Alarm.com (ALRM) Q4 2025 earnings summary

Executive summary

• Q4 and full year 2025 results exceeded expectations, with SaaS and license revenue up 8.8% year-over-year in Q4 to $180.2M and full year revenue reaching $689.4M, while total annual revenue surpassed $1.011 billion for the first time.

• The business model is differentiated from typical SaaS, with revenue driven by connected IoT devices rather than seat-based pricing, providing long-term durability.

• Strategic focus on innovation, R&D, and expansion into commercial, energy, and international markets has diversified revenue streams and enhanced resilience.

• GAAP net income rose to $34.7M in Q4 and $131.6M for the year, with diluted EPS of $0.66 and $2.46, respectively.

• Non-GAAP adjusted EBITDA reached $54.9M in Q4 and $206M for 2025.

Financial highlights

• Q4 SaaS and licensed revenue: $180.2M, up 8.8% year-over-year; full year: $689.4M, up 9.2%.

• Q4 total revenue grew 8% year-over-year to $261.7M; full year total revenue reached $1.011B, up 7.6%.

• Q4 gross profit: $172.6M, up 8.8% year-over-year; hardware gross profit up 13.4% to $19.1M.

• Q4 GAAP net income: $34.7M ($0.66/diluted share); non-GAAP adjusted net income: $38.9M; non-GAAP EPS: $0.72, up 24.1%.

• Q4 adjusted EBITDA: $54.9M, up 18.3% year-over-year; full year adjusted EBITDA: $206M, up 16.9%.

• Q4 non-GAAP free cash flow: $35.1M; full year: $137M.

• Cash and cash equivalents decreased to $960.6M at year-end 2025 from $1.22B in 2024.

• Cash flows from operations were $153.3M in 2025, down from $206.4M in 2024.

Outlook and guidance

• Q1 2026 SaaS and license revenue expected between $175.8M and $176M, reflecting normal EnergyHub seasonality.

• Full year 2026 SaaS and license revenue guidance raised to $743M–$745M; total revenue expected at $1.058B–$1.065B.

• 2026 non-GAAP adjusted EBITDA guidance: $213M–$215M (20.2% margin midpoint); non-GAAP net income: $150.5M–$151M ($2.78–$2.79/diluted share, 57.2M shares diluted).

• Commercial and energy segments expected to grow 25–30% in 2026, becoming about a third of SaaS revenue.

• Expects to exit 2027 with a 21% adjusted EBITDA margin run rate.