Alarm.com Holdings, Inc.

Good day and thank you for standing by. Welcome to the Alarm.com Second Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star one one on your telephone. You'll then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised today's conference is being recorded. I would not like to hand the conference over to your speaker today, Matthew Zartman, Vice President of Investor Relations, please go ahead.

Thank you, Kevin. Good afternoon, everyone. Joining us on today's call are Steve Trundle, Alarm.com's CEO, and Kevin Bradley, our CFO. During today's call, we will be making forward-looking statements which are predictions, projections, estimates, or other statements about future events. These statements are based on current expectations and assumptions that are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. We refer you to these risk factors discussed in our quarterly report on Form 10Q and our Form 8K, which will be filed shortly with the SEC, along with the associated press release. This call is subject to these factors, and we encourage you to review them. Alarm.com assumes no obligation to update these forward-looking statements or other information that speak as of their respective dates. In addition, several non-GAAP financial measures will be discussed on the call. Reconciliation of GAAP and non-GAAP measures can be found in today's press release on our Investor Relations website. I'll now turn the call over to Steve Trundle. Steve?

Thank you, Matt. Good afternoon and welcome to everyone. We're pleased to report financial results for the second quarter that were above our expectations. SAS and license revenue in the second quarter grew to $170 million, and adjusted EBITDA was $48.4 million. A significant highlight of the second quarter was the celebration of our 10th year anniversary as a publicly traded company. We were invited by NASDAQ to ring in the opening of the market on June 30th. A few of our investors have been with us throughout our entire public journey, and I am thankful for their continued support. While going public is a big deal for most tech companies, I'm even more pleased with what the team has achieved in the 10 years since. At the time of our IPO, we forecasted total annual revenues of $195 million, including $139 million in SAS and $56 million in hardware, and nearly all of that was coming from the North American residential security market. We were a good single-line business. The mission I set for the company early on was to deliver a cloud-based sensor into every property in the world. We decided to go public because we believed that we could continue to build the company and expand the business in pursuit of this mission. We wanted to create more opportunities for our employees, expand to the new markets, and deliver safety, security, and energy efficiency to the world. Since our IPO, we have saved dozens of lives and have kept millions and millions of people safer than they would be in a world without Alarm.com. And we have grown the business significantly and profitably without any material dilution to our shareholders. As Kevin will present, our current revenue run rate is more than five times greater than when we went public and places us on an annual pace of $1 billion in revenues. The diversity of the revenues that we have built across the North American, international, residential, commercial, and energy markets provides tremendous durability for the future. But we're here today to report on our quarter, so let me turn back to the business at hand. The major components of our business performed well during the quarter and all contributed nicely to our -than-expected results. Revenue outperformance, particularly in hardware revenue, resulted in stronger, adjusted EBITDA. Our residential business continued to deliver steady growth and strong cash flow during the second quarter. We remain committed to the large residential market in the United States and Canada. Millions of potential subscribers have yet to adopt integrated video solutions, and security-based use cases continue to be the primary driver of the adoption of smart home products and services. Most consumers in the market for security desire professional services, including a professionally designed, installed, and serviced system. These tend to be the more serious customers, and they typically engage with one of our 12,000 professional service provider partners. We are well positioned to serve the continued demand in the residential market as the provider of choice for those who are serious about security. Our channel partners serve as the sales and marketing engine for the business, enabling a highly efficient customer acquisition model. Our sales and marketing spend has remained around 12% of total revenue in recent years, well below pure averages. At times, we will also invest into our channel to strengthen our national sales and service footprint and enable greater adoption of the full ecosystem of Alarm.com products and services for residential subscribers. We're pleased to have completed a couple of minority investments consistent with this strategy during the second quarter. Shifting to our growth initiatives, the most prominent drivers of performance continue to be the commercial, international, and energy hub businesses. Their collective contributions to our consolidated SaaS revenue approached 30% in the second quarter. Their combined -over-year growth rate held at around 25% in line with what we have articulated in prior quarters. The commercial business continues to progress as our service provider partners and commercial integrators adopt increasing components of our unified video access control and commercial intrusion platform. One element of our commercial business is our subsidiary, OpenEye, which provides a cloud-based video surveillance platform designed for multi-site commercial and enterprise customers. OpenEye delivers enterprise video compatibility and integration with many different products in the market. The OpenEye team recently introduced new AI-powered tools to accelerate and simplify forensic video review. Subscribers can now search video footage across multiple locations and multiple cameras by visual characteristics, such as a red jacket or a white pickup truck. They can also select a reference object in a video feed, and the AI software will search for similar matches. These capabilities are designed to help commercial users respond faster and more effectively to security incidents. The new features are included in OpenEye's premium services tier. I also want to quickly touch on tariffs, which Kevin will cover in more detail when he discusses our financials in a moment. Like other companies, we continue to monitor framework announcements and watch for the details in any formal trade agreements that are reached. Based on the frameworks that we've seen to date, we feel that with our current U.S.-based and in-transit inventory positions, we're able to manage through the rest of 2025 on our plan and provide a predictable environment for our service provider partners. In closing, I'd like to thank our service provider partners and our Alarm.com team for their dedication and our investors for their ongoing support, particularly as we celebrate our 10th year as a public company. With that, I'll turn the call over to Kevin Bradley for a review of our financial performance. Kevin?