Home security and automation software provider Alarm.com (NASDAQ:ALRM) reported Q1 CY2025 results exceeding 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.
Is now the time to buy ALRM? Find out in our full research report (it’s free).
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 Operating Income: $43.73 million vs analyst estimates of $21.91 million (18.3% margin, 99.6% 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
- Billings: $239.8 million at quarter end, up 6.8% year on year
- Market Capitalization: $2.94 billion
StockStory’s Take
Alarm.com’s first quarter was shaped by strong adoption of its commercial and energy market offerings, as well as higher revenue retention in its core residential segment. CEO Steve Trundle attributed the solid results to “growth initiatives in the commercial and energy markets and higher revenue retention on the residential side of the business,” adding that demand remained stable despite a shifting macroeconomic environment. Management highlighted the growing contribution of EnergyHub, which supports utilities adapting to increased electrification, and noted that its 729 floodlight video camera continues to see robust uptake. The company also benefited from a continued shift toward higher-value commercial installations and expanding use of video analytics services by new customers both domestically and internationally.
Looking ahead, management expects growth to be driven by ongoing expansion in commercial and energy markets, with particular focus on international video adoption and the rollout of new hardware products. CFO Kevin Bradley cautioned that EnergyHub’s strong first-quarter contribution is seasonal and that “revenue retention rates are expected to return to historical ranges as the year progresses.” The company is also monitoring the impact of U.S. hardware tariffs, but Bradley noted, “We have significantly improved and diversified our supply chain,” and believes that passing through baseline tariff costs should have minimal effect on demand. As Alarm.com broadens its product suite and deepens relationships with service providers, management remains focused on operating leverage and margin improvement while navigating a competitive, evolving market.
Key Insights from Management’s Remarks
Management credited the quarter’s outperformance to commercial and energy market growth, strong video adoption, and resilient customer retention, while highlighting proactive efforts to manage supply chain and tariff risks.
-
Commercial segment momentum: The commercial business saw expanding adoption, with higher average revenue per user (ARPU) and strong customer retention. Management described a “land and expand” dynamic where initial installations are followed by upselling of additional services, contributing to higher ARPU and improved revenue quality.
-
EnergyHub’s rising impact: The EnergyHub platform, which helps utilities manage distributed energy resources and grid load, contributed significantly to the quarter’s performance. Recent partnerships, such as the one with General Motors Energy, are expected to deepen the platform’s integration with electric vehicle (EV) ecosystems, enhancing its strategic value for utilities.
-
Video analytics expansion: Uptake of the 729 floodlight camera and associated video analytics services increased, with over 85% of new installations also subscribing to Alarm.com’s proactive deterrent solution, PerimeterGuard. International markets showed notable progress, with 30% of new accounts including video, double the rate from a year ago.
-
Margin improvement focus: Operating margins improved as the company leveraged scale and maintained disciplined expense growth. Management reiterated its commitment to driving operating leverage, particularly as growth in commercial, energy, and international markets offset slower residential momentum.
-
Tariff and supply chain resilience: Less than 10% of hardware revenue now comes from China, and the company proactively built up inventory ahead of tariff changes. Management plans to pass through baseline tariff costs and expects minimal demand impact, based on past experience with hardware price increases.
Drivers of Future Performance
Alarm.com’s 2025 outlook is shaped by continued commercial and energy market expansion, new product launches, and disciplined tariff management.
-
Commercial and energy growth: Management expects sustained growth in commercial security and EnergyHub offerings, with international expansion and utility partnerships seen as key areas of opportunity. The company is particularly focused on scaling its presence in international markets and deepening relationships with utilities as electrification trends accelerate.
-
Product innovation and adoption: The upcoming launch of the 516 Wi-Fi camera, designed for broader international appeal and a lower price point, is aimed at further increasing video analytics adoption. A new battery-powered, wireless camera for residential customers is also in the pipeline, targeting existing customers for upsell opportunities as they renew service contracts.
-
Tariff and macroeconomic uncertainty: While management believes current tariff impacts can be managed, the company has incorporated a wider range of hardware revenue outcomes in its guidance to account for possible market fluctuations. There is some conservatism in the outlook to reflect potential changes in demand or supply chain disruptions.
Catalysts in Upcoming Quarters
In future quarters, the StockStory team will be tracking (1) progress in international video adoption and commercial segment expansion, (2) the impact of new product launches like the 516 Wi-Fi and wireless cameras on customer upsell rates, and (3) the company’s ability to maintain margin discipline amid evolving tariff and supply chain conditions. Developments in EnergyHub utility partnerships and execution of upsell strategies to existing customers will also be important milestones.
Alarm.com currently trades at a forward price-to-sales ratio of 3.6×. At this valuation, is it a buy or sell post earnings? The answer lies in our full research report (it’s free).
High Quality Stocks for All Market Conditions
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.