Alarm.com Holdings, Inc. (NASDAQ: ALRM)

Sector: Technology Industry: Software - Application CIK: 0001459200
Market Cap 2.59 Bn
P/B 3.13
P/E 20.21
P/S 2.61
ROIC (Qtr) 4.82
Div Yield % 0.00
Rev 1y % (Qtr) 6.61
Total Debt (Qtr) 1.07 Bn
Debt/Equity (Qtr) 1.29

About

Alarm.com Holdings, Inc. (ALRM) is a prominent player in the realm of the Internet of Things (IoT), specifically for intelligently connected properties. The company's offerings encompass a broad spectrum of solutions designed to cater to the residential, multi-family, small business, and enterprise commercial markets. These solutions are centered around interactive security, video monitoring, intelligent automation, and energy management, all working in unison to make both residential and commercial properties safer, smarter, and more efficient. Alarm.com's...

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Price action

Investment thesis

Bull case

  • Healthy cash reserves of 1.07B provide 2.09x coverage of short-term debt 509.27M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 173.66M provides exceptional 10.03x coverage of interest expenses 17.31M, showing strong debt service capability.
  • Robust free cash flow of 154.43M exceeds capital expenditure of 19.24M by 8.03x, indicating strong organic growth funding capability.
  • Tangible assets of 1.87B provide exceptional 66.90x coverage of deferred revenue 27.96M, showing strong service capability backing.
  • Operating cash flow of 173.66M provides strong 6.21x coverage of deferred revenue 27.96M, indicating service delivery capability.

Bear case

  • Operating cash flow of 173.66M barely covers its investment activities of (258.13M), with a coverage ratio of -0.67, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (258.13M) provide weak support for R&D spending of 266.05M, which is -0.97x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Cash reserves of 1.07B provide limited coverage of acquisition spending of (213.30M), which is -5x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • The company's operating cash flow of 173.66M shows concerning coverage of stock compensation expenses of 36.18M, with a 4.80 ratio indicating potential earnings quality issues.
  • Long-term investments of 197.70M represent a high 1.61x of fixed assets 122.95M, indicating potential overexposure to financial assets versus operational capabilities.

Segments Breakdown of Revenue (2024)

Segments Breakdown of Revenue (2024)

Peer comparison

Companies in the Software - Application
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 SAP Sap Se 288.31 Bn 34.60 6.72 10.73 Bn
2 CRM Salesforce, Inc. 248.32 Bn 34.38 6.16 11.14 Bn
3 SHOP Shopify Inc. 212.27 Bn 119.19 19.85 1.12 Bn
4 INTU Intuit Inc. 180.73 Bn 43.89 9.30 6.78 Bn
5 UBER Uber Technologies, Inc 178.38 Bn 10.72 3.60 12.19 Bn
6 NOW ServiceNow, Inc. 146.98 Bn 84.91 11.60 2.40 Bn
7 ADBE Adobe Inc. 144.48 Bn 20.77 6.23 6.64 Bn
8 ADP Automatic Data Processing Inc 108.20 Bn 26.16 5.18 9.77 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.24 2.65
EV to Cash from Ops. EV/CFO 15.13 13.37
EV to Debt EV to Debt 2.46 57.69
EV to EBIT EV/EBIT 14.41 19.12
EV to EBITDA EV/EBITDA 15.08 15.00
EV to Free Cash Flow [EV/FCF] EV/FCF 17.02 14.69
EV to Market Cap EV to Market Cap 1.01 -92.28
EV to Revenue EV/Rev 2.65 4.60
Price to Book Value [P/B] P/B 3.13 4.26
Price to Earnings [P/E] P/E 20.21 -136.90
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.00 -3.95
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 4.25
Dividend per Basic Share Div per Share (Qtr) 0.00 0.15
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 2.52
Interest Coverage Int. cover (Qtr) 10.54 -52.32
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -65.98 -259.78
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -8.89 9,763.58
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 1.61
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 7.30 -263.15
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 19.63 56.46
EBIT Growth (1y) % EBIT 1y % (Qtr) 20.33 -225.15
EBT Growth (1y) % EBT 1y % (Qtr) 14.90 -86.10
EPS Growth (1y) % EPS 1y % (Qtr) 2.39 123.84
FCF Growth (1y) % FCF 1y % (Qtr) -13.46 -36.82
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 9.14 95.08
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.47 0.58
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.02
Cash Ratio Cash Ratio (Qtr) 1.63 3.75
Current Ratio Curr Ratio (Qtr) 2.06 8.16
Debt to Equity Ratio Debt/Equity (Qtr) 1.29 0.17
Interest Cover Ratio Int Coverage (Qtr) 10.54 -52.32
Times Interest Earned Times Interest Earned (Qtr) 10.54 -52.32
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 22.90 -100.06
EBIT Margin % EBIT Margin % (Qtr) 18.39 -164.24
EBT Margin % EBT Margin % (Qtr) 16.64 -116.94
Gross Margin % Gross Margin % (Qtr) 66.00 58.20
Net Profit Margin % Net Margin % (Qtr) 12.90 -121.65