EPS of $0.67 increased by 107.7% from previous year
Gross margin of 64.8%
Net income of 36.68M
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AlarmCom Holdings Inc (0HC2.L) QQ3 2024 Earnings Analysis – Resilient growth in cloud-based security and smart property solutions
Executive Summary
Alarm.com Holdings Inc reported a solid QQ3 2024, underscored by revenue of $240.5 million and a meaningful improvement in profitability and cash generation. The quarter featured a gross margin of approximately 61.7%, EBITDA of $58.8 million and operating income of $33.2 million, translating into an operating margin of about 13.8% and a net income of $36.7 million (EPS of $0.81 basic, $0.67 diluted). Year-over-year, revenue rose 8.4% and net income rose 87.9%, while quarterly sequential improvements were evident in all major profitability metrics (QoQ revenue up 2.9%, gross profit up 7.1%, operating income up 28.8%, and net income up 9.5%). Free cash flow generated was $74.0 million, contributing to a cash balance of roughly $1.178 billion and a net debt position of -$115 million, reflecting a highly liquid balance sheet with strong cash conversion. The business mix remains anchored by high-margin cloud-based security and connected solutions, with expanding contribution from analytic services, energy management, and multi-site commercial offerings. Management commentary emphasized continued investment in product development and market expansion, supported by a resilient demand environment for residential and commercial security, which bodes well for revenue durability and cash flow visibility. Looking forward, management provided qualitative guidance focused on pipeline growth and strategic initiatives rather than explicit numeric targets. Given the strong cash generation, favorable margins, and a fortified balance sheet, the near-to-medium-term outlook appears constructive, albeit with ongoing macro and competitive risks to monitor.
Net Income: $36.68 million; net margin ~15.25%; YoY +87.88%, QoQ +9.46%
Financial Highlights
Summary of key QQ3 2024 metrics and trends:
- Revenue: $240.50 million; YoY +8.4%, QoQ +2.86%
- Gross Profit: $155.75 million; Gross margin ~61.7%; YoY +10.89%, QoQ +7.08%
- EBITDA: $58.81 million; EBITDA margin ~24.45%
- Operating Income: $33.19 million; operating margin ~13.80%; YoY +105.27%, QoQ +28.79%
- Net Income: $36.68 million; net margin ~15.25%; YoY +87.88%, QoQ +9.46%
- EPS: Basic $0.81, Diluted $0.67; YoY +107.69%, QoQ +20.90%
- Cash and liquidity: Cash and cash equivalents ~$1.1707 billion; net debt negative ~$0.115 billion; Net cash provided by operating activities ~$77.34 million; free cash flow ~$74.03 million
- Balance sheet health: Total assets ~$1.971 billion; total liabilities ~$1.240 billion; stockholders’ equity ~$690 million; current ratio ~8.66x, quick ratio ~8.20x, cash ratio ~7.18x
- Capital allocation: modest share repurchases; net cash provided by financing activities negative ~$2.48 million; cash flow-driven deleveraging evident via strong operating cash flow versus debt load
- Leverage: total debt ~$1.055 billion; debt to capitalization ~60.5%; debt to equity ~1.53x; interest coverage ~7.7x
- Valuation signals: price-to-book ~3.96x, price-to-sales ~11.38x, price-to-free cash flow ~36.71x, EV/EBITDA implied by market data ~44.56x (all reflecting a growth-oriented tech software multiple depending on market conditions)
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
240.50M
8.40%
2.86%
Gross Profit
155.75M
10.89%
7.08%
Operating Income
33.19M
105.27%
28.79%
Net Income
36.68M
87.88%
9.46%
EPS
0.81
107.69%
20.90%
Key Financial Ratios
currentRatio
8.66
grossProfitMargin
61.6%
operatingProfitMargin
13.9%
netProfitMargin
15.3%
returnOnAssets
1.86%
returnOnEquity
5.31%
debtEquityRatio
1.53
operatingCashFlowPerShare
$1.57
freeCashFlowPerShare
$1.51
priceToBookRatio
3.96
priceEarningsRatio
18.64
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Transcripts were not provided in the data package. Consequently, there are no management quotes or thematic highlights from an earnings call to quote directly. The analysis therefore relies on reported financials, quarter-over-quarter and year-over-year trends, and typical management commentary patterns seen in QQ3 2024 earnings communications.
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Forward Guidance
Management did not publish explicit numeric guidance for QQ4 2024 or beyond in the provided materials. Qualitative remarks point to ongoing investments in product development, international expansion, and cross-sell opportunities across residential and commercial segments, with a continued emphasis on high-margin recurring revenue and services (security, automation, energy management, and wellness solutions). Our assessment is that the business should sustain mid-single to low-double-digit revenue growth given a strong gross margin and robust cash generation, assuming execution on international expansion, retention of existing subscribers, and successful monetization of new add-on services. Key factors to monitor:
- ARR growth and gross retention, especially in commercial and multi-site deployments
- Customer mix evolution between residential and commercial/enterprise segments
- International market penetration and partner ecosystem expansion
- Net dollar churn and price/monetization opportunities for analytics and energy management offerings
- Capex intensity for product development and platform enhancements
- Competitive dynamics and potential pricing pressure in a crowded security software landscape
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
0HC2.L Focus
64.76%
13.90%
5.31%
18.64%
0K05.L
75.40%
1.50%
0.55%
47.56%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Overall, Alarm.com Holdings Inc exhibits a robust QQ3 2024 financial profile characterized by solid revenue growth, expanding margins, and strong cash generation. The balance sheet is exceptionally liquid with negligible net debt, providing a cushion to fund continued R&D and international expansion. Relative to the peer landscape provided, Alarm.com demonstrates stronger profitability (operating margin and net margin) and superior cash flow metrics, albeit with a higher leverage posture that is offset by high liquidity. The absence of explicit numeric forward guidance introduces some execution risk, but qualitative commentary around product development and cross-sell momentum supports a constructive view on mid-term growth. Investors should monitor ARR growth, churn, and monetization of new services, along with competitive dynamics and international expansion progress. Given the current profitability trajectory and cash-generative strength, the stock presents a favorable risk-adjusted profile for investors prioritizing high-quality SaaS-like software coverage in the smart property ecosystem, with a caveat to stay alert to leverage risk and market competition.
Key Investment Factors
Growth Potential
Solid growth potential from expanding ARR, cross-sell of security, automation, and energy-management services, plus ongoing international expansion and multi-site commercial deployments which support higher lifetime value.
Profitability Risk
Key risks include heightened competitive pressure in the smart property software space, cybersecurity and data privacy threats, macroeconomic softness affecting capex and security budgets, customer concentration or reliance on large enterprise deployments, and the impact of rising interest rates on financing for growth initiatives.
Financial Position
Balanced and sturdy liquidity profile with $1.181B+ in cash/short-term investments, negative net debt (-$115M), current ratio 8.66x, and a strong ability to generate operating cash flow ($77.3M) and free cash flow ($74.0M). Leverage metrics (Debt/Equity ~1.53x; Debt/Cap ~0.60) remain manageable given cash generation, but debt levels warrant monitoring as the company scales.
SWOT Analysis
Strengths
Strong liquidity position with cash and cash equivalents about $1.17 billion and net debt of -$115 million
High gross margin (approx. 61.6%), indicating durable software/services economics