-- Third quarter SaaS and license revenue increased to $145.0 million, compared to $133.1 million for the third quarter of 2022 --

-- Third quarter GAAP net income attributable to common stockholders increased to $19.5 million, compared to $18.3 million for the third quarter of 2022 --

-- Third quarter non-GAAP adjusted EBITDA increased to $41.4 million, compared to $40.8 million for the third quarter of 2022 --

Alarm.com Holdings, Inc. (NASDAQ:ALRM), the leading platform for the intelligently connected property, today reported financial results for its third quarter ended September 30, 2023. Alarm.com also provided its financial outlook for SaaS and license revenue for the fourth quarter of 2023 and increased its SaaS and license revenue, non-GAAP adjusted EBITDA and non-GAAP adjusted net income attributable to common stockholders guidance for the full year of 2023.

"We are pleased to report solid results in the quarter and continued contributions from our various growth initiatives," said Steve Trundle, CEO of Alarm.com. "Our continued innovation in cloud-based safety and security solutions will help drive growth for our service providers and our business in global markets in the years ahead."

Third Quarter 2023 Financial Results as Compared to Third Quarter 2022

SaaS and license revenue increased 8.9% to $145.0 million, compared to $133.1 million.
Total revenue increased 2.6% to $221.9 million, compared to $216.1 million.
GAAP net income attributable to common stockholders increased to $19.5 million, or $0.37 per diluted share, compared to $18.3 million, or $0.35 per diluted share.
Non-GAAP adjusted EBITDA(*) increased to $41.4 million, compared to $40.8 million.
Non-GAAP adjusted net income attributable to common stockholders(*) increased to $30.6 million, or $0.56 per diluted share, compared to $30.1 million or $0.55 per diluted share.

Balance Sheet and Cash Flow

Total cash and cash equivalents increased to $680.0 million as of September 30, 2023, compared to $622.2 million as of December 31, 2022. During the nine months ended September 30, 2023, we repurchased 239,540 shares of Alarm.com common stock at an average price of $53.66, for $12.9 million.
For the three and nine months ended September 30, 2023, cash flows from operations was $62.8 million and $96.1 million, respectively, compared to $10.2 million and $22.5 million for the same periods in the prior year. For the three and nine months ended September 30, 2023, non-GAAP free cash flow(*) was $60.9 million and $90.7 million, respectively, compared to $8.4 million and $(5.6) million for the same periods in the prior year.

(*) Reconciliations of the non-GAAP measures are set forth at the end of this press release.

Recent Business Highlights

Significantly Enhanced Mobile App Brings Greater Focus on Key Capabilities: Alarm.com's recently upgraded mobile app offers a more immersive and intuitive user experience while also streamlining access to high-use capabilities such as live video feeds and video clips. An upgraded activity feed allows subscribers to scroll through a chronological view of activity at their property that includes images from recorded video clips. Alarm.com developed the new enhancements to give subscribers frictionless access to high-value information and key commands that can drive system engagement.
Utilities Leveraging EnergyHub During Hot 2023 Summer: EnergyHub Virtual Power Plants (VPPs) enabled peak load reduction to help maintain grid stability across North America this summer. EnergyHub's utility clients called 38% more demand response events compared to 2022 in order to shift 68 Gigawatt hours of energy usage out of peak demand times.
Launched In-App Property Panic: Alarm.com's video-only subscribers can now initiate a signal to a central station in an emergency directly from the Alarm.com mobile app to summon help to their property. Video clips associated with an incident can also be immediately shared with central station operators via Alarm.com's Visual Verification platform.

Financial Outlook

Alarm.com is providing its outlook for SaaS and license revenue for the fourth quarter of 2023 and increasing its SaaS and license revenue, non-GAAP adjusted EBITDA and non-GAAP adjusted net income attributable to common stockholders guidance for the full year of 2023 based upon current management expectations.

For the fourth quarter of 2023:

SaaS and license revenue is expected to be in the range of $146.0 million to $146.2 million.

For the full year of 2023:

SaaS and license revenue is expected to be in the range of $566.9 million to $567.1 million.
Total revenue is expected to be in the range of $878.9 million to $881.1 million, which includes anticipated hardware and other revenue in the range of $312.0 million to $314.0 million.
Non-GAAP adjusted EBITDA is expected to be in the range of $143.0 million to $144.0 million.
Non-GAAP adjusted net income attributable to common stockholders is expected to be in the range of $103.5 million to $105.0 million, based on an estimated tax rate of 21.0%.
Based on an expected 54.6 million weighted average diluted shares outstanding, non-GAAP adjusted net income attributable to common stockholders is expected to be $1.90 to $1.92 per diluted share.

The 2023 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 third quarter 2023 financial results and its outlook for the fourth quarter and full year of 2023. A live audio webcast is scheduled to begin at 4:30 p.m. ET on November 9, 2023. To participate on the live call, analysts and investors should pre-register to obtain a dial-in number and individual passcode by visiting: https://edge.media-server.com/mmc/p/xsuvnt4d/. 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. The information contained on any referenced website is not incorporated herein.

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 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 non-GAAP 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, non-GAAP free cash flow, non-GAAP adjusted SaaS and license revenue and non-GAAP adjusted SaaS and license revenue growth rate. 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 non-GAAP adjusted EBITDA as a performance measure 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 most directly comparable GAAP financial measures, which are included in this press release.

We consider non-GAAP 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 non-GAAP adjusted EBITDA and non-GAAP adjusted net income attributable to common stockholders 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:

Interest expense: We record interest expense primarily related to the January 2021 issuance of $500.0 million aggregate principal amount of 0% convertible senior notes due January 15, 2026, or the 2026 Notes. We exclude interest expense in calculating our non-GAAP adjusted EBITDA. 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 other than the interest expense related to the amortization of debt issuance costs related to the 2026 Notes as discussed below.

Interest income and certain activity within other (expense) / income, net: We exclude interest income as well as certain activity within other (expense) / income, net including gains, losses or impairments on investments and other assets as well as losses on the early extinguishment of the debt, when applicable, from our non-GAAP financial measures because we do not consider it part of our ongoing results of operations.

Provision for income taxes: We exclude the impact related to our provision for income taxes from our non-GAAP adjusted EBITDA calculation. We do not consider this tax adjustment to be part of our ongoing results of operations.

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.

Depreciation expense: We record depreciation primarily for investments in property and equipment. We exclude depreciation in calculating non-GAAP 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 of debt issuance costs: We record amortization of debt issuance costs related to the 2026 Notes as interest expense. We exclude amortization of debt issuance costs from our 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, because we believe that the exclusion of this non-cash interest expense will provide for more meaningful information about our financial performance.

Stock-based compensation expense: We exclude stock-based compensation expense, which relates to restricted stock units 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.

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.

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.

Vivint license revenue: We exclude Vivint license revenue from our non-GAAP adjusted SaaS and license revenue and non-GAAP adjusted SaaS and license revenue growth rate because we believe that this exclusion will provide more meaningful information about our financial performance on a comparable basis, given that we are no longer recording Vivint license revenue effective beginning in the fourth quarter of 2022. We filed a demand for arbitration on October 27, 2022 following Vivint's notification to us indicating that Vivint will stop paying us license fees under the Patent and Cross License Agreement.

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 opportunities, positioning, the benefits of recently launched offerings, acquisitions and investments, anticipated impact of Vivint's refusal to pay license fees and related legal actions, and the Company's guidance for the fourth quarter and full year of 2023 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: impact of the global economic uncertainty and financial market conditions caused by significant worldwide events, including public health crises, such as the COVID-19 pandemic, geopolitical upheaval, such as Russia's incursion into Ukraine and the war between Israel and Hamas, supply chain disruptions, interest rates and inflation (collectively, Macroeconomic Conditions); impact of Macroeconomic Conditions and their economic effects on demand for the Company's products; impact of Vivint's refusal to pay license fees and related legal actions; 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 potential loss of any key supplier or the inability of a key supplier to deliver their products to us on time or at the contracted price; 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; and 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 August 9, 2023 and other subsequent filings the Company makes with the Securities and Exchange Commission from time to time, including its Form 10-Q for the quarter ended September 30, 2023. 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)
(unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Revenue:
SaaS and license revenue	$	145,027		$	133,126		$	420,853		$	385,826
Hardware and other revenue		76,827			83,012			234,592			248,594
Total revenue		221,854			216,138			655,445			634,420
Cost of revenue⁽¹⁾:
Cost of SaaS and license revenue		21,917			18,437			63,076			54,019
Cost of hardware and other revenue		59,488			67,149			180,868			208,990
Total cost of revenue		81,405			85,586			243,944			263,009
Operating expenses:
Sales and marketing		23,861			23,057			74,278			69,182
General and administrative		31,455			28,011			88,753			81,314
Research and development		61,014			55,581			183,840			161,227
Amortization and depreciation		7,948			7,587			23,481			23,123
Total operating expenses		124,278			114,236			370,352			334,846
Operating income		16,171			16,316			41,149			36,565
Interest expense		(906	)		(787	)		(2,601	)		(2,356	)
Interest income		8,493			2,903			21,092			4,062
Other (expense) / income, net		(435	)		(76	)		(1,214	)		42
Income before income taxes		23,323			18,356			58,426			38,313
Provision for income taxes		3,972			246			9,257			472
Net income		19,351			18,110			49,169			37,841
Net loss attributable to redeemable noncontrolling interests		173			222			570			412
Net income attributable to common stockholders	$	19,524		$	18,332		$	49,739		$	38,253

Per share information attributable to common stockholders:
Net income per share:
Basic	$	0.39		$	0.37		$	1.00		$	0.77
Diluted	$	0.37		$	0.35		$	0.94		$	0.73
Weighted average common shares outstanding:
Basic		49,917,533			49,791,465			49,782,571			49,974,925
Diluted		54,778,793			54,832,528			54,588,826			54,988,020
______________________________
(1) Exclusive of amortization and depreciation shown in operating expenses below.

Stock-based compensation expense included in operating expenses:	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Cost of hardware and other revenue	$	3		$	—		$	3		$	—
Sales and marketing		854			983			2,778			3,481
General and administrative		3,260			3,953			9,873			11,135
Research and development		7,689			8,218			23,769			23,437
Total stock-based compensation expense	$	11,806		$	13,154		$	36,423		$	38,053



ALARM.COM HOLDINGS, INC.
Consolidated Balance Sheets
(in thousands, except share and per share data)
(unaudited)

	September 30, 2023			December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	679,969		$	622,165
Accounts receivable, net of allowance for credit losses of $3,856 and $2,835, and net of allowance for product returns of $2,175 and $1,551 as of September 30, 2023 and December 31, 2022, respectively		110,267			124,283
Inventory		114,248			115,584
Other current assets, net of allowance for credit losses of $0 as of September 30, 2023 and December 31, 2022		26,685			29,056
Total current assets		931,169			891,088
Property and equipment, net		55,862			57,172
Intangible assets, net		82,498			82,458
Goodwill		153,847			148,183
Deferred tax assets		126,800			84,185
Operating lease right-of-use assets		26,840			28,933
Other assets, net of allowance for credit losses of $2 as of September 30, 2023 and December 31, 2022		34,481			37,356
Total assets	$	1,411,497		$	1,329,375
Liabilities, redeemable noncontrolling interests and stockholders' equity
Current liabilities:
Accounts payable, accrued expenses and other current liabilities	$	122,552		$	119,657
Accrued compensation		26,491			25,582
Deferred revenue		10,336			7,540
Operating lease liabilities		12,538			12,157
Total current liabilities		171,917			164,936
Deferred revenue		12,503			10,792
Convertible senior notes, net		492,727			490,370
Operating lease liabilities		23,245			27,380
Other liabilities		13,065			13,050
Total liabilities		713,457			706,528
Redeemable noncontrolling interests		30,342			23,988
Stockholders' equity
Preferred stock, $0.001 par value, 10,000,000 shares authorized; no shares issued and outstanding as of September 30, 2023 and December 31, 2022		—			—
Common stock, $0.01 par value, 300,000,000 shares authorized; 51,687,998 and 50,985,454 shares issued; and 49,915,713 and 49,452,709 shares outstanding as of September 30, 2023 and December 31, 2022, respectively		517			510
Additional paid-in capital		529,070			497,199
Treasury stock, at cost; 1,772,285 and 1,532,745 shares as of September 30, 2023 and December 31, 2022, respectively		(96,847	)		(83,993	)
Accumulated other comprehensive income		76			—
Retained earnings		234,882			185,143
Total stockholders' equity		667,698			598,859
Total liabilities, redeemable noncontrolling interests and stockholders' equity	$	1,411,497		$	1,329,375



ALARM.COM HOLDINGS, INC.
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

	Nine Months Ended September 30,
Cash flows from operating activities:	2023			2022
Net income	$	49,169		$	37,841
Adjustments to reconcile net income to net cash from operating activities:
Provision for credit losses on accounts receivable		1,422			1,606
Reserve for product returns		2,979			3,721
Recovery of credit losses on notes receivable		—			(77	)
Inventory write-down		1,181			—
Amortization on patents and tooling		965			1,037
Amortization and depreciation		23,481			23,123
Amortization of debt issuance costs		2,357			2,342
Amortization of operating leases		8,540			7,767
Deferred income taxes		(42,612	)		(42,566	)
Change in fair value of contingent liability		23			—
Stock-based compensation		36,423			38,053
Gain on investment		—			(140	)
Changes in operating assets and liabilities (net of business acquisitions):
Accounts receivable		11,048			(18,321	)
Inventory		2,750			(37,043	)
Other current and non-current assets		6,423			(7,443	)
Accounts payable, accrued expenses and other current liabilities		371			17,803
Deferred revenue		4,507			3,531
Operating lease liabilities		(10,329	)		(9,390	)
Other liabilities		(2,605	)		611
Cash flows from operating activities		96,093			22,455
Cash flows used in investing activities:
Business acquisition, net of cash acquired		(9,696	)		(31,730	)
Additions to property and equipment		(5,349	)		(28,084	)
Issuances of notes receivable		(300	)		(3,000	)
Receipt of payments on notes receivable		40			49
Capitalized software development costs		(315	)		—
Purchase of investment in unconsolidated entity		(200	)		—
Proceeds from sale of investment		—			140
Purchases of developed technology and other assets		(5,915	)		—
Cash flows used in investing activities		(21,735	)		(62,625	)
Cash flows used in financing activities:
Payments of deferred consideration for acquisitions		(1,672	)		—
Purchases of treasury stock, including transaction costs		(12,854	)		(51,866	)
Purchases of redeemable noncontrolling interest		(832	)		—
Payments of acquired debt		(3,016	)		—
Issuances of common stock from equity-based plans		3,129			3,391
Cash flows used in financing activities		(15,245	)		(48,475	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(57	)		—
Net increase / (decrease) in cash, cash equivalents and restricted cash		59,056			(88,645	)
Cash, cash equivalents and restricted cash at beginning of the period		622,879			710,621
Cash, cash equivalents and restricted cash at end of the period	$	681,935		$	621,976

Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	679,969		$	621,347
Restricted cash included in other current assets and other assets		1,966			629
Total cash, cash equivalents and restricted cash	$	681,935		$	621,976



ALARM.COM HOLDINGS, INC.
Reconciliation of Non-GAAP Measures
(in thousands)
(unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Non-GAAP adjusted EBITDA:
Net income	$	19,351		$	18,110		$	49,169		$	37,841
Adjustments:
Interest expense, interest income and certain activity within other (expense) / income, net		(7,587	)		(2,116	)		(18,491	)		(1,859	)
Provision for income taxes		3,972			246			9,257			472
Amortization and depreciation expense		7,948			7,587			23,481			23,123
Stock-based compensation expense		11,806			13,154			36,423			38,053
Acquisition-related expense		(4	)		728			576			728
Litigation expense		5,949			3,131			7,968			9,536
Total adjustments		22,084			22,730			59,214			70,053
Non-GAAP adjusted EBITDA	$	41,435		$	40,840		$	108,383		$	107,894

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Non-GAAP adjusted net income:
Net income, as reported	$	19,351		$	18,110		$	49,169		$	37,841
Provision for income taxes		3,972			246			9,257			472
Income before income taxes		23,323			18,356			58,426			38,313
Adjustments:
Less: interest income and certain activity within other (expense) / income, net		(8,493	)		(2,903	)		(21,092	)		(4,215	)
Amortization expense		5,190			4,647			15,076			13,924
Amortization of debt issuance costs		787			782			2,357			2,342
Stock-based compensation expense		11,806			13,154			36,423			38,053
Acquisition-related expense		(4	)		728			576			728
Litigation expense		5,949			3,131			7,968			9,536
Non-GAAP adjusted income before income taxes		38,558			37,895			99,734			98,681
Income taxes¹		(8,097	)		(7,958	)		(20,944	)		(20,723	)
Non-GAAP adjusted net income	$	30,461		$	29,937		$	78,790		$	77,958

¹Income taxes are calculated using a rate of 21.0% for each of the three and nine months ended September 30, 2023 and 2022. The 21.0% effective tax rate for each of the three and nine months ended September 30, 2023 and 2022 excludes the income tax effect on the non-GAAP adjustments and reflects 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 Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Non-GAAP adjusted net income attributable to common stockholders:
Net income attributable to common stockholders, as reported	$	19,524		$	18,332		$	49,739		$	38,253
Provision for income taxes		3,972			246			9,257			472
Income attributable to common stockholders before income taxes		23,496			18,578			58,996			38,725
Adjustments:
Less: interest income and certain activity within other (expense) / income, net		(8,493	)		(2,903	)		(21,092	)		(4,215	)
Amortization expense		5,190			4,647			15,076			13,924
Amortization of debt issuance costs		787			782			2,357			2,342
Stock-based compensation expense		11,806			13,154			36,423			38,053
Acquisition-related expense		(4	)		728			576			728
Litigation expense		5,949			3,131			7,968			9,536
Non-GAAP adjusted income attributable to common stockholders before income taxes		38,731			38,117			100,304			99,093
Income taxes¹		(8,134	)		(8,005	)		(21,064	)		(20,810	)
Non-GAAP adjusted net income attributable to common stockholders	$	30,597		$	30,112		$	79,240		$	78,283

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Non-GAAP adjusted net income attributable to common stockholders per share:
Net income attributable to common stockholders per share - basic, as reported	$	0.39		$	0.37		$	1.00		$	0.77
Provision for income taxes		0.08			—			0.19			0.01
Income attributable to common stockholders before income taxes		0.47			0.37			1.19			0.78
Adjustments:
Less: interest income and certain activity within other (expense) / income, net		(0.17	)		(0.06	)		(0.42	)		(0.08	)
Amortization expense		0.10			0.09			0.30			0.28
Amortization of debt issuance costs		0.02			0.02			0.05			0.05
Stock-based compensation expense		0.23			0.27			0.73			0.76
Acquisition-related expense		—			0.01			0.01			0.01
Litigation expense		0.12			0.06			0.16			0.19
Non-GAAP adjusted income attributable to common stockholders before income taxes		0.77			0.76			2.02			1.99
Income taxes¹		(0.16	)		(0.16	)		(0.43	)		(0.42	)
Non-GAAP adjusted net income attributable to common stockholders per share - basic	$	0.61		$	0.60		$	1.59		$	1.57
Non-GAAP adjusted net income attributable to common stockholders per share - diluted	$	0.56		$	0.55		$	1.45		$	1.42
Weighted average common shares outstanding:
Basic, as reported		49,917,533			49,791,465			49,782,571			49,974,925
Diluted, as reported		54,778,793			54,832,528			54,588,826			54,988,020

¹Income taxes are calculated using a rate of 21.0% for each of the three and nine months ended September 30, 2023 and 2022. The 21.0% effective tax rate for each of the three and nine months ended September 30, 2023 and 2022 excludes the income tax effect on the non-GAAP adjustments and reflects the estimated long-term corporate tax rate.



ALARM.COM HOLDINGS, INC.
Reconciliation of Non-GAAP Measures - continued
(in thousands)
(unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Non-GAAP free cash flow:
Cash flows from operating activities	$	62,826		$	10,197		$	96,093		$	22,455
Additions to property and equipment		(1,956	)		(1,782	)		(5,349	)		(28,084	)
Non-GAAP free cash flow	$	60,870		$	8,415		$	90,744		$	(5,629	)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Non-GAAP adjusted SaaS and license revenue:
SaaS and license revenue	$	145,027		$	133,126		$	420,853		$	385,826
License revenue from Vivint		—			(5,765	)		—			(16,631	)
Non-GAAP adjusted SaaS and license revenue	$	145,027		$	127,361		$	420,853		$	369,195

Third Quarter 2023 as Compared to Third Quarter 2022:	Three Months Ended September 30, 2023		Nine Months Ended September 30, 2023
SaaS and license revenue growth rate	8.9	%	9.1	%
Adjustment to SaaS and license revenue growth rate for Vivint license revenue	5.0		4.9
Non-GAAP adjusted SaaS and license revenue growth rate	13.9	%	14.0	%

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