Business Wire | Feb 25, 2021 04:02PM EST

Alarm.com Reports Fourth Quarter and Full Year 2020 Results

Feb. 25, 2021

TYSONS, Va.--(BUSINESS WIRE)--Feb. 25, 2021--Alarm.com Holdings, Inc. (Nasdaq: ALRM), the leading platform for the intelligently connected property, today reported financial results for its fourth quarter and full year ended December 31, 2020. Alarm.com also provided its financial outlook for SaaS and license revenue for the first quarter of 2021 and guidance for the full year 2021.

"We are pleased to report solid results for the quarter and the year," said Steve Trundle, President and CEO of Alarm.com. "Our service provider partners and the Alarm.com team continued to perform at high levels despite the ongoing pandemic. During the year we delivered a breadth of innovative new platform capabilities for both our residential and commercial services, including the Smart Water Valve + Meter, Connected Car, Flex IO, the Alarm.com Touchless Video Doorbell and OpenEye's SaaS application for commercial customers, which will help our service provider partners extend their leadership positions in multiple markets."

Fourth Quarter 2020 Financial Results as Compared to Fourth Quarter 2019

* SaaS and license revenue increased 17% to $105.5 million, compared to $90.1 million. * Total revenue increased 18% to $165.6 million, compared to $140.5 million. * GAAP net income attributable to common stockholders increased to $16.0 million, or $0.31 per diluted share, compared to $13.0 million or $0.26 per diluted share. * Non-GAAP adjusted EBITDA increased to $32.4 million, compared to $30.0 million. * Non-GAAP adjusted net income attributable to common stockholders increased to $23.1 million, or $0.45 per diluted share, compared to $21.5 million, or $0.43 per diluted share.

Full Year 2020 Financial Results as Compared to Full Year 2019

* SaaS and license revenue increased 17% to $393.3 million, compared to $337.4 million. * Total revenue increased 23% to $618.0 million, compared to $502.4 million. * GAAP net income attributable to common stockholders increased to $77.9 million, or $1.53 per diluted share, compared to $53.5 million or $1.06 per diluted share. * Non-GAAP adjusted EBITDA increased to $125.3 million, compared to $108.3 million. * Non-GAAP adjusted net income attributable to common stockholders increased to $89.4 million, or $1.75 per diluted share, compared to $77.2 million, or $1.54 per diluted share.

Balance Sheet and Cash Flow

* Total cash and cash equivalents increased to $253.5 million as of December 31, 2020, compared to $119.6 million as of December 31, 2019. * For the quarter ended December 31, 2020, cash flows from operations was $35.4 million and free cash flow was $29.9 million, compared to cash flows from operations of $23.3 million and free cash flow of $14.6 million for the quarter ended December 31, 2019. * For the year ended December 31, 2020, cash flows from operations was $102.1 million and free cash flow was $85.9 million, compared to cash flows from operations of $47.1 million and free cash flow of $27.8 million for the year ended December 31, 2019.

Recent Business Highlights

* Launched the Alarm.com Touchless Video Doorbell: Alarm.com launched the first commercially available video doorbell that rings without requiring any physical contact with the device to reduce public health risks and make home visits and deliveries safer. Alarm.com's video analytics engines enable the video doorbell to automatically identify people at the door during the day or at night. It immediately alerts the property owner who can see and speak to visitors through Alarm.com's apps with HD video and two-way audio. The video doorbell's camera provides a 150 vertical field of view and greater than HD clarity for a full head-to-toe image of visitors as well as a clear view of packages left on the doorstep. The Alarm.com Touchless Doorbell won a TWICE Picks Award at CES 2021 for its unique impact on safety and value that it delivers to consumers.

* Released Initial Integration of OpenEye and Alarm.com for Business: CloudConnect is a two-way integration between the OpenEye Cloud Video Platform and the Alarm.com for Business platform that directly associates event data from intrusion sensors and access control readers with OpenEye's SaaS offering. Based on criteria such as system arming status or badge scans by specific users, subscribers can customize event-based rules to record video clips, tag videos and generate alerts, or they can directly navigate to video recordings associated with a particular event. The integration further unifies intrusion, access control and video solutions to offer a more intelligent and convenient way to manage and secure commercial properties.

* EnergyHub Expands Ecosystem of Electric Vehicle (EV) Chargers: A new partnership with Enel X allows utilities to manage Enel X smart EV charging stations through EnergyHub's Mercury DERMS platform. The expanded breadth of EnergyHub's EV charging solution increases the EV charging resources available for utilities to manage in concert with other distributed energy resources. Flexibly managing energy demand can reduce strain on the grid and help utilities avoid infrastructure upgrade costs. EnergyHub's utility customers Baltimore Gas & Electric (BG&E) and Eversource are the first to leverage this new partnership.

* PointCentral Launches Connected Retro: The connected intercom solution seamlessly upgrades existing telephone-based apartment and gated-community intercom systems without adding or replacing hardware. Leveraging the acquisition of Doorport, PointCentral's Connected Retro solution enhances property security and convenience with digital key pin codes that work seamlessly throughout a community, with 30-day audit history tied to every code. Combined with the full suite of PointCentral's smart rental solutions, property managers and owners can offer a comprehensive curb-to-couch experience to address use cases like unattended showings, package delivery and contactless entry that help increase tenant satisfaction while also improving security, operational efficiencies and asset protection.

* Expanded Commercial Services Offering with Acquisition of Shooter Detection Systems (SDS): SDS develops the Guardian Indoor Active Shooter Detection System, a unique innovative combination of acoustic and infrared sensors and proprietary algorithms that accurately detects gunshots and communicates incident details to building occupants and security teams. Alarm.com and SDS will continue to advance SDS's engineering and development of gunshot detection solutions and also integrate it with the Alarm.com ecosystem to deliver new levels of safety and security for commercial enterprises of all sizes.

* Rear Admiral (Ret.) Stephen Evans Appointed to Board of Directors: Effective February 1, 2021, Rear Admiral (Ret.) Evans was appointed to serve as a member of Alarm.com's board of directors. Admiral Evans retired in 2020 from the United States Navy where he most recently served as Special Advisor to the Commander, Naval Operations. Admiral Evans served as Senior Advisor, Deputy U.S. Military, NATO Military Committee from 2019 to 2020, as Commander, George H. W. Bush Carrier Strike Group from 2017 to 2019 and as Commander, Naval Service Training Command from 2015 to 2017. Admiral Evans earned a B.A. at The Citadel and a M.A. in National Security Affairs from the U.S. Naval War College.

Financial Outlook

At this time, the general economic situation remains fluid and it remains challenging to predict the full scope and duration of the impacts of the COVID-19 pandemic. Alarm.com is providing its outlook for SaaS and license revenue for the first quarter of 2021 and its guidance for the full year 2021 based upon current management expectations in light of the ongoing COVID-19 pandemic.

For the first quarter of 2021:

* SaaS and license revenue is expected to be in the range of $104.8 million to $105.0 million.

For the full year 2021:

* SaaS and license revenue is expected to be in the range of $440.5 million to $441.5 million. * Total revenue is expected to be in the range of $660.5 million to $671.5 million, which includes anticipated hardware and other revenue in the range of $220.0 million to $230.0 million. * Non-GAAP adjusted EBITDA is expected to be in the range of $120.0 million to $130.0 million. * Non-GAAP adjusted net income attributable to common stockholders is expected to be in the range of $84.0 million to $90.0 million, based on an estimated tax rate of 21.0%. * Based on an expected 52.2 million weighted average diluted shares outstanding, non-GAAP adjusted net income attributable to common stockholders is expected to be $1.61 to $1.72 per diluted share.

The guidance provided above is forward-looking in nature. Actual results may differ materially. See the cautionary note regarding "Forward-Looking Statements" below. The guidance provided above is based on expectations as of the date of this press release and Alarm.com undertakes no obligation to update guidance after such date.

Conference Call and Webcast Information

Alarm.com will host a conference call to discuss its fourth quarter and full year 2020 financial results and its outlook for the first quarter and full year 2021. A live audio webcast is scheduled to begin at 4:30 p.m. ET on February 25, 2021. To participate on the live call, analysts and investors should dial 866.588.3290 (U.S./Canada) or 262.558.6169 (International) at least ten minutes prior to the start time of the call. A telephonic replay of the call will be available through March 4, 2021 by dialing 855.859.2056 (U.S./Canada) or 404.537.3406 (International) and providing Conference ID: 5419089. Alarm.com will also offer a live and archived webcast of the conference call accessible on Alarm.com's Investor Relations website at http://investors.alarm.com.

About Alarm.com Holdings, Inc.

Alarm.com is the leading platform for the intelligently connected property. Millions of consumers and businesses depend on Alarm.com's technology to manage and control their property from anywhere. Our platform integrates with a growing variety of Internet of Things (IoT) devices through our apps and interfaces. Our security, video, access control, intelligent automation, energy management, and wellness solutions are available through our network of thousands of professional service providers in North America and around the globe. Alarm.com's common stock is traded on Nasdaq under the ticker symbol ALRM. For more information, please visit www.alarm.com.

Non-GAAP Financial Measures

To supplement our consolidated selected financial data presented on a basis consistent with GAAP, this press release contains certain non-GAAP financial measures, including adjusted EBITDA, non-GAAP adjusted income before income taxes, non-GAAP adjusted net income, non-GAAP adjusted income attributable to common stockholders before income taxes, non-GAAP adjusted net income attributable to common stockholders, non-GAAP adjusted net income attributable to common stockholders per share and free cash flow. We have included non-GAAP measures in this press release because they are financial, operating or liquidity measures used by our management to (i) understand and evaluate our core operating performance and trends and generate future operating plans, (ii) make strategic decisions regarding the allocation of capital and investments in initiatives that are focused on cultivating new markets for our solutions and (iii) provide useful information to management about the amount of cash generated by the business after necessary capital expenditures. We also use certain non-GAAP financial measures, including adjusted EBITDA, as performance measures under our executive bonus plan. Further, we believe that these non-GAAP measures of our financial results provide useful information to investors and others in understanding and evaluating our results of operations, business trends and financial condition. While we believe the use of these non-GAAP measures provides useful information to investors and management in analyzing our financial performance, non-GAAP measures have inherent limitations in that they do not reflect all of the amounts and transactions that are included in our financial statements prepared in accordance with GAAP. Non-GAAP measures do not serve as an alternative to GAAP nor do we consider our non-GAAP measures in isolation, accordingly we present non-GAAP financial measures only in connection with GAAP results. We urge investors to consider non-GAAP measures only in conjunction with our GAAP financials and to review the reconciliation of our non-GAAP financial measures to the comparable GAAP financial measures, which are included in this press release.

We consider free cash flow to be a liquidity measure, which we define as cash flows from operating activities less purchases of property and equipment.

With respect to our expectations under "Financial Outlook" above, reconciliation of adjusted EBITDA and adjusted net income guidance to the closest corresponding GAAP measure is not available without unreasonable efforts on a forward-looking basis due to the high variability, complexity and low visibility with respect to the charges excluded from these non-GAAP measures, in particular, non-ordinary course litigation expense, acquisition-related expense and tax windfall adjustments can have unpredictable fluctuations based on unforeseen activity that is out of our control and/or cannot reasonably be predicted. We expect the above charges to have a significant and potentially highly variable impact on our future GAAP financial results.

We exclude one or more of the following items from non-GAAP financial and operating measures:

Stock-based compensation expense: We exclude stock-based compensation expense, which relates to stock options and other forms of equity incentives primarily awarded to employees of Alarm.com, because they are non-cash charges that we do not consider when assessing the operating performance of our business. Additionally, the determination of stock-based compensation expense can be calculated using various methodologies and is dependent upon subjective assumptions and other factors that vary on a company-by-company basis. Therefore, we believe that excluding stock-based compensation expense from our non-GAAP financial measures improves the comparability of our results to the results of other companies in our industry.

Secondary offering expense We exclude secondary offering expense because we do not consider costs associated with the secondary offering to be indicative of our core operating performance and we believe that the exclusion of this expense allows us to better provide meaningful information about our operating performance, facilitates comparisons to our historical operating results and improves the comparability of our results to the results of other companies in our industry.

Litigation expense: We exclude non-ordinary course litigation expense because we do not consider legal costs and settlement fees incurred in litigation and litigation-related matters of non-ordinary course lawsuits and other disputes, particularly costs incurred in ongoing intellectual property litigation, to be indicative of our core operating performance. We do not adjust for ordinary course legal expenses, including those expenses resulting from maintaining and enforcing our intellectual property portfolio and license agreements.

Acquisition-related expense: Included in operating expenses are incremental costs directly related to business and asset acquisitions as well as changes in the fair value of contingent consideration liabilities, when applicable. We exclude acquisition-related expense from our non-GAAP financial measures because we believe that the exclusion of this expense allows us to better provide meaningful information about our operating performance, facilitates comparisons to our historical operating results, improves the comparability of our results to the results of other companies in our industry, and ultimately, we believe helps investors better understand the acquisition-related expense and the effects of the transaction on our results of operations.

Depreciation expense: We record depreciation primarily for investments in property and equipment. We exclude depreciation in calculating adjusted EBITDA because we do not consider depreciation when we evaluate our ongoing business operations. For non-GAAP adjusted net income, non-GAAP adjusted net income attributable to common stockholders and non-GAAP adjusted net income attributable to common stockholders per share, basic and diluted, we do not exclude depreciation.

Amortization expense: GAAP requires that operating expenses include the amortization of acquired intangible assets, which principally include acquired customer relationships, developed technology and trade names. We exclude amortization of intangibles from our non-GAAP financial measures because we do not consider amortization expense when we evaluate our ongoing business operations, nor do we factor amortization expense into our evaluation of potential acquisitions, or our measurement of the performance of those acquisitions. We believe that the exclusion of amortization expense enables the comparison of our performance to other companies in our industry as other companies may be more or less acquisitive than us and therefore, amortization expense may vary significantly by company based on their acquisition history. Although we exclude amortization of acquired intangible assets from our non-GAAP financial measures, management believes that it is important for investors to understand that such intangible assets were recorded as part of purchase accounting and contribute to revenue generation.

Interest expense: We record interest expense primarily related to our debt facility. We exclude interest expense in calculating our adjusted EBITDA calculation. For non-GAAP adjusted net income, non-GAAP adjusted net income attributable to common stockholders and non-GAAP adjusted net income attributable to common stockholders per share, basic and diluted, we do not exclude interest expense.

Interest income and other income, net: We exclude interest income and other income, net from our non-GAAP financial measures because we do not consider it part of our ongoing results of operations.

Income taxes We exclude the impact related to our provision for / (benefit from) income taxes from our adjusted EBITDA calculation. We do not consider this tax adjustment to be part of our ongoing results of operations.

Forward-Looking Statements

This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by their use of terms and phrases such as "anticipate," "believe," "continue," "designed," "enable," "ensure," "expect," "intend," "will," and other similar terms and phrases, and such forward-looking statements include, but are not limited to, the statements regarding the Company's positioning, the benefits of recently launched offerings, and the Company's guidance for the first quarter and full year 2021 described under "Financial Outlook" above and key assumptions related thereto. The events described in these forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from the results anticipated by these forward-looking statements, including, but not limited to: the Company's results and business operations may be negatively impacted by the COVID-19 pandemic, the Company's actual operating results may differ significantly from any guidance provided, certain precautions the Company is taking due to the COVID-19 pandemic could harm its business, the Company's quarterly results may fluctuate, downturns in general economic and market conditions, including due to the COVID-19 pandemic, may reduce demand, the reliability of the Company's network operations centers, the Company's ability to retain service provider partners and residential and commercial subscribers and sustain its growth rate, the Company's ability to manage growth and execute on its business strategies, the effects of increased competition and evolving technologies, the Company's ability to integrate acquired assets and businesses and to manage service provider partners, customers and employees, consumer demand for interactive security, video monitoring, intelligent automation, energy management and wellness solutions, the Company's reliance on its service provider network to attract new customers and retain existing customers, the Company's dependence on its suppliers, the reliability of the Company's hardware and wireless network suppliers and enhanced United States tax, tariff, import/export restrictions, or other trade barriers, particularly tariffs from China as well as other risks and uncertainties discussed in the "Risk Factors" section of the Company's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 5, 2020 and other subsequent filings the Company makes with the Securities and Exchange Commission from time to time. In addition, the forward-looking statements included in this press release represent the Company's views and expectations as of the date hereof and are based on information currently available to the Company. The Company anticipates that subsequent events and developments may cause the Company's views to change. However, while the Company may elect to update these forward-looking statements at some point in the future, the Company specifically disclaims any obligation to do so except as required by law. These forward-looking statements should not be relied upon as representing the Company's views as of any date subsequent to the date hereof.

ALARM.COM HOLDINGS, INC.

Consolidated Statements of Operations

(in thousands, except share and per share data)

Three Months Ended Year Ended December 31, December 31,

2020 2019 2020 2019 2018

Revenue:

SaaS andlicense $ 105,477 $ 90,062 $ 393,257 $ 337,375 $ 291,072 revenue

Hardware and 60,099 50,426 224,746 164,988 129,422 other revenue

Total revenue 165,576 140,488 618,003 502,363 420,494

Cost of revenue:

Cost of SaaSand license 13,866 12,638 53,539 50,066 44,933 revenue

Cost ofhardware and 45,394 39,932 173,889 133,533 100,782 other revenue

Total cost of 59,260 52,570 227,428 183,599 145,715 revenue

Operating expenses:

Sales and 23,562 18,423 75,967 61,815 55,902 marketing

General and 23,009 18,174 78,643 69,959 95,750 administrative

Research and 38,867 30,068 152,147 114,443 89,204 development

Amortizationand 7,497 6,301 27,520 22,134 21,721 depreciation

Totaloperating 92,935 72,966 334,277 268,351 262,577 expenses

Operating 13,381 14,952 56,298 50,413 12,202 income

Interest (527 ) (652 ) (2,596 ) (2,974 ) (2,918 )expense

Interest 136 605 870 4,922 2,272 income

Other income, 678 67 25,588 6,535 143 net

Income before 13,668 14,972 80,160 58,896 11,699 income taxes

Provision for/ (benefit (1,971 ) 2,138 3,500 5,566 (9,825 )from) incometaxes

Net income 15,639 12,834 76,660 53,330 21,524

Net lossattributableto redeemable 328 201 1,193 201 - noncontrollinginterest

Net incomeallocated to - - - - (3 )participatingsecurities

Net incomeattributable $ 15,967 $ 13,035 $ 77,853 $ 53,531 $ 21,521 to commonstockholders



Per shareinformationattributable to commonstockholders:

Net income per share:

Basic $ 0.32 $ 0.27 $ 1.59 $ 1.11 $ 0.45

Diluted $ 0.31 $ 0.26 $ 1.53 $ 1.06 $ 0.43

Weightedaverage common sharesoutstanding:

Basic 49,271,962 48,624,834 48,950,328 48,427,446 47,633,739

Diluted 51,384,316 50,184,451 50,963,190 50,273,889 49,692,184



Stock-basedcompensationexpense Three Months Ended Year Ended December 31,included in December 31,operatingexpenses:

2020 2019 2020 2019 2018

Sales and $ 762 $ 690 $ 3,025 $ 2,075 $ 1,196 marketing

General and 1,963 1,712 7,996 6,474 4,901 administrative

Research and 5,550 3,480 18,155 12,054 7,332 development

Totalstock-based $ 8,275 $ 5,882 $ 29,176 $ 20,603 $ 13,429 compensationexpense

ALARM.COM HOLDINGS, INC.

Consolidated Balance Sheets

(in thousands, except share and per share data)

December 31,

2020

2019

Assets

Current assets:

Cash and cash equivalents

$

253,459

$

119,629

Accounts receivable, net of allowance for credit losses of $4,696 and $2,584, respectively, and net of allowance for product returns of $1,480 and $1,075, respectively

83,326

76,373

Inventory

44,281

34,168

Other current assets, net of allowance for credit losses of $17 and $16, respectively

16,348

13,504

Total current assets

397,414

243,674

Property and equipment, net

44,796

38,548

Intangible assets, net

103,259

103,438

Goodwill

112,838

104,963

Deferred tax assets

21,692

19,137

Operating lease right-of-use assets

33,455

30,523

Other assets, net of allowance for credit losses of $72 and $0, respectively

18,233

17,516

Total assets

$

731,687

$

557,799

Liabilities, redeemable noncontrolling interest and stockholders' equity

Current liabilities:

Accounts payable, accrued expenses and other current liabilities

$

53,927

$

48,727

Accrued compensation

22,307

16,342

Deferred revenue

4,037

3,043

Operating lease liabilities

9,973

7,683

Total current liabilities

90,244

75,795

Deferred revenue

8,492

7,455

Long-term debt

110,000

63,000

Operating lease liabilities

37,697

37,199

Other liabilities

6,811

7,489

Total liabilities

253,244

190,938

Redeemable noncontrolling interest

10,691

11,210

Stockholders' equity

Preferred stock, $0.001 par value, 10,000,000 shares authorized; no shares issued and outstanding as of December 31, 2020 and 2019

-

-

Common stock, $0.01 par value, 300,000,000 shares authorized; 49,630,773 and 48,700,963 shares issued; and 49,483,620 and 48,700,713 shares outstanding as of December 31, 2020 and 2019, respectively

496

487

Additional paid-in capital

405,831

365,627

Treasury stock, at cost; 147,153 and 0 shares as of December 31, 2020 and 2019, respectively

(5,149

)

-

Retained earnings / (accumulated deficit)

66,574

(10,463

)

Total stockholders' equity

467,752

355,651

Total liabilities, redeemable noncontrolling interest and stockholders' equity

$

731,687

$

557,799

ALARM.COM HOLDINGS, INC.

Consolidated Balance Sheets

(in thousands, except share and per share data)

December 31,

2020 2019

Assets

Current assets:

Cash and cash equivalents $ 253,459 $ 119,629

Accounts receivable, net of allowance for creditlosses of $4,696 and $2,584, respectively, and net of 83,326 76,373 allowance for product returns of $1,480 and $1,075,respectively

Inventory 44,281 34,168

Other current assets, net of allowance for credit 16,348 13,504 losses of $17 and $16, respectively

Total current assets 397,414 243,674

Property and equipment, net 44,796 38,548

Intangible assets, net 103,259 103,438

Goodwill 112,838 104,963

Deferred tax assets 21,692 19,137

Operating lease right-of-use assets 33,455 30,523

Other assets, net of allowance for credit losses of 18,233 17,516 $72 and $0, respectively

Total assets $ 731,687 $ 557,799

Liabilities, redeemable noncontrolling interest and stockholders' equity

Current liabilities:

Accounts payable, accrued expenses and other current $ 53,927 $ 48,727 liabilities

Accrued compensation 22,307 16,342

Deferred revenue 4,037 3,043

Operating lease liabilities 9,973 7,683

Total current liabilities 90,244 75,795

Deferred revenue 8,492 7,455

Long-term debt 110,000 63,000

Operating lease liabilities 37,697 37,199

Other liabilities 6,811 7,489

Total liabilities 253,244 190,938

Redeemable noncontrolling interest 10,691 11,210

Stockholders' equity

Preferred stock, $0.001 par value, 10,000,000 sharesauthorized; no shares issued and outstanding as of - - December 31, 2020 and 2019

Common stock, $0.01 par value, 300,000,000 sharesauthorized; 49,630,773 and 48,700,963 shares issued; 496 487 and 49,483,620 and 48,700,713 shares outstanding asof December 31, 2020 and 2019, respectively

Additional paid-in capital 405,831 365,627

Treasury stock, at cost; 147,153 and 0 shares as of (5,149 ) - December 31, 2020 and 2019, respectively

Retained earnings / (accumulated deficit) 66,574 (10,463 )

Total stockholders' equity 467,752 355,651

Total liabilities, redeemable noncontrolling interest $ 731,687 $ 557,799 and stockholders' equity

ALARM.COM HOLDINGS, INC.

Consolidated Statements of Cash Flows

(in thousands)

Year Ended December 31,

Cash flows from operating activities:

2020

2019

2018

Net income

$

76,660

$

53,330

$

21,524

Adjustments to reconcile net income to net cash from operating activities:

Provision for credit losses on accounts receivable

2,162

1,170

149

Reserve for product returns

1,795

(123

)

273

(Recovery of) / provision for credit losses on notes receivable

(359

)

(3,272

)

3,319

Provision for excess and obsolete inventory

1,451

485

-

Amortization on patents and tooling

882

700

900

Amortization and depreciation

27,520

22,134

21,721

Amortization of debt issuance costs

108

108

108

Amortization of operating leases

8,888

7,600

-

Deferred income taxes

(3,256

)

2,599

(11,482

)

Change in fair value of contingent liability

(2,595

)

(198

)

-

Stock-based compensation

29,176

20,603

13,429

Gain on notes receivable

-

(6,931

)

-

Acquired in-process research and development

3,297

850

-

Gain on sale of investment

(24,737

)

-

-

(Gain on) / impairment of investment

(676

)

605

-

Disposal of property and equipment

-

-

1,410

Changes in operating assets and liabilities (net of business acquisitions):

Accounts receivable

(10,098

)

(22,273

)

(9,298

)

Inventory

(10,647

)

(6,976

)

(8,813

)

Other current and non-current assets

(2,683

)

(2,887

)

115

Accounts payable, accrued expenses and other current liabilities

13,781

(10,980

)

30,615

Deferred revenue

2,031

(1,567

)

(1,502

)

Operating lease liabilities

(10,177

)

(8,268

)

-

Other liabilities

(443

)

403

(1,758

)

Cash flows from operating activities

102,080

47,112

60,710

Cash flows used in investing activities:

Business acquisitions, net of cash acquired

(26,299

)

(58,833

)

-

Additions to property and equipment

(16,141

)

(19,324

)

(11,015

)

Purchases of in-process research and development

(3,297

)

(850

)

-

Issuances or purchases of notes receivable

(1,200

)

(26,103

)

(1,287

)

Receipt of payments on notes receivable

2,026

31,696

-

Proceeds from sale of investment

25,687

-

-

Purchases of patents and patent licenses

(1,050

)

-

(1,075

)

Cash flows used in investing activities

(20,274

)

(73,414

)

(13,377

)

Cash flows from / (used in) financing activities:

Proceeds from credit facility

50,000

-

-

Repayments of credit facility

(3,000

)

(4,000

)

(4,000

)

Payments of deferred consideration for business acquisitions

(1,538

)

-

-

Purchases of treasury stock and repurchases of common stock

(5,149

)

-

(1

)

Issuances of common stock from equity-based plans

11,711

3,870

6,400

Cash flows from / (used in) financing activities

52,024

(130

)

2,399

Net increase / (decrease) in cash and cash equivalents

133,830

(26,432

)

49,732

Cash and cash equivalents at beginning of the period

119,629

146,061

96,329

Cash and cash equivalents at end of the period

$

253,459

$

119,629

$

146,061

ALARM.COM HOLDINGS, INC.

Consolidated Statements of Cash Flows

(in thousands)

Year Ended December 31,

Cash flows from operating activities: 2020 2019 2018

Net income $ 76,660 $ 53,330 $ 21,524

Adjustments to reconcile net income to net cash from operating activities:

Provision for credit losses on 2,162 1,170 149 accounts receivable

Reserve for product returns 1,795 (123 ) 273

(Recovery of) / provision for credit (359 ) (3,272 ) 3,319 losses on notes receivable

Provision for excess and obsolete 1,451 485 - inventory

Amortization on patents and tooling 882 700 900

Amortization and depreciation 27,520 22,134 21,721

Amortization of debt issuance costs 108 108 108

Amortization of operating leases 8,888 7,600 -

Deferred income taxes (3,256 ) 2,599 (11,482 )

Change in fair value of contingent (2,595 ) (198 ) - liability

Stock-based compensation 29,176 20,603 13,429

Gain on notes receivable - (6,931 ) -

Acquired in-process research and 3,297 850 - development

Gain on sale of investment (24,737 ) - -

(Gain on) / impairment of investment (676 ) 605 -

Disposal of property and equipment - - 1,410

Changes in operating assets andliabilities (net of business acquisitions):

Accounts receivable (10,098 ) (22,273 ) (9,298 )

Inventory (10,647 ) (6,976 ) (8,813 )

Other current and non-current assets (2,683 ) (2,887 ) 115

Accounts payable, accrued expenses and 13,781 (10,980 ) 30,615 other current liabilities

Deferred revenue 2,031 (1,567 ) (1,502 )

Operating lease liabilities (10,177 ) (8,268 ) -

Other liabilities (443 ) 403 (1,758 )

Cash flows from operating activities 102,080 47,112 60,710

Cash flows used in investing activities:

Business acquisitions, net of cash (26,299 ) (58,833 ) - acquired

Additions to property and equipment (16,141 ) (19,324 ) (11,015 )

Purchases of in-process research and (3,297 ) (850 ) - development

Issuances or purchases of notes (1,200 ) (26,103 ) (1,287 )receivable

Receipt of payments on notes 2,026 31,696 - receivable

Proceeds from sale of investment 25,687 - -

Purchases of patents and patent (1,050 ) - (1,075 )licenses

Cash flows used in investing (20,274 ) (73,414 ) (13,377 )activities

Cash flows from / (used in) financing activities:

Proceeds from credit facility 50,000 - -

Repayments of credit facility (3,000 ) (4,000 ) (4,000 )

Payments of deferred consideration for (1,538 ) - - business acquisitions

Purchases of treasury stock and (5,149 ) - (1 )repurchases of common stock

Issuances of common stock from 11,711 3,870 6,400 equity-based plans

Cash flows from / (used in) financing 52,024 (130 ) 2,399 activities

Net increase / (decrease) in cash and 133,830 (26,432 ) 49,732 cash equivalents

Cash and cash equivalents at beginning 119,629 146,061 96,329 of the period

Cash and cash equivalents at end of $ 253,459 $ 119,629 $ 146,061 the period

ALARM.COM HOLDINGS, INC.

Reconciliation of Non-GAAP Measures

(in thousands)

(unaudited)

Three Months EndedDecember 31,

Year Ended December 31,

2020

2019

2020

2019

2018

Adjusted EBITDA:

Net income

$

15,639

$

12,834

$

76,660

$

53,330

$

21,524

Adjustments:

Interest expense, interest income and other income, net

(287

)

(20

)

(23,862

)

(8,483

)

503

Provision for / (benefit from) income taxes

(1,971

)

2,138

3,500

5,566

(9,825

)

Amortization and depreciation expense

7,497

6,301

27,520

22,134

21,721

Stock-based compensation expense

8,275

5,882

29,176

20,603

13,429

Secondary offering expense

-

-

543

-

-

Acquisition-related expense

688

813

2,732

2,403

-

Litigation expense

2,521

2,072

8,988

12,754

45,729

Total adjustments

16,723

17,186

48,597

54,977

71,557

Adjusted EBITDA

$

32,362

$

30,020

$

125,257

$

108,307

$

93,081

Adjusted net income:

Net income, as reported

$

15,639

$

12,834

$

76,660

$

53,330

$

21,524

Provision for / (benefit from) income taxes

(1,971

)

2,138

3,500

5,566

(9,825

)

Income before income taxes

13,668

14,972

80,160

58,896

11,699

Adjustments:

Less: interest income and other income, net

(814

)

(672

)

(26,458

)

(11,457

)

(2,415

)

Amortization expense

4,590

3,996

16,799

14,334

15,235

Stock-based compensation expense

8,275

5,882

29,176

20,603

13,429

Secondary offering expense

-

-

543

-

-

Acquisition-related expense

688

813

2,732

2,403

-

Litigation expense

2,521

2,072

8,988

12,754

45,729

Non-GAAP adjusted income before income taxes

28,928

27,063

111,940

97,533

83,677

Income taxes 1

(6,074

)

(5,683

)

(23,507

)

(20,482

)

(17,572

)

Non-GAAP adjusted net income

$

22,854

$

21,380

$

88,433

$

77,051

$

66,105

1 Income taxes are calculated using a rate of 21.0% for each of the years ended December 31, 2020, 2019 and 2018 as well as the three months ended December 31, 2020, 2019. The 21.0% effective tax rates for each of the years ended December 31, 2020, 2019 and 2018 as well as the three months ended December 31, 2020, 2019 exclude the income tax effect on the non-GAAP adjustments and reflect the estimated long-term corporate tax rate.

ALARM.COM HOLDINGS, INC.

Reconciliation of Non-GAAP Measures

(in thousands)

(unaudited)

Three Months Ended Year Ended December 31, December 31,

2020 2019 2020 2019 2018

Adjusted EBITDA:

Net income $ 15,639 $ 12,834 $ 76,660 $ 53,330 $ 21,524

Adjustments:

Interest expense,interest income and (287 ) (20 ) (23,862 ) (8,483 ) 503 other income, net

Provision for /(benefit from) (1,971 ) 2,138 3,500 5,566 (9,825 )income taxes

Amortization anddepreciation 7,497 6,301 27,520 22,134 21,721 expense

Stock-basedcompensation 8,275 5,882 29,176 20,603 13,429 expense

Secondary offering - - 543 - - expense

Acquisition-related 688 813 2,732 2,403 - expense

Litigation expense 2,521 2,072 8,988 12,754 45,729

Total adjustments 16,723 17,186 48,597 54,977 71,557

Adjusted EBITDA $ 32,362 $ 30,020 $ 125,257 $ 108,307 $ 93,081



Adjusted net income:

Net income, as $ 15,639 $ 12,834 $ 76,660 $ 53,330 $ 21,524 reported

Provision for /(benefit from) (1,971 ) 2,138 3,500 5,566 (9,825 )income taxes

Income before 13,668 14,972 80,160 58,896 11,699 income taxes

Adjustments:

Less: interestincome and other (814 ) (672 ) (26,458 ) (11,457 ) (2,415 )income, net

Amortization 4,590 3,996 16,799 14,334 15,235 expense

Stock-basedcompensation 8,275 5,882 29,176 20,603 13,429 expense

Secondary offering - - 543 - - expense

Acquisition-related 688 813 2,732 2,403 - expense

Litigation expense 2,521 2,072 8,988 12,754 45,729

Non-GAAP adjustedincome before 28,928 27,063 111,940 97,533 83,677 income taxes

Income taxes^ 1 (6,074 ) (5,683 ) (23,507 ) (20,482 ) (17,572 )

Non-GAAP adjusted $ 22,854 $ 21,380 $ 88,433 $ 77,051 $ 66,105 net income

^1 Income taxes are calculated using a rate of 21.0% for each of the yearsended December 31, 2020, 2019 and 2018 as well as the three months endedDecember 31, 2020, 2019. The 21.0% effective tax rates for each of the yearsended December 31, 2020, 2019 and 2018 as well as the three months endedDecember 31, 2020, 2019 exclude the income tax effect on the non-GAAPadjustments and reflect the estimated long-term corporate tax rate.

ALARM.COM HOLDINGS, INC.

Reconciliation of Non-GAAP Measures - continued

(in thousands, except share and per share data)

(unaudited)

Three Months EndedDecember 31,

Year Ended December 31,

2020

2019

2020

2019

2018

Adjusted net income attributable to common stockholders:

Net income attributable to common stockholders, as reported

$

15,967

$

13,035

$

77,853

$

53,531

$

21,521

Provision for / (benefit from) income taxes

(1,971

)

2,138

3,500

5,566

(9,825

)

Income attributable to common stockholders before income taxes

13,996

15,173

81,353

59,097

11,696

Adjustments:

Less: interest income and other income, net

(814

)

(672

)

(26,458

)

(11,457

)

(2,415

)

Amortization expense

4,590

3,996

16,799

14,334

15,235

Stock-based compensation expense

8,275

5,882

29,176

20,603

13,429

Secondary offering expense

-

-

543

-

-

Acquisition-related expense

688

813

2,732

2,403

-

Litigation expense

2,521

2,072

8,988

12,754

45,729

Non-GAAP adjusted income attributable to common stockholders before income taxes

29,256

27,264

113,133

97,734

83,674

Income taxes 1

(6,144

)

(5,725

)

(23,758

)

(20,524

)

(17,572

)

Non-GAAP adjusted net income attributable to common stockholders

$

23,112

$

21,539

$

89,375

$

77,210

$

66,102

ALARM.COM HOLDINGS, INC.

Reconciliation of Non-GAAP Measures - continued

(in thousands, except share and per share data)

(unaudited)

Three Months Ended Year Ended December 31, December 31,

2020 2019 2020 2019 2018

Adjusted net incomeattributable to commonstockholders:

Net incomeattributable tocommon $ 15,967 $ 13,035 $ 77,853 $ 53,531 $ 21,521 stockholders, asreported

Provision for /(benefit from) (1,971 ) 2,138 3,500 5,566 (9,825 )income taxes

Income attributableto common 13,996 15,173 81,353 59,097 11,696 stockholders beforeincome taxes

Adjustments:

Less: interestincome and other (814 ) (672 ) (26,458 ) (11,457 ) (2,415 )income, net

Amortization 4,590 3,996 16,799 14,334 15,235 expense

Stock-basedcompensation 8,275 5,882 29,176 20,603 13,429 expense

Secondary offering - - 543 - - expense

Acquisition-related 688 813 2,732 2,403 - expense

Litigation expense 2,521 2,072 8,988 12,754 45,729

Non-GAAP adjustedincome attributableto common 29,256 27,264 113,133 97,734 83,674 stockholders beforeincome taxes

Income taxes^ 1 (6,144 ) (5,725 ) (23,758 ) (20,524 ) (17,572 )

Non-GAAP adjustednet income $ 23,112 $ 21,539 $ 89,375 $ 77,210 $ 66,102 attributable tocommon stockholders

Three Months EndedDecember 31,

Year Ended December 31,

2020

2019

2020

2019

2018

Adjusted net income attributable to common stockholders per share:

Net income attributable to common stockholders per share - basic, as reported

$

0.32

$

0.27

$

1.59

$

1.11

$

0.45

Provision for / (benefit from) income taxes

(0.04

)

0.04

0.06

0.11

(0.20

)

Income attributable to common stockholders before income taxes

0.28

0.31

1.66

1.22

0.25

Adjustments:

Less: interest income and other income, net

(0.02

)

(0.02

)

(0.54

)

(0.24

)

(0.05

)

Amortization expense

0.09

0.09

0.34

0.30

0.32

Stock-based compensation expense

0.17

0.12

0.60

0.42

0.28

Secondary offering expense

-

-

0.01

-

-

Acquisition-related expense

0.02

0.02

0.06

0.05

-

Litigation expense

0.05

0.04

0.18

0.26

0.96

Non-GAAP adjusted income before income taxes

0.59

0.56

2.31

2.01

1.76

Income taxes 1

(0.12

)

(0.12

)

(0.48

)

(0.42

)

(0.37

)

Non-GAAP adjusted net income attributable to common stockholders per share - basic

$

0.47

$

0.44

$

1.83

$

1.59

$

1.39

Non-GAAP adjusted net income attributable to common stockholders per share - diluted

$

0.45

$

0.43

$

1.75

$

1.54

$

1.33

Weighted average common shares outstanding:

Basic, as reported

49,271,962

48,624,834

48,950,328

48,427,446

47,633,739

Diluted, as reported

51,384,316

50,184,451

50,963,190

50,273,889

49,692,184

1 Income taxes are calculated using a rate of 21.0% for each of the years ended December 31, 2020, 2019 and 2018 as well as the three months ended December 31, 2020, 2019. The 21.0% effective tax rates for each of the years ended December 31, 2020, 2019 and 2018 as well as the three months ended December 31, 2020, 2019 exclude the income tax effect on the non-GAAP adjustments and reflect the estimated long-term corporate tax rate.

Three Months Ended Year Ended December 31, December 31,

2020 2019 2020 2019 2018

Adjusted net incomeattributable to common stockholdersper share:

Net incomeattributable tocommon stockholders $ 0.32 $ 0.27 $ 1.59 $ 1.11 $ 0.45 per share - basic,as reported

Provision for /(benefit from) (0.04 ) 0.04 0.06 0.11 (0.20 )income taxes

Income attributableto common 0.28 0.31 1.66 1.22 0.25 stockholders beforeincome taxes

Adjustments:

Less: interestincome and other (0.02 ) (0.02 ) (0.54 ) (0.24 ) (0.05 )income, net

Amortization expense 0.09 0.09 0.34 0.30 0.32

Stock-based 0.17 0.12 0.60 0.42 0.28 compensation expense

Secondary offering - - 0.01 - - expense

Acquisition-related 0.02 0.02 0.06 0.05 - expense

Litigation expense 0.05 0.04 0.18 0.26 0.96

Non-GAAP adjustedincome before income 0.59 0.56 2.31 2.01 1.76 taxes

Income taxes^ 1 (0.12 ) (0.12 ) (0.48 ) (0.42 ) (0.37 )

Non-GAAP adjustednet incomeattributable to $ 0.47 $ 0.44 $ 1.83 $ 1.59 $ 1.39 common stockholdersper share - basic



Non-GAAP adjustednet incomeattributable to $ 0.45 $ 0.43 $ 1.75 $ 1.54 $ 1.33 common stockholdersper share - diluted



Weighted averagecommon shares outstanding:

Basic, as reported 49,271,962 48,624,834 48,950,328 48,427,446 47,633,739

Diluted, as reported 51,384,316 50,184,451 50,963,190 50,273,889 49,692,184

^1 Income taxes are calculated using a rate of 21.0% for each of the yearsended December 31, 2020, 2019 and 2018 as well as the three months endedDecember 31, 2020, 2019. The 21.0% effective tax rates for each of the yearsended December 31, 2020, 2019 and 2018 as well as the three months endedDecember 31, 2020, 2019 exclude the income tax effect on the non-GAAPadjustments and reflect the estimated long-term corporate tax rate.

ALARM.COM HOLDINGS, INC.

Reconciliation of Non-GAAP Measures - continued

(in thousands)

(unaudited)

Three Months EndedDecember 31,

Year Ended December 31,

2020

2019

2020

2019

2018

Free cash flow:

Cash flows from operating activities

$

35,410

$

23,265

$

102,080

$

47,112

$

60,710

Additions to property and equipment

(5,464

)

(8,664

)

(16,141

)

(19,324

)

(11,015

)

Non-GAAP free cash flow

$

29,946

$

14,601

$

85,939

$

27,788

$

49,695

View source version on businesswire.com: https://www.businesswire.com/news/home/20210225006103/en/

CONTACT: Investor Relations: David Trone Alarm.com dtrone@alarm.com

CONTACT: Media Relations: Matthew Zartman Alarm.com mzartman@alarm.com