Alarm.com combines 95% retention, 87%–88% core SaaS margins, and commercial-energy optionality with an ADT overhang that creates an attractive five-year asymmetric valuation.
Overview
Alarm.com is a cloud-based, professional-grade platform for connected residential and commercial properties, combining security, video, access, automation, energy management, and wellness through a unified application. Its B2B2C model reaches customers through more than 9,000 independent dealers, while recurring SaaS and licensing revenue represents approximately 68% of sales. **The core economic asset is a high-retention subscription base:** revenue retention remains around 95%, core SaaS gross margins are 87%–88%, and the company processes data from more than 170 million connected devices. Q2 2026 total revenue rose 9.2% to $277.7 million, SaaS and license revenue increased 11.1% to $188.8 million, Adjusted EBITDA rose 15.7% to $57.7 million, and adjusted EPS of $0.77 beat consensus by 18.5%. Management raised FY2026 guidance to $1.0790–$1.0894 billion of revenue and $2.92–$2.94 adjusted EPS, while targeting a 21% Adjusted EBITDA margin exiting FY2027. **The valuation case rests on commercial fire, EnergyHub, AI video, and international optionality offsetting ADT migration and housing weakness.** At 18.4x forward P/E, the report views the stock as below its $99.56 probability-weighted five-year value, with a near-term consensus target of $65.