Alarm.com Holdings, Inc.

Previous wording

You should read the following discussion and analysis of our financial condition and results of operations together with (1) our condensed consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q, or Quarterly Report, and (2) the audited consolidated financial statements and the related notes and management’s discussion and analysis of financial condition and results of operations for the fiscal year ended December 31, 2024 included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed on February 20, 2025, or Annual Report, with the Securities and Exchange Commission, or SEC. This Quarterly Report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These statements are often identified by the use of words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “objective,” “ongoing,” “plan,” “predict,” “project,” “potential,” “should,” “will,” “would,” or the negative or plural of these words or similar expressions or variations and such forward-looking statements include, but are not limited to, statements with respect to the anticipated impact of the global economic uncertainty and financial market conditions caused by significant worldwide events, including public health crises, and geopolitical upheaval (including the ongoing conflicts in Ukraine and in the Middle East and surrounding areas), disruptions to global supply chains, fluctuations in interest rates, tariffs, risk of recession and inflation (collectively, the Macroeconomic Conditions) on our business, results of operations and financial condition, including on our hardware sales and our Software-as-a-Service, or SaaS, and license revenue growth rate; our business strategy, plans and objectives for future operations; continued enhancements of our platform and offerings; the potential impact of trade policies and new or increased tariffs on our cost of hardware revenue and hardware revenue margins; and our future financial and business performance. The events described in these forward-looking statements are subject to a number of risks, uncertainties, assumptions and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified in the section titled “Risk Factors” set forth in Part II, Item 1A of this Quarterly Report and elsewhere in this and in our other SEC filings. You should not rely upon forward-looking statements as predictions of future events. Furthermore, such forward-looking statements speak only as of the date of this r…

Excerpt shortened here; the source contains the full paragraph.

Current wording

You should read the following discussion and analysis of our financial condition and results of operations together with (1) our condensed consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q, or Quarterly Report, and (2) the audited consolidated financial statements and the related notes and management’s discussion and analysis of financial condition and results of operations for the fiscal year ended December 31, 2024 included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed on February 20, 2025, or Annual Report, with the Securities and Exchange Commission, or SEC. This Quarterly Report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These statements are often identified by the use of words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “objective,” “ongoing,” “plan,” “predict,” “project,” “potential,” “should,” “will,” “would,” or the negative or plural of these words or similar expressions or variations and such forward-looking statements include, but are not limited to, statements with respect to the anticipated impact of the global economic uncertainty and financial market conditions caused by significant worldwide events, including public health crises, and geopolitical upheaval (including the ongoing conflicts in Ukraine and in the Middle East and surrounding areas), disruptions to global supply chains, fluctuations in interest rates, the U.S. government shutdown, tariffs, risk of recession and inflation (collectively, the Macroeconomic Conditions) on our business, results of operations and financial condition, including on our hardware sales and our Software-as-a-Service, or SaaS, and license revenue growth rate; our business strategy, plans and objectives for future operations; continued enhancements of our platform and offerings; the potential impact of trade policies and new or increased tariffs on our cost of hardware revenue and hardware revenue margins; and our future financial and business performance. The events described in these forward-looking statements are subject to a number of risks, uncertainties, assumptions and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified in the section titled “Risk Factors” set forth in Part II, Item 1A of this Quarterly Report and elsewhere in this and in our other SEC filings. You should not rely upon forward-looking statements as predictions of future events. Furthermore, such forward-looking statements speak…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

We primarily generate SaaS and license revenue, our largest source of revenue, through our service provider partners, who resell our services and pay us monthly fees. Our service provider partners sell, install and support Alarm.com solutions that enable residential and commercial property owners to intelligently secure, connect, control and automate their properties. Our subscribers consist of all of the properties maintained by those residential and commercial property owners to which we are delivering at least one of our solutions. We derive a portion of our revenue from licensing our intellectual property to third parties on a per customer basis. SaaS and license revenue represented 67% and 68% of our revenue during the three and six months ended June 30, 2025, respectively, as compared to 67% in the same periods in the prior year.

Current wording

We primarily generate SaaS and license revenue, our largest source of revenue, through our service provider partners, who resell our services and pay us monthly fees. Our service provider partners sell, install and support Alarm.com solutions that enable residential and commercial property owners to intelligently secure, connect, control and automate their properties. Our subscribers consist of all of the properties maintained by those residential and commercial property owners to which we are delivering at least one of our solutions. We derive a portion of our revenue from licensing our intellectual property to third parties on a per customer basis. SaaS and license revenue represented 68% of our revenue during each of the three and nine months ended September 30, 2025, respectively, as compared to 66% and 67% in the same periods in the prior year.

Previous wording

We also generate SaaS and license revenue from monthly fees charged to service providers on a per subscriber basis for access to our non-hosted software platform, or Software platform. The non-hosted software for interactive security, automation and related solutions is typically deployed and operated by the service provider in its own network operations center. Software license revenue represented 2% of our revenue during each of the three and six months ended June 30, 2025 and 2024.

Current wording

We also generate SaaS and license revenue from monthly fees charged to service providers on a per subscriber basis for access to our non-hosted software platform, or Software platform. The non-hosted software for interactive security, automation and related solutions is typically deployed and operated by the service provider in its own network operations center. Software license revenue represented 2% of our revenue during each of the three and nine months ended September 30, 2025 and 2024.

Previous wording

We also generate revenue from the sale of many types of hardware, including video cameras, video recorders, cellular radio modules, smart thermostats, image sensors, gunshot detection sensors and other peripherals, that enable our solutions. Our hardware and other revenue also includes our revenue from the sale of perpetual licenses that provide our customers in the commercial market the right to use our video surveillance software for an indefinite period of time in exchange for a one-time license fee. Additionally, our hardware and other revenue includes our revenue from the sale of licenses that provide our customers the right to use our gunshot detection solution in exchange for license fees. Hardware and other revenue represented 33% and 32% of our revenue during the three and six months ended June 30, 2025, respectively, as compared to 33% in the same periods in the prior year. We typically expect hardware and other revenue to fluctuate as a percentage of total revenue.

Current wording

We also generate revenue from the sale of many types of hardware, including video cameras, video recorders, cellular radio modules, smart thermostats, image sensors, gunshot detection sensors and other peripherals, that enable our solutions. Our hardware and other revenue also includes our revenue from the sale of perpetual licenses that provide our customers in the commercial market the right to use our video surveillance software for an indefinite period of time in exchange for a one-time license fee. Additionally, our hardware and other revenue includes our revenue from the sale of licenses that provide our customers the right to use our gunshot detection solution in exchange for license fees. Hardware and other revenue represented 32% of our revenue during each of the three and nine months ended September 30, 2025, respectively, as compared to 34% and 33% in the same periods in the prior year. We typically expect hardware and other revenue to fluctuate as a percentage of total revenue.

Previous wording

•SaaS and license revenue increased 9% to $170.0 million during the three months ended June 30, 2025 from $155.9 million during the three months ended June 30, 2024. SaaS and license revenue increased 9% to $333.8 million during the six months ended June 30, 2025 from $306.3 million during the six months ended June 30, 2024. Included in SaaS and license revenue was software license revenue, which decreased to $4.5 million during the three months ended June 30, 2025 from $5.2 million during the three months ended June 30, 2024. Software license revenue decreased to $9.2 million during the six months ended June 30, 2025 from $10.4 million during the six months ended June 30, 2024.

Current wording

•SaaS and license revenue increased 10% to $175.4 million during the three months ended September 30, 2025 from $159.3 million during the three months ended September 30, 2024. SaaS and license revenue increased 9% to $509.2 million during the nine months ended September 30, 2025 from $465.5 million during the nine months ended September 30, 2024. Included in SaaS and license revenue was software license revenue, which decreased to $4.3 million during the three months ended September 30, 2025 from $5.0 million during the three months ended September 30, 2024. Software license revenue decreased to $13.5 million during the nine months ended September 30, 2025 from $15.4 million during the nine months ended September 30, 2024.

Previous wording

•Total revenue increased 9% to $254.3 million during the three months ended June 30, 2025 from $233.8 million during the three months ended June 30, 2024. Total revenue increased 8% to $493.1 million during the six months ended June 30, 2025 from $457.1 million during the six months ended June 30, 2024.

Current wording

•Total revenue increased 7% to $256.4 million during the three months ended September 30, 2025 from $240.5 million during the three months ended September 30, 2024. Total revenue increased 7% to $749.5 million during the nine months ended September 30, 2025 from $697.6 million during the nine months ended September 30, 2024.

Previous wording

•Net income increased to $34.2 million during the three months ended June 30, 2025, as compared to $32.5 million during the three months ended June 30, 2024. Net income increased to $61.9 million during the six months ended June 30, 2025, as compared to $55.9 million during the six months ended June 30, 2024. Net income attributable to common stockholders increased to $34.6 million during the three months ended June 30, 2025, as compared to $33.5 million during the three months ended June 30, 2024. Net income attributable to common stockholders increased to $62.5 million during the six months ended June 30, 2025, as compared to $57.1 million during the six months ended June 30, 2024.

Current wording

•Net income decreased to $35.1 million during the three months ended September 30, 2025, as compared to $36.5 million during the three months ended September 30, 2024. Net income increased to $97.0 million during the nine months ended September 30, 2025, as compared to $92.4 million during the nine months ended September 30, 2024. Net income attributable to common stockholders decreased to $35.3 million during the three months ended September 30, 2025, as compared to $36.7 million during the three months ended September 30, 2024. Net income attributable to common stockholders increased to $97.8 million during the nine months ended September 30, 2025, as compared to $93.8 million during the nine months ended September 30, 2024.

Previous wording

•Non-GAAP adjusted EBITDA, a non-GAAP measurement of operating performance, increased to $48.4 million during the three months ended June 30, 2025 from $42.8 million during the three months ended June 30, 2024. Non-GAAP adjusted EBITDA increased to $92.0 million during the six months ended June 30, 2025 from $79.9 million during the six months ended June 30, 2024.

Current wording

•Non-GAAP adjusted EBITDA, a non-GAAP measurement of operating performance, increased to $59.2 million during the three months ended September 30, 2025 from $50.0 million during the three months ended September 30, 2024. Non-GAAP adjusted EBITDA increased to $151.1 million during the nine months ended September 30, 2025 from $129.9 million during the nine months ended September 30, 2024.

Previous wording

Please see Non-GAAP Measures below in this section of this Quarterly Report for a discussion of the limitations of non-GAAP adjusted EBITDA (a non-GAAP measure) and a reconciliation of non-GAAP adjusted EBITDA from net income, the most directly comparable measurement in accordance with accounting principles generally accepted in the United States, or GAAP, for the three and six months ended June 30, 2025 and 2024.

Current wording

Please see Non-GAAP Measures below in this section of this Quarterly Report for a discussion of the limitations of non-GAAP adjusted EBITDA (a non-GAAP measure) and a reconciliation of non-GAAP adjusted EBITDA from net income, the most directly comparable measurement in accordance with accounting principles generally accepted in the United States, or GAAP, for the three and nine months ended September 30, 2025 and 2024.

Previous wording

On July 4, 2025, Public Law 119-21, commonly referred to as the One Big Beautiful Bill Act, or OBBBA, was enacted in the United States. The OBBBA includes a broad range of tax provisions that may impact the timing and the magnitude of certain key tax deductions. The most significant provisions to us are the permanent reinstatement of the full domestic research and development expenditure deduction in the year such costs are incurred and the 100% first-year bonus depreciation deduction. We currently anticipate these provisions will significantly reduce our current federal income tax cash outlays over the next several years. Certain other international tax provisions may also be favorable to us. We continue to analyze the OBBBA tax provisions to assess their potential impact on our financial position, results of operations and cash flows.

Current wording

On July 4, 2025, Public Law 119-21, commonly referred to as the One Big Beautiful Bill Act, or OBBBA, was enacted in the United States. The OBBBA includes a broad range of tax provisions that impact the timing and the magnitude of certain key tax deductions. The most significant provisions to us are the permanent reinstatement of the full and immediate deduction for domestic research and development expenditures in the year such costs are incurred and the 100% first-year bonus depreciation deduction, with both provisions reducing our associated deferred tax assets. We currently anticipate these provisions will significantly reduce our current federal income tax cash outlays over the next several years. Certain other international tax provisions may also be favorable to us beginning in 2026. We will continue to analyze the OBBBA tax provisions, including any additional guidance that is issued, to assess their potential impact on our financial position, results of operations and cash flows.

Previous wording

The global economy, credit markets and financial markets have and may continue to experience significant volatility as a result of the Macroeconomic Conditions. These Macroeconomic Conditions have and may continue to create supply chain disruptions, inventory disruptions, and fluctuations in economic growth, including fluctuations in employment rates, inflation, tariffs, energy prices and consumer sentiment. It remains difficult to assess or predict the ultimate duration and economic impact of the Macroeconomic Conditions. The results of operations for the three and six months ended June 30, 2025 are not necessarily indicative of the results that can be expected for our entire fiscal year ending December 31, 2025, which is increasingly true in periods of extreme uncertainty, such as the uncertainty caused by the Macroeconomic Conditions. Prolonged uncertainty with respect to the Macroeconomic Conditions could cause further economic slowdown or cause other unpredictable events, each of which could adversely affect our business, results of operations or financial condition.

Current wording

The global economy, credit markets and financial markets have and may continue to experience significant volatility as a result of the Macroeconomic Conditions. These Macroeconomic Conditions have and may continue to create supply chain disruptions, inventory disruptions, and fluctuations in economic growth, including fluctuations in employment rates, inflation, tariffs, energy prices and consumer sentiment. It remains difficult to assess or predict the ultimate duration and economic impact of the Macroeconomic Conditions. The results of operations for the three and nine months ended September 30, 2025 are not necessarily indicative of the results that can be expected for our entire fiscal year ending December 31, 2025, which is increasingly true in periods of extreme uncertainty, such as the uncertainty caused by the Macroeconomic Conditions. Prolonged uncertainty with respect to the Macroeconomic Conditions could cause further economic slowdown or cause other unpredictable events, each of which could adversely affect our business, results of operations or financial condition.

Previous wording

Non-GAAP adjusted EBITDA is a non-GAAP measure that represents our net income before interest expense, interest income, certain activity within other expense, net, provision for income taxes, income from equity method investments, net, amortization and depreciation expense, stock-based compensation expense, acquisition-related expense, legal costs and settlement fees incurred and received in connection with non-ordinary course litigation and other disputes, particularly costs involved in ongoing intellectual property litigation. We do not consider these items to be indicative of our core operating performance. The non-cash items include amortization and depreciation expense; income from equity method investments, net; amortization of debt issuance costs for the January 20, 2021 issuance of $500.0 million aggregate principal amount of 0% convertible senior notes due January 15, 2026, or the 2026 Notes, included in interest expense; amortization of debt issuance costs for the May 31, 2024 issuance of $500.0 million aggregate principal amount of 2.25% convertible senior notes due June 1, 2029, or the 2029 Notes, included in interest expense; and stock-based compensation expense related to restricted stock units and other forms of equity compensation, including, but not limited to, the sale of common stock. We do not adjust for ordinary course legal expenses resulting from maintaining and enforcing our intellectual property portfolio and license agreements.

Current wording

Non-GAAP adjusted EBITDA is a non-GAAP measure that represents our net income before interest expense, interest income, certain activity within other income / (expense), net, provision for income taxes, income from equity method investments, net, amortization and depreciation expense, stock-based compensation expense, acquisition-related expense, legal costs and settlement fees incurred and received in connection with non-ordinary course litigation and other disputes, particularly costs involved in ongoing intellectual property litigation. We do not consider these items to be indicative of our core operating performance. The non-cash items include amortization and depreciation expense; income from equity method investments, net; amortization of debt issuance costs for the January 20, 2021 issuance of $500.0 million aggregate principal amount of 0% convertible senior notes due January 15, 2026, or the 2026 Notes, included in interest expense; amortization of debt issuance costs for the May 31, 2024 issuance of $500.0 million aggregate principal amount of 2.25% convertible senior notes due June 1, 2029, or the 2029 Notes, included in interest expense; and stock-based compensation expense related to restricted stock units and other forms of equity compensation, including, but not limited to, the sale of common stock. We do not adjust for ordinary course legal expenses resulting from maintaining and enforcing our intellectual property portfolio and license agreements.

Previous wording

We record interest expense primarily related to our 2026 Notes and 2029 Notes. We exclude interest expense in calculating non-GAAP adjusted EBITDA because we believe the exclusion of interest expense will provide for more meaningful information about our financial performance. We exclude interest income and certain activity within other expense, net including gains, losses or impairments on investments without readily determinable fair values and other assets, gains on settlement fees and losses on the early extinguishment of debt, when applicable, from non-GAAP adjusted EBITDA because we do not consider it part of our ongoing results of operations. We exclude the impact related to our provision for income taxes and income from equity method investments, net from non-GAAP adjusted EBITDA because we do not consider these adjustments to be part of our ongoing results of operations.

Current wording

We record interest expense primarily related to our 2026 Notes and 2029 Notes. We exclude interest expense in calculating non-GAAP adjusted EBITDA because we believe the exclusion of interest expense will provide for more meaningful information about our financial performance. We exclude interest income and certain activity within other income / (expense), net including gains, losses or impairments on investments without readily determinable fair values and other assets, gains on settlement fees and losses on the early extinguishment of debt, when applicable, from non-GAAP adjusted EBITDA because we do not consider it part of our ongoing results of operations. We exclude the impact related to our provision for income taxes and income from equity method investments, net from non-GAAP adjusted EBITDA because we do not consider these adjustments to be part of our ongoing results of operations.

Previous wording

EBITDA and a reconciliation of non-GAAP adjusted EBITDA from net income, the most directly comparable GAAP measurement, for the three and six months ended June 30, 2025 and 2024.

Current wording

EBITDA and a reconciliation of non-GAAP adjusted EBITDA from net income, the most directly comparable GAAP measurement, for the three and nine months ended September 30, 2025 and 2024.

Previous wording

Our cost of SaaS and license revenue primarily includes the amounts paid to wireless network providers and, to a lesser extent, the costs of running our network operations centers which are expensed as incurred, as well as patent and royalty costs in connection with technology licensed from third-party providers and amounts paid to distributed energy resource providers. Our cost of SaaS and license revenue also includes our cost of software license revenue, which primarily includes the payroll and payroll-related costs of the department dedicated to providing service exclusively to those service providers that host the Software platform. As of June 30, 2025 and 2024, we had 75 and 79 employees who manufacture hardware for oursuite of IoT solutions, respectively. Our cost of hardware and other revenue primarily includes cost of raw materials, tooling, freight shipments and amounts paid to our third-party manufacturer for production and fulfillment of our cellular radio modules and image sensors, and procurement costs for our video cameras, video recorders, smart thermostats and gunshot detection sensors, which we purchase from an original equipment manufacturer, and other devices. Cost of hardware and other revenue also includes material costs and labor cost related to our employees who manufacture hardware for oursuite of IoT solutions. Additionally, our cost of hardware and other revenue includes royalty costs in connection with technology licensed from third-party providers.

Current wording

Our cost of SaaS and license revenue primarily includes the amounts paid to wireless network providers and, to a lesser extent, the costs of running our network operations centers which are expensed as incurred, as well as patent and royalty costs in connection with technology licensed from third-party providers and amounts paid to distributed energy resource providers. Our cost of SaaS and license revenue also includes our cost of software license revenue, which primarily includes the payroll and payroll-related costs of the department dedicated to providing service exclusively to those service providers that host the Software platform. As of September 30, 2025 and 2024, we had 76 employees who manufacture hardware for oursuite of IoT solutions, respectively. Our cost of hardware and other revenue primarily includes cost of raw materials, tooling, freight shipments and amounts paid to our third-party manufacturer for production and fulfillment of our cellular radio modules and image sensors, and procurement costs for our video cameras, video recorders, smart thermostats and gunshot detection sensors, which we purchase from an original equipment manufacturer, and other devices. Cost of hardware and other revenue also includes material costs and labor cost related to our employees who manufacture hardware for oursuite of IoT solutions. Additionally, our cost of hardware and other revenue includes royalty costs in connection with technology licensed from third-party providers.

Previous wording

In April 2025, the U.S. government announced a baseline tariff of 10% on all products imported into the United States (with certain limited exceptions) and additional individualized tariffs based on country of origin at different rates per country. Certain of these tariffs have been subsequently paused or modified, and the situation remains fluid. The United States and/or countries into which we import products may, in the future, adjust and/or impose new quotas, duties, tariffs or reciprocal tariffs or other restrictions. A significant portion of our hardware is produced outside the United States, including in Vietnam, Thailand and Taiwan. The U.S. government has announced several tariff framework agreements, and when the terms of such agreements are finalized, we will assess their potential impact on our business. The ultimate impact of any tariffs will depend on various factors, including how long such tariffs remain in place, the ultimate levels of such tariffs and how other countries respond to the U.S. tariffs. During the second quarter of 2025, we passed through most of the cost of the baseline tariffs to our customers consistent with our contractual rights. Our hardware revenue margins are expected to decline slightly in the future because a component of our hardware revenue now incorporates a pass-through cost. If tariffs are modified beyond the baseline tariff of 10% or are expanded to apply to more of our products, such actions may increase our cost of hardware revenue and reduce our hardware revenue margins further. We continue to closely monitor changes in tariff policy and retain flexibility in response.

Current wording

In April 2025, the U.S. government announced a baseline tariff of 10% on all products imported into the United States (with certain limited exceptions) and additional individualized tariffs based on country of origin at different rates per country. Certain of these tariffs have been subsequently paused or modified, and the situation remains fluid. The United States and/or countries into which we import products have adjusted and/or imposed and may, in the future, adjust and/or impose new quotas, duties, tariffs or reciprocal tariffs or other restrictions. A significant portion of our hardware is produced outside the United States, including in Vietnam, Thailand and Taiwan. The U.S. government has since announced several tariff framework agreements, including with countries where a significant portion of our hardware is produced. While we began passing through the costs of baseline tariffs to our customers in the second quarter of 2025, we have not yet adjusted those pass-throughs to account for certain newer tariffs at higher rates. We do not currently anticipate making further adjustments to these pass-throughs for the remainder of 2025. As a result, we have begun to absorb these additional costs, which we expect will negatively impact our hardware revenue margins. The ultimate impact of any tariffs will depend on various factors, including how long such tariffs remain in place, the ultimate levels of such tariffs, the outcome of pending legal challenges to their validity, how other countries respond to the U.S. tariffs, and the specific timing of when we implement higher pass-through costs.

Previous wording

Our operating expenses consist of sales and marketing, general and administrative, research and development and amortization and depreciation expenses. Salaries, bonuses, stock-based compensation, benefits and other personnel related costs are the most significant components of each of these expense categories, excluding amortization and depreciation. We include stock-based compensation expense in connection with the grant of restricted stock units and other forms of equity compensation, including equity compensation with performance conditions, in the applicable operating expense category based on the respective equity award recipient’s function (sales and marketing, general and administrative or research and development). We grew from 2,033 employees as of June 30, 2024 to 2,048 employees as of June 30, 2025, and grew from 2,020 employees as of March 31, 2025. We may continue to hire new employees to support the projected future growth of our business.

Current wording

Our operating expenses consist of sales and marketing, general and administrative, research and development and amortization and depreciation expenses. Salaries, bonuses, stock-based compensation, benefits and other personnel related costs are the most significant components of each of these expense categories, excluding amortization and depreciation. We include stock-based compensation expense in connection with the grant of restricted stock units and other forms of equity compensation, including equity compensation with performance conditions, in the applicable operating expense category based on the respective equity award recipient’s function (sales and marketing, general and administrative or research and development). We grew from 2,055 employees as of September 30, 2024 to 2,075 employees as of September 30, 2025, and grew from 2,048 employees as of June 30, 2025. We may continue to hire new employees to support the projected future growth of our business.

Previous wording

The number of employees in sales and marketing functions increased from 576 as of June 30, 2024 to 599 as of June 30, 2025 and increased from 579 as of March 31, 2025. We expect to continue to invest in our sales and marketing activities to expand our business both domestically and internationally and we expect to increase our marketing expense in 2025 as compared to 2024. We may increase the size of our sales force and our service provider partner support team to provide additional support to our existing service provider partner base to drive their productivity in selling our solutions as well as to enroll new service provider partners in North America and in international markets.

Current wording

The number of employees in sales and marketing functions increased from 583 as of September 30, 2024 to 614 as of September 30, 2025 and increased from 599 as of June 30, 2025. We expect to continue to invest in our sales and marketing activities to expand our business both domestically and internationally and we expect to increase our marketing expense in 2025 as compared to 2024. We may increase the size of our sales force and our service provider partner support team to provide additional support to our existing service provider partner base to drive their productivity in selling our solutions as well as to enroll new service provider partners in North America and in international markets.

Previous wording

The number of employees in general and administrative functions increased from 223 as of June 30, 2024 to 238 as of June 30, 2025 and increased from 236 as of March 31, 2025. Excluding intellectual property litigation and acquisition-related expense, we expect general and administrative costs to increase prospectively as our business grows. This includes cost increases related to human resources, accounting, finance, and legal personnel, additional external legal, audit fees and other expenses associated with regulations governing public companies. While somewhat unpredictable, we also expect to continue to incur costs related to litigation involving intellectual property. See the section of this Quarterly Report titled "Legal Proceedings" for additional information regarding litigation matters.

Current wording

The number of employees in general and administrative functions decreased from 232 as of September 30, 2024 to 231 as of September 30, 2025 and decreased from 238 as of June 30, 2025. Excluding intellectual property litigation and acquisition-related expense, we expect general and administrative costs to increase prospectively as our business grows. This includes cost increases related to human resources, accounting, finance, and legal personnel, additional external legal, audit fees and other expenses associated with regulations governing public companies. While somewhat unpredictable, we also expect to continue to incur costs related to litigation involving intellectual property. See the section of this Quarterly Report titled "Legal Proceedings" for additional information regarding litigation matters.

Previous wording

The number of employees in research and development functions decreased from 1,155 as of June 30, 2024 to 1,136 as of June 30, 2025 and increased from 1,129 as of March 31, 2025. Our research and development efforts are focused on innovating new features and enhancing the functionality of our platforms and the solutions we offer to our service provider partners and subscribers. We will also continue to invest in efforts to extend our platforms to adjacent markets and internationally to maintain our leadership position in the development of intelligently connected property technology, and continued enhancement of our Partner Services Platform, a comprehensive suite of enterprise-grade business management solutions for our service provider partners.

Current wording

The number of employees in research and development functions decreased from 1,164 as of September 30, 2024 to 1,154 as of September 30, 2025 and increased from 1,136 as of June 30, 2025. Our research and development efforts are focused on innovating new features and enhancing the functionality of our platforms and the solutions we offer to our service provider partners and subscribers. We will also continue to invest in efforts to extend our platforms to adjacent markets and internationally to maintain our leadership position in the development of intelligently connected property technology, and continued enhancement of our Partner Services Platform, a comprehensive suite of enterprise-grade business management solutions for our service provider partners.

Previous wording

Other expense, net primarily consists of non-operating and miscellaneous expense and income, including the impacts of fluctuations in foreign currency exchange rates.

Current wording

Other income / (expense), net primarily consists of non-operating and miscellaneous expense and income, including the impacts of fluctuations in foreign currency exchange rates.

Previous wording

We are subject to U.S. federal, state and local income taxes as well as foreign income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. As a result, we recognize tax liabilities based on estimates of whether additional taxes will be due. For the three and six months ended June 30, 2025, our effective tax rate was below the 21.0% statutory rate primarily due to 2025 research and development tax credits claimed, the foreign derived intangible income deduction and a favorable true-up adjustment of our 2024 income tax provision estimate associated with research and development tax credits, partially offset by the impact of state taxes, foreign withholding taxes and other nondeductible expenses. We recognize stock-based compensation tax shortfalls and excess tax windfall benefits on a discrete basis during the quarter in which they occur, and we anticipate our effective tax rate will vary from quarter to quarter depending on our stock price as well as the vesting and exercises of various forms of equity compensation under our equity incentive plans each period, including restricted stock units and stock options.

Current wording

We are subject to U.S. federal, state and local income taxes as well as foreign income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. As a result, we recognize tax liabilities based on estimates of whether additional taxes will be due. For the three months ended September 30, 2025, our effective tax rate was above the 21.0% statutory rate primarily due to the impact of state taxes, foreign withholding taxes, a reduced foreign derived intangible income deduction and other nondeductible expenses, partially offset by the impact of 2025 research and development tax credits claimed. For the nine months ended September 30, 2025, our effective tax rate was above the 21.0% statutory rate primarily due to the impact of state taxes, foreign withholding taxes and other nondeductible expenses, partially offset by the impact of 2025 research and development tax credits claimed and a favorable true-up adjustment of our 2024 income tax provision estimate associated with research and development tax credits. We recognize stock-based compensation tax shortfalls and excess tax windfall benefits on a discrete basis during the quarter in which they occur, and we anticipate our effective tax rate will vary from quarter to quarter depending on our stock price as well as the vesting and exercises of various forms of equity compensation under our equity incentive plans each period, including restricted stock units and stock options.

Previous wording

Comparison of the Three and Six Months Ended June 30, 2025 to June 30, 2024

Current wording

Comparison of the Three and Nine Months Ended September 30, 2025 to September 30, 2024

Previous wording

The following tables in this section set forth our selected condensed consolidated statements of operations (in thousands), data for the percentage change and data as a percentage of revenue for the three and six months ended June 30, 2025 and June 30, 2024.

Current wording

The following tables in this section set forth our selected condensed consolidated statements of operations (in thousands), data for the percentage change and data as a percentage of revenue for the three and nine months ended September 30, 2025 and September 30, 2024.

Previous wording

The $20.5 million increase in total revenue for the three months ended June 30, 2025 as compared to the same period in the prior year was primarily the result of a $14.1 million, or 9%, increase in our SaaS and license revenue, and a $6.4 million, or 8%, increase in our hardware and other revenue. Our software license revenue included within SaaS and license revenue decreased $0.7 million to $4.5 million during the three months ended June 30, 2025 as compared to $5.2 million during the same period in the prior year primarily due to the result of the continuing transition of customers from non-hosted software to our cloud-based hosted platform. The SaaS and license revenue for the Alarm.com segment increased $10.2 million for the three months ended June 30, 2025 as compared to the same period in the prior year primarily due to growth in our subscriber base, including the revenue impact from subscribers we added in 2024. The SaaS and license revenue for our Other segment increased $3.9 million for the three months ended June 30, 2025 as compared to the same period in the prior year primarily due to an increase in sales of our energy management and demand response solutions as well as our property management solution. The increase in hardware and other revenue for the three months ended June 30, 2025 as compared to the same period in the prior year was primarily from the $5.6 million increase in hardware and other revenue, net of intersegment eliminations, in the Alarm.com segment arising from an increase in the volume of video cameras sold. Hardware and other revenue, net of intersegment eliminations, in our Other segment increased $0.8 million for the three months ended June 30, 2025 as compared to the same period in the prior year primarily due to increased sales related to our property management solution.

Current wording

The $15.9 million increase in total revenue for the three months ended September 30, 2025 as compared to the same period in the prior year was primarily the result of a $16.1 million, or 10%, increase in our SaaS and license revenue, partially offset by a $0.2 million decrease in our hardware and other revenue. Our software license revenue included within SaaS and license revenue decreased $0.7 million to $4.3 million during the three months ended September 30, 2025 as compared to $5.0 million during the same period in the prior year primarily due to the result of the continuing transition of customers from non-hosted software to our cloud-based hosted platform. The SaaS and license revenue for the Alarm.com segment increased $12.0 million for the three months ended September 30, 2025 as compared to the same period in the prior year primarily due to growth in our subscriber base, including the revenue impact from subscribers we added in 2024. The SaaS and license revenue for our Other segment increased $4.1 million for the three months ended September 30, 2025 as compared to the same period in the prior year primarily due to an increase in sales of our energy management and demand response solutions as well as our property management solution. The decrease in hardware and other revenue for the three months ended September 30, 2025 as compared to the same period in the prior year was primarily from the $2.3 million decrease in hardware and other revenue, net of intersegment eliminations, in the Alarm.com segment arising from a decrease in the volume of video cameras and thermostats sold, partially offset by price increases we have implemented on certain products to cover a portion of our increases in costs. Hardware and other revenue, net of intersegment eliminations, in our Other segment increased $2.1 million for the three months ended September 30, 2025 as compared to the same period in the prior year primarily due to sales of energy credits related to the acquisition of BTR as well as increased sales related to our property management solution.

Previous wording

The $36.0 million increase in total revenue for the six months ended June 30, 2025 as compared to the same period in the prior year was primarily the result of a $27.5 million, or 9%, increase in our SaaS and license revenue and a $8.5 million, or 6%, increase in our hardware and other revenue. Our software license revenue included within SaaS and license revenue decreased $1.2 million to $9.2 million during the six months ended June 30, 2025, as compared to $10.4 million during the same period in the prior year primarily due to the result of the continuing transition of customers from non-hosted software to our cloud-based hosted platform. The SaaS and license revenue for the Alarm.com segment increased $19.9 million for the six months ended June 30, 2025 as compared to the same period in the prior year primarily due to growth in our subscriber base, including the revenue impact from subscribers we added in 2024. The SaaS and license revenue for our Other segment increased $7.6 million for the six months ended June 30, 2025 as compared to the same period in the prior year primarily due to an increase in sales of our energy management and demand response solutions as well as our property management solution. The increase in hardware and other revenue for the six months ended June 30, 2025 as compared to the same period in the prior year was primarily from the $7.3 million increase in hardware and other revenue, net of intersegment eliminations, in the Alarm.com segment due to an increase in the volume of video cameras sold. Hardware and other revenue, net of intersegment eliminations, in our Other segment increased $1.2 million for the six months ended June 30, 2025 as compared to the same period in the prior year, primarily due to an increase in sales related to our property management solution.

Current wording

The $51.9 million increase in total revenue for the nine months ended September 30, 2025 as compared to the same period in the prior year was primarily the result of a $43.6 million, or 9%, increase in our SaaS and license revenue and a $8.3 million, or 4%, increase in our hardware and other revenue. Our software license revenue included within SaaS and license revenue decreased $1.9 million to $13.5 million during the nine months ended September 30, 2025, as compared to $15.4 million during the same period in the prior year primarily due to the result of the continuing transition of customers from non-hosted software to our cloud-based hosted platform. The SaaS and license revenue for the Alarm.com segment increased $31.9 million for the nine months ended September 30, 2025 as compared to the same period in the prior year primarily due to growth in our subscriber base, including the revenue impact from subscribers we added in 2024. The SaaS and license revenue for our Other segment increased $11.7 million for the nine months ended September 30, 2025 as compared to the same period in the prior year primarily due to an increase in sales of our energy management and demand response solutions as well as our property management solution. The increase in hardware and other revenue for the nine months ended September 30, 2025 as compared to the same period in the prior year was primarily from the $5.0 million increase in hardware and other revenue, net of intersegment eliminations, in the Alarm.com segment due to an increase in the volume of video cameras sold as well as price increases we have implemented on certain products to cover a portion of our increases in costs. Hardware and other revenue, net of intersegment eliminations, in our Other segment increased $3.3 million for the nine months ended September 30, 2025 as compared to the same period in the prior year, primarily due to sales of energy credits related to the acquisition of BTR as well as an increase in sales related to our property management solution.

Previous wording

The $6.2 million increase in cost of revenue for the three months ended June 30, 2025 as compared to the same period in the prior year was the result of a $4.6 million, or 8%, increase in cost of hardware and other revenue, and a $1.6 million, or 7%, increase in cost of SaaS and license revenue. Our cost of software license revenue included within cost of SaaS and license revenue was $0.1 million for each of the three months ended June 30, 2025 and 2024. The cost of hardware and other revenue for the Alarm.com segment increased $4.0 million during the three months ended June 30, 2025 as compared to the same period in the prior year primarily due to an increase in the number of hardware units shipped. The cost of hardware and other revenue for the Other segment increased $0.6 million during the three months ended June 30, 2025 as compared to the same period in the prior year primarily due to an increase in the number of hardware units shipped related to our property management solution. The cost of SaaS and license revenue for the Other segment increased $1.1 million during the three months ended June 30, 2025 as compared to the same period in the prior year primarily due to an increase in sales of our energy management and demand response solutions, which drove a corresponding increase in amounts paid to distributed energy resource providers. The cost of SaaS and license revenue for the Alarm.com segment increased $0.5 million during the three months ended June 30, 2025 as compared to the same period in the prior year primarily due to the growth in our subscriber base, which drove a corresponding increase in amounts paid to wireless network providers.

Current wording

The $2.8 million increase in cost of revenue for the three months ended September 30, 2025 as compared to the same period in the prior year was the result of a $1.7 million, or 3%, increase in cost of hardware and other revenue, and a $1.1 million, or 5%, increase in cost of SaaS and license revenue. Our cost of software license revenue included within cost of SaaS and license revenue was $0.1 million and $0.2 million for the three months ended September 30, 2025 and 2024, respectively. The cost of hardware and other revenue for the Alarm.com segment decreased $0.3 million during the three months ended September 30, 2025 as compared to the same period in the prior year primarily due to a decrease in the number of hardware units shipped. The cost of hardware and other revenue for the Other segment increased $2.0 million during the three months ended September 30, 2025 as compared to the same period in the prior year primarily due to costs associated with sales of energy credits related to the acquisition of BTR and an increase in the number of hardware units shipped related to our property management solution. The cost of SaaS and license revenue for the Other segment increased $0.9 million during the three months ended September 30, 2025 as compared to the same period in the prior year primarily due to an increase in sales of our energy management and demand response solutions, which drove a corresponding increase in amounts paid to distributed energy resource providers. The cost of SaaS and license revenue for the Alarm.com segment increased $0.2 million during the three months ended September 30, 2025 as compared to the same period in the prior year primarily due to the growth in our subscriber base, which drove a corresponding increase in amounts paid to wireless network providers.

Previous wording

Cost of hardware and other revenue as a percentage of hardware and other revenue was 76% for each of the six months ended June 30, 2025 and 2024. Cost of SaaS and license revenue as a percentage of SaaS and license revenue was 14% for each of the six months ended June 30, 2025 and 2024. Cost of software license revenue as a percentage of software license revenue was 2% for the six months ended June 30, 2025 as compared to 3% for the same period in the prior year.

Current wording

Cost of hardware and other revenue as a percentage of hardware and other revenue was 78% for the three months ended September 30, 2025 and 76% for the same period in the prior year. Cost of SaaS and license revenue as a percentage of SaaS and license revenue was 14% and 15% for the three months ended September 30, 2025 and 2024, respectively. Cost of software license revenue as a percentage of software license revenue was 2% for the three months ended September 30, 2025 as compared to 3% for the same period in the prior year.

Previous wording

The $7.9 million increase in cost of revenue for the six months ended June 30, 2025 as compared to the same period in the prior year was the result of a $5.2 million, or 5%, increase in cost of hardware and other revenue, and a $2.7 million, or 6%, increase in cost of SaaS and license revenue. Our cost of software license revenue included within cost of SaaS and license revenue was $0.2 million for the six months ended June 30, 2025 as compared to $0.3 million during the same period in the prior year. The cost of hardware and other revenue for the Alarm.com segment increased $4.3 million during the six months ended June 30, 2025 as compared to the same period in the prior year primarily due to an increase in the number of hardware units shipped. The cost of hardware and other revenue for the Other segment increased $0.9 million during the six months ended June 30, 2025 as compared to the same period in the prior year primarily due to an increase in the number of hardware units shipped related to our property management solution. The cost of SaaS and license revenue for the Other segment increased $1.9 million during the six months ended June 30, 2025 as compared to the same period in the prior year primarily due to an increase in sales of our energy management and demand response solutions, which drove a corresponding increase in amounts paid to distributed energy resource providers. The cost of SaaS and license revenue for the Alarm.com segment increased $0.8 million during the six months ended June 30, 2025 as compared to the same period in the prior year primarily due to the growth in our subscriber base, which drove a corresponding increase in amounts paid to wireless network providers.

Current wording

The $10.7 million increase in cost of revenue for the nine months ended September 30, 2025 as compared to the same period in the prior year was the result of a $6.9 million, or 4%, increase in cost of hardware and other revenue, and a $3.8 million, or 6%, increase in cost of SaaS and license revenue. Our cost of software license revenue included within cost of SaaS and license revenue was $0.3 million for the nine months ended September 30, 2025 as compared to $0.5 million during the same period in the prior year. The cost of hardware and other revenue for the Alarm.com segment increased $4.0 million during the nine months ended September 30, 2025 as compared to the same period in the prior year primarily due to an increase in the number of various hardware units shipped. The cost of hardware and other revenue for the Other segment increased $2.9 million during the nine months ended September 30, 2025 as compared to the same period in the prior year primarily due to costs associated with sales of energy credits related to the acquisition of BTR and an increase in the number of hardware units shipped related to our property management solution. The cost of SaaS and license revenue for the Other segment increased $2.8 million during the nine months ended September 30, 2025 as compared to the same period in the prior year primarily due to an increase in sales of our energy management and demand response solutions, which drove a corresponding increase in amounts paid to distributed energy resource providers. The cost of SaaS and license revenue for the Alarm.com segment increased $1.0 million during the nine months ended September 30, 2025 as compared to the same period in the prior year primarily due to the growth in our subscriber base, which drove a corresponding increase in amounts paid to wireless network providers.

Previous wording

Cost of hardware and other revenue as a percentage of hardware and other revenue was 76% for each of the three months ended June 30, 2025 and 2024. Cost of SaaS and license revenue as a percentage of SaaS and license revenue was 14% for each of the three months ended June 30, 2025 and 2024. Cost of software license revenue as a percentage of software license revenue was 2% for the three months ended June 30, 2025 as compared to 3% for the same period in the prior year.

Current wording

Cost of hardware and other revenue as a percentage of hardware and other revenue was 76% for each of the nine months ended September 30, 2025 and 2024. Cost of SaaS and license revenue as a percentage of SaaS and license revenue was 14% for each of the nine months ended September 30, 2025 and 2024. Cost of software license revenue as a percentage of software license revenue was 2% for the nine months ended September 30, 2025 as compared to 3% for the same period in the prior year.

Previous wording

The $3.3 million increase in sales and marketing expense for the three months ended June 30, 2025 as compared to the same period in the prior year was primarily due to a $1.5 million increase in personnel and related costs for our Alarm.com segment, attributable in part to increases in the headcount for our sales team to support our growth, and a $1.0 million increase in marketing expense for our Alarm.com segment. Personnel and related costs includes salary, benefits, stock-based compensation and travel expenses. Sales and marketing expense from our Other segment increased $0.7 million for the three months ended June 30, 2025 as compared to the same period in the prior year, primarily due to an increase in personnel and related costs, attributable in part to increases in the headcount for our sales team.

Current wording

The $2.5 million increase in sales and marketing expense for the three months ended September 30, 2025 as compared to the same period in the prior year was primarily due to a $0.9 million increase in personnel and related costs for our Alarm.com segment, attributable in part to increases in the headcount for our sales team to support our growth, and a $0.5 million increase in marketing expense for our Alarm.com segment. Personnel and related costs includes salary, benefits, stock-based compensation and travel expenses. Sales and marketing expense from our Other segment increased $0.8 million for the three months ended September 30, 2025 as compared to the same period in the prior year, primarily due to an increase in personnel and related costs, attributable in part to increases in the headcount for our sales team.

Previous wording

The $6.4 million increase in sales and marketing expense for the six months ended June 30, 2025 as compared to the same period in the prior year was primarily due to a $3.0 million increase in personnel and related costs for our Alarm.com segment, attributable in part to increases in the headcount for our sales team to support our growth, and a $1.6 million increase in marketing expense for our Alarm.com segment. Sales and marketing expense from our Other segment increased $1.8 million for the six months ended June 30, 2025, as compared to the same period in the prior year, primarily due to increases in personnel and related costs, attributable in part to increases in the headcount for our sales team. The number of employees in sales and marketing functions increased from 576 as of June 30, 2024 to 599 as of June 30, 2025.

Current wording

The $8.9 million increase in sales and marketing expense for the nine months ended September 30, 2025 as compared to the same period in the prior year was primarily due to a $3.8 million increase in personnel and related costs for our Alarm.com segment, attributable in part to increases in the headcount for our sales team to support our growth, and a $2.1 million increase in marketing expense for our Alarm.com segment. Sales and marketing expense from our Other segment increased $2.6 million for the nine months ended September 30, 2025, as compared to the same period in the prior year, primarily due to increases in personnel and related costs, attributable in part to increases in the headcount for our sales team. The number of employees in sales and marketing functions increased from 583 as of September 30, 2024 to 614 as of September 30, 2025.

Previous wording

The $1.0 million increase in general and administrative expense for the three months ended June 30, 2025 as compared to the same period in the prior year was primarily due to a $1.7 million increase in the provision for credit losses for our Alarm.com segment due in part to the $0.7 million credit loss expense recorded on a loan agreement with a service provider partner during the three months ended June 30, 2025 that did not occur during the same period in the prior year. General and administrative expenses from our Other segment decreased by $0.4 million for the three months ended June 30, 2025 as compared to the same period in the prior year, primarily due to a decrease in the provision for credit losses.

Current wording

The $2.2 million increase in general and administrative expense for the three months ended September 30, 2025 as compared to the same period in the prior year was primarily due to a $1.9 million increase in legal costs related to intellectual property litigation and a $0.3 million increase in rent expense for our Alarm.com segment. General and administrative expenses from our Other segment decreased by $0.1 million for the three months ended September 30, 2025 as compared to the same period in the prior year, primarily due to a decrease in personnel and related costs.

Previous wording

The $1.3 million decrease in general and administrative expense for the six months ended June 30, 2025 as compared to the same period in the prior year was primarily due to a $2.5 million decrease in the provision for credit losses for our Alarm.com segment primarily related to credit loss expense recorded during the six months ended June 30, 2024 related to a loan we previously provided to an affiliated entity of one of our distribution partners that did not occur during the six months ended June 30, 2025. This decrease in general and administrative expense was partially offset by a $0.7 million increase in personnel and related costs for our Alarm.com segment due in part to increases in the headcount to support our operational growth. General and administrative expenses from our Other segment increased by $0.7 million for the six months ended June 30, 2025 as compared to the same period in the prior year, primarily due to an increase in legal costs. The number of employees in general and administrative functions increased from 223 as of June 30, 2024 to 238 as of June 30, 2025.

Current wording

The $0.9 million increase in general and administrative expense for the nine months ended September 30, 2025 as compared to the same period in the prior year was primarily due to a $2.4 million increase in our expenses for external consultants and a $1.4 million increase in personnel and related costs for our Alarm.com segment. These increases in general and administrative expense are partially offset by a $2.9 million decrease in the provision for credit losses for our Alarm.com segment primarily related to credit loss expense recorded during the nine months ended September 30, 2024 related to a loan we previously provided to an affiliated entity of one of our distribution partners that did not occur during the nine months ended September 30, 2025 as well as a decrease of $0.8 million in recruiting costs for our Alarm.com segment. General and administrative expenses from our Other segment increased by $0.7 million for the nine months ended September 30, 2025 as compared to the same period in the prior year, primarily due to an increase in legal costs. The number of employees in general and administrative functions decreased from 232 as of September 30, 2024 to 231 as of September 30, 2025.

Previous wording

The $3.3 million increase in research and development expense for the three months ended June 30, 2025 as compared to the same period in the prior year was primarily due to a $1.1 million increase in our expenses for external consultants and a $0.5 million increase in expenses for software licenses for our Alarm.com segment. Research and development expense from our Other segment increased by $0.7 million for the three months ended June 30, 2025 as compared to the same period in the prior year, primarily due to an increase in personnel and related costs attributable in part to an increase in headcount of employees in research and development functions.

Current wording

The $4.4 million increase in research and development expense for the three months ended September 30, 2025 as compared to the same period in the prior year was primarily due to a $1.8 million increase in personnel and related costs for our Alarm.com segment, a $1.1 million increase in our expenses for external consultants and a $0.7 million increase in expenses for software licenses for our Alarm.com segment. Research and development expense from our Other segment increased by $0.5 million for the three months ended September 30, 2025 as compared to the same period in the prior year, primarily due to an increase in personnel and related costs attributable in part to an increase in headcount of employees in research and development functions.

Previous wording

The $5.8 million increase in research and development expense for the six months ended June 30, 2025 as compared to the same period in the prior year was primarily due to a $1.8 million increase in our expenses for external consultants, a $1.1 million increase in expenses for software licenses, a $0.4 million increase in rent expense and a $0.3 million increase in personnel and related costs for our Alarm.com segment. Research and development expense from our Other segment increased by $1.2 million for the six months ended June 30, 2025 as compared to the same period in the prior year due to an increase in personnel and related costs. The overall number of employees in research and development functions decreased from 1,155 as of June 30, 2024 to 1,136 as of June 30, 2025.

Current wording

The $10.2 million increase in research and development expense for the nine months ended September 30, 2025 as compared to the same period in the prior year was primarily due to a $3.0 million increase in our expenses for external consultants, a $2.1 million increase in personnel and related costs, a $1.8 million increase in expenses for software licenses and a $0.5 million increase in rent expense for our Alarm.com segment. Research and development expense from our Other segment increased by $1.8 million for the nine months ended September 30, 2025 as compared to the same period in the prior year due to an increase in personnel and related costs. The overall number of employees in research and development functions decreased from 1,164 as of September 30, 2024 to 1,154 as of September 30, 2025.

Previous wording

Amortization and depreciation increased $0.5 million and $0.1 million for the three and six months ended June 30, 2025, respectively, as compared to the same periods in the prior year, primarily due to an increase in depreciation expense related to property and equipment as well as intangible assets that were acquired in connection with the purchase of 81% of the issued and outstanding shares of capital stock of CHeKT, Inc., or CHeKT, on February 10, 2025.

Current wording

Amortization and depreciation increased $0.2 million and $0.3 million for the three and nine months ended September 30, 2025, respectively, as compared to the same periods in the prior year, primarily due to changes in depreciation expense related to property and equipment as well as intangible assets that were acquired in connection with the purchase of 81% of the issued and outstanding shares of capital stock of CHeKT, Inc., or CHeKT, on February 10, 2025, and the purchase of 100% of the issued and outstanding shares of capital stock of BTR.

Previous wording

Interest expense increased $2.4 million and $5.9 million for the three and six months ended June 30, 2025, respectively, as compared to the same periods in the prior year, primarily due to the interest expense and amortization of the debt issuance costs related to the 2029 Notes.

Current wording

Interest expense increased by $5.9 million for the nine months ended September 30, 2025 as compared to the same period in the prior year, primarily due to the interest expense and amortization of the debt issuance costs related to the 2029 Notes.

Previous wording

Interest income increased $1.0 million and $4.8 million for the three and six months ended June 30, 2025, respectively, as compared to the same periods in the prior year, primarily due to an increase in interest income earned on cash and cash equivalents from higher amounts of cash and cash equivalents during the six months ended June 30, 2025 as compared to the same period in the prior year.

Current wording

Interest income decreased by $3.1 million for the three months ended September 30, 2025, as compared to the same period in the prior year, primarily due to a decrease in interest income earned on cash and cash equivalents from lower average interest rates and lower amounts of cash and cash equivalents during the three months ended September 30, 2025, as compared to the same period in the prior year. Interest income increased $1.7 million for the nine months ended September 30, 2025, as compared to the same period in the prior year, primarily due to an increase in interest income earned on cash and cash equivalents from higher amounts of cash and cash equivalents during the nine months ended September 30, 2025 as compared to the same period in the prior year.

Previous wording

Other expense, net decreased $1.1 million for the three months ended June 30, 2025 as compared to the same period in the prior year, primarily due to a $1.9 million gain on fluctuations in foreign currency exchange rates and a $0.5 million reduction in expenses related to a program to help our service providers resell our solutions and hardware to our subscribers. These decreases in other expense, net were partially offset by a $1.5 million unrealized loss on equity securities during the three months ended June 30, 2025, which did not occur during the three months ended June 30, 2024. Other expense, net increased $1.3 million for the six months ended June 30, 2025 as compared to the same period in the prior year, primarily due to a $3.8 million unrealized loss on equity securities during the six months ended June 30, 2025, which did not occur during the six months ended June 30, 2024. This increase in other expense, net was partially offset by a $1.6 million gain on fluctuations in foreign currency exchange rates and a $0.8 million reduction in expenses related to a program to help our service providers resell our solutions and hardware to our subscribers.

Current wording

Other income / (expense), net increased $3.6 million for the three months ended September 30, 2025 as compared to the same period in the prior year, primarily due to a $3.8 million increase in unrealized gain on equity securities. Other income / (expense), net increased $2.4 million for the nine months ended September 30, 2025 as compared to the same period in the prior year, primarily due to a $1.3 million gain on fluctuations in foreign currency exchange rates and a $1.0 million reduction in expenses related to a program to help our service providers resell our solutions and hardware to our subscribers.