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Home security and automation software provider Alarm.com (NASDAQ:ALRM) reported Q1 CY2025 results topping the market’s revenue expectations , with sales up 7% year on year to $238.8 million. The company expects the full year’s revenue to be around $983.5 million, close to analysts’ estimates. Its non-GAAP profit of $0.54 per share was 13.8% above analysts’ consensus estimates.

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Alarm.com (ALRM) Q1 CY2025 Highlights:

• Revenue: $238.8 million vs analyst estimates of $234.3 million (7% year-on-year growth, 1.9% beat)

• Adjusted EPS: $0.54 vs analyst estimates of $0.47 (13.8% beat)

• Adjusted EBITDA: $43.54 million vs analyst estimates of $39.83 million (18.2% margin, 9.3% beat)

• The company slightly lifted its revenue guidance for the full year to $983.5 million at the midpoint from $979.5 million

• EBITDA guidance for the full year is $191.5 million at the midpoint, in line with analyst expectations

• Operating Margin: 12.4%, up from 8.4% in the same quarter last year

• Free Cash Flow Margin: 7.5%, down from 22.3% in the previous quarter

• Market Capitalization: $2.65 billion

Company Overview

Founded in 2000 as a business unit within MicroStrategy, Alarm.com (NASDAQ:ALRM) is a software-as-a-service platform that enables users to control their security systems and smart home appliances from a single app.

Sales Growth

A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Unfortunately, Alarm.com’s 6.9% annualized revenue growth over the last three years was weak. This fell short of our benchmark for the software sector and is a rough starting point for our analysis.

This quarter, Alarm.com reported year-on-year revenue growth of 7%, and its $238.8 million of revenue exceeded Wall Street’s estimates by 1.9%.

Looking ahead, sell-side analysts expect revenue to grow 3.6% over the next 12 months, a deceleration versus the last three years. This projection doesn't excite us and implies its products and services will face some demand challenges.

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