One-glance verdict
Undervalued
$104.77 our estimate vs market $57.37
Wall Street consensus: $63.00 (-39.9% lower than our fair-value estimate)
45% below our estimate, below the bear case
Fundamentals snapshot
Alarm.com Holdings, Inc.
ALRM · NMS · Technology · Software - Application
Current price
$57.37
52-week range
$41.49 - $58.62
Market cap
$2.82B
Balance sheet
Watch
7.73x Adequate
Net debt $86.15M. Interest coverage shows how many times profit covers the interest bill.
What stands out
2 Rewards
0 Risks
2 rewards · 0 risks
View details ↓What this company does
Alarm.com Holdings, Inc.
Alarm.com provides the software platform that connects and controls smart home and business security systems, from video cameras and door locks to thermostats. The company makes most of its money from the monthly fees people pay for these services, creating reliable recurring revenue (predictable income that comes in every month from existing customers). This subscription model is powerful because it provides a steady and predictable stream of sales.
How the company got here
Founded in 2000 as a part of another company, Alarm.com was created to send email and text alerts when a security system was triggered. A key turning point came in 2009 when it was purchased by a venture capital firm and became a standalone company. Instead of selling hardware directly to people, it focused on creating a cloud-based platform (a service hosted on the internet) that connected security, video, and home automation devices into a single app. This strategy of partnering with thousands of professional security dealers for installation and service, rather than competing with them, allowed the company to grow rapidly and become a leading platform for connected homes and businesses.
What it actually does
Alarm.com provides the software that connects and controls smart devices in a home or business, all managed through a single app on your phone or computer. You don't buy products directly from Alarm.com; instead, you hire a professional security dealer who uses Alarm.com's technology to set up and manage your system. This service allows you to remotely arm or disarm your security system, view live video from cameras, lock doors, control thermostats, and manage lights. The company makes money by charging these professional dealers a monthly subscription fee for each property using its platform.
Alarm.com
This is the company's main and largest business segment, representing the vast majority of its revenue. It provides the cloud-based software platform for both homes and businesses that connects security systems, video cameras, locks, thermostats, and other smart devices. Homeowners and business managers pay a monthly fee to one of Alarm.com's thousands of service provider partners, who in turn pay Alarm.com for access to the platform. This creates a steady, predictable stream of income known as recurring revenue, which is a key part of its business model.
Other
This smaller segment is focused on developing and selling products in related markets, primarily around energy management and home automation. This includes software and services that help utility companies manage electricity demand and solutions for residential and commercial automation. While it's a much smaller piece of the overall business compared to the main Alarm.com platform, it represents an area where the company is exploring new growth opportunities.
What management is betting on now
The company is focused on expanding its services for businesses, which it calls the commercial market. This includes offering more advanced video surveillance, access control (managing who can enter a building or room), and even fire alarm monitoring. Another key priority is growing internationally by offering its existing home and business solutions in new countries. Management is also investing heavily in video services, encouraging customers to add more cameras and use its video analytics (smart software that can tell the difference between people, animals, and vehicles) to get more value from their systems.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q3
$74.53M
FY2024 Q4
$53.99M
FY2025 Q1
$17.94M
FY2025 Q2
$18.16M
FY2025 Q3
$65.87M
FY2025 Q4
$35.07M
FY2026 Q1
$49.72M
FY2026 Q2
$37.04M
Revenue
$277.73M
Net income
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Diluted EPS
0.48
Operating cash flow
$41.89M
Free cash flow
$37.04M
Fetching…
Sources
Revenue
$265.19M
Net income
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Diluted EPS
0.47
Operating cash flow
$50.63M
Free cash flow
$49.72M
Fetching…
Sources
Revenue
$261.66M
Net income
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Diluted EPS
0.66
Operating cash flow
$35.93M
Free cash flow
$35.07M
Fetching…
Sources
Revenue
$256.40M
Net income
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Diluted EPS
0.65
Operating cash flow
$70.63M
Free cash flow
$65.87M
Fetching…
Sources
Revenue
$254.31M
Net income
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Diluted EPS
0.63
Operating cash flow
$22.72M
Free cash flow
$18.16M
Fetching…
Sources
Revenue
$238.82M
Net income
—
Diluted EPS
0.52
Operating cash flow
$24.06M
Free cash flow
$17.94M
Fetching…
Sources
Revenue
$242.24M
Net income
$30.33M
Diluted EPS
0.56
Operating cash flow
$56.26M
Free cash flow
$53.99M
Fetching…
Sources
Revenue
$240.50M
Net income
$36.68M
Diluted EPS
0.67
Operating cash flow
$77.34M
Free cash flow
$74.53M
Fetching…
Sources
Is it cheap or expensive?
Fair value $104.77 vs current price $57.37
Wall Street consensus is the average analyst price target: $63.00 (-39.9% lower than our fair-value estimate).
Our most-likely fair value is $104.77 a share — about 82.6% above today's price of $57.37, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Watch
Net debt $86.1M. Interest coverage 7.7x.
Net debt
$86.15M
Interest coverage
7.73x
Alarm.com Holdings, Inc. is healthier than 0 of 1 peers on balance-sheet leverage.
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Worse cushion
Baseline
Better cushion
ALRM
BASELINE
Alarm.com Holdings, Inc.
Total debt $567.47M Interest coverage 7.73x This is the baseline the peer rows are being compared against.
What you should know
The case for and against ALRM
2 Rewards
0 Risks
Rewards
-
Revenue grew 4.9% last year.
-
Free cash flow was positive in 10/10 years.
Risks
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
25.38x
Forward P/E
18.69x
P/B
3.25x
P/S
2.65x
EV/EBITDA
17.58x
PEG ratio
1.41x
Profitability
How much profit each dollar creates
Gross margin
65.8%
Operating margin
15.1%
Net margin
11.1%
ROE
13.3%
ROA
5.0%
Health
Liquidity and balance-sheet strength
Debt / equity
0.62x
Current ratio
4.96x
Quick ratio
3.98x
Total debt
$567.47M
Total cash
$481.32M
Growth
How the business has been compounding
Revenue TTM
$1.06B
Revenue 5Y CAGR
7.8%
EPS TTM
2.26
EPS 5Y CAGR
32.0%
Cash flow
How much cash the business throws off
Operating CF TTM
$199.08M
Free CF TTM
$137.05M
FCF margin
12.9%
Dividend
Shareholder payout
Yield
0.0%
Payout ratio
0.0%
Last ex-div date
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