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"Risk Factors" and "Special Note Regarding Forward-Looking Statements" in this Annual Report for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
−Removed: Alarm.com is the leading platform for the intelligently connected property.
−Removed: Our cloud-based platform offers an expansive suite of IoT solutions addressing global opportunities in the residential, multi-family, small business and enterprise commercial markets.
−Removed: Alarm.com’s solution suite includes security, video and video analytics, energy management, access control, electric utility grid management, indoor gunshot detection, water management, health and wellness, personal safety and data-rich emergency response.
+Added: Alarm.com is the leading platform for intelligently connected properties.
+Added: Our cloud-based platform offers an expansive suite of IoT solutions addressing global opportunities in the residential, multi-family, small business, enterprise commercial and energy markets.
+Added: 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, personal safety and data-rich emergency response.
During 2025 , our platforms processed more than 365 billion data points generated by over 170 million connected devices.
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Alarm.com has established a global network of trusted service provider partners who distribute our solutions to their customers.
−Removed: Our service provider partners represent a diverse range of independent businesses, and are experts at selling, installing and supporting our technology.
+Added: Our service provider partners represent a wide range of independent businesses, and are experts at selling, installing and supporting our technology.
They depend on the Alarm.com platform for connected property technology and to operate and manage their businesses efficiently.
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The Alarm.com platform enables our service provider partners to address the needs of a broad range of residential and commercial customers.
−Removed: They can deploy interactive security, video monitoring, property automation, access control, energy management, gunshot detection, water management, vehicle and fleet management, and wellness and personal safety solutions as stand-alone offerings or as integrated solutions.
+Added: They can deploy interactive security, video monitoring, property automation, access control, energy management, gunshot detection, water management, vehicle and fleet management, and personal safety solutions as stand-alone offerings or as integrated solutions.
Executive Overview and Highlights of 2025 and 2024 Results
−Removed: Alarm.com primarily generates SaaS and license revenue, our largest source of revenue, through our service provider partners, who resell our services and pay us monthly fees.
+Added: We primarily generate SaaS and license revenue, our largest source of revenue, through our service provider partners, who resell our services and pay us monthly fees.
Our service provider partners sell, install and support Alarm.com solutions that enable residential and commercial property owners to intelligently secure, connect, control and automate their properties.
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Software license revenue decreased to $20.3 million in 2024 from $23.2 million in 2023.
−Removed: • Total revenue increased 7% to $939.8 million in 2024 from $881.7 million in 2023.
+Added: • Total revenue increased 8% to $1.0112 billion in 2025 from $939.8 million in 2024.
Total revenue increased 7% to $939.8 million in 2024 from $881.7 million in 2023.
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Information about the 2029 Notes and the related interest expense as well as changes in legal costs, which may affect the comparability of historical financial information, is disclosed in the Comparison of Years Ended December 31, 2025 to December 31, 2024 section below within Item 7.
+Added: "Management’s Discussion and Analysis of Financial Condition and Results of Operations." Information about investments in unconsolidated entities accounted for under the equity method of accounting and the related equity method income from our investments in unconsolidated entities as well as acquisitions, which may affect the comparability of historical financial information, is disclosed in the Comparison of Years Ended December 31, 2025 to December 31, 2024 section below within Item 7.
"Management’s Discussion and Analysis of Financial Condition and Results of Operations."
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Our products are currently localized and available in over 50 countries outside of North America.
−Removed: On November 22, 2024, we acquired certain assets of Kapacity.io to help accelerate deployment of a cloud-based demand response platform internationally for our EnergyHub subsidiary.
Recent Developments
−Removed: On January 30, 2025, we entered into a senior secured loan agreement with a service provider partner, under which a term loan was provided to the service provider partner in the original principal amount of $21.5 million, which loan is collateralized by the assets of the service provider partner.
−Removed: Quarterly principal payments begin in the second quarter of 2027.
−Removed: 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%.
−Removed: For the first two years of the loan, monthly interest payments can be payable in kind at the election of the borrower.
−Removed: The maturity date of the loan is January 30, 2030.
−Removed: On February 10, 2025, Alarm.com Incorporated acquired 81% of the issued and outstanding shares of capital stock of CHeKT.
−Removed: CHeKT provides a remote video monitoring service for central station operators that is compatible with a variety of cameras.
−Removed: We believe the acquisition of CHeKT will help to expand our opportunity to provide remote video monitoring solutions in the commercial and residential markets.
−Removed: 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.
−Removed: We are currently evaluating the accounting treatment of this acquisition and are in the process of completing the preliminary purchase price allocation of the assets acquired and liabilities assumed.
+Added: On November 20, 2025, we paid $30.1 million in cash to purchase 20.3% of the outstanding shares of Pronet.
+Added: We do not have a controlling financial interest in Pronet, but based on the legal form of Pronet, our level of ownership and our extent of influence, we concluded that this equity investment in Pronet, 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.
+Added: On November 21, 2025, EnergyHub acquired 100% of the issued and outstanding shares of capital stock of RGS.
+Added: RGS provides demand response aggregation and program management services for utilities.
+Added: The acquisition is anticipated to strengthen EnergyHub’s position in the demand response market as well as make new demand energy response classes available to RGS customers.
+Added: On November 21, 2025, in consideration for the purchase of 100% of the issued and outstanding shares of capital stock of RGS, we paid $77.2 million in cash.
+Added: Pursuant to the terms of the stock purchase agreement, following the preliminary determination of the working capital of RGS as of the closing date, the purchase price increased by $1.6 million.
+Added: The working capital adjustment is expected to be finalized during the first quarter of 2026.
+Added: The purchase price allocation was not finalized as of the filing date of this Annual Report on Form 10-K and is primarily pending the final determination of the working capital adjustment.
+Added: On January 14, 2026, we paid $500.0 million in aggregate principal amount to holders of the 2026 Notes, fully settling the outstanding balance.
+Added: The settlement was funded with cash on hand, consistent with our stated intent, with no shares of common stock issued.
The global economy, credit markets and financial markets have and may continue to experience significant volatility as a result of the Macroeconomic Conditions.
−Removed: These Macroeconomic Conditions have and may continue to create tariffs, supply chain disruptions, inventory disruptions, and fluctuations in economic growth, including fluctuations in employment rates, inflation, energy prices and consumer sentiment.
+Added: These Macroeconomic Conditions have and may continue to create 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.
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Non-GAAP Adjusted EBITDA
−Removed: Non-GAAP adjusted EBITDA is a non-GAAP measure that represents our net income before interest expense, interest income, certain activity within other (expense) / income, net, provision for income taxes, amortization and depreciation expense, stock-based compensation expense, acquisition-related expense, legal costs and settlement fees incurred and received in connection with non-ordinary course litigation and other disputes, particularly costs involved in ongoing intellectual property litigation.
+Added: Non-GAAP adjusted EBITDA is a non-GAAP measure that represents our net income before interest expense, interest income, certain activity within other income / (expense), net, provision for income taxes, income from equity method investments, net, amortization and depreciation expense, stock-based compensation expense, acquisition-related expense, legal costs and settlement fees incurred and received in connection with non-ordinary course litigation and other disputes, particularly costs involved in ongoing intellectual property litigation.
We do not consider these items to be indicative of our core operating performance.
The non-cash items include amortization and depreciation expense;
+Added: income from equity method investments, net;
amortization of debt issuance costs for the January 20, 2021 issuance of $500.0 million aggregate principal amount of 0% convertible senior notes due January 15, 2026, or the 2026 Notes, included in interest expense;
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We exclude interest expense in calculating non-GAAP adjusted EBITDA because we believe the exclusion of interest expense will provide for more meaningful information about our financial performance.
−Removed: We exclude interest income and certain activity within other (expense) / income, net including gains, losses or impairments on investments without readily determinable fair values and other assets, gains and losses from equity method investments, gains on settlement fees and losses on the early extinguishment of debt, when applicable, from non-GAAP adjusted EBITDA because we do not consider it part of our ongoing results of operations.
−Removed: We exclude the impact related to our provision for income taxes from non-GAAP adjusted EBITDA because we do not consider this tax adjustment to be part of our ongoing results of operations.
+Added: We exclude interest income and certain activity within other income / (expense), net including gains, losses or impairments on investments without readily determinable fair values and other assets, gains on settlement fees and losses on the early extinguishment of debt, when applicable, from non-GAAP adjusted EBITDA because we do not consider it part of our ongoing results of operations.
+Added: We exclude the impact related to our provision for income taxes and income from equity method investments, net from non-GAAP adjusted EBITDA because we do not consider these adjustments to be part of our ongoing results of operations.
GAAP requires that operating expenses include the amortization of acquired intangible assets, which principally include acquired customer relationships, developed technology and trade names.
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We exclude non-ordinary course litigation expense because we do not consider legal costs and settlement fees incurred and received in litigation and litigation-related matters of non-ordinary course lawsuits and other disputes, particularly costs incurred in ongoing intellectual property litigation, to be indicative of our core operating performance.
−Removed: We do not adjust for ordinary course legal expenses, including those expenses resulting from maintaining and enforcing our intellectual property portfolio and license agreements.
+Added: We do not adjust for ordinary course
+Added: legal expenses, including those expenses resulting from maintaining and enforcing our intellectual property portfolio and license agreements.
Non-GAAP adjusted EBITDA is a key measure our management uses to understand and evaluate our core operating performance and trends to generate future operating plans, to make strategic decisions regarding the allocation of capital, and to make investments in initiatives that are focused on cultivating new markets for our solutions.
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We generate hardware and other revenue primarily from the sale of video cameras, video recorders, smart thermostats and cellular radio modules that provide access to our cloud-based platforms and, to a lesser extent, the sale of other devices, including image sensors, gunshot detection sensors and peripherals.
−Removed: We primarily transfer hardware to
−Removed: our customers upon delivery to the customer, which corresponds with the time at which the customer obtains control of the hardware.
+Added: We primarily transfer hardware to our customers upon delivery to the customer, which corresponds with the time at which the customer obtains control of the hardware.
We record a reserve against revenue for hardware returns based on historical returns.
Our hardware and other revenue also includes our revenue from the sale of perpetual licenses that provide our customers in the commercial market the right to use our video surveillance software for an indefinite period of time in exchange for a one-time license fee.
−Removed: Additionally, our hardware and other revenue includes our revenue from the sale of licenses that provide our customers the right to use our indoor gunshot detection solution in exchange for license fees.
+Added: Additionally, our hardware and other revenue includes our revenue from the sale of licenses that provide our customers the right to use our gunshot detection solution in exchange for license fees.
Hardware and other revenue may also include activation fees charged to some of our service provider partners for activation of a new subscriber account on our platforms, as well as fees paid by service provider partners for our marketing services.
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Our cost of revenue excludes amortization and depreciation shown in operating expenses.
−Removed: Since 2019, the U.S.
−Removed: government has implemented and imposed significant changes to U.S.
−Removed: trade policy with respect to China.
−Removed: Tariffs have subjected certain Alarm.com products manufactured overseas to additional import duties of up to 25%.
−Removed: The amount of the import tariff and the number of products subject to tariffs have changed numerous times based on action by the U.S.
−Removed: Less than one-third of the hardware products that we sell to our service provider partners are imported from China and could be subject to increased tariffs.
−Removed: While the additional import duties resulted in an increase to our cost of hardware revenue, these import duties had a modest impact on hardware revenue margins.
−Removed: If tariffs are increased or are expanded to apply to more of our products, such actions may increase our cost of hardware revenue and reduce our hardware revenue margins in the future.
−Removed: We continue to monitor the changes in tariffs.
−Removed: We currently expect our hardware revenue margins in 2025 to approximate the hardware revenue margins experienced during 2024.
+Added: In April 2025, the U.S.
+Added: government announced a baseline tariff of 10% on all products imported into the United States (with certain limited exceptions) and additional individualized tariffs based on country of origin at different rates per country.
+Added: Certain of these tariffs have been subsequently paused or modified, and the situation remains fluid.
+Added: The United States and/or countries into which we import products have adjusted and/or imposed and may, in the future, adjust and/or impose new quotas, duties, tariffs or reciprocal tariffs or other restrictions.
+Added: A significant portion of our hardware is produced outside the United States, including in Vietnam, Thailand and Taiwan.
+Added: government has since announced several tariff framework agreements, including with countries where a significant portion of our hardware is produced.
+Added: While we began passing through the costs of baseline tariffs to our customers in the second quarter of 2025, as of December 31, 2025, we had not yet adjusted those pass-throughs to account for certain newer tariffs at higher rates.
+Added: As a result, we began to absorb those additional costs, which we expect will negatively impact our hardware revenue margins in 2026.
+Added: The ultimate impact of any tariffs will depend on various factors, including how long such tariffs remain in place, the ultimate levels of such tariffs, the outcome of pending legal challenges to their validity, how other countries respond to the U.S.
+Added: tariffs, and the specific timing of when we implement higher pass-through costs.
Operating Expenses
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We grew from 2,010 employees as of January 1, 2025 to 2,058 employees as of December 31, 2025 .
−Removed: W e expect to continue to hire new employees to support the projected future growth of our business.
+Added: W e may continue to hire new employees to support the projected future growth of our business.
Sales and Marketing Expense.
Sales and marketing expense consists primarily of personnel and related expenses for our sales and marketing teams, including salaries, bonuses, stock-based compensation, benefits, travel, and commissions.
−Removed: sales and marketing teams engage in sales, account management, service provider partner support, advertising, promotion of our products and services and marketing.
+Added: Our sales and marketing teams engage in sales, account management, service provider partner support, advertising, promotion of our products and services and marketing.
The number of employees in sales and marketing functions increased from 572 as of January 1, 2025 to 607 as of December 31, 2025.
−Removed: We expect to continue to invest in our sales and marketing activities to expand our business both domestically and internationally and we expect to increase our marketing expense in 2025 as compared to 2024.
−Removed: We intend to increase the size of our sales force and our service provider partner support team to provide additional support to our existing service provider partner base to drive their productivity in selling our solutions as well as to enroll new service provider partners in North America and in international markets.
+Added: We expect to continue to invest in our sales and marketing activities to expand our business both domestically and internationally.
+Added: We may increase the size of our sales force and our service provider partner support team to provide additional support to our existing service provider partner base to drive their productivity in selling our solutions as well as to enroll new service provider partners in North America and in international markets.
General and Administrative Expense.
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Also included in general and administrative expenses are credit losses and acquisition-related expenses, which consist primarily of legal, accounting and professional service fees directly related to acquisitions and valuation gains or losses on acquisition-related contingent liabilities.
−Removed: The number of employees in general and administrative functions increased from 229 as of January 1, 2024 to 237 as of December 31, 2024.
+Added: The number of employees in general and administrative functions decreased from 237 as of January 1, 2025 to 235 as of December 31, 2025.
Excluding intellectual property litigation and acquisition-related expense, we expect general and administrative costs to increase prospectively as our business grows.
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Research and Development Expense .
−Removed: Research and development expense consists primarily of personnel and related expenses for our employees working on our product development and software and device engineering teams, including salaries, bonuses, stock-based compensation, benefits and other personnel costs.
+Added: Research and development expense consists primarily of personnel and related expenses for our employees working on our product development and software and device engineering teams as well as employees supporting research and development efforts, including salaries, bonuses, stock-based compensation, benefits and other personnel costs.
Also included are non-personnel costs such as consulting and professional fees paid to third-party development resources.
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Interest Expense
−Removed: We record interest expense associated with our 2026 Notes, 2029 Notes and acquired debt.
−Removed: Interest expense in 2025 is expected to increase as compared to 2024 due to the issuance of the 2029 Notes.
+Added: We record interest expense associated with our 2026 Notes and 2029 Notes.
+Added: Interest expense in 2026 is expected to decrease as compared to 2025 due to the maturity of the 2026 Notes on January 15, 2026.
Interest Income
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Interest income in 2025 will depend, in part, on our use of cash and fluctuations in interest rates.
−Removed: Other (Expense) / Income, Net
−Removed: Other (expense) / income, net primarily consists of non-operating and miscellaneous expense and income.
+Added: Other Income / (Expense), Net
+Added: Other income / (expense), net primarily consists of non-operating and miscellaneous expense and income, including the impacts of fluctuations in foreign currency exchange rates as well as gains and losses on equity securities.
Provision for Income Taxes
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As a result, we recognize tax liabilities based on estimates of whether additional taxes will be due.
−Removed: For the year ended December 31, 2024, our effective tax rate was below the 21.0% statutory rate primarily due to research and development tax credits claimed, the foreign derived intangible income deduction and tax windfall benefits from employee stock-based compensation, partially offset by the impact of state taxes, foreign withholding taxes and other nondeductible expenses.
+Added: For the year ended December 31, 2025, our effective tax rate was above the 21.0% statutory rate primarily due to the impact of state taxes, foreign withholding taxes and other nondeductible expenses, partially offset by the impact of 2025 research and development tax credits claimed and a favorable true-up adjustment of our 2024 income tax provision estimate associated with research and development tax credits.
We recognize stock-based compensation tax shortfalls and excess tax windfall benefits on a discrete basis during the quarter in which they occur, and we anticipate our effective tax rate will vary from quarter to quarter depending on our stock price as well as the vesting and exercises of various forms of equity compensation under our equity incentive plans each period, including restricted stock units and stock options.
+Added: Income from Equity Method Investments, Net
+Added: Income from equity method investments, net primarily consists of our share of the net assets and net income / (losses) of our investees accounted for under the equity method, including the impacts of amortization expense related to basis differences.
Results of Operations
The following table sets forth our selected consolidated statements of operations (in thousands) and data as a percentage of revenue for the periods presented.
+Added: Certain previously reported amounts in the consolidated statements of operations for the year ended December 31, 2024 have been reclassified to conform to our current presentation to reflect income from equity method investments, net, as a separate line item, which was previously included in other income / (expense), net.
Consolidated Statements of Operations
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Interest income 45,617 5 47,359 5 29,801 3
−Removed: Other (expense) / income, net (2,674) — 4,624 1 (59) —
+Added: Other income / (expense), net 4,645 — (2,807) — 4,624 1
Income before income taxes 166,606 16 141,674 15 97,825 11
Provision for income taxes 37,620 3 19,294 2 17,485 2
+Added: Income from equity method investments, net (2,642) — (133) — — —
Net income $ 131,628 13 % $ 122,513 13 % $ 80,340 9 %
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Total revenue $ 1,011,187 $ 939,827 8 %
−Removed: The $58.1 million increase in total revenue in 2024 as compared to 2023 was the result of a $62.0 million, or 11%, increase in our SaaS and license revenue and a $3.9 million, or 1%, decrease in our hardware and other revenue.
+Added: The $71.4 million increase in total revenue in 2025, as compared to 2024, was the result of a $58.2 million, or 9%, increase in our SaaS and license revenue and a $13.2 million, or 4%, increase in our hardware and other revenue.
Our software license revenue included within SaaS and license revenue decreased $2.6 million to $17.7 million in 2025, as compared to $20.3 million during 2024, primarily due to the result of the continuing transition of customers from non-hosted software to our cloud based hosted platform.
−Removed: The SaaS and license revenue for the Alarm.com segment increased $49.8 million in 2024 as compared to 2023 primarily due to growth in our subscriber base, including the revenue impact from subscribers we added in 2023, as well as an increase in our license revenue.
+Added: The SaaS and license revenue for the Alarm.com segment increased $40.7 million in 2025, as compared to 2024, primarily due to growth in our subscriber base, including the revenue impact from subscribers we added in 2024.
The SaaS and license revenue for our Other segment increased $17.5 million in 2025, as compared to 2024, primarily due to an increase in sales of our energy management and demand response solutions as well as our property management solution.
−Removed: The decrease in hardware and other revenue in 2024 as compared to 2023 was primarily from the $3.3 million decrease in hardware and other revenue, net of intersegment eliminations, for the Alarm.com segment arising from a decrease in the volume of cameras sold.
−Removed: Hardware and other revenue, net of intersegment eliminations, in our Other segment decreased $0.6 million, in 2024 as compared to 2023 primarily due to decreased sales related to our property management solution.
+Added: Hardware and other revenue, net of intersegment eliminations, in our Alarm.com segment increased $8.2 million in 2025, as compared to 2024, primarily due to the increases in the sale of perpetual licenses related to our video surveillance software as well as price increases we have implemented on certain products to cover a portion of our increases in costs.
+Added: Hardware and other revenue, net of intersegment eliminations, in our Other segment increased $5.0 million in 2025, as compared to 2024, primarily due to sales of energy credits related to the acquisition of BTR as well as an increase in sales related to our property management solution.
Cost of Revenue
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(1) Excludes amortization and depreciation shown in operating expenses.
−Removed: The $1.0 million increase in cost of revenue in 2024 as compared to 2023 was the result of a $3.6 million, or 4%, increase in cost of SaaS and license revenue and a $2.6 million, or 1%, decrease in cost of hardware and other revenue.
−Removed: Our cost of software license revenue included within cost of SaaS and license revenue remained relatively consistent at $0.6 million during 2024 and 2023.
+Added: The $16.1 million increase in cost of revenue in 2025, as compared to 2024, was the result of a $9.5 million, or 4%, increase in cost of hardware and other revenue, and a $6.6 million, or 7%, increase in cost of SaaS and license revenue.
+Added: Our cost of software license revenue included within cost of SaaS and license revenue was $0.4 million and $0.6 million during 2025 and 2024, respectively.
+Added: The cost of hardware and other revenue for the Alarm.com segment increased $4.9 million in 2025, as compared to 2024, primarily due to an increase in the number of hardware units sold related to our video surveillance software.
+Added: The cost of hardware and other revenue for the Other segment increased $4.6 million in 2025, as compared to 2024, primarily due to costs associated with sales of energy credits related to the acquisition of BTR and an increase in the number of hardware units shipped related to our property management solution.
+Added: The cost of SaaS and license revenue for the Other segment increased $5.3 million in 2025, as compared to 2024, primarily due to an increase in sales of our energy management and demand response solutions, which drove a corresponding increase in amounts paid to distributed energy resource providers.
The cost of SaaS and license revenue for the Alarm.com segment increased $1.3 million in 2025, as compared to 2024, primarily due to the growth in our subscriber base, which drove a corresponding increase in amounts paid to wireless network providers.
−Removed: The cost of SaaS and license revenue for the Other segment increased $3.3 million in 2024 as compared to 2023 primarily due to an increase in sales of our energy management and demand response solutions, which drove a corresponding increase in amounts paid to distributed energy resource providers.The cost of hardware and other revenue for the Alarm.com segment decreased $2.1 million in 2024 as compared to 2023 primarily due to a decrease in the number of hardware units shipped.
−Removed: The cost of hardware and other revenue for the Other segment decreased $0.5 million in 2024 as compared to 2023 primarily due to a decrease in the number of hardware units shipped.
−Removed: Cost of hardware and other revenue as a percentage of hardware and other revenue was 77% in 2024 and 2023.
+Added: Cost of hardware and other revenue as a percentage of hardware and other revenue was 76% and 77% in 2025 and 2024, respectively.
Cost of SaaS and license revenue as a percentage of SaaS and license revenue was 14% and 14% in 2025 and 2024, respectively.
The decrease in cost of SaaS and license revenue as a percentage of SaaS and license revenue in 2025, as compared to 2024, is a reflection of the mix of sales and services during the periods.
−Removed: Cost of software license revenue as a percentage of software license revenue was 3% in 2024 and 2023.
+Added: Cost of software license revenue as a percentage of software license revenue was 2% and 3% in 2025 and 2024, respectively.
Sales and Marketing Expense
4 unchanged sentences
The $12.5 million increase in sales and marketing expense in 2025, as compared to 2024, was primarily due to a $6.2 million increase in personnel and related costs for our Alarm.com segment, attributable in part to increases in the headcount for our sales team to support our growth, and a $2.4 million increase in marketing expense for our Alarm.com segment.
−Removed: These increases in sales and marketing expense for our Alarm.com segment were partially offset by a $0.7 million decrease in our expenses for external consultants in 2024 as compared to 2023.
Sales and marketing expense from our Other segment increased $3.4 million in 2025, as compared to 2024, primarily due to increases in personnel and related costs, attributable in part to increases in the headcount for our sales team.
5 unchanged sentences
% of total revenue 11 % 12 %
−Removed: The $4.1 million decrease in general and administrative expense in 2024 as compared to 2023 was primarily due to a $16.1 million decrease in legal costs for our Alarm.com segment related to intellectual property litigation.
−Removed: This decrease in general and administrative expense was partially offset by a $4.0 million increase in the provision for credit losses related to a loan we previously provided to an affiliated entity of one of our distribution partners, a $3.9 million increase in expenses related to a program to help our service providers resell our solutions and hardware to our subscribers, a $1.1 million increase in personnel and related costs, a $0.9 million increase in rent expense and a $0.7 million increase in recruiting costs and in 2024 as compared
−Removed: General and administrative expenses from our Other segment increased by $1.5 million during 2024 as compared to 2023, primarily due to an increase in personnel and related costs.
−Removed: The overall number of employees in general and administrative functions increased from 229 as of December 31, 2023 to 237 as of December 31, 2024.
+Added: The $1.5 million increase in general and administrative expense in 2025, as compared to 2024, was primarily due to a $3.1 million increase in our expenses for external consultants and a $2.5 million increase in personnel and related costs for our Alarm.com segment.
+Added: These increases in general and administrative expense are partially offset by a $2.8 million decrease in the provision for credit losses for our Alarm.com segment primarily related to credit loss expense recorded in 2024 related to a loan we previously provided to an affiliated entity of one of our distribution partners that did not occur in 2025, as well as a decrease of $1.1 million in recruiting costs for our Alarm.com segment.
+Added: General and administrative expenses from our Other segment increased by $0.3 million in 2025, as compared to 2024, primarily due to an increase in legal costs.
+Added: The overall number of
+Added: employees in general and administrative functions decreased from 237 as of December 31, 2024, to 235 as of December 31, 2025.
Research and Development Expense
3 unchanged sentences
% of total revenue 27 % 27 %
−Removed: The $10.8 million increase in research and development expense in 2024 as compared to 2023 was primarily due to a $5.7 million increase in personnel and related costs for our Alarm.com segment, attributable in part to an increase in headcount of employees in research and development functions as well as a $2.4 million increase in our expenses for external consultants.
−Removed: Research and development expense from our Other segment increased by $3.3 million in 2024 as compared to 2023 primarily due to an increase in our personnel and related costs.
+Added: The $14.4 million increase in research and development expense in 2025, as compared to 2024, was primarily due to a $4.3 million increase in personnel and related costs for our Alarm.com segment, attributable in part to an increase in headcount of employees in research and development functions, a $3.5 million increase in our expenses for external consultants and a $2.0 million increase in expenses for software licenses for our Alarm.com segment.
+Added: Research and development expense from our Other segment increased by $3.0 million in 2025, as compared to 2024, primarily due to an increase in personnel and related costs.
The overall number of employees in research and development functions increased from 1,127 as of December 31, 2024, to 1,150 as of December 31, 2025.
4 unchanged sentences
% of total revenue 3 % 3 %
−Removed: Amortization and depreciation decreased $2.3 million in 2024 as compared to 2023, primarily due to changes in amortization expense related to the intangible assets we previously acquired.
+Added: Amortization and depreciation increased $1.7 million in 2025, as compared to 2024, primarily due to intangible assets that were acquired in connection with the purchase of 81% of the issued and outstanding shares of capital stock of CHeKT on February 10, 2025, the purchase of 100% of the issued and outstanding shares of capital stock of BTR on August 15, 2025, and the purchase of 100% of the issued and outstanding shares of capital stock of RGS on November 21, 2025, as well as changes in depreciation expense related to property and equipment.
Interest Expense
9 unchanged sentences
% of total revenue 5 % 5 %
−Removed: Interest income increased $17.6 million in 2024 as compared to 2023, primarily due to an increase in interest income earned on cash and cash equivalents from higher amounts of cash and cash equivalents and higher average interest rates during 2024 as compared to 2023.
−Removed: The increase in interest income was partially offset by a $0.5 million reduction to interest income for the reversal of payable in kind interest associated with a subordinated credit agreement with an affiliated entity of one of our distribution partners during 2024, which did not occur during 2023 .
−Removed: Other (Expense) / Income, Net
+Added: Interest income decreased $1.7 million in 2025 as compared to 2024, primarily due to a decrease in interest income earned on cash and cash equivalents from lower average interest rates and lower amounts of cash and cash equivalents during some of 2025, as compared to 2024.
+Added: Other Income / (Expense), Net
Year Ended December 31, % Change
2025 2024 2025 vs.
−Removed: Other (expense) / income, net $ (2,674) $ 4,624 (158) %
+Added: Other income / (expense), net $ 4,645 $ (2,807) (265) %
% of total revenue — % — %
−Removed: Other (expense) / income, net decreased $7.3 million in 2024 as compared to 2023, primarily due to a gain recorded from the settlement of a legal matter in 2023 that did not occur in 2024 as well as an increase in non-operating and miscellaneous expenses.
+Added: Other income / (expense), net increased $7.5 million in 2025 primarily due to a $4.7 million gain on publicly traded equity securities within our treasury portfolio and a $2.0 million gain on fluctuations in foreign currency exchange rates.
Provision for Income Taxes
5 unchanged sentences
Our effective tax rate was 22.6% in 2025 as compared to 13.6% in 2024.
−Removed: The increase in the provision for income taxes was primarily due to the increase in income before income taxes, partially offset by an increase in our research and development income tax credits and windfall benefits from employee stock-based compensation.
+Added: The increase in the provision for income taxes was primarily due to the increase in income before income taxes, a reduction in our foreign derived intangible income deduction and our research and development tax credits, a tax shortfall in employee stock-based compensation in 2025 as opposed to a windfall tax benefit recognized in 2024 and a less favorable true-up adjustment of our 2024 income tax provision estimate associated with research and development tax credits recorded in 2025 as compared to a similar true-up adjustment of our 2023 income tax provision estimate associated with research and development tax credits recorded in 2024.
+Added: Income from Equity Method Investments, Net
+Added: Year Ended December 31, % Change
+Added: 2025 2024 2025 vs.
+Added: Income from equity method investments, net $ (2,642) $ (133) 1,886 %
+Added: % of total revenue — % — %
+Added: Income from equity method investments, net increased $2.5 million in 2025, as compared to 2024, primarily due to the increase in our share of the net assets and net income of our investees accounted for under the equity method, partially offset by amortization expense related to basis differences in our equity method investments.
Comparison of Years Ended December 31, 2024 to December 31, 2023
4 unchanged sentences
Alarm.com and Other.
−Removed: Our Alarm.com segment represents our cloud-based and Software platforms for the intelligently connected property and related solutions that contributed 92%, 93% and 94% of our revenue, net of intersegment eliminations, for the years ended December 31, 2024, 2023 and 2022, respectively.
+Added: Our Alarm.com segment represents our cloud-based and Software platforms for intelligently connected properties and related solutions that contributed 91%, 92% and 93% of our revenue, net of intersegment eliminations, for the years ended December 31, 2025, 2024 and 2023, respectively.
Our Other segment is focused on researching, developing and offering residential and commercial automation solutions and energy management products and services in adjacent markets.
28 unchanged sentences
Operating income / (loss) $ 141,679 $ (8,180) $ (411) $ 550 $ 133,638
−Removed: Assets $ 2,081,214 $ 85,468 $ (128,465) $ (9) $ 2,038,208
+Added: $ 2,181,210 $ 190,095 $ (234,681) $ (33) $ 2,136,591
Reconciliation of operating income to income before income taxes
2 unchanged sentences
Interest income 45,617
−Removed: Other (expense) / income, net (2,674)
+Added: Other income / (expense), net 4,645
Income before income taxes $ 166,606
22 unchanged sentences
Operating income / (loss) $ 121,541 $ (12,723) $ (468) $ 198 $ 108,548
−Removed: Assets $ 1,477,674 $ 73,621 $ (111,725) $ (7) $ 1,439,563
+Added: $ 2,081,214 $ 85,468 $ (128,465) $ (9) $ 2,038,208
Reconciliation of operating income to income before income taxes
2 unchanged sentences
Interest income 47,359
−Removed: Other (expense) / income, net 4,624
+Added: Other income / (expense), net (2,807)
Income before income taxes $ 141,674
26 unchanged sentences
Interest income 29,801
−Removed: Other (expense) / income, net (59)
+Added: Other income / (expense), net 4,624
Income before income taxes $ 97,825
1 unchanged sentence
There was no software license revenue recorded for the Other segment during the years ended December 31, 2025, 2024 and 2023.
−Removed: Additions to property and equipment were $20.1 million, $8.9 million and $28.4 million for the Alarm.com segment for the years ended December 31, 2024, 2023 and 2022, respectively.
−Removed: Additions to property and equipment were $0.1 million, $0.2 million and $0.3 million for the Other segment for the years ended December 31, 2024, 2023 and 2022, respectively.
+Added: Cash additions to property and equipment were $16.2 million, $10.0 million and $7.4 million for the Alarm.com segment for the years ended December 31, 2025, 2024 and 2023, respectively.
+Added: Cash additions to property and equipment were less than $0.1 million for the Other segment for the year ended December 31, 2025, and were $0.1 million for the years ended December 31, 2024 and 2023.
Critical Accounting Estimates
10 unchanged sentences
We have variable consideration primarily in the form of rebate incentives, which contain uncertainties and require us to make estimates of the amount of consideration to which we will be entitled.
−Removed: The significant inputs related to our estimates of variable consideration include the volume and amount of products and services sold historically and expected to be sold in the future, the availability and performance of our services and the historical and expected number of returns.
−Removed: We record a reserve against revenue for hardware returns based on historical returns.
−Removed: For each of the years ended December 31, 2024, 2023 and 2022, our reserve against revenue for hardware returns was 1% of hardware and other revenue.
−Removed: We evaluate our hardware reserve on a quarterly basis or if there is an indication of significant changes in return experience.
−Removed: Historically, our returns of hardware have not significantly differed from our estimated reserve.
+Added: The significant inputs related to our estimates of variable consideration include the volume and amount of products and services sold historically and expected to be sold in the future, and the availability and performance of our services.
While variable consideration assumptions are specific to each contract, we did not make any material changes to these assumptions for the year ended December 31, 2025.
1 unchanged sentence
However, if changes in these assumptions occur, and, should those changes be significant, they could have a material impact on our SaaS and license revenue as well as our hardware and other revenue.
+Added: We generally offer customers a limited right of return for hardware that has been purchased from us.
+Added: We record a reserve against revenue for hardware returns based on historical returns.
+Added: For each of the years ended December 31, 2025, 2024 and 2023, our reserve against revenue for hardware returns was 1% of hardware and other revenue.
+Added: We evaluate our hardware reserve on a quarterly basis or if there is an indication of significant changes in return experience.
+Added: Historically, our returns of hardware have not significantly differed from our estimated reserve and while we do not expect any material changes in the near term to the underlying assumptions used to recognize our reserve against revenue for hardware returns, if changes in these assumptions occur, and, should those changes be significant, they could have a material impact on our hardware and other revenue.
Business Combinations
1 unchanged sentence
This valuation contains uncertainties and requires management to apply significant judgment in estimating the fair value of long-lived and intangible assets acquired, which involves the use of significant estimates and assumptions.
−Removed: Significant estimates and assumptions in valuing certain acquired customer relationship intangible assets include estimates about future expected cash flows and discount rates.
−Removed: Significant estimates and assumptions in valuing acquired developed technology intangible assets include estimates about future expected cash flows, obsolescence factors and discount rates.
+Added: Significant estimates and assumptions in valuing certain acquired customer relationship intangible assets include estimates about future expected cash flows, attrition rates and discount rates.
+Added: Significant estimates and assumptions in valuing acquired developed technology intangible assets include estimates about future expected cash flows, obsolescence factors, royalty rates and discount rates.
Significant estimates and assumptions in valuing acquired trade name intangible assets include estimates about future expected cash flows, royalty rates and discount rates.
We did not make any material changes to the underlying assumptions used as of the acquisition date to calculate the purchase price of the business combinations that occurred during 2025 and 2023.
−Removed: We do not expect any changes to the underlying assumptions used to calculate the purchase price of those business combinations as the purchase price allocation was finalized for these business combinations.
+Added: We do not expect any changes to the
+Added: underlying assumptions used to calculate the purchase price of those business combinations, in part, because the purchase price allocation was finalized for some of these business combinations.
Goodwill, Intangible Assets and Long-lived Assets
4 unchanged sentences
Qualitative factors we consider when we perform a qualitative analysis include, but are not limited to, macroeconomic conditions, industry and market conditions, company specific events, changes in circumstances and market capitalization.
−Removed: For our 2024 annual impairment review, we performed a qualitative assessment for our Alarm.com reporting unit, our only reporting unit with a goodwill balance.
−Removed: There were no triggering events that occurred between our qualitative annual impairment test performed as of October 1, 2024 and December 31, 2024.
−Removed: If triggering events arise in the future that require changes in the underlying assumptions used in our assessment of our goodwill, and, should those changes be significant, they could have a material impact on our goodwill and potentially our other (expense) / income, net, if those significant changes result in an impairment.
+Added: For our 2025 annual impairment review, we performed a qualitative assessment for our Alarm.com and Other reporting units.
+Added: There were no indicators of impairment that occurred between our qualitative annual impairment test performed as of October 1, 2025 and December 31, 2025.
+Added: If triggering events arise in the future that require changes in the underlying assumptions used in our assessment of our goodwill, and, should those changes be significant, they could have a material impact on our goodwill and potentially our other income / (expense), net, if those significant changes result in an impairment.
Intangible Assets and Long-lived Assets
5 unchanged sentences
There were no indicators of impairment of our intangible assets with definite lives or long-lived assets during the years ended December 31, 2025, 2024 and 2023.
−Removed: If triggering events arise in the future, depending on the significance of the underlying assumptions in the impairment analysis, they could have a material impact on our intangible assets and long-lived assets and potentially our other (expense) / income, net, if those significant changes result in an impairment.
+Added: If triggering events arise in the future, depending on the significance of the underlying assumptions in the impairment analysis, they could have a material impact on our intangible assets and long-lived assets and potentially our other income / (expense), net, if those significant changes result in an impairment.
Accounting for Income Taxes
8 unchanged sentences
Stock-Based Compensation
+Added: On April 17, 2025, our board of directors adopted, and on June 4, 2025, our stockholders approved, our 2025 Equity Incentive Plan, or 2025 Plan.
+Added: The 2025 Plan provides that (i) no new awards may be granted under the 2015 Equity Incentive Plan, or 2015 Plan, as of June 4, 2025, although awards granted under the 2015 Plan prior to June 4, 2025, will remain outstanding in accordance with their terms and those of the 2015 Plan, and (ii) the shares of common stock that were available for grant under the 2015 Plan but were unissued as of June 4, 2025, became available for issuance pursuant to awards granted under the 2025 Plan.
We compensate our executive officers, board of directors and employees with stock-based compensation plans under our 2025 Plan.
−Removed: We record stock-based compensation expense related to performance-based restricted stock units based on
−Removed: management’s determination of the probable outcome of the performance conditions, which requires considerable judgment.
+Added: We record stock-based compensation expense related to performance-based restricted stock units based on management’s determination of the probable outcome of the performance conditions, which requires considerable judgment.
We estimate the fair value of each option granted on the date of the grant using the Black-Scholes option-pricing model, which contains uncertainties and requires us to estimate the risk-free interest rate, expected term, expected stock price volatility and dividend yield.
14 unchanged sentences
Liquidity and Capital Resources
−Removed: As of December 31, 2024, we had $1.22 billion in cash and cash equivalents.
+Added: As of December 31, 2025, we had $960.6 million in cash and cash equivalents.
We consider all highly liquid instruments purchased with an original maturity from the date of purchase of three months or less to be cash equivalents.
2 unchanged sentences
Beginning in 2022, the Tax Cuts and Jobs Act of 2017 amended Internal Revenue Code Section 174, or Section 174, to eliminate the option to immediately deduct research and development expenditures in the year incurred, requiring these expenditures to be capitalized and amortized over five years for domestic expenditures and over 15 years for foreign expenditures.
−Removed: We calculated the 2022 federal and state cash tax increase from Section 174 to be $38.1 million, which was paid in early 2023, the 2023 federal and state cash tax increase from Section 174 to be $43.5 million, which we paid in April 2024, and we have estimated the 2024 federal and state cash tax increase from Section 174 to be approximately $33.5 million, which we expect to pay in April 2025.
−Removed: The Section 174 impact on 2025 cash flows from operating activities will depend on, among other factors, our 2025 operating results and the level of 2025 research and development activity.
−Removed: Based on information currently available to us, we estimate the 2025 Section 174 federal and state cash tax payable for our 2025 taxable income to be in the range of $25.0 million to $30.0 million if the requirement to capitalize and amortize research and development expenditures is not deferred, modified or repealed.
−Removed: This estimate is based on the limited information that is currently available and is subject to change.
−Removed: While the largest impact has been to cash flow from operating activities, the impact for domestic research and development expenditures would continue over the five-year amortization period beginning in 2022, but has decreased over that period and is expected to be immaterial beginning in year six.
−Removed: There is discussion of prospectively repealing the requirement to capitalize domestic research and development costs, but there is no assurance such legislation will be enacted.
+Added: We calculated the 2023 federal and state cash tax increase from Section 174 to be $43.5 million, which we paid in April 2024, and we calculated the 2024 federal and state cash tax increase from Section 174 to be $33.5 million, which we paid in April 2025.
+Added: On July 4, 2025, the OBBBA was enacted in the United States.
+Added: The OBBBA includes a broad range of tax provisions that impact the timing and the magnitude of certain key tax deductions.
+Added: The most significant provisions to us are the permanent reinstatement of the full and immediate deduction for domestic research and development expenditures in the year such costs are incurred and the 100% first-year bonus depreciation deduction, with both provisions reducing our associated deferred tax assets.
+Added: We currently anticipate these provisions will significantly reduce our current federal income tax cash outlays over the next several years.
+Added: Certain other international tax provisions may also be favorable to us beginning in 2026.
We believe our existing cash and cash equivalents and our future cash flows from operating activities will be sufficient to meet our anticipated operating cash needs for at least the next 12 months.
−Removed: Over the next 12 months, we expect our capital expenditure requirements to be between $12.0 million and $15.0 million, primarily related to purchases of computer software and equipment as well as the continued build out of our leased and owned office space.
+Added: Over the next 12 months, we expect our capital expenditure requirements to be between $8.0 million and $11.0 million, primarily related to purchases of computer software and equipment as well as the continued build out of our leased and owned office space, excluding any leasehold improvements related to tenant improvement allowances.
As of December 31, 2025, maturities of lease liabilities for our various leases are as follows:
$14.3 million in 2026, $14.6 million in 2027, $13.6 million in 2028, $12.0 million in 2029, $11.3 million in 2030 and $37.1 million in 2031 and thereafter.
−Removed: On January 30, 2025, we entered into a senior secured loan agreement with a service provider partner, under which a term loan was provided to the service provider partner in the original principal amount of $21.5 million, which loan is collateralized by the assets of the service provider partner.
+Added: On January 30, 2025, we entered into a senior secured loan agreement with SafeStreets, 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 SafeStreets.
Quarterly principal payments begin in the second quarter of 2027.
3 unchanged sentences
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.
−Removed: We are currently evaluating the accounting treatment of this acquisition and are in the process of completing the preliminary purchase price allocation of the assets acquired and liabilities assumed.
+Added: 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.
+Added: 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.
+Added: 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.
+Added: On April 28, 2025, we paid $29.1 million in cash to purchase 24.7% of the outstanding shares of SafeStreets.
+Added: We do not have a controlling financial interest in SafeStreets, but based on the legal form of SafeStreets, our level of ownership and the extent of influence, we concluded that this equity investment in SafeStreets, 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.
+Added: 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.
+Added: 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.
+Added: After consummation of these transactions, All Access and Safe Haven were under common control.
+Added: 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 the 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.
+Added: On August 15, 2025, EnergyHub acquired all of the issued and outstanding shares of capital stock of BTR.
+Added: BTR provides a managed charging solution for electric vehicle manufacturers and drivers.
+Added: BTR’s technology integrates directly into a vehicle’s native mobile app, delivering utility program enrollment, charging insights and incentives to electric vehicle drivers.
+Added: The acquisition is anticipated to expand EnergyHub’s ecosystem of automotive partners and strengthen its end-to-end managed charging offering, supporting improved driver engagement and grid optimization for utility clients.
+Added: In consideration for the purchase of all of the issued and outstanding shares of capital stock of BTR, we paid $12.4 million in cash on August 15, 2025, after deducting $1.6 million related to agreed holdback provisions.
+Added: On November 20, 2025, we paid $30.1 million in cash to purchase 20.3% of the outstanding shares of Pronet.
+Added: We do not have a controlling financial interest in Pronet, but based on the legal form of Pronet, our level of ownership and our extent of influence, we concluded that this equity investment in Pronet, 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.
+Added: On November 21, 2025, in consideration for the purchase of 100% of the issued and outstanding shares of capital stock of RGS, we paid $77.2 million in cash.
+Added: Pursuant to the terms of the stock purchase agreement, following the preliminary determination of the working capital of RGS as of the closing date, the purchase price increased by $1.6 million.
Our future working capital, capital expenditure and cash requirements will depend on many factors, including the impact of the Macroeconomic Conditions on the economy and our operations, the rate of our revenue growth, the amount and timing of our investments in human resources and capital equipment, future acquisitions and investments, and the timing and extent of our introduction of new solutions and platform and solution enhancements.
3 unchanged sentences
Any additional equity financing would be dilutive to our current stockholders.
−Removed: The following discussion summarizes our current and long-term material cash requirements as of December 31, 2024, which we expect to fund primarily with operating cash flows:
+Added: The following discussion summarizes our current and long-term material cash requirements as of December 31, 2025, which we expect to fund primarily with proceeds from our 2026 Notes and 2029 Notes as well as from operating cash flows:
Material Cash Requirements (in thousands)
31 unchanged sentences
No sinking fund is provided for the 2026 Notes.
−Removed: 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:
+Added: The 2026 Notes were 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;
−Removed: (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;
+Added: (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
+Added: 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 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.
−Removed: 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.
−Removed: Upon conversion, we may satisfy our conversion obligation by paying or delivering, as the case may be, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election.
−Removed: It is our current intent to settle the principal amount of the 2026 Notes with cash.
+Added: 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 could have converted all or any portion of their 2026 Notes at any time, regardless of the foregoing conditions.
+Added: Upon conversion, prior to August 15, 2025, we had the ability to satisfy our conversion obligation by paying or delivering, as the case may be, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election.
+Added: It was our intent to settle the principal amount of the 2026 Notes with cash.
+Added: On or after August 15, 2025, we must pay cash to satisfy the principal portion of our conversion obligation and must deliver shares to satisfy any excess conversion value.
The initial conversion rate for the 2026 Notes is 6.7939 shares of our common stock per $1,000 principal amount of 2026 Notes, which is equivalent to an initial conversion price of $147.19 per share of our common stock, subject to adjustment under certain circumstances in accordance with the terms of the 2026 Indenture.
4 unchanged sentences
We are using the remaining net proceeds from the issuance of the 2026 Notes for working capital and other general corporate purposes, which may include acquisitions or strategic investments in complementary businesses or technologies.
+Added: On January 14, 2026, we paid $500.0 million in aggregate principal amount to holders of the 2026 Notes, fully settling the outstanding balance.
+Added: The settlement was funded with cash on hand, consistent with our stated intent, with no shares of common stock issued.
Convertible Senior Notes - 2029 Notes
4 unchanged sentences
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.
−Removed: 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
−Removed: on, and including, the trading day immediately preceding the date on which we provide notice of redemption.
+Added: We may redeem for cash, all or any portion of the 2029 Notes (subject to the partial redemption limitation described below), at our option, on or after June 7, 2027, at a redemption price equal to 100% of the principal amount of the 2029 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, if the last reported sale price of our common stock has been at least 130% of the conversion price for the 2029 Notes then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending 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.
1 unchanged sentence
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:
−Removed: (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;
−Removed: (2) during the five business day period immediately after any ten consecutive trading day period in which, for each trading day of that period, the trading price per $1,000 principal amount of 2029 Notes for such trading day was less than 98% of the product of the last reported sale price of our common stock and the conversion rate for the 2029 Notes on each such trading day;
+Added: (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
+Added: ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price for the 2029 Notes on each applicable trading day;
+Added: (2) during the five business day period immediately after any 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;
8 unchanged sentences
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.
−Removed: We are using the remaining net proceeds from the issuance of the 2029 Notes for general corporate purposes, which may include acquisitions or strategic investments in complementary businesses or technologies, other repurchases of our common stock, repurchases of our 2026 Notes and for working capital, operating expenses and capital expenditures.
+Added: 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, and for working capital, operating expenses and capital expenditures.
Capped Call – 2029 Notes
5 unchanged sentences
On January 20, 2021, we issued $500.0 million aggregate principal amount of 0% convertible senior notes due January 15, 2026, in a private placement to qualified institutional buyers and received proceeds of $484.3 million, net of $15.7 million of transaction fees and other debt issuance costs.
+Added: On January 14, 2026, we paid $500.0 million in aggregate principal amount to holders of the 2026 Notes, fully settling the outstanding balance.
+Added: The settlement was funded with cash on hand, consistent with our stated intent, with no shares of common stock issued.
The 2026 Notes are discussed in more detail above under “Convertible Senior Notes - 2026.”
6 unchanged sentences
Stock Repurchase Programs
−Removed: On February 15, 2023, our board of directors authorized a stock repurchase program, effective February 23, 2023, under which we were authorized to purchase up to an aggregate of $100.0 million of our outstanding common stock during the two-year period ending February 23, 2025.
+Added: On December 3, 2020, our board of directors authorized a stock repurchase program, under which we were authorized to purchase up to an aggregate of $100.0 million of our outstanding common stock during the three-year period ending December 3, 2023.
+Added: On February 15, 2023, our board of directors authorized the cancellation of the balance under the stock repurchase program ending December 3, 2023, and also authorized a stock repurchase program, effective February 23, 2023, under which we were authorized to purchase up to an aggregate of $100.0 million of our outstanding common stock during the two-year period ending February 23, 2025.
On May 24, 2024, our board of directors authorized the repurchase of our common stock in connection with the issuance of the 2029 Notes, the cancellation of the balance under the stock repurchase program ending February 23, 2025, and also authorized a stock repurchase program, effective May 31, 2024, under which we are authorized to purchase up to an aggregate of $100.0 million of our outstanding common stock during the two-year period ending May 31, 2026.
−Removed: The full repurchase balance for this program of $100.0 million was available as of December 31, 2024.
+Added: During the year ended December 31, 2025, we repurchased 772,494 shares of our common stock for $41.6 million under the stock repurchase program, effective May 24, 2024.
During the year ended December 31, 2024, we repurchased 1,117,068 shares of our common stock for $75.0 million concurrently with the pricing of the 2029 Notes, which was separately authorized by our board of directors.
−Removed: During the years ended December 31, 2023 and 2022, we repurchased 487,918 and 1,385,592 shares of our common stock under our stock repurchase programs that were subsequently canceled effective May 31, 2024 and February 15, 2023, for $27.3 million and $78.8 million, respectively, which includes applicable commissions and fees.
−Removed: As of January 1, 2023, we are subject to a 1.0% excise tax on the value of net corporate stock repurchases under the Inflation Reduction Act of 2022.
+Added: During the year ended December 31, 2023, we repurchased 487,918 shares of our common stock under our stock repurchase program that was subsequently canceled effective May 31, 2024 for $27.3 million, which includes applicable commissions and fees.
+Added: 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 consolidated balance sheets.
Shares Withheld
−Removed: As permitted under the terms of the 2015 Equity Incentive Plan, or 2015 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.
+Added: As permitted under the terms of the 2025 Plan, we may withhold 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.
9 unchanged sentences
Cash flows used in investing activities (358,482) (24,681) (25,966)
−Removed: Cash flows from / (used in) financing activities 346,430 (31,865) (76,324)
+Added: Cash flows (used in) / from financing activities (55,006) 346,430 (31,865)
Operating Activities
1 unchanged sentence
For 2025, cash flows from operating activities were $153.3 million, compared to $206.4 million for 2024.
+Added: This $53.1 million decrease in cash flows from operating activities was due to a $122.5 million decrease in cash from operating assets and liabilities, partially offset by a $60.3 million increase in non-cash and other reconciling items and a $9.1 million increase in net income.
+Added: The $122.5 million decrease in cash from operating assets and liabilities was primarily due to a $82.6 million change in accounts receivable, accounts payable and other current liabilities primarily due to the timing of disbursements and the collection of receipts, a $14.2 million change in inventory resulting from an increase in the change of purchased inventory in 2025 as compared to 2024 as well as a $12.7 million income tax receivable recorded in 2025.
+Added: The $60.3 million increase in non-cash and other reconciling items was primarily due to a $64.5 million change in deferred income taxes, which was primarily driven by the enactment of the OBBBA, which allows for the immediate deduction of post-2024 domestic research and development expenditures, resulting in a reduction to the associated deferred tax asset, as well as the current year amortization of the capitalized pre-2025 domestic research and development expenditures.
+Added: The increase in non-cash and other reconciling items was also due to $7.8 million in distributions received from our equity method investees in 2025.
+Added: These increases in non-cash and other reconciling items were partially offset by a $8.1 million decrease in stock-based compensation as well as a $7.6 million increase in gains from investments in unconsolidated entities in 2025 as compared to 2024.
+Added: For 2024, cash flows from operating activities were $206.4 million, compared to $136.0 million for 2023.
This $70.4 million increase in cash flows from operating activities was due to a $42.2 million increase in net income, a $19.7 million increase in cash from operating assets and liabilities and a $8.5 million increase in non-cash and other reconciling items.
2 unchanged sentences
These increases in non-cash and other reconciling items were partially offset by a $6.0 million decrease in stock-based compensation and a $2.3 million decrease in amortization and depreciation expense in 2024 as compared to 2023 as well as a $1.4 million inventory write-down in 2023 that did not occur in 2024.
−Removed: For 2023, cash flows from operating activities were $136.0 million, compared to $56.9 million for 2022.
−Removed: This $79.1 million increase in cash flows from operating activities was due to a $49.3 million increase in cash from operating assets and liabilities, a $24.7 million increase in net income and a $5.1 million increase in non-cash and other reconciling items.
−Removed: The $49.3 million increase in cash from operating assets and liabilities was primarily due to a $61.3 million change in inventory resulting from a decrease in purchased inventory following 2022 purchase activity to reduce risks and uncertainties in our supply chain as well as differences in the timing of disbursements and the collection of receipts in 2023 as compared to 2022.
−Removed: The $5.1 million increase in non-cash and other reconciling items was primarily due to a $7.3 million change in deferred income taxes, which was primarily driven by the capitalization and amortization of research and development expenditures under Section 174, as well as a $1.4 million inventory write-down during 2023, which did not occur in 2022.
−Removed: These increases in non-cash and other reconciling items were partially offset by a $5.4 million decrease in stock-based compensation in 2023 as compared to 2022.
Investing Activities
2 unchanged sentences
For 2025, cash flows used in investing activities was $358.5 million, compared to $24.7 million in 2024.
+Added: The $333.8 million increase in cash used in investing activities was primarily due to an increase of $194.9 million in purchases of investments in unconsolidated entities in 2025 as compared to 2024 as well as an increase of $24.8 million in notes receivable issued, primarily due to the $21.5 million note receivable issued to SafeStreets in 2025 that did not occur in 2024.
+Added: The increase in cash used in investing activities was also due to $23.6 million paid to purchase 81% of the issued and outstanding shares of capital stock of CHeKT on February 10, 2025, $12.4 million paid to purchase all of the issued and outstanding shares of capital stock of BTR on August 15, 2025 and $77.2 million paid to purchase all of the issued and outstanding shares of capital stock of RGS on November 21, 2025.
+Added: For 2024, cash flows used in investing activities was $24.7 million, compared to $26.0 million in 2023.
The $1.3 million decrease in cash used in investing activities was primarily due to the $9.7 million paid to purchase 100% of the issued and outstanding shares of capital stock of EBS Spółka z ograniczoną odpowiedzialnością, or EBS, net of cash acquired, and the $5.9 million paid to purchase certain assets from Vintra, Inc., or Vintra, including direct transaction costs, in 2023 which did not occur in 2024.
These decreases in cash used in investing activities were partially offset by a $9.3 million increase in purchases of investments in unconsolidated entities, a $2.6 million increase in purchases of equipment, $1.4 million paid to purchase certain assets of Kapacity.io in 2024 which did not occur in 2023 as well as a $0.9 million increase in payments related to capitalized software development costs in 2024 as compared to 2023.
−Removed: For 2023, cash flows used in investing activities was $26.0 million, compared to $68.3 million in 2022.
−Removed: The $42.3 million decrease in cash used in investing activities was primarily due to the $31.9 million paid to purchase 85% of the issued and outstanding shares of capital stock of Noonlight and the $21.8 million paid for developable land during 2022, which did not occur during 2023.
−Removed: These decreases in cash used in investing activities were partially offset by $9.7 million paid to purchase 100% of the issued and outstanding shares of capital stock of EBS, net of cash acquired, and the $5.9 million paid to purchase certain assets from Vintra, including direct transaction costs, in 2023, which did not occur in 2022.
Financing Activities
1 unchanged sentence
Cash used in financing activities typically includes repurchases of common stock, repayments of debt, payments of debt issuance costs and purchases of capped calls related to the 2029 Notes.
+Added: For 2025, cash flows used in financing activities was $55.0 million, compared to cash flows from financing activities of $346.4 million in 2024.
+Added: The $401.4 million decrease in cash flows from in financing activities was primarily due to the $485.2 million in proceeds received from the issuance of the 2029 Notes, net of issuances costs paid in 2024, which did not occur in 2025.
+Added: These decreases in cash flows from financing activities were partially offset by a $33.4 million decrease in purchases of shares of our common stock in 2025 as compared to 2024, and $63.1 million purchases of capped calls related to the 2029 Notes in 2024, which did not occur in 2025.
For 2024, cash flows from financing activities was $346.4 million, compared to cash flows used in financing activities of $31.9 million in 2023.
The $378.3 million increase in cash flows from in financing activities was primarily due to $485.2 million in proceeds from the issuance of the 2029 Notes, net of issuances costs paid in 2024, which did not occur in 2023.
−Removed: These increases in cash flows from financing activities were partially offset by a $47.7 million increase in purchases of shares of our common stock and $63.1 million purchases of capped calls related to the 2029 Notes in 2024, which did not occur in 2023.
−Removed: For 2023, cash flows used in financing activities was $31.9 million, compared to $76.3 million in 2022.
−Removed: The $44.4 million decrease in cash flows used in financing activities was primarily due to the $51.5 million decrease in purchases of shares of our common stock in 2023 as compared to 2022, partially offset by $3.0 million in debt payments related to the debt assumed in the acquisition of EBS as well as $2.6 million of tax withholdings paid related to vesting of restricted stock units in 2023, which did not occur in 2022.
+Added: These increases in cash flows from financing activities were partially offset by a $47.7 million increase in purchases of shares of our common stock and $63.1 million in purchases of capped calls related to the 2029 Notes in 2024, which did not occur in 2023.
Non-GAAP Measures
−Removed: We define non-GAAP adjusted EBITDA as our net income before interest expense, interest income, certain activity within other (expense) / income, net, provision for income taxes, amortization and depreciation expense, stock-based compensation expense, acquisition-related expense, legal costs and settlement fees incurred and received in connection with non-ordinary course litigation and other disputes, particularly costs involved in ongoing intellectual property litigation.
+Added: We define non-GAAP adjusted EBITDA as our net income before interest expense, interest income, certain activity within other income / (expense), net, provision for income taxes, income from equity method investments, net, amortization and depreciation expense, stock-based compensation expense, acquisition-related expense, legal costs and settlement fees incurred and received in connection with non-ordinary course litigation and other disputes, particularly costs involved in ongoing intellectual property litigation.
We do not consider these items to be indicative of our core operating performance.
−Removed: The non-cash items include amortization and depreciation expense, amortization of debt issuance costs for the 2026 Notes and 2029 Notes included in interest expense, stock-based compensation expense related to restricted stock units and other forms of equity compensation, including, but not limited to, the sale of common stock.
+Added: The non-cash items include amortization and depreciation expense;
+Added: income from equity method investments, net;
+Added: amortization of debt issuance costs for the 2026 Notes and 2029 Notes included in interest expense;
+Added: stock-based compensation expense related to restricted stock units and other forms of equity compensation, including, but not limited to, the sale of common stock.
We do not adjust for ordinary course legal expenses resulting from maintaining and enforcing our intellectual property portfolio and license agreements.
18 unchanged sentences
Net income $ 131,628 $ 122,513 $ 80,340
−Removed: Interest expense, interest income and certain activity within other (expense) / income, net (36,066) (32,229) (5,768)
+Added: Interest expense, interest income and certain activity within other income / (expense), net (28,424) (35,933) (32,229)
Provision for income taxes 37,620 19,294 17,485
+Added: (Income) / loss from equity method investments
+Added: (2,642) (133) —
Amortization and depreciation expense 30,819 29,131 31,424
5 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.