Alarm.com Raises Outlook as Recurring Revenue Growth Accelerates
SaaS and license revenue reached $188.8 million, rising 11.1% from a year earlier.
Alarm.com Holdings (ALRM), the connected-property software provider, reported non-GAAP diluted earnings of $0.77 a share, up from $0.62 a year earlier, as adjusted net income rose 16.5% to $41.1 million.
The quarter extended an acceleration in recurring revenue growth, which increased from 8.8% in the fourth quarter to 10.8% in the first. Hardware sales grew more slowly, shifting the revenue mix further toward SaaS and licenses.
Total revenue rose 9.2% to $277.7 million, easing from 11.0% growth in the prior quarter but improving from 8.0% in the fourth quarter. GAAP net income fell 29.3% to $24.2 million, and diluted earnings declined to $0.48 a share from $0.63.
Hardware and other revenue increased 5.5% to $89.0 million. Its gross margin widened to about 26.1% from 24.3%, offsetting compression in the higher-margin SaaS and license business and leaving the company’s overall gross margin essentially flat at 65.6%.
Operating income edged up 1.4% to $32.5 million, while the operating margin narrowed to about 11.7% from 12.6% as expenses grew faster than revenue. Litigation expense climbed to $9.3 million from $87,000 and became a major adjustment between GAAP and non-GAAP results.
Adjusted EBITDA rose 15.7% to $57.7 million, lifting its margin to about 20.8% from 19.6% a year earlier and 18.7% in the first quarter. Second-quarter free cash flow more than doubled to $37.0 million, while first-half free cash flow increased to $86.8 million from $36.1 million.
Alarm.com now expects full-year SaaS and license revenue of $754.0 million to $754.4 million, raising the midpoint by $4.2 million from its May outlook and by $10.2 million from its February forecast. Its third-quarter projection of $189.8 million to $190.0 million implies sequential growth of about 0.6%, slowing from roughly 4.0% in the second quarter.
The company launched a commercial Fire Communicator, extending its platform into commercial fire monitoring, while its EnergyHub business managed 304 demand-response events during the July heat wave. Alarm.com also increased first-half share repurchases to $45.0 million as cash declined following the January repayment of $500 million in convertible notes.