 million, on an attribution method based on the discounted cash flows of the model over an estimated useful life of 11 years. Customer Relationships We recorded the customer relationships intangible separately from goodwill based on determination of the length, strength and contractual nature of the relationship that CHeKT shared with its customers. We valued the single group of customer relationships using the with-and-without method, an income approach. The significant assumptions used in the income approach include estimates about future expected cash flows from customer contracts and the discount rate. We are amortizing the customer relationships, valued at $ 0.5 million, on a straight-line basis over an estimated useful life of three years . 13 ALARM.COM HOLDINGS, INC. Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued) June 30, 2025 and 2024 Trade Names We valued the trade names acquired using a relief from royalty method. The significant assumptions used in the income approach include future expected cash flows from the trade name, the royalty rate and the discount rate. We are amortizing the trade names, valued at $ 0.8 million, on an attribution basis derived from the discounted cash flows of the model over an estimated useful life of seven years . Redeemable Noncontrolling Interest We have a redeemable noncontrolling interest related to our 81 % equity ownership interest in CHeKT. The CHeKT stockholder agreement contains a put option that gives the minority CHeKT stockholders the right to sell their remaining 19 % equity ownership interest to us based on the fair value of the shares and also contains a call option that gives us the right to purchase the remaining CHeKT shares from the minority CHeKT stockholders based on the fair value of the shares. The put and call options can each be exercised beginning in the first quarter of 2028. This redeemable noncontrolling interest was recorded at fair value on February 10, 2025, by applying the income approach using unobservable inputs for projected cash flows, including projected financial results and a discount rate, which are considered Level 3 inputs. This redeemable noncontrolling interest is considered temporary equity and we report it between liabilities and stockholders’ equity in the condensed consolidated balance sheets. The redemption value of the CHeKT noncontrolling interest was $ 6.4 million as of February 10, 2025 and June 30, 2025. Business Combinations in Operations - CHeKT The operations of the CHeKT business combination discussed above were included in the condensed consolidated financial statements as of the acquisition date. The pro forma information as well as the revenue and net income of the business combination were not material to the condensed consolidated financial statements for the three and six months ended June 30, 2025. Note 7. Goodwill and Intangible Assets, Net The changes in goodwill by reportable segment are outlined below (in thousands): Alarm.com Other Total Balance as of January 1, 2025 $ 154,211 $ — $ 154,211 Goodwill acquired 23,579 — 23,579 Foreign currency translation adjustment 867 — 867 Balance as of June 30, 2025 $ 178,657 $ — $ 178,657 On February 10, 2025, we acquired 81 % of the issued and outstanding shares of capital stock of CHeKT and recorded $ 23.6 million of goodwill in the Alarm.com segment. The following table reflects changes in the net carrying amount of the components of intangible assets (in thousands): Customer Relationships Developed Technology Trade Name Capitalized Software Development Costs Other Total Balance as of January 1, 2025 $ 29,625 $ 30,543 $ 500 $ 2,445 $ 46 $ 63,159 Intangible assets acquired 486 9,412 814 — — 10,712 Capitalized software development costs — — — 790 — 790 Amortization ( 4,017 ) ( 4,212 ) ( 94 ) ( 180 ) — ( 8,503 ) Balance as of June 30, 2025 $ 26,094 $ 35,743 $ 1,220 $ 3,055 $ 46 $ 66,158 We recorded $ 4.7 million and $ 9.2 million of amortization related to our intangible assets for the three and six months ended June 30, 2025, respectively, as compared to $ 4.7 million and $ 9.4 million for the same periods in the prior year. There were no impairments of long-lived intangible assets during the three and six months ended June 30, 2025 and 2024. During the six months ended June 30, 2024, $ 0.3 million of fully amortized developed technology intangible assets previously acquired were written-off in the Alarm.com segment as the technology was no longer in use. 14 ALARM.COM HOLDINGS, INC. Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued) June 30, 2025 and 2024 The following tables reflect the weighted average remaining life and carrying value of finite-lived intangible assets (in thousands, except weighted-average remaining life): June 30, 2025 Gross Carrying Amount Accumulated Amortization Net Carrying Value Weighted- Average Remaining Life (in years) Customer relationships $ 128,766 $ ( 102,672 ) $ 26,094 4.8 Developed technology 80,728 ( 44,985 ) 35,743 5.3 Trade name 5,288 ( 4,068 ) 1,220 5.2 Capitalized software development costs 3,470 ( 415 ) 3,055 3.7 Other 46 — 46 5.0 Total intangible assets $ 218,298 $ ( 152,140 ) $ 66,158 5.1 December 31, 2024 Gross Carrying Amount Accumulated Amortization Net Carrying Value Weighted- Average Remaining Life (in years) Customer relationships $ 128,280 $ ( 98,655 ) $ 29,625 5.3 Developed technology 71,316 ( 40,773 ) 30,543 4.0 Trade name 4,474 ( 3,974 ) 500 2.9 Capitalized software development costs 2,680 ( 235 ) 2,445 3.7 Other 46 — 46 5.0 Total intangible assets $ 206,796 $ ( 143,637 ) $ 63,159 4.6 15 ALARM.COM HOLDINGS, INC. Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued) June 30, 2025 and 2024 Note 8. Investments in Unconsolidated Entities Investments in Safe Haven Security Services, LLC, or Safe Haven, and All Access Holdings, LLC, or All Access On May 30, 2025, we paid $ 119.3 million in cash to purchase 32.5 % of the outstanding shares of Safe Haven, after deducting $ 6.3 million related to an agreed holdback provision that is expected to be paid during the second quarter of 2026. On June 6, 2025, we paid $ 19.2 million in cash to purchase 32.5 % of the outstanding shares of All Access, after deducting $ 1.0 million related to an agreed holdback provision that is expected to be paid during the second quarter of 2026. After consummation of these transactions, All Access and Safe Haven were under common control. We do not have a controlling financial interest in Safe Haven or All Access, but based on the legal form of Safe Haven and All Access, our level of ownership and our extent of influence, we concluded that the equity investments in Safe Haven and All Access, which are included in the Alarm.com segment, do not meet the criteria for consolidation and will be accounted for under the equity method of accounting. As of June 30, 2025, the carrying value of our equity investments in Safe Haven and All Access exceeded our share of Safe Haven's and All Access' net assets primarily due to trade name intangible assets, customer relationship intangible assets and goodwill. Trade names and customer relationships are definite-lived intangible assets and are amortized on an attribution method based on the projected discounted cash flows over useful lives ranging from nine years to 14 years. Investment in Safe Streets USA, LLC, or Safe Streets On April 28, 2025 we paid $ 29.1 million in cash to purchase 24.7 % of the outstanding shares of Safe Streets. We do not have a controlling financial interest in Safe Streets, but based on the legal form of Safe Streets, our level of ownership and our extent of influence, we concluded that this equity investment in Safe Streets, which is included in the Alarm.com segment, does not meet the criteria for consolidation and will be accounted for under the equity method of accounting. As of June 30, 2025, the carrying value of our equity investment in Safe Streets exceeded our share of Safe Streets' net assets primarily due to trade name intangible assets, customer relationship intangible assets and goodwill. Trade names and customer relationships are definite-lived intangible assets and are amortized on an attribution method based on the projected discounted cash flows over their useful lives of 10 years and 11 years, respectively. Investment in a Hardware Supplier In October 2018, we entered into a subordinate convertible promissory note with one of our hardware suppliers. In July 2019, we converted the outstanding notes receivable balance of $ 5.6 million into 9,520,832 shares of Series B preferred stock in the hardware supplier. We concluded that the $ 5.6 million equity investment, which is included in the Alarm.com segment, does not meet the criteria for consolidation and will be accounted for using the measurement alternative. Under the alternative, we measure investments without readily determinable fair values at cost, less impairment, adjusted for observable price changes from orderly transactions for identical or similar investments. As of June 30, 2025 and December 31, 2024, our investment in the hardware supplier was $ 5.6 million. Investments in Technology Partners In February 2021, we paid $ 5.0 million in cash to purchase 1,000,000 shares of Series B-2 Preferred Stock from a technology partner as part of a financing round that included other investors. The $ 5.0 million equity investment, which is included in the Alarm.com segment, does not meet the criteria for consolidation and is accounted for using the measurement alternative. Under the measurement alternative, we measure investments without readily determinable fair values at cost, less impairment, adjusted for observable price changes from orderly transactions for identical or similar investments. As of June 30, 2025 and December 31, 2024, our investment in the technology partner was $ 5.7 million. In December 2022, we paid $ 5.1 million in cash to another technology partner to purchase 4,231,717 shares of its Series A Preferred Stock. The $ 5.1 million equity investment, which is included in the Alarm.com segment, does not meet the criteria for consolidation and is accounted for using the measurement alternative. As of June 30, 2025 and December 31, 2024, our investment in the technology partner was $ 5.1 million. 16 ALARM.COM HOLDINGS, INC. Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued) June 30, 2025 and 2024 In December 2023, we paid $ 1.5 million to another technology partner as part of a Simple Agreement for Future Equity, or SAFE. We paid an additional $ 1.5 million during both May 2024 and December 2024 to the same technology partner via a SAFE for a total investment of $ 4.5 million. On June 11, 2025, the $ 4.5 million SAFE was converted into shares of Series B preferred stock representing 25.9 % of the outstanding shares of the technology partner. Our preferred stock provides us with a liquidation preference that is considered substantive. Accordingly, our equity ownership interest is not considered in-substance common stock. We concluded that the equity investment in the technology partner, which is included in the Alarm.com segment, does not meet the criteria for consolidation and will be accounted for under the measurement alternative. Under the measurement alternative, we measure investments without readily determinable fair values at cost, less impairment, adjusted for observable price changes from orderly transactions for identical or similar investments. As of June 30, 2025 and December 31, 2024, our investment in the technology partner was $ 4.5 million. Summary of Investments in Unconsolidated Entities Our investments in unconsolidated entities are as follows (in thousands): June 30, 2025 December 31, 2024 Ownership Percentage Carrying Value Excess Carrying Value of Investment Over Proportionate Share of Net Assets Carrying Value Excess Carrying Value of Investment Over Proportionate Share of Net Assets Safe Haven and All Access 32.5 % $ 146,194 $ 147,824 $ — $ — Safe Streets 24.7 % 29,503 29,573 — — Other unconsolidated entities 22,912 721 17,170 733 Total $ 198,609 $ 178,118 $ 17,170 $ 733 Equity method income from our investments in unconsolidated entities are as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Income from equity method investments, net $ 316 $ — $ 316 $ — Other related party transactions and balances outstanding with our equity method investees for activity subsequent to our investments are as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Revenue from equity method investees $ 2,561 $ — $ 2,698 $ — Interest income from equity method investees 283 — 288 — Distributions received from equity method investees — — — — June 30, 2025 December 31, 2024 Outstanding principal from loans to equity method investees $ 21,626 $ 145 Interest receivable from equity method investees 393 — Accounts receivable from equity method investees 1,978 82 Total amounts receivable from equity method investees $ 23,997 $ 227 17 ALARM.COM HOLDINGS, INC. Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued) June 30, 2025 and 2024 Note 9. Other Assets Loan to Safe Streets On January 30, 2025, we entered into a senior secured loan agreement with Safe Streets, under which a term loan was provided to them in the original principal amount of $ 21.5 million, which loan is collateralized by the assets of Safe Streets. 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. As of June 30, 2025, $ 21.5 million of principal was outstanding from Safe Streets under the loan agreement. Loan to a Distribution Partner In December 2022, we amended a subordinated credit agreement with the affiliated entity of one of our distribution partners, or the Affiliate. The amended subordinated credit agreement with the Affiliate matures on June 18, 2027, and interest on the outstanding principal balance accrues at a rate of 12.0 % per annum and is payable in kind. In March 2024, the Affiliate was in default on a loan arrangement with one of its third party secured lenders. Based on this information from the Affiliate, during the three months ended March 31, 2024, we recorded a credit loss expense of $ 4.0 million in general and administrative expense and recorded a reduction to our interest income of $ 0.5 million related to the reversal of payable in kind interest associated with the subordinated credit agreement. We placed this loan in nonaccrual status and recorded a full allowance for credit losses for this note receivable as of March 31, 2024. During the three months ended June 30, 2024, we wrote off the entire $ 4.0 million outstanding note receivable balance that originated in 2017 and reversed the previously recorded allowance for credit losses. For the three and six months ended June 30, 2025, we recognized $ 0.4 million and $ 0.9 million of revenue from the distribution partner associated with this loan, respectively, as compared to $ 0.6 million and $ 1.3 million for the same periods in the prior year. Loan to a Service Provider Partner In July 2020, we entered into a loan agreement with a service provider partner, under which we agreed to loan the service provider partner up to $ 2.5 million, collateralized by the assets of the service provider partner. Interest on the outstanding principal accrues at a rate per annum equal to 9.0 % and monthly interest and principal payments began in April 2021. The maturity date of the loan is July 24, 2025. As of June 30, 2025 and December 31, 2024, $ 1.0 million of principal was outstanding from the service provider partner under the loan agreement. In July 2025, we learned that this service provider partner may have a lien placed on its property that may have a priority over our security interest. Based on the information provided by the service provider partner, during the three months ended June 30, 2025, we recorded a credit loss expense of $ 0.7 million in general and administrative expense and we placed this loan in nonaccrual status as of June 30, 2025. For the three and six months ended June 30, 2025 and 2024, we recognized less than $ 0.1 million and $ 0.1 million of revenue from the service provider partner associated with this loan, respectively. Allowance for Credit Losses - Notes Receivable We identified one portfolio segment, loan receivables, for our notes receivable. There were no changes to our policies or practices involving the issuance of notes receivable, customer acquisitions or any other factors that influenced our estimate of expected credit losses for notes receivable during the three and six months ended June 30, 2025. We do not accrue interest on notes receivable that are considered impaired or are 90 days or greater past due based on their contractual payment terms. Notes receivable that are 90 days or greater past due are placed on nonaccrual status. Notes receivable may be placed on nonaccrual status earlier if, in management’s opinion, a timely collection of the full principal and interest becomes uncertain. After a note receivable has been placed on nonaccrual status, interest will be recognized when cash is received. A note receivable may be returned to accrual status after all of the customer’s delinquent balances of principal and interest have been settled, and collection of all remaining contractual amounts due is reasonably assured. We have elected not to measure an allowance for credit losses for accrued interest receivables . We write-off any accrued interest on notes receivable that are considered impaired or are 90 days or greater past due based on their contractual payment terms by reversing interest income. The accrued interest receivable as of June 30, 2025 and December 31, 2024 was $ 0.7 million and $ 0.2 million, respectively, and is reflected in other current assets and other assets within our condensed consolidated balance sheets and excluded from the amortized cost basis of the notes receivable . During the six months ended June 30, 2024, we recorded a reduction to our interest income of $ 0.5 million related to the reversal of payable in kind interest associated with a subordinated credit agreement with the Affiliate. We did not write off any accrued interest receivable during the three and six months ended June 30, 2025 or the three months ended June 30, 2024. 18 ALARM.COM HOLDINGS, INC. Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued) June 30, 2025 and 2024 There were no purchases or sales of financial assets during the three and six months ended June 30, 2025 and 2024. During the three and six months ended June 30, 2024, we wrote off $ 4.0 million related to a note receivable that originated in 2017 with the Affiliate and reversed the previously recorded allowance for credit losses. The changes in our allowance for credit losses for notes receivable are as follows (in thousands): Three Months Ended June 30, 2025 Three Months Ended June 30, 2024 Six Months Ended June 30, 2025 Six Months Ended June 30, 2024 Beginning of period balance $ ( 1 ) $ ( 4,003 ) $ ( 1 ) $ ( 5 ) (Provision for) / recovery of expected credit losses ( 749 ) 2 ( 749 ) ( 3,996 ) Write-offs — 4,000 — 4,000 End of period balance $ ( 750 ) $ ( 1 ) $ ( 750 ) $ ( 1 ) We manage our notes receivables using delinquency as a key credit quality indicator. The following tables reflect the current and delinquent notes receivable by class of financing receivables and by year of origination (in thousands): June 30, 2025 Loan Receivables: 2025 2024 2023 2022 2021 Prior Total Current $ 23,500 $ 500 $ 126 $ 1,500 $ — $ 964 $ 26,590 30-59 days past due — — — — — — — 60-89 days past due — — — — — — — 90-119 days past due — — — — — — — 120+ days past due — — — — — — — Total $ 23,500 $ 500 $ 126 $ 1,500 $ — $ 964 $ 26,590 December 31, 2024 Loan Receivables: 2024 2023 2022 2021 2020 Prior Total Current $ 500 $ 146 $ 1,500 $ — $ 993 $ — $ 3,139 30-59 days past due — — — — — — — 60-89 days past due — — — — — — — 90-119 days past due — — — — — — — 120+ days past due — — — — — — — Total $ 500 $ 146 $ 1,500 $ — $ 993 $ — $ 3,139 There was one note receivable placed on nonaccrual status as of June 30, 2025 and no notes receivable placed on nonaccrual status as of December 31, 2024. During the three and six months ended June 30, 2025 and 2024, there was no interest income recognized related to notes receivable that were in nonaccrual status. As of June 30, 2025, there was $ 0.2 million of notes receivable placed in nonaccrual status for which there was not a related allowance for credit losses. As of December 31, 2024, there were no notes receivable placed in nonaccrual status for which there was not a related allowance for credit losses. As of June 30, 2025 and December 31, 2024, there were no notes receivable that were 90 days or greater past due for which we continued to accrue interest income. Prepaid Expenses As of June 30, 2025 and December 31, 2024, $ 22.1 million and $ 16.1 million of prepaid expenses were included in other current assets, respectively, primarily related to software licenses, long lead-time parts related to our inventory and insurance. 19 ALARM.COM HOLDINGS, INC. Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued) June 30, 2025 and 2024 Note 10. Fair Value Measurements The following tables present our assets and liabilities measured at fair value on a recurring basis (in thousands): Fair Value Measurements on a Recurring Basis Assets: Level 1 Level 2 Level 3 Total Money market accounts as of June 30, 2025 $ 1,020,079 $ — $ — $ 1,020,079 Money market accounts as of December 31, 2024 1,209,474 — — 1,209,474 Equity securities with readily determinable fair value as of June 30, 2025 9,342 — — 9,342 Equity securities with readily determinable fair value as of December 31, 2024 7,425 — — 7,425 Liabilities: Contingent consideration liability from acquisition as of June 30, 2025 $ — $ — $ 613 $ 613 Contingent consideration liability from acquisition as of December 31, 2024 — — 2,169 2,169 The following table summarizes the change in fair value of the Level 3 contingent consideration liability with significant unobservable inputs (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Beginning of period balance $ 1,868 $ 2,092 $ 2,169 $ 2,061 Performance target achievement payment ( 1,266 ) — ( 1,266 ) — Changes in fair value included in earnings 11 13 ( 290 ) 44 End of period balance $ 613 $ 2,105 $ 613 $ 2,105 As of June 30, 2025, $ 1.01 billion of our money market accounts was included in cash and cash equivalents, $ 6.1 million was included in other assets and $ 2.0 million was included in other current assets in our condensed consolidated balance sheets. As of December 31, 2024, $ 1.20 billion of our money market accounts was included in cash and cash equivalents, $ 1.9 million was included in other current assets and $ 6.2 million was included in other assets in our condensed consolidated balance sheets. Our assets from money market accounts are valued using quoted prices in active markets. Our equity securities with readily determinable fair value represent our investments in publicly traded companies, which are valued using quoted prices in active markets. During the three and six months ended June 30, 2025, we recorded an unrealized loss on equity securities of $ 1.5 million and $ 3.8 million, respectively, as compared to less than $ 0.1 million for the same periods in the prior year. Our investments in public entities are recorded at fair value within other current assets in our condensed consolidated balance sheets and changes in fair value of the investments are recorded within other expense, net within our condensed consolidated statements of operations. See Note 13 for the carrying amounts and estimated fair values of our convertible senior notes as of June 30, 2025 and December 31, 2024. The contingent consideration liability consists of the potential earn-out payment related to our acquisition of 100 % of the issued and outstanding capital stock of EBS on January 18, 2023. The earn-out payment is contingent on the satisfaction of two performance targets related to the integration of EBS's hardware into the Alarm.com platform by December 31, 2025, and has a maximum potential payment of up to $ 2.5 million. We account for the contingent consideration using fair value and established a liability for the future earn-out payment based on an estimation of the probability of the future achievement of the performance targets. The contingent consideration liability was valued with Level 3 unobservable inputs, including the probability of expected achievement of the performance targets. At January 18, 2023, the fair value of the liability was $ 2.0 million. At each reporting date until December 31, 2025, or the achievement of the performance targets, we will remeasure the liability, using the same valuation approach. The fair value of the contingent consideration liability as of June 30, 2025 was included within accounts payable, accrued expenses and other current liabilities within our condensed consolidated balance sheet. Changes in fair value resulting from information that existed subsequent to the acquisition date are recorded in general and administrative expense in the condensed consolidated statements of operations. One of the performance targets was achieved during the six months ended June 30, 2025, and the related payment of $ 1.3 million was made during the second quarter of 2025. The unobservable inputs used in the valuation for the remaining performance target as of June 30, 2025 included an expected achievement percentage of 50.0 %. The valuation also included a weighted average discount rate of 5.1 %, weighted by the probability of achievement of the performance targets at various dates, including a range of 5.0 % to 5.1 %. Selecting another probability of 20 ALARM.COM HOLDINGS, INC. Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued) June 30, 2025 and 2024 expected achievement or discount rate within an acceptable range would not result in a significant change to the fair value of the contingent consideration liability. We monitor the availability of observable market data to assess the appropriate classification of financial instruments within the fair value hierarchy. Changes in economic conditions or model-based valuation techniques may require the transfer of financial instruments from one fair value level to another. There were no transfers into or out of Level 3 or reclassifications between levels of the fair value hierarchy during the three and six months ended June 30, 2025 and 2024. Note 11. Leases As of June 30, 2025, we leased office space, data centers and office equipment under non-cancelable operating leases with various expiration dates through 2034. In August 2014, we signed a lease for office space in Tysons, Virginia where we relocated our corporate headquarters to in February 2016. We have subsequently entered into amendments to this lease to provide us with additional office space as well as tenant improvement allowances. In August 2024, we entered into an amendment to the lease for our corporate headquarters, which extends the term of our existing leased office space to 2034 and includes two successive five-year renewal options. Additionally, the amendment provides for additional office space, parking spaces and tenant improvement allowances. Supplemental information related to leases is presented in the table below (in thousands, except weighted-average term and discount rate): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Operating lease cost $ 3,926 $ 2,977 $ 7,829 $ 5,953 Cash paid for amounts included in the measurement of operating lease liabilities 2,919 3,530 6,393 6,751 Operating lease right-of-use assets obtained in exchange for new operating lease liabilities 259 272 4,400 2,915 June 30, 2025 December 31, 2024 Weighted-average remaining lease term — operating leases 7.6 years 7.8 years Weighted-average discount rate — operating leases 8.2 % 8.2 % Maturities of lease liabilities are as follows (in thousands): Year Ended December 31, Operating Leases (1) Remainder of 2025 $ 6,914 2026 13,042 2027 13,237 2028 12,643 2029 12,177 2030 and thereafter 48,567 Total lease payments 106,580 Less: imputed interest (2) 29,903 Present value of lease liabilities $ 76,677 _______________ (1) Operating lease payments exclude $ 4.4 million of legally binding minimum lease payments for leases executed but not yet commenced. There are no options to extend lease terms that were reasonably certain of being exercised included in these balances. (2) Imputed interest was calculated using the incremental borrowing rate applicable for each lease. Our finance leases and subleases were not material to the condensed consolidated financial statements as of June 30, 2025. We did not have any finance leases or subleases as of December 31, 2024. Our lease agreements do not contain any material residual value guarantees, restrictive covenants or variable lease payments. Short-term lease costs were immaterial for the three and six months ended June 30, 2025 and 2024. 21 ALARM.COM HOLDINGS, INC. Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued) June 30, 2025 and 2024 Note 12. Liabilities The components of accounts payable, accrued expenses and other current liabilities are as follows (in thousands): June 30, 2025 December 31, 2024 Accounts payable $ 55,383 $ 65,615 Accrued expenses 17,948 29,443 Income taxes payable 16,081 28,045 Holdback liability from business combinations, asset acquisitions and investments in unconsolidated entities 10,491 — Contingent consideration liability from acquisition 613 1,216 Other current liabilities 14,116 15,108 Accounts payable, accrued expenses and other current liabilities $ 114,632 $ 139,427 The components of other liabilities are as follows (in thousands): June 30, 2025 December 31, 2024 Holdback liability from business combinations and asset acquisitions $ — $ 200 Contingent consideration liability from acquisition — 953 Other liabilities 14,498 14,326 Other liabilities $ 14,498 $ 15,479 Note 13. Debt, Commitments and Contingencies The debt, commitments and contingencies described below would require us, or our subsidiaries, to make payments to third parties under certain circumstances. Convertible Senior Notes - 2026 Notes On January 20, 2021, we issued $ 500.0 million aggregate principal amount of 0 % convertible senior notes due January 15, 2026, in a private placement to qualified institutional buyers, or the 2026 Notes. The terms of the 2026 Notes are governed by an Indenture, or the 2026 Indenture, by and between Alarm.com Holdings, Inc. and U.S. Bank National Association, as trustee. The 2026 Notes are senior unsecured obligations that do not bear regular interest and the principal amount of the 2026 Notes will not accrete. The 2026 Notes may bear special interest under specified circumstances related to our failure to comply with our reporting obligations under the 2026 Indenture. Special interest, if any, will be payable semiannually in arrears on January 15 and July 15 of each year, beginning on July 15, 2021. We received proceeds from the issuance of the 2026 Notes of $ 484.3 million, net of $ 15.7 million of transaction fees and other debt issuance costs. We may redeem for cash, all or any portion of the 2026 Notes, at our option, on or after January 20, 2024, at a redemption price equal to 100 % of the principal amount of the 2026 Notes to be redeemed, plus accrued and unpaid special interest, if any, to, but excluding, the redemption date, if the last reported sale price of our common stock has been at least 130 % of the conversion price for the 2026 Notes then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption. No sinking fund is provided for the 2026 Notes. The 2026 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 August 15, 2025, only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2021 (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 2026 Notes on each applicable trading day; (2) during the five business day period immediately after any 10 consecutive trading day period in which, for each trading day of that period, the trading price per $1,000 principal amount of 2026 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 2026 Notes on each such trading day; (3) if we call any or all of the 2026 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 22 ALARM.COM HOLDINGS, INC. Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued) June 30, 2025 and 2024 respect to the 2026 Notes called (or deemed called) for redemption; or (4) upon the occurrence of specified corporate events as set forth in the 2026 Indenture. On or after August 15, 2025, until the close of business on the second scheduled trading day immediately preceding the maturity date of the 2026 Notes, holders of the 2026 Notes may convert all or any portion of their 2026 Notes at any time, regardless of the foregoing conditions. 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 2026 Notes with cash. The initial conversion rate for the 2026 Notes is 6.7939 shares of our common stock per $1,000 principal amount of 2026 Notes, which is equivalent to an initial conversion price of $ 147.19 per share of our common stock, subject to adjustment under certain circumstances in accordance with the terms of the 2026 Indenture. In addition, following certain corporate events that occur prior to the maturity date of the 2026 Notes or if we deliver a notice of redemption in respect of the 2026 Notes, we will, under certain circumstances, increase the conversion rate of the 2026 Notes for a holder who elects to convert its 2026 Notes (or any portion thereof) in connection with such a corporate event or convert its 2026 Notes called (or deemed called) for redemption during the related redemption period (as defined in the 2026 Indenture), as the case may be. If we undergo a fundamental change (as defined in the 2026 Indenture), subject to certain exceptions and except as described in the 2026 Indenture, holders may require us to repurchase for cash all or any portion of their 2026 Notes at a fundamental change repurchase price equal to 100 % of the principal amount of the 2026 Notes to be repurchased, plus accrued and unpaid special interest, if any, to, but excluding, the fundamental change repurchase date. The 2026 Indenture includes customary covenants and sets forth certain events of default after which the 2026 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 2026 Notes become automatically due and payable. We used some of the proceeds to repay the $ 110.0 million outstanding principal balance under our credit facility and also used some of the proceeds to pay accrued interest, fees and expenses related to our credit facility, which was terminated effective January 20, 2021. We are using the remaining net proceeds from the issuance of the 2026 Notes for working capital and other general corporate purposes, which may include acquisitions or strategic investments in complementary businesses or technologies. We account for the 2026 Notes as a liability. The debt issuance costs are presented as a deduction from the outstanding principal balance of the 2026 Notes and are amortized to interest expense using the effective interest method over the contractual term of the 2026 Notes at a rate of 0.6 %. As of June 30, 2025 and December 31, 2024, the fair value of our 2026 Notes was $ 486.0 million and $ 473.8 million, respectively. The fair value was determined based on the quoted price of the 2026 Notes in an inactive market on the last traded day of the quarter and has been classified as Level 2 in the fair value hierarchy. Based on the closing price of our common stock of $ 56.57 on the last trading day of the quarter, the if-converted value of the 2026 Notes did not exceed the principal amount of $ 500.0 million as of June 30, 2025. The net carrying amount of the liability component of the 2026 Notes is as follows (in thousands): June 30, 2025 December 31, 2024 Principal $ 500,000 $ 500,000 Unamortized debt issuance costs ( 1,729 ) ( 3,319 ) Net carrying amount $ 498,271 $ 496,681 Interest expense related to the 2026 Notes is as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Amortization of debt issuance costs $ 796 $ 791 $ 1,590 $ 1,581 Total interest expense $ 796 $ 791 $ 1,590 $ 1,581 23 ALARM.COM HOLDINGS, INC. Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued) June 30, 2025 and 2024 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. and U.S. Bank Trust Company, National Association, as trustee. The 2029 Notes are senior unsecured obligations that bear interest at a rate of 2.25 % per annum, payable semiannually in arrears on June 1 and December 1 of each year, beginning on December 1, 2024, and the principal amount of the 2029 Notes will not accrete. We received proceeds from the issuance of the 2029 Notes of $ 485.2 million, net of $ 14.8 million of transaction fees and other debt issuance costs. We may redeem for cash, all or any portion of the 2029 Notes (subject to the partial redemption limitation described below), at our option, on or after June 7, 2027, at a redemption price equal to 100 % of the principal amount of the 2029 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, if the last reported sale price of our common stock has been at least 130 % of the conversion price for the 2029 Notes then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption. If we redeem less than all the 2029 Notes, at least $ 75.0 million aggregate principal amount of the 2029 Notes must be outstanding and not subject to redemption as of the relevant redemption notice date. No sinking fund is provided for the 2029 Notes. The 2029 Notes will be convertible at the option of the holders at any time prior to the close of business on the business day immediately preceding January 1, 2029, only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on September 30, 2024 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130 % of the conversion price for the 2029 Notes on each applicable trading day; (2) during the five business day period immediately after any 10 consecutive trading day period in which, for each trading day of that period, the trading price per $1,000 principal amount of 2029 Notes for such trading day was less than 98 % of the product of the last reported sale price of our common stock and the conversion rate for the 2029 Notes on each such trading day; (3) if we call any or all of the 2029 Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date, but only with respect to the 2029 Notes called (or deemed called) for redemption; or (4) upon the occurrence of specified corporate events as set forth in the 2029 Indenture. On or after January 1, 2029, until the close of business on the second scheduled trading day immediately preceding the maturity date of the 2029 Notes, holders of the 2029 Notes may convert all or any portion of their 2029 Notes at any time, regardless of the foregoing conditions. Upon conversion, we may satisfy our conversion obligation by paying or delivering, as the case may be, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election. It is our current intent to settle the principal amount of the 2029 Notes with cash. The initial conversion rate for the 2029 Notes is 11.4571 shares of our common stock per $1,000 principal amount of 2029 Notes, which is equivalent to an initial conversion price of $ 87.28 per share of our common stock, subject to adjustment under certain circumstances in accordance with the terms of the 2029 Indenture. In addition, following certain corporate events that occur prior to the maturity date of the 2029 Notes or if we deliver a notice of redemption in respect of some or all of the 2029 Notes, we will, under certain circumstances, increase the conversion rate of the 2029 Notes for a holder who elects to convert its 2029 Notes (or any portion thereof) in connection with such a corporate event or convert its 2029 Notes called (or deemed called) for redemption during the related redemption period (as defined in the 2029 Indenture), as the case may be. If we undergo a fundamental change (as defined in the 2029 Indenture), subject to certain exceptions and except as described in the 2029 Indenture, holders may require us to repurchase for cash all or any portion of their 2029 Notes at a fundamental change repurchase price equal to 100 % of the principal amount of the 2029 Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. The 2029 Indenture includes customary covenants and sets forth certain events of default after which the 2029 Notes may be declared immediately due and payable and sets forth certain types of bankruptcy or insolvency events of default involving us after which the 2029 Notes become automatically due and payable. 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. 24 ALARM.COM HOLDINGS, INC. Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued) June 30, 2025 and 2024 We account for the 2029 Notes as a liability. The debt issuance costs are presented as a deduction from the outstanding principal balance of the 2029 Notes and are amortized to interest expense using the effective interest method over the contractual term of the 2029 Notes at a rate of 2.9 %. As of June 30, 2025 and December 31, 2024, the fair value of our 2029 Notes was $ 484.5 million and $ 496.7 million, respectively. The fair value was determined based on the quoted price of the 2029 Notes in an inactive market on the last traded day of the quarter and has been classified as Level 2 in the fair value hierarchy. Based on the closing price of our common stock of $ 56.57 on the last trading day of the quarter, the if-converted value of the 2029 Notes did not exceed the principal amount of $ 500.0 million as of June 30, 2025. The net carrying amount of the liability component of the 2029 Notes is as follows (in thousands): June 30, 2025 December 31, 2024 Principal $ 500,000 $ 500,000 Unamortized debt issuance costs ( 11,792 ) ( 13,204 ) Net carrying amount $ 488,208 $ 486,796 Interest expense related to the 2029 Notes is as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Interest expense $ 2,812 $ 938 $ 5,625 $ 938 Amortization of debt issuance costs 708 230 1,412 230 Total interest expense $ 3,520 $ 1,168 $ 7,037 $ 1,168 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. We elected to integrate the capped call options with the 2029 Notes for federal income tax purposes pursuant to applicable U.S. Treasury Regulations. Accordingly, the $ 63.1 million cost of the purchased capped calls will be deductible for income tax purposes. The original issue discount is accreted over the term of the 2029 Notes. The capped call transactions are generally expected to reduce the potential dilution to holders of our common stock upon any conversion of the 2029 Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted 2029 Notes, as the case may be, with such reduction and/or offset subject to a cap. As the capped call options are both legally detachable and separately exercisable from the 2029 Notes, we account for the capped call options separately from the 2029 Notes. The capped call options are indexed to our own common stock and classified in stockholders’ equity. As such, the premiums paid for the capped call options were included as a net reduction to additional paid-in capital in the condensed consolidated balance sheets. The capped call transactions will not be remeasured as long as they continue to meet the conditions for equity classification. Commitments and Contingencies Indemnification Agreements We have various agreements that may obligate us to indemnify the other party to the agreement with respect to certain matters. Generally, these indemnification provisions are included in contracts arising in the normal course of business. Although we cannot predict the maximum potential amount of future payments that may become due under these indemnification agreements, we do not believe any potential liability that might arise from such indemnity provisions is probable or material. 25 ALARM.COM HOLDINGS, INC. Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued) June 30, 2025 and 2024 Legal Proceedings On January 10, 2022, EcoFactor, Inc., or EcoFactor, filed a lawsuit against us in U.S. District Court, District of Oregon, alleging Alarm.com’s products and services directly and indirectly infringe five U.S. patents owned by EcoFactor. EcoFactor is seeking a permanent injunction, enhanced damages and attorneys' fees. EcoFactor had previously asserted two of the same patents against us in an October 2019 complaint with the U.S. International Trade Commission, or ITC. In July 2021, the ITC found in favor of Alarm.com. EcoFactor appealed the decision but withdrew its appeal in December 2021. We moved to dismiss the Oregon case for failure to state a claim on March 28, 2022. On April 18, 2022, the district court stayed the case at the request of the parties pending the disposition of other proceedings involving the asserted patents. These proceedings include four ex parte reexamination proceedings at the U.S. Patent and Trademark Office and one inter partes review. Three of the patents were found unpatentable in reexamination. EcoFactor appealed the decision with respect to one of the patents to the United States Court of Appeals for the Federal Circuit on July 9, 2024, EcoFactor has until October 3, 2025 to appeal the rejection of the second patent to the Federal Circuit, and EcoFactor appealed the rejection of the third patent to the U.S. Patent Trial and Appeal Board, or PTAB, filing its appeal brief on June 10, 2024. Ex parte reexamination of a fourth patent concluded on August 23, 2023 after the claims were amended. On April 18, 2022, all claims of a fifth patent were found unpatentable by the PTAB in inter partes review, and all claims were canceled on February 1, 2024. Should EcoFactor prevail in its lawsuit we could be required to pay damages and/or a reasonable royalty for sales of our solution, we could be enjoined from making, using and selling our solution if a license or other right to continue selling such elements is not made available to us, and we could be required to pay ongoing royalties and comply with unfavorable terms if such a license is made available to us. While we believe we have valid defenses to EcoFactor’s claims, the outcome of these legal claims cannot be predicted with certainty and any of these outcomes could result in an adverse effect on our business. Based on currently available information, we have determined a loss is not probable or reasonably estimable at this time. On July 22, 2021, Causam Enterprises, Inc., or Causam, filed a lawsuit against us in U.S. District Court, Western District of Texas, alleging that Alarm.com’s smart thermostats infringe four U.S. patents owned by Causam. Causam is seeking preliminary and permanent injunctions, enhanced damages and attorneys’ fees. We have not yet responded to the complaint. On September 3, 2021, the court issued an order staying the lawsuit until the ITC investigation described below is finally resolved. On July 28, 2021, Causam filed a complaint with the ITC naming Alarm.com Incorporated, Alarm.com Holdings, Inc., and EnergyHub, Inc., among others, as proposed respondents. The complaint alleges infringement of the same four patents Causam asserted in district court. Causam is seeking a permanent limited exclusion order and permanent cease and desist order. On August 27, 2021, the ITC instituted an investigation into Causam’s allegations naming Alarm.com Incorporated, Alarm.com Holdings, Inc., EnergyHub Inc. and others as respondents. We answered the complaint on October 4, 2021. Among other things, we asserted defenses based on non-infringement and invalidity of the patents in question. An evidentiary hearing in the investigation was held from June 28, 2022 through July 1, 2022. On February 16, 2023, the ITC issued a final decision in favor of Alarm.com and EnergyHub. Causam filed an appeal of the ITC decision on April 14, 2023. Causam did not appeal the ITC decision with respect to Alarm.com and EnergyHub. Oral arguments on the appeal are scheduled for September 3, 2025. Should Causam prevail in its district court lawsuit we could be required to pay damages and/or a reasonable royalty for sales of our solution, we could be enjoined from making, using and selling our solution if a license or other right to continue selling such elements is not made available to us, and we could be required to pay ongoing royalties and comply with unfavorable terms if such a license is made available to us. While we believe we have valid defenses to Causam’s claims, the outcome of these legal claims cannot be predicted with certainty, and any of these outcomes could result in an adverse effect on our business. Based on currently available information, we have determined a loss is not probable or reasonably estimable at this time. On July 3, 2025, SkyBell Technologies, Inc., or SkyBell, filed a lawsuit against us in U.S. District Court, Eastern District of Virginia, alleging that Alarm.com misappropriated SkyBell’s trade secrets relating to video doorbells. SkyBell is seeking injunctive relief, enhanced damages, attorneys’ fees, a constructive trust, and an order that Alarm.com assign to SkyBell the alleged trade secrets. We have not yet responded to the complaint. Should SkyBell prevail in its lawsuit, we could be required to pay damages and/or a reasonable royalty for sales of our solution, we could be enjoined from making, using and selling our solution if a license or other right to continue selling such elements is not made available to us, we could be required to pay ongoing royalties and comply with unfavorable terms if such a license is made available to us, and we could be required to assign, transfer, and return any SkyBell trade secret that we are found to improperly possess. While we believe we have valid defenses to SkyBell’s claims, the outcome of these legal claims cannot be predicted with certainty, and any of these outcomes could result in an adverse effect on our business. Based on currently available information, we have determined a loss is not probable or reasonably estimable at this time. In addition to the matters described above, we may be required to provide indemnification to certain of our service provider partners for certain claims regarding our solutions. For example, we incurred costs associated with the indemnification of our service provider Central Security Group – Nationwide, Inc. (d/b/a Alert 360), or CSG, in an ongoing patent litigation. In 2018, 26 ALARM.COM HOLDINGS, INC. Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued) June 30, 2025 and 2024 Ubiquitous Connectivity, LP, or Ubiquitous, brought suit against CSG in U.S. District Court, Northern District of Oklahoma, alleging infringement of two U.S. patents. The case was stayed by agreement of the parties for several years while the patents in suit were challenged before the PTAB. In January 2021, the PTAB deemed 42 out of 46 claims of the two asserted patents unpatentable. Ubiquitous appealed a portion of the PTAB’s findings to the United States Court of Appeals for the Federal Circuit. The Federal Circuit affirmed the PTAB’s ruling on August 8, 2023. As a result, only four patent claims remain at issue and the Northern District of Oklahoma case is no longer stayed. The case is currently in the discovery phase. The court held a claim construction hearing on December 12, 2024, and rendered a claim construction opinion on May 20, 2025. A hearing on dispositive motions, including for summary judgment, is scheduled for April 15, 2026. A trial is scheduled for July 6, 2026. Should Ubiquitous prevail on its infringement claims, we could be required to indemnify CSG for damages in the form of a reasonable royalty or of Ubiquitous’s lost profits. CSG could be enjoined from making, using, and selling our solution if a license or other right to continue selling our technology is not made available or if we are unable to design around such patents, and we could be required to pay ongoing royalties and comply with unfavorable terms if such a license is made available to us. The outcome of these legal claims cannot be predicted with certainty. Based on currently available information, we have determined a loss is not probable or reasonably estimable at this time. We may also be a party to litigation and subject to claims incident to the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, we currently believe that the final outcome of these ordinary course matters will not have a material adverse effect on our business. Other than the preceding matters, we are not a party to any lawsuit or proceeding that, in the opinion of management, is reasonably possible or probable of having a material adverse effect on our financial position, results of operations or cash flows. We reserve for contingent liabilities based on ASC 450, " Contingencies ," when it is determined that a liability, inclusive of defense costs, is probable and reasonably estimable. Litigation is subject to many factors that are difficult to predict, so there can be no assurance that, in the event of a material unfavorable result in one or more claims, we will not incur material costs. Note 14. Stockholders' Equity Stock Repurchase Programs 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 and six months ended June 30, 2025, we repurchased 88,000 and 174,400 shares of our common stock under this program for $ 5.1 million and $ 10.2 million, respectively, which includes applicable commissions and fees. During the three and six months ended June 30, 2024, we repurchased 1,117,068 shares of our common stock under our stock repurchase program authorized in connection with the issuance of the 2029 Notes for $ 75.0 million. 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 tax withholdings related to the vesting of restricted stock units were paid during the three and six months ended June 30, 2025. We paid $ 3.4 million of tax withholding related to vesting of restricted stock units during the three and six months ended June 30, 2024. 27 ALARM.COM HOLDINGS, INC. Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued) June 30, 2025 and 2024 Note 15. Stock-Based Compensation Stock-based compensation expense is included in the following line items in the condensed consolidated statements of operations (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Cost of hardware and other revenue $ — $ 1 $ — $ 2 Sales and marketing 620 724 1,100 1,479 General and administrative 2,474 3,303 5,446 6,484 Research and development 5,840 7,185 11,846 14,516 Total stock-based compensation expense $ 8,934 $ 11,213 $ 18,392 $ 22,481 The following table summarizes the components of non-cash stock-based compensation expense (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Stock options $ 841 $ 1,146 $ 1,834 $ 2,133 Restricted stock units 8,043 10,017 16,450 20,247 Employee stock purchase plan 50 50 108 101 Total stock-based compensation expense $ 8,934 $ 11,213 $ 18,392 $ 22,481 Tax (shortfall) / windfall benefit from stock-based awards $ ( 299 ) $ 645 $ ( 550 ) $ 1,131 We granted 99,000 and 134,000 stock options pursuant to our 2015 Equity Incentive Plan during the three and six months ended June 30, 2025, respectively, as compared to 93,500 and 99,500 stock options for the same periods in the prior year. There were 23,572 and 45,287 stock options exercised during the three and six months ended June 30, 2025, respectively, as compared to 14,467 and 142,993 stock options for the same periods in the prior year. There was an aggregate of 311,138 and 374,210 restricted stock units without performance conditions granted to certain of our employees and directors during the three and six months ended June 30, 2025, respectively, as compared to an aggregate of 241,728 and 329,878 restricted stock units without performance conditions for the same periods in the prior year. There were no restricted stock units with performance conditions granted to our employees during the three and six months ended June 30, 2025 and 2024. There were 219,074 and 291,058 restricted stock units without performance conditions that vested during the three and six months ended June 30, 2025, respectively, as compared to 209,087 and 290,783 restricted stock units without performance conditions vested during the same periods in the prior year. There were zero and 30,667 restricted stock units with performance conditions that vested during the three and six months ended June 30, 2025, respectively, as compared to 33,395 restricted stock units with performance conditions vested during each of the three and six months ended June 30, 2024. 28 ALARM.COM HOLDINGS, INC. Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued) June 30, 2025 and 2024 Note 16. Earnings Per Share Basic and Diluted Earnings Per Share The components of basic and diluted earnings per share are as follows (in thousands, except share and per share amounts): Three Months Ended June 30, Six Months Ended June 30, Numerator: 2025 2024 2025 2024 Net income $ 34,217 $ 32,520 $ 61,929 $ 55,924 Net loss attributable to redeemable noncontrolling interests 335 991 573 1,182 Net income attributable to common stockholders - basic (A) 34,552 33,511 62,502 57,106 Add back total interest expense, net of tax, attributable to convertible senior notes 3,249 1,473 6,494 2,067 Net income attributable to common stockholders - diluted (B) $ 37,801 $ 34,984 $ 68,996 $ 59,173 Denominator: Weighted average common shares outstanding — basic (C) 49,806,105 49,832,503 49,733,328 49,897,884 Dilutive effect of convertible senior notes, stock options and restricted stock units 10,331,099 6,847,852 10,426,521 5,970,163 Weighted average common shares outstanding — diluted (D) 60,137,204 56,680,355 60,159,849 55,868,047 Net income attributable to common stockholders per share: Basic (A/C) $ 0.69 $ 0.67 $ 1.26 $ 1.14 Diluted (B/D) $ 0.63 $ 0.62 $ 1.15 $ 1.06 The following securities have been excluded from the calculation of diluted weighted average common shares outstanding as the inclusion of these securities would have an anti-dilutive effect: Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Stock options 789,688 422,524 698,302 422,524 Restricted stock units 91,570 7,200 — 1,700 Our redeemable noncontrolling interests relate to our 86 % equity ownership interest in OpenEye, our 85 % equity ownership interest in Noonlight and our 81 % equity ownership interest in CHeKT. See Note 6 for details on the put option and call option contained in the CHeKT stockholder agreement. We use the treasury stock method when calculating the dilutive impact of the stock options and restricted stock units on net income per share. We use the if-converted method when calculating the dilutive impact of the 2026 Notes and 2029 Notes on net income per share. As a result, we included 3,396,950 shares related to the 2026 Notes within the weighted average shares outstanding when calculating the diluted net income per share for each of the three and six months ended June 30, 2025 and 2024. We included 5,728,550 shares related to the 2029 Notes within the weighted average shares outstanding when calculating the diluted net income per share for the three and six months ended June 30, 2025, as compared to 1,951,484 and 975,742 shares during the same periods in the prior year. Additionally, we included $ 3.2 million and $ 6.5 million of interest expense and debt issuance cost amortization, net of tax, within the numerator of the diluted net income per share for the three and six months ended June 30, 2025, respectively, as compared to $ 1.5 million and $ 2.1 million for the same periods in the prior year. The denominator for diluted net income per share does not include any effect from the capped call transactions we entered into concurrently with the issuance of the 2029 Notes, as this effect would be anti-dilutive. In the event of conversion of the 2029 Notes, shares delivered to us under the capped call will offset the dilutive effect of the shares that we would issue under the 2029 Notes. See Note 13 for further details on our 2029 Notes and the related capped call transactions. 29 ALARM.COM HOLDINGS, INC. Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued) June 30, 2025 and 2024 Note 17. Significant Service Providers and Distributors During the three and six months ended June 30, 2025, our 10 largest revenue service provider partners or distributors accounted for 46 % of our consolidated revenue, as compared to 47 % for the same periods in the prior year. One of our service provider partners within the Alarm.com segment individually represented greater than 15 % but not more than 20 % of our revenue for each of the three and six months ended June 30, 2025 and 2024. No service provider partners represented more than 10% of accounts receivable as of June 30, 2025 and December 31, 2024. Note 18. Income Taxes For purposes of interim reporting, our annual effective income tax rate is estimated in accordance with ASC 740-270, "Interim Reporting." This rate is applied to the pre-tax book income of the entities expected to be benefited during the year. Discrete items that impact the tax provision are recorded in the period incurred. For the three and six months ended June 30, 2025, we recorded a provision for income taxes of $ 5.5 million and $ 12.8 million, respectively, resulting in an effective income tax rate of 13.8 % and 17.1 % for those periods. For the three and six months ended June 30, 2024, we recorded a provision for income taxes of $ 0.9 million and $ 3.6 million, respectively, resulting in an effective income tax rate of 2.6 % and 6.1 % for those periods. For the three and six months ended June 30, 2025, our effective tax rate was below the 21.0% statutory rate primarily due to 2025 research and development tax credits claimed, the foreign derived intangible income deduction and a favorable true-up adjustment of our 2024 income tax provision estimate associated with research and development tax credits, partially offset by the impact of state taxes, foreign withholding taxes and other nondeductible expenses. For the three months ended June 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 associated with research and development tax credits, 2024 research and development tax credits claimed, the foreign derived intangible income deduction and tax windfall benefits from employee stock-based compensation. For the six months ended June 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 associated with research and development tax credits, 2024 research and development tax credits claimed, the foreign derived intangible income deduction, 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. We recognize a valuation allowance if, based on the weight of available evidence, both positive and negative, it is more likely than not that some portion, or all, of net deferred tax assets will not be realized. Our valuation allowance for state research and development tax credit carryforwards, net deferred tax assets of our EBS subsidiary and an unrealized U.S. federal capital loss was $ 5.0 million as of December 31, 2024 and increased to $ 6.1 million as of June 30, 2025. We apply guidance for uncertainty in income taxes that requires the application of a more likely than not threshold to the recognition and de-recognition of uncertain tax positions. If the recognition threshold is met, this guidance permits us to recognize a tax benefit measured at the largest amount of the tax benefit that, in our judgment, is more likely than not to be realized upon settlement. We recorded a net increase to the unrecognized tax benefits liability of $ 1.7 million primarily due to a liability for research and development tax credits claimed during the six months ended June 30, 2025. We recorded a net decrease to the unrecognized tax benefits liability of $ 0.4 million primarily due to the closure of the 2018 and 2019 Internal Revenue Service federal income tax return examination, partially offset by a liability for research and development tax credits claimed during the six months ended June 30, 2024. Our condensed consolidated balance sheets included an accrual for total interest expense related to unrecognized tax benefits of $ 1.2 million and $ 0.9 million as of June 30, 2025 and December 31, 2024, respectively. We recognize interest and penalties related to unrecognized tax benefits as a component of income tax expense. Our tax returns are subject to on-going review and examination by various tax authorities. Tax authorities may not agree with the treatment of items reported in our tax returns, and therefore the outcome of tax reviews and examinations can be unpredictable. On October 13, 2021, the Internal Revenue Service commenced an examination of our federal income tax return for 2018 and on August 12, 2022, the Internal Revenue Service expanded the examination to include our federal income tax return for 2019. On January 25, 2024, the Internal Revenue Service notified us that the income tax examination of our 2018 and 2019 federal income tax returns has been closed. As a result, we paid $ 0.6 million in additional federal taxes, including interest, during the three months ended June 30, 2024, and recognized a net income tax benefit of $ 1.7 million during the three months ended March 31, 2024. As of June 30, 2025, we did not have material undistributed foreign earnings. We have not recorded a deferred tax liability on the undistributed earnings from our foreign subsidiaries, as such earnings are considered to be indefinitely reinvested. 30 ALARM.COM HOLDINGS, INC. Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued) June 30, 2025 and 2024 On July 4, 2025, Public Law 119-21, commonly referred to as the One Big Beautiful Bill Act, or OBBBA, was enacted in the United States. The OBBBA includes a broad range of tax provisions that may impact the timing and the magnitude of certain key tax deductions. The most significant provisions to us are the permanent reinstatement of the full domestic research and development expenditure deduction in the year such costs are incurred and the 100% first-year bonus depreciation deduction. We currently anticipate these provisions will significantly reduce our current federal income tax cash outlays over the next several years. Certain other international tax provisions may also be favorable to us. We continue to analyze the OBBBA tax provisions to assess their potential impact on our financial position, results of operations and cash flows. Note 19. Segment Information We have two reportable segments: • Alarm.com segment • Other segment Our chief operating decision maker is our chief executive officer. Management determined the operational data used by the chief operating decision maker is that of the two reportable segments. Management bases strategic goals and decisions on these segments and the data presented below is used to measure financial results. Our Alarm.com segment represents our cloud-based platform and licenses and services on our non-hosted software platform for the intelligently connected property and related solutions that contributed 92 % of our revenue, net of intersegment eliminations, for the three and six months ended June 30, 2025, as compared to 93 % for the same periods 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. Inter-segment revenue includes sales of hardware between our segments. 31 ALARM.COM HOLDINGS, INC. Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued) June 30, 2025 and 2024 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 June 30, 2025 Alarm.com Other Intersegment Alarm.com Intersegment Other Total SaaS and license revenue $ 150,997 $ 18,996 $ — $ — $ 169,993 Hardware and other revenue 82,873 2,641 ( 663 ) ( 536 ) 84,315 Total revenue 233,870 21,637 ( 663 ) ( 536 ) 254,308 Cost of SaaS and license revenue 17,489 6,164 87 ( 87 ) 23,653 Cost of hardware and other revenue 62,483 2,417 ( 551 ) ( 540 ) 63,809 Total cost of revenue 79,972 8,581 ( 464 ) ( 627 ) 87,462 Selling and marketing expense 25,035 6,101 — — 31,136 General and administrative expense 25,345 1,739 — — 27,084 Research and development expense 61,257 7,813 — — 69,070 Amortization and depreciation expense 7,239 295 — — 7,534 Total operating expenses 118,876 15,948 — — 134,824 Operating income / (loss) $ 35,022 $ ( 2,892 ) $ ( 199 ) $ 91 $ 32,022 Reconciliation of operating income to income before income taxes Operating income $ 32,022 Interest expense ( 4,321 ) Interest income 11,808 Other expense, net ( 150 ) Income before income taxes $ 39,359 32 ALARM.COM HOLDINGS, INC. Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued) June 30, 2025 and 2024 Three Months Ended June 30, 2024 Alarm.com Other Intersegment Alarm.com Intersegment Other Total SaaS and license revenue $ 140,854 $ 15,073 $ — $ — $ 155,927 Hardware and other revenue 77,465 1,463 ( 860 ) ( 188 ) 77,880 Total revenue 218,319 16,536 ( 860 ) ( 188 ) 233,807 Cost of SaaS and license revenue 17,011 5,083 71 ( 71 ) 22,094 Cost of hardware and other revenue 58,816 1,355 ( 842 ) ( 141 ) 59,188 Total cost of revenue 75,827 6,438 ( 771 ) ( 212 ) 81,282 Selling and marketing expense 22,453 5,384 — — 27,837 General and administrative expense 23,949 2,155 — — 26,104 Research and development expense 58,573 7,157 — — 65,730 Amortization and depreciation expense 6,827 253 — — 7,080 Total operating expenses 111,802 14,949 — — 126,751 Operating income / (loss) $ 30,690 $ ( 4,851 ) $ ( 89 ) $ 24 $ 25,774 Reconciliation of operating income to income before income taxes Operating income $ 25,774 Interest expense ( 1,968 ) Interest income 10,856 Other expense, net ( 1,258 ) Income before income taxes $ 33,404 33 ALARM.COM HOLDINGS, INC. Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued) June 30, 2025 and 2024 Six Months Ended June 30, 2025 Alarm.com Other Intersegment Alarm.com Intersegment Other Total SaaS and license revenue $ 298,645 $ 35,148 $ — $ — $ 333,793 Hardware and other revenue 156,922 4,531 ( 1,336 ) ( 780 ) 159,337 Total revenue 455,567 39,679 ( 1,336 ) ( 780 ) 493,130 Cost of SaaS and license revenue 34,272 10,949 171 ( 171 ) 45,221 Cost of hardware and other revenue 118,369 4,183 ( 1,210 ) ( 867 ) 120,475 Total cost of revenue 152,641 15,132 ( 1,039 ) ( 1,038 ) 165,696 Selling and marketing expense 47,502 12,183 — — 59,685 General and administrative expense 50,181 3,904 — — 54,085 Research and development expense 121,941 15,496 — — 137,437 Amortization and depreciation expense 13,967 591 — — 14,558 Total operating expenses 233,591 32,174 — — 265,765 Operating income / (loss) $ 69,335 $ ( 7,627 ) $ ( 297 ) $ 258 $ 61,669 Assets $ 2,154,748 $ 64,107 $ ( 120,596 ) $ ( 205 ) $ 2,098,054 Reconciliation of operating income to income before income taxes Operating income $ 61,669 Interest expense ( 8,635 ) Interest income 24,179 Other income / (expense), net ( 2,835 ) Income before income taxes $ 74,378 34 ALARM.COM HOLDINGS, INC. Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued) June 30, 2025 and 2024 Six Months Ended June 30, 2024 Alarm.com Other Intersegment Alarm.com Intersegment Other Total SaaS and license revenue $ 278,713 $ 27,558 $ — $ — $ 306,271 Hardware and other revenue 149,827 2,862 ( 1,545 ) ( 325 ) 150,819 Total revenue 428,540 30,420 ( 1,545 ) ( 325 ) 457,090 Cost of SaaS and license revenue 33,470 9,015 175 ( 138 ) 42,522 Cost of hardware and other revenue 114,386 2,627 ( 1,498 ) ( 240 ) 115,275 Total cost of revenue 147,856 11,642 ( 1,323 ) ( 378 ) 157,797 Selling and marketing expense 42,863 10,428 — — 53,291 General and administrative expense 52,234 3,166 — — 55,400 Research and development expense 117,415 14,271 — — 131,686 Amortization and depreciation expense 13,911 506 — — 14,417 Total operating expenses 226,423 28,371 — — 254,794 Operating income / (loss) $ 54,261 $ ( 9,593 ) $ ( 222 ) $ 53 $ 44,499 Assets $ 1,907,486 $ 55,017 $ ( 107,239 ) $ ( 17 ) $ 1,855,247 Reconciliation of operating income to income before income taxes Operating income $ 44,499 Interest expense ( 2,764 ) Interest income 19,396 Other income / (expense), net ( 1,576 ) Income before income taxes $ 59,555 Our SaaS and license revenue for the Alarm.com segment included software license revenue of $ 4.5 million and $ 9.2 million for the three and six months ended June 30, 2025, respectively, as compared to $ 5.2 million and $ 10.4 million for the same periods in the prior year. There was no software license revenue recorded for the Other segment during the three and six months ended June 30, 2025 and 2024. Additions to property and equipment were $ 5.0 million and $ 13.0 million for the Alarm.com segment for the three and six months ended June 30, 2025, respectively, as compared to $ 1.9 million and $ 5.8 million for the same periods in the prior year. Additions to property and equipment were less than $ 0.1 million for the Other segment for each of the three and six months ended June 30, 2025 as compared to less than $ 0.1 million and $ 0.1 million for the Other segment for the three and six months ended June 30, 2024, respectively. We derived substantially all revenue from North America for the three and six months ended June 30, 2025 and 2024. Substantially all of our long-lived assets were in North America as of June 30, 2025 and December 31, 2024. 35