Alarm.com Q3 2026 Earnings: Revenue Rises While GAAP Profit Slips

Alarm.com (NASDAQ: ALRM) reported Q3 2026 total revenue of $279.4 million, up 9.0% from $256.4 million a year earlier, while GAAP diluted EPS attributable to common stockholders rose to $0.66 from $0.65. SaaS and license revenue also grew 9.0%, and adjusted EBITDA increased about 19.3%, but GAAP net income slipped as lower non-operating income offset higher operating profit. The company raised its full-year SaaS and license revenue and adjusted EBITDA outlook.

Core Financial Results

Both major revenue streams advanced at roughly the same pace during the quarter ended September 30, 2026. Consolidated gross profit increased about 10.6%, slightly faster than revenue, lifting gross margin by approximately one percentage point.

Operating income grew about 18.5% as total operating expenses increased more slowly than gross profit. That improvement did not fully reach the GAAP bottom line, however, with net income declining about 2.3% year over year.

Adjusted EBITDA and adjusted EPS are non-GAAP measures. Alarm.com revised its definition of certain non-GAAP metrics in Q1 2026, and the prior-year figures were updated to conform to the current presentation.

Business and Revenue Performance

SaaS and license revenue increased 9.0% to $191.2 million, accounting for approximately 68% of total revenue. Hardware and other revenue rose about 8.9% to $88.3 million, meaning growth was relatively balanced between the two reported revenue categories.

The margin trends were less uniform. SaaS and license cost of revenue increased about 21.5%, faster than the corresponding revenue growth, reducing the category’s calculated gross margin from approximately 86.2% to 84.6%. By contrast, hardware and other cost of revenue was nearly unchanged despite higher sales, lifting that category’s calculated gross margin from about 21.8% to 28.4%. These cost lines exclude amortization and depreciation.

Alarm.com also acquired CellGate, which provides cellular gate access control and video intercom products. The company expects the acquisition to add a growing recurring-revenue business and expand its distribution relationships, although it did not quantify CellGate’s Q3 contribution. New video doorbells, indoor cameras and AI-generated video clip summaries also expanded the product portfolio, but no related revenue figures were disclosed.

Higher Operating Profit Did Not Translate Into GAAP Net Income Growth

Operating income rose by $6.8 million year over year, reflecting the combination of higher revenue and improved consolidated gross margin. Below the operating line, interest income fell to $4.9 million from $11.3 million, while other income declined to $1.5 million from $3.5 million. As a result, income before taxes decreased slightly to $46.7 million despite the operating improvement.

A lower tax provision provided an offset, but the equity-method result shifted from $2.8 million of income to a $0.5 million loss. The combined effect left GAAP net income at $34.3 million, down from $35.1 million, even as adjusted earnings and operating income increased.

Cash Flow and Balance Sheet

For the nine months ended September 30—not Q3 alone—operating cash flow increased to $167.6 million from $117.4 million. Non-GAAP free cash flow, defined as operating cash flow less property and equipment purchases, rose to $156.3 million from $102.0 million.

Cash and cash equivalents declined to $534.7 million from $960.6 million at the end of 2025. Alarm.com attributed the decrease primarily to the January 2026 repayment and full settlement of $500.0 million in 0% convertible senior notes. The balance sheet still carried $491.8 million of noncurrent convertible senior notes as of September 30.

Financial Guidance

Alarm.com introduced a Q4 SaaS and license revenue outlook and increased its full-year 2026 guidance. The midpoint of the new full-year SaaS and license revenue range is $756.2 million, $12.2 million above the midpoint of the guidance issued in February, implying an earlier midpoint of approximately $744.0 million.

The adjusted earnings outlook assumes a 21.0% tax rate and 56.3 million weighted average diluted shares outstanding.

Recent Insider Transactions

The provided insider transaction data shows 74,554 shares purchased and 87,293 shares sold across 20 transactions during the reported six-month period, resulting in net sales of 12,739 shares. The latest listed activity included five direct sales, a derivative-security exercise conversion and a stock gift.

Stock gifts, stock awards and derivative conversions are not equivalent to open-market purchases or sales.

Risks Investors Should Monitor

• SaaS margin pressure: SaaS and license cost of revenue grew substantially faster than the related revenue, reducing the category’s calculated gross margin despite continued top-line growth.
• Dependence on non-operating income: Lower interest and other income prevented higher operating profit from producing GAAP net income growth. The reduction in cash following the note repayment could continue to affect interest income.
• Hardware cost exposure: Hardware gross margin improved in Q3, but Alarm.com specifically identified tariffs, trade policies and supply-chain disruption as factors that could raise hardware costs and pressure margins.
• Execution against the raised outlook: The full-year guidance depends on Q4 SaaS and license revenue reaching $194.6 million to $194.8 million. The expected financial contribution from CellGate was not quantified.

Summary

Alarm.com produced 9.0% revenue growth and higher operating and adjusted earnings in Q3 2026, with improved hardware economics lifting consolidated gross margin. Lower interest and other income, together with a less favorable equity-method result, kept GAAP net income slightly below the prior-year level. The main follow-up points are whether SaaS margins stabilize, hardware profitability holds and the company delivers the Q4 revenue required by its raised full-year outlook.