What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2026-02-19 compared with 2025-02-20 · 582 added, 430 removed, 1400 unchanged (42% of the section changed)

19 unchanged sentences

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Change in Accounting Principle

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

Basis for Opinions

11 unchanged sentences

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

As described in Management’s Report on Internal Control over Financial Reporting, management has excluded Zona NewCo, LLC, or Resideo Grid Services ("RGS"), Bridge to Renewables, Inc.

(“BTR”), and CHeKT from its assessment of internal control over financial reporting as of December 31, 2025 because they were acquired by the Company in purchase business combinations during 2025.

We have also excluded RGS, BTR, and CHeKT from our audit of internal control over financial reporting.

RGS and BTR are wholly-owned subsidiaries whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting represent less than 1% of total assets and less than 1% of total revenues of the related consolidated financial statement amounts as of and for the year ended December 31, 2025.

CHeKT is an 81 % owned subsidiary whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting represent less than 1% of total assets and less than 1% of total revenues of the related consolidated financial statement amounts as of and for the year ended December 31, 2025.

Definition and Limitations of Internal Control over Financial Reporting

1 unchanged sentence

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

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

expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

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

9 unchanged sentences

Hardware revenue is recognized when the customer obtains control.

The Company’s total revenue was $939.8 million for the year ended December 31, 2024.

The Company’s total revenue was $1.01 billion for the year ended December 31, 2025.

The principal considerations for our determination that performing procedures relating to revenue recognition is a critical audit matter are the significant audit effort in performing procedures and evaluating audit evidence related to the accuracy and occurrence of revenue transactions.

27 unchanged sentences

Interest income 45,617 47,359 29,801

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

Other income / (expense), net 4,645 ( 2,807 ) 4,624

Income before income taxes 166,606 141,674 97,825

Provision for income taxes 37,620 19,294 17,485

Income from equity method investments, net ( 2,642 ) ( 133 ) —

Net income 131,628 122,513 80,340

17 unchanged sentences

Net income $ 131,628 $ 122,513 $ 80,340

Other comprehensive (loss) / income

Other comprehensive income / (loss)

Foreign currency translation adjustment 1,875 ( 583 ) 1,398

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

Total other comprehensive income / (loss) 1,875 ( 583 ) 1,398

Comprehensive income 133,503 121,930 81,738

10 unchanged sentences

Inventory 94,429 87,435

Other current assets, net

Other current assets, net of allowance for credits losses of $ 749 and $ 0 as of December 31, 2025 and 2024, respectively

75,646 47,374

5 unchanged sentences

Operating lease right-of-use assets 52,636 53,425

Investments in unconsolidated entities 226,931 17,170

Other assets, net of allowance for credit losses of $ 0 and $ 1 as of December 31, 2025 and 2024, respectively

6 unchanged sentences

Deferred revenue 16,428 12,940

Convertible senior notes, net 499,867 —

Operating lease liabilities 8,524 7,700

1 unchanged sentence

Deferred revenue 13,456 13,619

Convertible senior notes, net 983,477 493,515

Convertible senior notes, net, noncurrent 489,641 983,477

Operating lease liabilities 67,609 65,534

29 unchanged sentences

Reserve for product returns 3,071 3,187 4,399

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

3,996 3 ( 78 )

Inventory write-down — 1,420 —

Amortization on patents and tooling 847 1,213 1,359

Provision for credit losses on notes receivable

Amortization and depreciation 30,819 29,131 31,424

3 unchanged sentences

Deferred income taxes 29,974 ( 34,496 ) ( 47,730 )

Change in fair value of contingent liability 108 68 —

Stock-based compensation 33,190 41,242 47,283

Gain from investment in unconsolidated entity

Distributions on investments in unconsolidated entities

Gain on from investments in unconsolidated entities

( 7,748 ) ( 127 ) —

Other adjustments

1,624 955 2,701

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

2 unchanged sentences

Other current and non-current assets ( 20,964 ) ( 2,697 ) ( 1,338 )

Accounts payable, accrued expenses and other current liabilities 20,133 4,613 32,938

Accounts payable and other current liabilities

( 46,488 ) 20,133 4,613

Deferred revenue 256 3,674 4,553

3 unchanged sentences

Cash flows used in investing activities:

Business acquisition, net of cash acquired — ( 9,696 ) ( 31,730 )

Business acquisitions, net of cash acquired ( 112,915 ) — ( 9,696 )

Additions to property and equipment ( 16,281 ) ( 10,133 ) ( 7,517 )

2 unchanged sentences

Receipt of payments on notes receivable 98 51 55

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

Proceeds from sale of investment — — 140

Purchases of intangible assets and other assets

Proceeds from sale of investments in unconsolidated entities

Purchase of investments in unconsolidated entities

( 205,880 ) ( 11,025 ) ( 1,700 )

Purchases of other intangible assets

— ( 1,431 ) ( 5,915 )

Cash flows used in investing activities ( 358,482 ) ( 24,681 ) ( 25,966 )

Cash flows from / (used in) financing activities:

Cash flows (used in) / from financing activities:

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

9 unchanged sentences

Issuances of common stock from equity-based plans 4,475 9,984 3,598

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

Cash flows (used in) / from financing activities ( 55,006 ) 346,430 ( 31,865 )

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 167 ) ( 109 ) 66

Net increase / (decrease) in cash, cash equivalents and restricted cash 528,053 78,200 ( 87,742 )

Net (decrease) / increase in cash, cash equivalents and restricted cash ( 260,325 ) 528,053 78,200

Cash, cash equivalents and restricted cash at beginning of the period 1,229,132 701,079 622,879

14 unchanged sentences

Cash not yet paid for capital expenditures 883 255 630

Cash not yet paid for business and asset acquisitions - holdback 200 2,780 4,833

Cash not yet paid for business and asset acquisitions and investments - holdback and working capital adjustments

13,513 200 2,780

Conversion of notes receivable and other assets to investments in unconsolidated entities

Contingent liability from business acquisition 1,223 2,169 2,061

8 unchanged sentences

Balance as of December 31, 2022 $ 23,988 50,985 $ 510 $ 497,199 1,533 $ ( 83,993 ) $ — $ 185,143 $ 598,859

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

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

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

Reclassification of subsidiary long-term incentive plan liability related to modification — — — 3,104 — — — — 3,104

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

Stock-based compensation expense — — — 47,422 — — — — 47,422

Noncontrolling interest assumed through acquisition 6,770 — — — — — — — —

Purchases of redeemable noncontrolling interest ( 1,238 ) — — 406 — — — — 406

Accretion adjustments of redeemable noncontrolling interest to redemption value 14,261 — — ( 14,261 ) — — — — ( 14,261 )

Net income / (loss) attributable to common stockholders ( 703 ) — — — — — — 81,043 81,043

Other comprehensive income — — — — — — 1,398 — 1,398

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

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

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

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

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

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

Purchases of redeemable noncontrolling interest ( 1,238 ) — — 406 — — — — 406

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

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

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

8 unchanged sentences

Purchase of treasury stock, including transaction costs and excise tax — — — ( 110 ) 772 ( 41,561 ) — — ( 41,671 )

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

Stock-based compensation expense — — — 33,237 — — — — 33,237

Noncontrolling interest assumed through acquisition 6,352 — — — — — — — —

Purchases of redeemable noncontrolling interest ( 14,643 ) — — ( 1,536 ) — — — — ( 1,536 )

Accretion adjustments of redeemable noncontrolling interest to redemption value 7,337 — — ( 7,337 ) — — — — ( 7,337 )

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

Net income / (loss) attributable to common stockholders ( 946 ) — — — — — — 132,574 132,574

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

Other comprehensive income — — — — — — 1,875 — 1,875

Balance as of December 31, 2025 $ 42,847 53,541 $ 536 $ 549,913 3,910 $ ( 227,852 ) $ 2,690 $ 522,876 $ 848,163

4 unchanged sentences

Alarm.com Holdings, Inc.

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

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

Alarm.com’s solution suite includes security, video and video analytics, energy management, access control, electric utility grid management, indoor gunshot detection, water management, health and wellness, personal safety and data-rich emergency response.

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

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.

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

14 unchanged sentences

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

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

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

Use of Estimates

2 unchanged sentences

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

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

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).

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

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

Cash and Cash Equivalents

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

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

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

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 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.

Certain previously reported amounts in the 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.

Certain previously reported amounts in the consolidated statement of cash flows for the years ended December 31, 2024 and 2023 have been

ALARM.COM HOLDINGS, INC.

1 unchanged sentence

December 31, 2025, 2024 and 2023

reclassified to conform to our current presentation, including the addition of other adjustments as a separate line item within the adjustments to reconcile net income to net cash flows from the operating activities section.

Cash and Cash Equivalents

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

As of December 31, 2025 and 2024, we have invested $ 941.1 million and $ 1.2095 billion in cash equivalents in the form of money market funds with a number of financial institutions, respectively.

We consider these money market funds to be Level 1 financial instruments (see Note 11).

Accounts Receivable

1 unchanged sentence

Revenue in countries outside of North America accounted for 5 %, 6 % and 4 % of our total revenue for the years ended December 31, 2025, 2024 and 2023, respectively.

Accounts receivable balances related to service providers partners outside of North America were 8 % and 7 % as of December 31, 2024 and 2023, respectively.

Accounts receivable balances related to service providers partners outside of North America were 8 % as of December 31, 2025 and 2024.

Our accounts receivable are stated at estimated realizable value.

2 unchanged sentences

As of December 31, 2025, we had a total of $ 8.2 million of restricted cash, of which $ 2.1 million was included in other current assets and $ 6.1 million was included in other assets within our consolidated balance sheets.

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

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

Notes Receivable

5 unchanged sentences

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

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

See Note 10 for further details on loans provided to distribution partners and service provider partners.

Credit Losses

9 unchanged sentences

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

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

For the years ended December 31, 2025, 2024 and 2023 we recorded credit loss expense for accounts receivable and notes receivable of $ 1.9 million, $ 4.7 million and $ 1.0 million in general and administrative expense in our consolidated statements of operations, respectively.

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

4 unchanged sentences

(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 years ended December 31, 2024, 2023 and 2022, and no changes to our policies or practices that influenced our estimate of expected credit losses for accounts receivable.

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

Credit Losses - Notes Receivable

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

We previously disclosed a hardware financing receivable portfolio segment;

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

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

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

There were no changes to our portfolio segments for our accounts receivable during the years ended December 31, 2025, 2024 and

ALARM.COM HOLDINGS, INC.

1 unchanged sentence

December 31, 2025, 2024 and 2023

previously allowance for credit losses recorded earlier in 2024.

2023, and no changes to our policies or practices that influenced our estimate of expected credit losses for accounts receivable.

Additionally, there were no significant changes in the amount of accounts receivable write-offs during the year ended December 31, 2025, as compared to historical periods.

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.

There were no purchases or sales of financial assets during the years ended December 31, 2025 and 2024.

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

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

8 unchanged sentences

We did not write off any accrued interest receivable during the years ended December 31, 2025 and 2023.

Our inventory, which is comprised of raw materials, work-in-process and finished goods, includes materials used to produce our wireless communications network enabled radios, video cameras, video recorders, smart thermostats, gunshot detection sensors, home automation system parts and peripherals, is stated at the lower of cost or net realizable value, and is charged to cost of sales primarily on a first in, first out, or FIFO, basis when the inventory is shipped from our manufacturer and received by our service provider partners.

Our inventory, which is comprised of raw materials, work-in-process and finished goods, includes materials used to produce our wireless communications network enabled radios, video cameras, video recorders, smart thermostats, active shooter detection sensors, home automation system parts and peripherals, is stated at the lower of cost or net realizable value, and is charged to cost of sales primarily on a first in, first out, or FIFO, basis when the inventory is shipped from our manufacturer and received by our service provider partners.

We periodically evaluate our inventory quantities for obsolescence based on criteria such as customer demand and changing technology and record an obsolescence write-off when necessary.

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 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 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 consolidated statements of operations.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2025, 2024 and 2023

We determine if an arrangement contains a lease at the inception of the arrangement.

14 unchanged sentences

ROU assets and lease liabilities resulting from operating leases are recorded on our consolidated balance sheets.

We did no t have any finance leases or subleases as of December 31, 2024 and 2023.

Our finance leases and subleases were not material to the consolidated financial statements as of December 31, 2025.

We did not have any finance leases or subleases as of December 31, 2024.

Lease expense is recognized on a straight-line basis over the term of the lease.

3 unchanged sentences

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

Expenses associated with short-term leases are recognized on a

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2024, 2023 and 2022

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

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

Short-term lease costs were immaterial for the years ended December 31, 2025 and 2024.

2 unchanged sentences

On May 31, 2024, we issued $ 500.0 million aggregate principal amount of 2.25 % convertible senior notes due June 1, 2029, in a private placement to qualified institutional buyers, or the 2029 Notes.

Prior to the January 1, 2022 adoption of Accounting Standards Update, or ASU, 2020-06, " Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity ," we separated the 2026 Notes into liability and equity components.

In accounting for the issuance of our convertible senior notes, the carrying amount of the liability component was calculated by measuring the fair value of a similar liability that did not have an associated convertible feature, using a discounted cash flow model with a risk adjusted yield.

The carrying amount of the equity component representing the conversion option was determined by deducting the fair value of the liability component from the par value of the 2026 Notes as a whole.

This difference between the aggregate principal amount and the liability component represented a debt discount that was amortized to interest expense using the effective interest method over the term of the notes.

Transaction costs attributable to the liability component were netted with the liability component and amortized to interest expense using the effective interest method over the term of the 2026 Notes.

Transaction costs attributable to the equity component were netted with the equity component of the notes in additional paid-in capital in the consolidated balance sheets.

The equity component was not remeasured as long as it continued to meet the conditions for equity classification.

We adopted ASU 2020-06 effective January 1, 2022, using a modified retrospective adoption method, which required us to record the initial effect of this guidance as a cumulative-effect adjustment to retained earnings on January 1, 2022.

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

We also recombined the liability and equity components of the debt issuance costs.

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

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

We account for the 2026 Notes and the 2029 Notes as a liability.

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

See Note 21 for details on our payment of the 2026 Notes upon maturity on January 15, 2026.

Capped Call Transactions

5 unchanged sentences

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

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

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

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2025, 2024 and 2023

classification.

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

3 unchanged sentences

Comprehensive Income

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

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

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

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2024, 2023 and 2022

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

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

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

Foreign Currency

5 unchanged sentences

Noncontrolling interests with redemption features that are not solely within our control are considered redeemable noncontrolling interests.

Our redeemable noncontrolling interests relate to our 86 % equity ownership interest in PC Open Incorporated, a Washington corporation, doing business as OpenEye and our 85 % equity ownership interest in Noonlight, Inc., or Noonlight, a Delaware corporation (see Note 7).

The OpenEye and Noonlight stockholder agreements contain a put option that gives the minority stockholders the right to sell their shares to us based on the fair value of the shares and also contain a call option that gives us the right to purchase the remaining shares from the minority stockholders based on the fair value of the shares.

The next put and call options related to OpenEye can each be exercised beginning in the first quarter of 2025.

Our redeemable noncontrolling interests relate to our 89 % equity ownership interest in PC Open Incorporated, a Washington corporation, doing business as OpenEye, our 99 % equity ownership interest in Noonlight, Inc., or Noonlight, a Delaware corporation (see Note 7) and our 81 % ownership interest in CHeKT, Inc., or CHeKT.

The OpenEye, Noonlight and CHeKT stockholder agreements contain a put option that gives the minority stockholders the right to sell their shares to us based on the fair value of the shares and also contain a call option that gives us the right to purchase the remaining shares from the minority stockholders based on the fair value of the shares.

The next put and call options related to OpenEye can be exercised beginning in the first quarter of 2028 and the fourth quarter of 2028, respectively.

The put and call options related to Noonlight can each be exercised beginning in the first quarter of 2026.

The put and call options related to CHeKT can each be exercised beginning in the first quarter of 2028.

These redeemable noncontrolling interests are considered temporary equity and we report them between liabilities and stockholders’ equity in the consolidated balance sheets.

1 unchanged sentence

We account for purchases of redeemable noncontrolling interest as a component of stockholders' equity when control is maintained.

We recognize the difference between the consideration paid for the acquired redeemable noncontrolling interest and the fair value of the acquired redeemable noncontrolling interest as an adjustment to additional paid-in capital.

We recognize the difference between the fair value of the consideration paid for the acquired redeemable noncontrolling interest and the carrying value of the acquired redeemable noncontrolling interest as an adjustment to additional paid-in capital.

The aggregate redemption values of the of the noncontrolling interest was $ 42.8 million and $ 44.7 million as of December 31, 2025 and 2024, respectively.

1 unchanged sentence

We capitalize the costs directly related to the development of internal-use software for our platforms during the application development stage of the projects.

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

Such costs primarily include payroll and payroll-related costs for engineers and product development employees as well as third-party consultants directly associated with the development project.

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

10 unchanged sentences

Our non-hosted software is typically developed in an agile environment with frequent revisions to product release features and functions.

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

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

Agile development

ALARM.COM HOLDINGS, INC.

1 unchanged sentence

December 31, 2025, 2024 and 2023

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

As of December 31, 2025 and 2024, our capitalized software development costs for internal-use software and external software included in the consolidated balance sheets were $ 3.4 million and $ 2.4 million, respectively.

Revenue Recognition

7 unchanged sentences

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

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

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

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

5 unchanged sentences

We generate all of our revenue from contracts with customers.

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

Contracts with our service provider partners typically have an initial term of one year .

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

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

13 unchanged sentences

Any discount within the contract is allocated proportionately to all of the separate performance obligations in the contract unless the terms of discount relate specifically to the entity’s efforts to satisfy some but not all of the performance obligations.

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

ALARM.COM HOLDINGS, INC.

1 unchanged sentence

December 31, 2025, 2024 and 2023

SaaS and License Revenue

13 unchanged sentences

We apply the usage-based royalty exception to recognize license revenue because the sole or predominant item to which the royalty relates is the license of intellectual property.

Under the usage-based royalty exception, we recognize revenue on a monthly basis over the period of service.

Under the usage-based royalty exception, we recognize revenue on a monthly basis over the license period.

In addition, in certain markets, our EnergyHub subsidiary sells its demand response service for an annual service fee, with pricing based on the number of subscribers or amount of aggregate electricity demand made available for a utility’s or market’s control.

5 unchanged sentences

We apply the usage-based royalty exception to recognize license revenue associated with software hosted by our customers because the predominant item to which the royalty relates is the license of intellectual property.

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

Under the usage-based royalty exception, we recognize revenue on a monthly basis over the period of use.

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

9 unchanged sentences

Our distributors sell directly to our service provider partners under terms between the two parties.

When determining the amount of consideration we expect to be entitled to for the sale of our hardware, we estimate the variable consideration associated with customer returns.

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

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

ALARM.COM HOLDINGS, INC.

1 unchanged sentence

December 31, 2025, 2024 and 2023

returns was 1 % of hardware and other revenue.

When determining the amount of consideration we expect to be entitled to for the sale of our hardware, we estimate the variable consideration associated with customer returns.

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

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.

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

3 unchanged sentences

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.

Our hardware and other revenue also 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.

Our perpetual licenses and licenses to our indoor gunshot detection solution provide a right to use intellectual property that is functional in nature and has significant stand-alone functionality.

Our hardware and other revenue also 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.

Our perpetual licenses and licenses to our gunshot detection solution provide a right to use intellectual property that is functional in nature and has significant stand-alone functionality.

Accordingly, for licenses of functional intellectual property, revenue is recognized at the point-in-time when control has been transferred to the customer, which occurs once the software has been made available to the customer.

22 unchanged sentences

We record a contract asset when we satisfy a performance obligation by transferring a promised good or service.

Contract assets can be conditional or unconditional depending on whether another performance obligation must be satisfied before payment can be received.

We receive payments from our service provider partners based on the billing schedule established in our contracts.

All of the accounts receivable presented in the consolidated balance sheets represent unconditional rights to consideration.

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

Contract assets can be conditional or unconditional depending on whether another performance

ALARM.COM HOLDINGS, INC.

1 unchanged sentence

December 31, 2025, 2024 and 2023

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

obligation must be satisfied before payment can be received.

We receive payments from our service provider partners based on the billing schedule established in our contracts.

All of the accounts receivable presented in the consolidated balance sheets represent unconditional rights to consideration.

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

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

We recognize an asset from the costs incurred to fulfill a contract if the costs (i) are specifically identifiable to a contract, (ii) enhance resources that will be used in satisfying performance obligations in future and (iii) are expected to be recovered.

Our assets related to costs incurred to obtain a contract consist of capitalized commission costs and upfront payments made to a customer.

Our assets related to costs incurred to obtain a contract consist of capitalized commission costs, upfront payments made to a customer and contracts with an outstanding performance obligation.

Based on the policy above, we capitalize a portion of our commission costs as an incremental cost of obtaining a contract.

22 unchanged sentences

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

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

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

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

Assets and Liabilities Measured at Fair Value on a Recurring Basis - In 2025 and 2024, we recorded assets for our money market accounts and equity securities with readily determinable fair values on a recurring basis.

In 2025 and 2024, we recorded liabilities for a contingent consideration liability related to acquisitions at fair value on a recurring basis.

Assets Measured at Fair Value on a Nonrecurring Basis - We measure certain assets, including property and equipment, goodwill and intangible and long-lived assets at fair value on a nonrecurring basis.

These assets are recognized at fair value when they are deemed to be other-than-temporarily impaired.

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

Additionally, equity investments without readily determinable fair

ALARM.COM HOLDINGS, INC.

1 unchanged sentence

December 31, 2025, 2024 and 2023

values are recognized at fair value on a nonrecurring basis when observable price changes from orderly transactions for identical or similar investments become available.

Concentration of Credit Risk

13 unchanged sentences

During 2025, 2024 and 2023, we recognized compensation expense of $ 33.2 million, $ 41.2 million and $ 47.3 million, respectively.

During 2024 and 2022 we recognized an associated tax windfall benefit from stock-based awards of $ 1.8 million and $ 2.0 million, respectively.

During 2023, we recognized a tax shortfall from stock-based awards of $ 0.5 million.

During 2025 and 2023 we recognized a tax shortfall from stock-based awards of $ 1.0 million and $ 0.5 million, respectively.

During 2024, we recognized an associated tax windfall benefit from stock-based awards of $ 1.8 million.

We account for stock-based compensation arrangements with non-employees based upon the award’s grant date fair value.

16 unchanged sentences

This valuation 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.

Significant estimates and assumptions in valuing certain acquired customer relationship intangible assets include estimates about future expected cash flows and discount rates.

Significant estimates and assumptions in valuing acquired developed technology intangible assets include estimates about future expected cash flows, obsolescence factors 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.

Significant estimates and assumptions in valuing certain acquired customer relationship intangible assets include estimates about future expected cash flows, attrition rates and discount rates.

Significant estimates and assumptions in valuing acquired developed technology intangible assets include estimates about future expected cash flows, obsolescence factors, royalty rates

ALARM.COM HOLDINGS, INC.

1 unchanged sentence

December 31, 2025, 2024 and 2023

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.

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

12 unchanged sentences

The amount of goodwill impairment is calculated as the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.

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.

Based on the results of our qualitative assessment, we determined that it was not more likely than not that the fair value of our reporting unit was less than its carrying amount, including goodwill.

For our 2025 annual impairment review, we performed a qualitative assessment for our Alarm.com and Other reporting units.

Based on the results of our qualitative assessment, we determined that it was not more likely than not that the fair value of our reporting units was less than their carrying amount, including goodwill.

Therefore, we concluded that there was no goodwill impairment as of October 1, 2025.

15 unchanged sentences

The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

We record net deferred tax assets to the extent we believe these assets will more likely than not be realized.

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

ALARM.COM HOLDINGS, INC.

1 unchanged sentence

December 31, 2025, 2024 and 2023

We record net deferred tax assets to the extent we believe these assets will more likely than not be realized.

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

4 unchanged sentences

We account for treasury stock under the cost method and present treasury stock, including any applicable commissions and fees, as a component of stockholders’ equity in the consolidated balance sheets and statements of equity.

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.

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.

6 unchanged sentences

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

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

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

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

Our redeemable noncontrolling interests are related to our 89 % equity ownership interest in OpenEye, our 99 % equity ownership interest in Noonlight and our 81 % equity ownership interest in CHeKT.

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

5 unchanged sentences

We adopted ASU 2023-07 during the fiscal year ended December 31, 2024, which increased the amount of disclosures within Note 20 related to segment expenses.

Not Yet Adopted

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

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 as 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.

1 unchanged sentence

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

This amendment

We adopted ASU 2023-09 during the fiscal year ended December 31, 2025, which increased the disclosures of certain tax amounts within Note 19

ALARM.COM HOLDINGS, INC.

1 unchanged sentence

December 31, 2025, 2024 and 2023

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.

related to income taxes.

Not Yet Adopted

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.

4 unchanged sentences

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

On September 18, 2025, the FASB issued ASU 2025-06, "Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40)," to align the accounting for software costs with the evolution of software development, including the shift from using a prescriptive and sequential development method to using an incremental and iterative development method.

This amendment clarifies that capitalization of internal-use software costs begins when (i) management has authorized and committed to funding the software project, and (ii) it is probable that the project will be completed and the software will be used to perform the function intended.

Additionally, this amendment supersedes the website development costs guidance and it clarifies certain disclosure requirements for internal-use software costs.

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

Early adoption is permitted as of the beginning of an annual reporting period.

This amendment should be applied either on a (i) prospective basis, (ii) retrospective basis to any or all prior periods presented, or (iii) modified transition basis that is based on the status of the project and whether software costs were capitalized before the date of adoption.

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

Revenue from Contracts with Customers

Contract Assets

Our assets related to costs incurred to obtain a contract 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 consolidated balance sheets.

The non-current portion of capitalized commission costs and upfront payments made to customers is reflected in other assets within our consolidated balance sheets.

Our assets related to costs incurred to obtain or fulfill a contract primarily consist of capitalized commission costs, upfront payments made to customers and costs incurred on contracts with an outstanding performance obligation.

The current portion of capitalized commission costs, upfront payments made to customers and costs incurred on contracts with an outstanding performance obligation is included in other current assets within our consolidated balance sheets.

The non-current portion of capitalized commission costs, upfront payments made to customers and costs incurred on contracts with an outstanding performance obligation is reflected in other assets within our consolidated balance sheets.

We review the capitalized costs for impairment at least annually.

5 unchanged sentences

Beginning of period balance $ 12,088 $ 9,099 $ 13,975

Commission costs and upfront payments to a customer capitalized in period 10,292 7,837 14,270

Additions to contract assets

15,524 10,292 7,837

Reimbursement of previously capitalized upfront payments to customers

— — ( 6,774 )

Amortization of contract assets ( 7,303 ) ( 5,939 ) ( 4,815 )

Amortization or satisfaction of outstanding performance obligation of capitalized contract assets

( 9,665 ) ( 7,303 ) ( 5,939 )

End of period balance $ 17,947 $ 12,088 $ 9,099

1 unchanged sentence

On the date of the payment, the $ 6.8 million unamortized portion of the contract asset balance was reduced to zero and the remaining amount of $ 0.1 million was recorded as an increase to SaaS and license revenue.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2025, 2024 and 2023

Contract Liabilities

4 unchanged sentences

Beginning of period balance $ 26,559 $ 22,885 $ 18,332

Revenue deferred and acquired in period 26,883 22,861 18,617

Revenue deferred or acquired in period

33,903 26,883 22,861

Revenue recognized from amounts included in contract liabilities ( 30,578 ) ( 23,209 ) ( 18,308 )

1 unchanged sentence

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

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2024, 2023 and 2022

Accounts Receivable, Net

17 unchanged sentences

End of period balance $ ( 4,931 ) $ ( 240 ) $ ( 3,777 ) $ ( 93 )

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2025, 2024 and 2023

The components of inventory are as follows (in thousands):

3 unchanged sentences

Total inventory $ 94,429 $ 87,435

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

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

Property and Equipment, Net

5 unchanged sentences

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

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2024, 2023 and 2022

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

10 unchanged sentences

Depreciation expense related to property and equipment for the years ended December 31, 2025, 2024 and 2023 was $ 11.2 million, $ 10.3 million and $ 11.2 million, respectively.

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

We had $ 0.6 million of disposals and write-offs of property and equipment that impacted the consolidated statements of operations during the year ended December 31, 2025.

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

2 unchanged sentences

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.

The acquisition of the developed technology has helped accelerate deployment of a cloud-based demand response platform internationally for our EnergyHub subsidiary.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2025, 2024 and 2023

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.

4 unchanged sentences

Substantially all of the acquired assets consisted of developed technology.

We believe the acquisition of the developed technology will expand Alarm.com's learning program and accelerate deployment of advanced video analytics solutions for the Alarm.com and OpenEye platforms.

The acquisition of the developed technology has expanded Alarm.com's learning program and accelerated deployment of advanced video analytics solutions for the Alarm.com and OpenEye platforms.

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

4 unchanged sentences

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

Acquisition of a Business – EBS

On January 18, 2023, one of our wholly-owned subsidiaries acquired 100 % of the issued and outstanding shares of capital stock of EBS Spółka z ograniczoną odpowiedzialnością, or EBS, an international producer of universal smart communicator devices, headquartered in Warsaw, Poland.

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

Acquisition of a Business - RGS

On November 21, 2025, EnergyHub, Inc., or EnergyHub, one of our wholly-owned subsidiaries, acquired 100 % of the issued and outstanding shares of capital stock of Zona NewCo, LLC, which acquired substantially all of the assets and liabilities of Resideo Grid Services, or RGS, from Resideo Technologies, Inc.

RGS provides demand response aggregation and program management services for utilities.

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.

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.

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.

The working capital adjustment is expected to be finalized during the first quarter of 2026.

As a result of the acquisition of RGS, we recorded approximately $ 0.8 million in acquisition-related costs for the year ended December 31, 2025.

These costs include expenses directly related to acquiring RGS, are expensed as incurred and are included in general and administrative expense in our consolidated statements of operations.

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, tax adjustments and the valuation of the acquired customer relationships.

ALARM.COM HOLDINGS, INC.

1 unchanged sentence

December 31, 2025, 2024 and 2023

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

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

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

The acquisition was accounted for as a business combination within our Alarm.com segment.

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

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

Acquisition of a Business – Noonlight

On September 23, 2022, Alarm.com Incorporated acquired 85 % of the issued and outstanding shares of capital stock of Noonlight.

Noonlight provides a connected safety and event management software and services platform that enables new applications and provides enhanced emergency response capabilities.

We believe the acquisition of Noonlight will enhance our comprehensive suite of interactive cloud-based services and allow us to expand markets for emergency response services as well as accelerate innovation in those services.

In consideration for the purchase of 85 % of the issued and outstanding shares of capital stock of Noonlight, we paid $ 31.9 million in cash on September 23, 2022, after deducting $ 1.5 million related to an outstanding loan issued to Noonlight during May of 2022 and $ 4.9 million related to agreed holdback provisions.

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

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

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

November 21, 2025

Calculation of Purchase Consideration:

Cash paid, net of working capital adjustment $ 78,811

Total consideration $ 78,811

Estimated Tangible and Intangible Net Assets:

Accounts receivable $ 4,887

Other current assets

Deferred tax assets 638

Customer relationships 28,947

Developed technology 4,279

Accounts payable ( 356 )

Accrued expenses and other current liabilities ( 1,588 )

Deferred revenue ( 3,069 )

Goodwill 45,057

Total estimated tangible and intangible net assets $ 78,811

Goodwill of $ 45.1 million reflects the value of acquired workforce and synergies we expect to achieve from integrating RGS's customers and demand response aggregation and program management services into EnergyHub’s existing service offerings.

The majority 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 Other segment.

Fair Value of Net Assets Acquired and Intangibles

The acquired activities and assets in the purchase of RGS constituted a business and in accordance with ASC 805, " Business Combinations ," the assets and liabilities were recorded at their respective fair values as of November 21, 2025.

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

Developed Technology

Developed technology primarily consists of intellectual property of proprietary software that is marketed for sale.

We valued the developed technology using the relief from royalty method, an income approach.

The significant assumptions used in the income approach include estimates about future expected cash flows from the developed technology, the royalty rate and the discount rate.

We are amortizing the RGS developed technology, valued at $ 4.3 million, on an attribution method based on the discounted cash flows of the model over an estimated useful life of two 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 RGS shared with its customers.

We valued the single group of customer relationships 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 customer contracts, the attrition rate and the discount rate.

We are amortizing the customer relationships, valued at $ 28.9 million, on a straight-line basis over an estimated useful life of 16 years.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2025, 2024 and 2023

Business Combinations in Operations - RGS

The operations of the RGS business combination discussed above were included in the 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 consolidated financial statements for the year ended December 31, 2025.

Acquisition of a Business – BTR

On August 15, 2025, EnergyHub, Inc., one of our wholly-owned subsidiaries, acquired all of the issued and outstanding shares of capital stock of Bridge to Renewables, Inc., or BTR.

BTR provides a managed charging solution for electric vehicle manufacturers and drivers.

BTR’s technology integrates directly into a vehicle’s native mobile app, delivering utility program enrollment, charging insights and incentives to electric vehicle drivers.

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.

In consideration for the purchase of BTR, we paid $ 12.4 million in cash on August 15, 2025, after deducting $ 1.6 million related to agreed holdback provisions.

The acquisition was accounted for as a business combination within the Other segment.

The purchase price allocation was finalized during the fourth quarter of 2025.

The overall impacts to our consolidated financial statements were not considered material for the year ended December 31, 2025.

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.

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

The acquisition of CHeKT has helped 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 $ 0.5 million in acquisition-related costs for the year ended December 31, 2025.

These costs include expenses directly related to acquiring CHeKT, are expensed as incurred and are included in general and administrative expense in our consolidated statements of operations.

The purchase price allocation was finalized during the fourth quarter of 2025, resulting in measurement period adjustments to decrease goodwill by $ 0.1 million and decrease tax-related liabilities by $ 0.1 million.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2025, 2024 and 2023

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

September 23, 2022

February 10, 2025

Calculation of Purchase Consideration:

Cash paid, net of working capital adjustment $ 23,382

Outstanding principal and interest of loan provided to Noonlight 1,537

Holdback consideration 3,694

2 unchanged sentences

Accounts receivable 308

Other current and non-current assets 200

Property and equipment 45

Deferred tax assets 424

Inventory 645

Other current assets

Customer relationships 486

Developed technology 9,412

2 unchanged sentences

Accrued expenses and other current liabilities ( 212 )

Deferred revenue ( 67 )

Deferred tax liability

Other liabilities

Redeemable noncontrolling interest ( 6,352 )

1 unchanged sentence

Total tangible and intangible net assets $ 27,076

Goodwill of $ 35.1 million reflects the value of acquired workforce and synergies we expect to achieve from integrating Noonlight's suite of emergency response cloud-managed application program interfaces into our existing comprehensive suite of interactive cloud-based services.

Goodwill of $ 23.5 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.

1 unchanged sentence

Fair Value of Net Assets Acquired and Intangibles

The acquired activities and assets in the purchase of Noonlight constituted a business and with the exception of contract liabilities accounted for under Topic 606, in accordance with ASC 805, " Business Combinations ," the assets and liabilities were

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2024, 2023 and 2022

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

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

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

2 unchanged sentences

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 Noonlight developed technology, valued at $ 9.3 million, on an attribution method based on the discounted cash flows of the model over an estimated useful life of seven years .

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 .

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2025, 2024 and 2023

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 $ 0.2 million, on an attribution basis derived from the discounted cash flows of the model over an estimated useful life of five years .

Redeemable Noncontrolling Interests

We have a redeemable noncontrolling interest related to our 85 % equity ownership interest in Noonlight.

The Noonlight stockholder agreement contains a put option that gives the minority Noonlight stockholders the right to sell their remaining 15 % 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 Noonlight shares from the minority Noonlight stockholders based on the fair value of the shares.

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 September 23, 2022, 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 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 consolidated balance sheets.

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

Business Combinations in Operations - Noonlight

The operations of the Noonlight business combination discussed above were included in the consolidated financial statements as of the acquisition date.

The pro forma information as well as the revenue and net losses of the business combination were not material to the consolidated financial statements in the year of acquisition.

The redemption value of the CHeKT noncontrolling interest was $ 6.4 million as of February 10, 2025 and $ 6.3 million as of December 31, 2025.

Business Combinations in Operations - CHeKT

The operations of the CHeKT business combination discussed above were included in the 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 consolidated financial statements for the year ended December 31, 2025.

Acquisition of a Business – EBS

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

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

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

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

The acquisition was accounted for as a business combination within our Alarm.com segment.

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

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

Goodwill and Intangible Assets, Net

2 unchanged sentences

Balance as of January 1, 2024 $ 154,498 $ — $ 154,498

Goodwill acquired - initial measurement

7,200 — 7,200

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

Foreign currency translation adjustment

( 287 ) — ( 287 )

Balance as of December 31, 2024 154,211 — 154,211

Goodwill acquired 23,579 48,156 71,735

Measurement period adjustment ( 91 ) ( 1,767 ) ( 1,858 )

Foreign currency translation adjustment 899 — 899

Balance as of December 31, 2025 $ 178,598 $ 46,389 $ 224,987

On January 18, 2023, we acquired 100 % of the issued and outstanding shares of capital stock of EBS and initially recorded $ 7.2 million of goodwill in the Alarm.com segment.

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

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

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

On February 10, 2025, we acquired 81 % of the issued and outstanding shares of capital stock of CHeKT and initially recorded $ 23.6 million of goodwill in the Alarm.com segment.

On August 15, 2025, we acquired 100 % of the issued and outstanding shares of capital stock of BTR and initially recorded $ 3.1 million of goodwill in the Other segment.

On November 21, 2025, we acquired 100 % of the issued and outstanding shares of capital stock of RGS and recorded $ 45.1 million of goodwill in the Other segment.

The goodwill related to the acquisitions of CHeKT, BTR and RGS reflects the value of acquired workforce and synergies we expect to achieve from integrating these acquisitions into our existing solutions.

The 2025 measurement period

ALARM.COM HOLDINGS, INC.

1 unchanged sentence

December 31, 2025, 2024 and 2023

adjustments related to the CHeKT and BTR working capital and tax adjustments during the year ended December 31, 2025.

There were no impairments of goodwill recorded during the years ended December 31, 2025, 2024 or 2023.

As of December 31, 2025, the accumulated balance of goodwill impairments was $ 4.8 million, which is related to our acquisition of EnergyHub in 2013.

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

11 unchanged sentences

Balance as of December 31, 2025 $ 55,024 $ 39,621 $ 1,302 $ 3,359 $ 46 $ 99,352

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

We recorded $ 19.4 million, $ 18.6 million and $ 19.3 million of amortization related to our intangible assets for the years ended December 31, 2025, 2024 and 2023, respectively.

1 unchanged sentence

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

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

The following tables reflect the weighted-average remaining life and carrying value of finite-lived intangible assets (in thousands, except weighted-average remaining life):

27 unchanged sentences

Total future amortization expense $ 99,352

Loan to a Distribution Partner

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

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

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

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

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

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

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

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

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

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

Loan to a Technology Partner

In June 2022, we entered into a convertible promissory note with a technology partner, under which we agreed to loan the technology partner $ 1.5 million.

Interest on the outstanding principal accrues at a rate per annum equal to 6.5 %, starting one year from the effective date of the loan.

Interest and principal payments are due on the maturity date of the loan, which is June 27, 2029, unless the loan is converted prior to the maturity date, which may occur upon a qualified financing event, as defined in the convertible promissory note, upon a sale of the technology partner or upon our election on the maturity date of the loan.

As of December 31, 2024 and 2023, $ 1.5 million of principal was outstanding from the technology partner under the convertible promissory note.

For the years ended December 31, 2024, 2023 and 2022, we did not record any revenue from the technology partner associated with this convertible promissory note.

Investments in Unconsolidated Entities

Investment in Protegger Luxembourg S.à r.l, or Pronet

On November 20, 2025, we paid $ 30.1 million in cash to purchase 20.3 % of the outstanding shares of Pronet.

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.

As of December 31, 2025, the carrying value of our equity investment in Pronet did not exceed our share of Pronet's net assets.

We are not obligated to fund losses of Pronet, when applicable.

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 December 31, 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.

We are not obligated to fund losses of Safe Haven or All Access, when applicable.

Investment in SafeStreets USA, LLC, or SafeStreets

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

We do not have a controlling financial interest in SafeStreets, but based on the legal form of SafeStreets, our level of ownership and our 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.

As of December 31, 2025, the carrying value of our equity investment in SafeStreets exceeded our share of SafeStreets' 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.

We are not obligated to fund losses of SafeStreets, when applicable.

Investment in a Hardware Supplier

17 unchanged sentences

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

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

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

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

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

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 December 31, 2025 and 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):

December 31, 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 % $ 141,205 $ 143,134 $ — $ —

24.7 % 29,436 31,144 — —

Pronet 20.3 % 30,142 — — —

Other unconsolidated entities

26,148 707 17,170 733

$ 226,931 $ 174,985 $ 17,170 $ 733

Equity method income from our investments in unconsolidated entities are as follows (in thousands):

Year Ended December 31,

Income from equity method investments, net $ 2,642 $ 133

Other related party transactions and balances outstanding with our equity method investees for activity subsequent to our

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2025, 2024 and 2023

investments are as follows (in thousands):

Year Ended December 31,

Revenue from equity method investees

$ 17,411 $ 39

Interest income from equity method investees

Distributions received from equity method investees

December 31, 2025 December 31, 2024

Outstanding principal from loans to equity method investees

$ 21,947 $ 145

Interest receivable from equity method investees

Accounts receivable from equity method investees

Total amounts receivable from equity method investees

$ 24,102 $ 227

Summarized Financial Information

Summarized financial information for all of our equity method investees in the aggregate for the periods during which we held an equity method investment are as follows (in thousands):

Statement of Operations Year Ended December 31,

$ 730,488 $ 1,565

Operating income

106,050 ( 176 )

64,131 ( 332 )

Net income attributable to the equity method investees

64,131 ( 332 )

Balance Sheet

December 31, 2025 December 31, 2024

Current assets

$ 107,854 $ 470

Noncurrent assets

Current liabilities

Noncurrent liabilities

Loan to SafeStreets

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.

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 December 31, 2025, $ 21.5 million of principal was outstanding from SafeStreets under the loan agreement.

Loan to a Distribution Partner

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

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

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

Based on this information 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

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2025, 2024 and 2023

$ 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.

For the years ended December 31, 2025, 2024 and 2023, we recognized $ 1.8 million, $ 2.6 million and $ 3.0 million of revenue from the distribution partner associated with this loan, respectively.

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 was July 24, 2025.

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.

As of December 31, 2025 and 2024, $ 0.9 million and $ 1.0 million of principal was outstanding from the service provider partner under the loan agreement.

For each of the years ended December 31, 2025, 2024 and 2023, we recognized $ 0.1 million, $ 0.2 million and $ 0.2 million of revenue from the service provider partner associated with this loan, respectively.

Allowance for Credit Losses - Notes Receivable

17 unchanged sentences

Total $ 22,600 $ 500 $ 447 $ 1,500 $ — $ 943 $ 25,990

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2024, 2023 and 2022

December 31, 2024

7 unchanged sentences

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

There were no notes receivable placed on nonaccrual status as of December 31, 2024 and 2023.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2025, 2024 and 2023

There was one note receivable placed on nonaccrual status as of December 31, 2025 and no notes receivable placed on nonaccrual status as of December 31, 2024.

During the years ended December 31, 2025, 2024 and 2023, there was no interest income recognized related to notes receivables that were in nonaccrual status.

As of December 31, 2024 and 2023, there were no notes receivable placed in nonaccrual status for which there was not a related allowance for credit losses.

As of December 31, 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 December 31, 2025 and 2024, there were no notes receivables that were 90 days or greater past due for which we continued to accrue interest income.

Prepaid Expenses

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

As of December 31, 2025 and 2024, $ 19.4 million and $ 16.1 million of prepaid expenses were included in other current assets, respectively, primarily related to software licenses, insurance and long lead-time parts related to our inventory.

Fair Value Measurements

4 unchanged sentences

$ 941,134 $ — $ — $ 941,134

Money market accounts as of December 31, 2024

1,209,474 — — 1,209,474

Equity securities with readily determinable fair value as of December 31, 2025

14,858 — — 14,858

Money market accounts as of December 31, 2023

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

7,425 — — 7,425

3 unchanged sentences

— — 2,169 2,169

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

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

Year Ended December 31,

2025 2024 2023

Contingent Consideration Liability from Acquisition

Subsidiary Long-Term Incentive Plan

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

Acquired liabilities

Performance target achievement payment ( 1,266 ) — —

Changes in fair value included in earnings 320 108 68

Reclassification to additional paid in capital upon modification

— — ( 3,104 )

End of period balance $ 1,223 $ 2,169 $ 2,061

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2024, 2023 and 2022

As of December 31, 2025, $ 933.0 million 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 consolidated balance sheets.

As of December 31, 2024, $ 1.2014 billion of our money market accounts was included in cash and cash equivalents, $ 6.2 million was included in other assets and $ 1.9 million was included in other current assets in our consolidated balance sheets.

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

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

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

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

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

During the year ended December 31, 2025, we recorded a gain on publicly traded equity securities within our treasury portfolio of $ 4.7 million.

During the year ended December 31, 2024, we recorded a loss on publicly traded equity securities within our treasury portfolio of less than $ 0.1 million.

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

See Note 14 for the carrying amount and estimated fair value of our convertible senior notes as of December 31, 2025 and 2024.

We previously maintained a subsidiary long-term incentive plan and recorded a liability based on the potential cash payment contingent upon meeting certain financial milestones related to the agreement established with certain employees of one of our subsidiaries.

This incentive plan was established in November 2017 and the amount of compensation awarded to employees depended on the fair market value of the subsidiary, which was determined in part by the subsidiary’s projected financial results.

We accounted for the subsidiary long-term incentive plan using fair value and established liabilities for the future payments under the terms of the incentive plan based on estimating revenue, EBITDA and EBITDA margin of the subsidiary over the period of the incentive plan through the anticipated achievement of the milestones.

We estimated the fair value of the liability by using a Monte Carlo simulation model which involves several Level 3 unobservable inputs.

The significant unobservable inputs used in the valuation included a weighted average revenue volatility and the revenue risk adjustment.

The revenue volatility was weighted using revenue volatility results from the subsidiary’s peer group as well as market transaction metrics.

The revenue risk adjustment was calculated using capital structure allocations from the subsidiary’s peer group, market transaction metrics as well as United States Treasury yields.

In May 2022, we terminated the subsidiary long-term incentive plan.

The fair value of the liability related to the subsidiary long-term incentive plan as of the termination date was consistent with the liability as of March 31, 2022.

Concurrent with the termination of the subsidiary long-term incentive plan, we granted performance-based restricted stock units to those employees who previously participated in the subsidiary long-term incentive plan.

We accounted for the termination of the subsidiary long-term incentive plan and concurrent grant of performance-based restricted stock units as a modification of the original subsidiary long-term incentive plan.

As a result, we reclassified the $ 3.1 million liability related to the subsidiary long-term incentive plan to additional paid-in capital during the three months ended June 30, 2022.

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

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

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

The earn-out payment is contingent on the satisfaction of certain performance targets related to the integration of EBS's hardware into the Alarm.com platform by December 31, 2025, and has a maximum potential payment of up to $ 2.5 million.

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, 2026, and has a

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2025, 2024 and 2023

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.

4 unchanged sentences

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

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

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

One of the performance targets was achieved during the year ended December 31, 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 December 31, 2025 included an expected achievement percentage of 100 %.

The valuation also included a weighted average discount rate of 4.9 %, weighted by the probability of achievement of the performance targets at various dates, including a range of 4.9 % to 5.0 %.

2 unchanged sentences

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 during the years ended December 31, 2024 and 2023, and no transfers into Level 3 during the year ended December 31, 2022.

There were no transfers into or out of Level 3 during the years ended December 31, 2025, 2024 and 2023.

There were no reclassifications between levels of the fair value hierarchy during the years ended December 31, 2025, 2024 and 2023.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2024, 2023 and 2022

As of December 31, 2025, we leased office space, data centers and office equipment under non-cancelable operating leases with various expiration dates through 2034.

9 unchanged sentences

Operating lease right-of-use assets obtained in exchange for new operating lease liabilities 7,650 38,872 5,262

During the years ended December 31, 2025, 2024 and 2023, we received cash incentives from our landlord of $ 4.5 million, zero , and $ 0.4 million, respectively, as reimbursement for tenant improvements.

December 31, 2025 December 31, 2024

1 unchanged sentence

Weighted-average discount rate — operating leases 8.1 % 8.2 %

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2025, 2024 and 2023

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

9 unchanged sentences

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

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2024, 2023 and 2022

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

3 unchanged sentences

Income taxes payable 1,785 28,045

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

Holdback and working capital liabilities from business combinations, asset acquisitions and investments in unconsolidated entities

Contingent consideration liability from acquisition

16 unchanged sentences

We received proceeds from the issuance of the 2026 Notes of $ 484.3 million, net of $ 15.7 million of transaction fees and other debt issuance costs.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2025, 2024 and 2023

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:

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;

2 unchanged sentences

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

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2024, 2023 and 2022

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

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.

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.

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.

It was our intent to settle the principal amount of the 2026 Notes with cash.

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.

As discussed in Note 2, we adopted ASU 2020-06 effective January 1, 2022, using a modified retrospective adoption method.

Prior to the adoption of the standard, the 2026 Notes were separated into liability and equity components.

The carrying amount of the liability component was calculated by measuring the fair value of a similar debt instrument that did not have an associated convertible feature.

The carrying amount of the equity component representing the conversion option was determined by deducting the fair value of the liability component from the par value of the 2026 Notes.

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

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

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

We also recombined the liability and equity components of the debt issuance costs.

The issuance costs are presented as a deduction from the outstanding principal balance of the 2026 Notes and are amortized to interest expense using the effective interest method over the contractual term of the 2026 Notes at a rate of 0.6 %.

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 December 31, 2025 and 2024, the fair value of our 2026 Notes was $ 499.1 million and $ 473.8 million, respectively.

1 unchanged sentence

Based on the closing price of our common stock of $ 51.02 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 December 31, 2025.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2025, 2024 and 2023

The net carrying amount of the liability component of the 2026 Notes is as follows (in thousands):

3 unchanged sentences

Net carrying amount $ 499,867 $ 496,681

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2024, 2023 and 2022

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

3 unchanged sentences

Total interest expense $ 3,186 $ 3,166 $ 3,145

See Note 21 for details on our payment of the 2026 Notes upon maturity on January 15, 2026.

Convertible Senior Notes - 2029 Notes

16 unchanged sentences

The initial conversion rate for the 2029 Notes is 11.4571 shares of our common stock per $1,000 principal amount of 2029 Notes, which is equivalent to an initial conversion price of $ 87.28 per share of our common stock, subject to adjustment under certain circumstances in accordance with the terms of the 2029 Indenture.

In addition, following certain corporate events that occur prior to the maturity date of the 2029 Notes or if we deliver a notice of redemption in respect of some or all of the 2029 Notes, we will, under certain circumstances, increase the conversion rate of the 2029 Notes for a holder who elects to convert its 2029 Notes (or any portion thereof) in connection with such a corporate event or convert its 2029 Notes called (or deemed called) for redemption during the related redemption period (as defined in the 2029 Indenture), as the case may be.

If we undergo a fundamental change (as defined in the 2029 Indenture), subject to certain exceptions and except as described in the 2029 Indenture, holders may require us to repurchase for cash all or any portion of their 2029 Notes at a fundamental change repurchase price equal to 100 % of the principal amount of the 2029 Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date.

The 2029 Indenture includes customary covenants and sets forth certain events of default after which the 2029 Notes may be declared immediately due and payable and sets forth certain types of bankruptcy or insolvency events of default involving us after which the 2029 Notes become automatically due and payable.

ALARM.COM HOLDINGS, INC.

1 unchanged sentence

December 31, 2025, 2024 and 2023

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.

We used $ 63.1 million of the net proceeds from the 2029 Notes to pay the cost of the capped call transactions described below and used $ 75.0 million to repurchase 1,117,068 shares of our common stock concurrently with the pricing of the 2029 Notes, which was separately authorized by our board of directors.

We are using the remaining net proceeds from the issuance of the 2029 Notes for general corporate purposes, which may include acquisitions or strategic investments in complementary businesses or technologies, other repurchases of our common stock, repurchases of our 2026 Notes and for working capital, operating expenses and capital expenditures.

We 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.

We account for the 2029 Notes as a liability.

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

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

As of December 31, 2025 and 2024, the fair value of our 2029 Notes was $ 477.3 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.

1 unchanged sentence

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

2025 December 31,

Principal $ 500,000 $ 500,000

4 unchanged sentences

Interest expense

$ 11,250 $ 6,593

Amortization of debt issuance costs 2,845 1,630

38 unchanged sentences

Patent and Trademark Office and one inter partes review.

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

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

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

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

Three of the patents were found unpatentable in reexamination.

The decision with respect to one of the patents was affirmed by the United States Court of Appeals for the Federal Circuit, or Federal Circuit, on January 21, 2026, EcoFactor filed an appeal of the decision with respect to the second patent with the Federal Circuit on November 20, 2025, and EcoFactor is appealing the rejection of the third patent to the Patent Trial and Appeal Board, or PTAB, having filed 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.

5 unchanged sentences

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.

Causam had previously asserted the same four patents against us in a July 2021 complaint with the ITC.

In February 2023, the ITC found in favor of Alarm.com and Causam’s appeal of the decision with respect to one patent was dismissed as moot on October 15, 2025 based on the Federal Circuit’s affirmance, on the same day, of a PTAB decision that found the patent at issue in the appeal is invalid.

Separately, the Federal Circuit affirmed a PTAB decision finding a second of the asserted patents invalid on September 5, 2025.

Before we responded to Causam’s district court complaint, the court issued a stay of the case until the ITC investigation was finally resolved.

Now that the appeal proceedings have been completed in the ITC investigation, Causam may seek to pursue the district court lawsuit.

Should Causam choose to pursue the district court lawsuit, and prevail, then 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

ALARM.COM HOLDINGS, INC.

1 unchanged sentence

December 31, 2025, 2024 and 2023

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.

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

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

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

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, but has not yet rendered a claim construction opinion.

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

A trial is scheduled for 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.

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.

On August 25, 2025, we moved to dismiss the complaint as barred by the statute of limitations.

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.

We may also be a party to litigation and subject to claims incident to the ordinary course of business.

13 unchanged sentences

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.

On February 15, 2023, our board of directors authorized the cancellation of the balance under the stock repurchase program ending December 3, 2023, and also authorized a stock repurchase program, effective February 23, 2023, under which we are authorized to purchase up to an aggregate of $ 100.0 million of our outstanding common stock during the two-year period ending February 23, 2025.

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.

ALARM.COM HOLDINGS, INC.

1 unchanged sentence

December 31, 2025, 2024 and 2023

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

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.

During the years ended December 31, 2023 and 2022, we repurchased 487,918 and 1,385,592 shares of our common stock under our stock repurchase programs that were subsequently canceled effective May 31, 2024 and February 15, 2023, for $ 27.3 million and $ 78.8 million, respectively, which includes applicable commissions and fees.

As of January 1, 2023, we are subject to a 1.0% excise tax on the value of net corporate stock repurchases under the Inflation Reduction Act of 2022.

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.

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

As permitted under the terms of the 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.

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.

19 unchanged sentences

Total stock-based compensation expense $ 33,190 $ 41,242 $ 47,283

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

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

$ ( 1,025 ) $ 1,829 $ ( 508 )

2 unchanged sentences

The 2025 Plan allows for the grant of stock options to employees and for the grant of nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, or RSUs, performance-based stock awards, and other forms of equity compensation to our employees, directors and non-employee directors.

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

On April 17, 2025, our board of directors adopted, and on June 4, 2025, our stockholders approved, our 2025 Plan.

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.

Additionally, no

ALARM.COM HOLDINGS, INC.

1 unchanged sentence

December 31, 2025, 2024 and 2023

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

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

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

further grants may be made under the Amended and Restated 2009 Stock Incentive Plan, or the 2009 Plan.

As of December 31, 2025, 10,774,498 shares remained available for future grant under the 2025 Plan.

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

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

Stock Options

Stock options under the 2015 Plan have been granted at exercise prices based on the closing price of our common stock on the date of grant.

Stock options under the 2025 Plan and the 2015 Plan have been granted at exercise prices based on the closing price of our common stock on the date of grant.

Stock options under the 2009 Plan were granted at exercise prices as determined by the board of directors to be the fair market value of our common stock.

Our stock options generally vest over a five-year period and each option, if not exercised or forfeited, expires on the ten th anniversary of the grant date.

Certain stock options granted under the 2015 Plan and previously granted under the 2009 Plan may be exercised before the options have vested.

Certain stock options granted under the 2025 Plan and previously granted under the 2015 Plan and 2009 Plan may be exercised before the options have vested.

Unvested shares issued as a result of early exercise are subject to repurchase by us upon termination of employment or services at the original exercise price.

49 unchanged sentences

Cash received from exercises of stock options was $ 2.7 million, $ 8.3 million and $ 2.0 million during the years ended December 31, 2025, 2024 and 2023, respectively.

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2024, 2023 and 2022

Restricted Stock Units

There was an aggregate of 709,762 , 628,394 and 558,747 RSUs without performance conditions granted to certain of our employees and directors during the years ended December 31, 2025, 2024 and 2023, respectively.

There were 25,205 RSUs with performance conditions granted during the year ended December 31, 2025.

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

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

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

21 unchanged sentences

Vested and expected to vest as of December 31, 2025 1,779,684 $ 60.25 $ 90,799 55,872 $ 69.82 $ 2,851

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2025, 2024 and 2023

The weighted average grant date fair value for our RSUs without performance conditions granted during the years ended December 31, 2025, 2024 and 2023 was $ 53.15 , $ 65.29 and $ 55.40 , respectively.

1 unchanged sentence

The total fair value of RSUs without performance conditions vested during the years ended December 31, 2025, 2024 and 2023 was $ 37.2 million, $ 37.0 million and $ 45.3 million, respectively.

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

The total fair value of RSUs with performance conditions vested during the years ended December 31, 2025, 2024 and 2023 was $ 4.6 million, $ 2.0 million and $ 3.2 million, respectively.

Employee Stock Purchase Plan

Our board of directors adopted our 2015 ESPP in June 2015.

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

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

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

As of December 31, 2025, 1,831,595 shares have been reserved for future grant under the 2015 ESPP.

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

3 unchanged sentences

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

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2024, 2023 and 2022

Earnings Per Share

21 unchanged sentences

Restricted stock units 11,300 1,700 255,325

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

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

Our redeemable noncontrolling interests relate to our 89 % equity ownership interest in OpenEye, our 99 % equity ownership interest in Noonlight and our 81 % equity ownership interest in CHeKT.

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

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2025, 2024 and 2023

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 the years ended December 31, 2024, 2023 and 2022.

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 on the 2026 Notes.

As a result, we included 2,103,317 shares related to the 2026 Notes and 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 year ended December 31, 2025.

We included 3,396,950 and 3,365,132 shares related to the 2026 and 2029 Notes, respectively, within the weighted averages shares outstanding when calculating the diluted net income per share for the year ended December 31, 2024.

We included 3,396,950 shares related to the 2026 Notes within the weighted averages shares outstanding when calculating the diluted net income per share for the year ended December 31, 2023.

3 unchanged sentences

One of our service provider partners within the Alarm.com segment individually represented greater than 15 % but not more than 20 % of our revenue for the years ended December 31, 2025, 2024 and 2023.

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

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

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2024, 2023 and 2022

No service provider partners represented more than 10% of accounts receivable as of December 31, 2025 or 2024.

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

16 unchanged sentences

Total $ 37,620 $ 19,294 $ 17,485

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2025, 2024 and 2023

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

1 unchanged sentence

2025 2024 2023

Federal statutory rate 21.0 % 21.0 % 21.0 %

State income tax expense, net of federal benefits 2.4 3.0 1.0

Foreign tax rate differential

Nondeductible meals and entertainment 0.4 0.2 0.9

Foreign-derived intangible income deduction ( 3.4 ) ( 4.4 ) ( 7.0 )

Valuation allowance 0.8 0.7 0.4

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

Tax (windfall benefits) / shortfall

Amount Percentage

Federal Statutory Tax Rate

$ 34,987 21.0 % $ 29,779 21.0 % $ 20,543 21.0 %

Foreign withholding tax 1.3 1.3 1.2

Nondeductible compensation 1.0 1.0 1.8

Income tax underpayment interest, net of tax benefit

Other 0.4 0.7 1.2

Effective rate 13.6 % 17.9 % 1.7 %

State and Local Income Taxes, Net of Federal Income Tax Effect (1)

6,249 3.8 4,587 3.2 3,654 3.7

Foreign Tax Effects

2,924 1.8 2,553 1.8 1,442 1.6

Effect on Changes in Tax Laws or Rates Enacted in Current Period

Effect of Cross-Border Tax Laws

1,017 0.6 ( 4,720 ) ( 3.3 ) ( 4,288 ) ( 4.4 )

Foreign Derived Intangible Income

4 — ( 4,844 ) ( 3.4 ) ( 4,288 ) ( 4.4 )

Global Intangible Low-Taxed Income

1,013 0.6 124 0.1 — —

( 11,279 ) ( 6.7 ) ( 14,236 ) ( 10.0 ) ( 7,005 ) ( 7.2 )

Federal Research and Development Tax Credits

( 11,279 ) ( 6.7 ) ( 14,236 ) ( 10.0 ) ( 7,005 ) ( 7.2 )

Changes in Valuation Allowances

Nontaxable or Nondeductible Items

3,072 1.8 1,637 1.2 2,819 2.9

Changes in Unrecognized Tax Benefits

83 — ( 320 ) ( 0.3 ) 261 0.3

Other Adjustments

567 0.3 14 — 15 —

Effective Tax Rate

$ 37,620 22.6 % $ 19,294 13.6 % $ 17,485 17.9 %

_______________

(1) In 2025, state taxes in Virginia, Illinois, Pennsylvania, Florida and Utah made up the majority (greater than 50%) of the tax effect in this category.

In 2024, state taxes in Virginia, Florida, Illinois and New York made up the majority (greater than 50%) of the tax effect in this category.

In 2023, state taxes in Virginia, Pennsylvania and Massachusetts made up the majority (greater than 50%) of the tax effect in this category.

The components of our cash paid for income taxes, net of refunds are as follows (in thousands):

Year Ended December 31,

2025 2024 2023

$ 30,080 $ 52,686 $ 50,973

13,445 12,990 12,345

1,862 2,535 1,259

Total $ 45,387 $ 68,211 $ 64,577

Income taxes paid (net of refunds) exceeded 5% of total income taxes paid (net of refunds) in the following jurisdictions (in thousands):

Year Ended December 31,

2025 2024 2023

$ 6,570 $ 4,787 $ —

_______________

(2) In 2023, no state jurisdictions had income taxes paid (net of refunds) that exceeded 5%.

ALARM.COM HOLDINGS, INC.

15 unchanged sentences

Capped call premium

10,661 13,416

Other 2,123 3,430

23 unchanged sentences

Ending balance $ 9,792 $ 9,124 $ 9,063

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

For the year ended December 31, 2024, the effective tax rate was below the 21.0% statutory rate primarily due to research and development tax credits claimed, the foreign derived intangible income deduction and tax windfall benefits from employee stock-based compensation, partially offset by the impact of state taxes, foreign withholding taxes and other nondeductible expenses.

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

On July 4, 2025, Public Law 119-21, commonly referred to as One Big Beautiful Bill Act, or OBBBA, was enacted in the United States.

The OBBBA includes a broad range of tax provisions that impact the timing and the magnitude of certain key tax deductions.

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

ALARM.COM HOLDINGS, INC.

1 unchanged sentence

December 31, 2025, 2024 and 2023

primarily due to research and development tax credits claimed and the foreign derived intangible income deduction, partially offset by the impact of state taxes, foreign withholding taxes, federal estimated tax payment interest expense, other nondeductible expenses and a stock-based compensation tax shortfall.

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

deduction, with both provisions reducing our associated deferred tax assets.

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 beginning in 2026.

We recorded a current federal tax benefit of $ 47.9 million based on our intent to deduct all 2025 domestic research and development expenditures, which resulted in a reduction of the current income tax payable of approximately $ 47.9 million and a corresponding decrease in the deferred tax asset.

In addition, we generated $ 5.8 million in excess federal research and development tax credits in 2025.

We will carryback this excess credit to 2024 and offset 2024 federal taxes, resulting in a 2025 current tax benefit.

Our effective income tax rates were 22.6 %, 13.6 % and 17.9 % for the years ended December 31, 2025, 2024 and 2023, respectively.

For the year ended December 31, 2025, the 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.

For the year ended December 31, 2024, the effective tax rate was below the 21.0% statutory rate primarily due to research and development tax credits claimed, the foreign derived intangible income deduction, tax windfall benefits from employee stock-based compensation and a favorable true-up adjustment of our 2023 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 year ended December 31, 2023, the effective tax rate was below the 21.0% statutory rate primarily due to research and development tax credits claimed and the foreign derived intangible income deduction, partially offset by the impact of state taxes, foreign withholding taxes, federal estimated tax payment interest expense, other nondeductible expenses and a stock-based compensation tax shortfall.

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

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

Our valuation allowance for state research and development tax credit carryforwards, net deferred tax assets of our EBS subsidiary, state net operating losses and an unrealized U.S.

federal capital loss was $ 5.6 million, $ 5.0 million and $ 3.8 million as of December 31, 2025, 2024 and 2023, respectively.

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

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

We recorded a net increase to the unrecognized tax benefits liability, excluding penalties and interest, of $ 0.7 million primarily due to a liability for research and development tax credits claimed, partially offset by the release of a federal unrecognized tax benefit liability due to the statute of limitations expiration during the year ended December 31, 2025.

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

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

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

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

Our unrecognized tax benefits as of December 31, 2025 and 2024 includes unrecognized tax benefits of $ 9.8 million and $ 9.1 million, respectively, that if recognized, would reduce our income tax expense and effective tax rate.

As of December 31, 2024 and 2023, our consolidated balance sheets included a $ 0.9 million and $ 0.8 million accrual for total interest expense related to unrecognized tax benefits, respectively.

As of December 31, 2025 and 2024, our consolidated balance sheets included a $ 1.2 million and $ 0.9 million accrual for total interest expense related to unrecognized tax benefits and penalties, respectively.

We recognize interest and penalties related to unrecognized tax benefits as a component of income tax expense.

As of December 31, 2025, we had gross U.S.

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

federal net operating loss carryforwards of $ 16.1 million, which will begin to expire in 2031.

As of December 31, 2025, we had state net operating loss carryforwards of $ 22.3 million, which will begin to expire in 2031.

As of December 31, 2024, we had less than $ 0.1 million of federal research and development tax credit carryforwards that will begin to expire in 2041.

As of December 31, 2025, we had $ 0.1 million of federal research and development tax credit carryforwards that will begin to expire in 2041.

As of December 31, 2025, we had state research and development tax credit carryforwards of $ 5.2 million, which will begin to expire in 2032.

The federal net operating loss carryforward arose in connection with the 2013 acquisition of EnergyHub and the 2022 acquisition of Noonlight.

Utilization of the acquired EnergyHub and Noonlight net operating loss carryforwards may be subject to annual limitations due to ownership change limitations as provided by the Internal Revenue Code of 1986, as amended.

The federal net operating loss carryforward arose in connection with the 2013 acquisition of EnergyHub and the 2025 acquisitions of CHeKT and BTR.

Utilization of the acquired EnergyHub, CHeKT and BTR net operating loss carryforwards are subject to annual limitations due to ownership change limitations as provided by the Internal Revenue Code of 1986, as amended.

Our tax returns are subject to on-going review and examination by various tax authorities.

2 unchanged sentences

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 a result, we paid $ 0.6 million in additional federal taxes, including interest,

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2025, 2024 and 2023

during the three months ended June 30, 2024, and recognized a net income tax benefit of $ 1.7 million during the three months ended March 31, 2024.

As of December 31, 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.

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

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

We have not historically recorded a deferred tax liability on the undistributed earnings from our foreign subsidiaries, as such earnings are considered to be indefinitely reinvested.

During the three months ended September 30, 2025, we changed this assertion with respect to a portion of the 2024 and 2025 current earnings of our Canadian business to begin providing deferred taxes on such earnings, the tax impact of which was not material.

Segment Information

1 unchanged sentence

• Alarm.com segment

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2024, 2023 and 2022

• Other segment

2 unchanged sentences

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

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

Our Alarm.com segment represents our cloud-based platform and licenses and services on our non-hosted software platform 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.

25 unchanged sentences

Operating income / (loss) $ 141,679 $ ( 8,180 ) $ ( 411 ) $ 550 $ 133,638

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

$ 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

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

Other income / (expense), net 4,645

Income before income taxes $ 166,606

16 unchanged sentences

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

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

Total assets $ 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

Other (expense) / income, net 4,624

Other income / (expense), net ( 2,807 )

Income before income taxes $ 141,674

29 unchanged sentences

Interest income 29,801

Other (expense) / income, net ( 59 )

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.

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.

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.

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.

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.

We derived substantially all revenue from North America for the years ended December 31, 2025, 2024 and 2023.

Substantially all of our long-lived assets were in North America as of December 31, 2025 and 2024.

Quarterly Financial Data (unaudited)

The following table shows selected unaudited quarterly consolidated statement of operations data for each of our eight most recently completed quarters.

In the opinion of management, the information for each of these quarters has been prepared on the same basis as our audited financial statements and include all adjustments, consisting of normal recurring adjustments and accruals, necessary for the fair statement of financial information in accordance with GAAP.

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

These Macroeconomic Conditions have and may continue to create tariffs, supply chain disruptions, inventory disruptions, and fluctuations in economic growth, including fluctuations in employment rates, inflation, energy prices and consumer sentiment.

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

ALARM.COM HOLDINGS, INC.

Notes to the Consolidated Financial Statements — (Continued)

December 31, 2024, 2023 and 2022

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

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

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

Three Months Ended

Total revenue $ 209,716 $ 223,875 $ 221,854 $ 226,237 $ 223,283 $ 233,807 $ 240,497 $ 242,240

Total cost of revenue 76,172 86,367 81,405 81,215 76,515 81,282 84,748 83,604

Net income 14,207 15,611 19,351 31,171 23,404 32,520 36,456 30,133

Net income attributable to common stockholders 14,416 15,799 19,524 31,304 23,595 33,511 36,682 30,328

Net income per share attributable to common stockholders

Basic $ 0.29 $ 0.32 $ 0.39 $ 0.63 $ 0.47 $ 0.67 $ 0.74 $ 0.61

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

Subsequent Events

Loan to a Service Provider Partner

On January 30, 2025, we entered into a senior secured loan agreement with a service provider partner, under which a term loan was provided to the service provider partner in the original principal amount of $ 21.5 million, which loan is collateralized by the assets of the service provider partner.

Quarterly principal payments begin in the second quarter of 2027.

Interest on the outstanding principal accrues at a rate per annum equal to the overnight financing rate published by the Federal Reserve Bank of New York for a period of three months, plus 3.0 %.

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

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

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

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

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

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.

Subsequent Event

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

On January 15, 2026, the 2026 Notes matured and on January 14, 2026, we paid $ 500.0 million in aggregate principal amount to holders of the 2026 Notes, fully settling the outstanding balance.

The settlement was funded with cash on hand, consistent with our stated intent, with no shares of common stock issued.

Schedule II – Valuation and Qualifying Accounts and Reserves

23 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.

What changed 10-K

Item 8. Financial Statements and Supplementary Data