Why Alarm.com Holdings Stock Was a Winner Today

Alarm.com Holdings (NASDAQ: ALRM), a company specializing technology-fueled security products and services, unveiled its first-quarter financial results Friday morning, and investors found them the opposite of alarming. On a modest double beat, the market rewarded the company with a slightly over 1% share price gain. That compared favorably to the marginal decline of the bellwether S&P 500 index.

Doing the double-beat dance

Alarm.com's revenue for the quarter increased by 7% year over year to slightly under $239 million, topping the consensus pundit expectation of $237 million and change. Adjusted net income also ticked higher, landing at $38.5 million ($0.54 per share) from the year-ago profit of $34.4 million. On average, analysts were anticipating $0.51 per share for this line item.

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The top-line improvement mainly derived from higher software-as-a-service (SaaS) and license revenue. Management said these combined to bring in almost $164 million during the quarter, for a year-over-year increase of 9%.

The company had a busy first quarter, introducing several new offerings to the market. One was a competitively priced indoor security camera, another was its AI Deterrence technology, which as the name implies uses artificial intelligence (AI) to identify and engage suspected intruders.

Decent improvements

In its earnings release, the company provided guidance for both its current (second) quarter, and the entirety of 2025. For the latter period, its total revenue is forecast at $975.8 million to $991.2 million, while adjusted, per-share net income should amount to $2.32 to $2.33. The average analyst top-line estimate is $979 million, and for adjusted profitability it is $2.27.

Full-year 2024 revenue was slightly under $40 million, and adjusted net income was $2.28 per share.

Alarm.com is doing a decent job staying on the cutting edge of its industry, although I don't consider this market to be a potentially high-growth area. I think the cautiously optimistic bump in price Friday was an appropriate reaction to its first-quarter performance, and to its potential.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Alarm.com. The Motley Fool has a disclosure policy.