Alarm.com Holdings, Inc.ALRM

Alarm.com Holdings, Inc. Earnings Per Share Disclosure

10-KFiled Feb 19, 20262 min read
Earnings Per Share
Basic and Diluted Earnings Per Share

The components of basic and diluted earnings per share are as follows (in thousands, except share and per share amounts):
 Year Ended December 31,
Numerator: 202520242023
Net income$131,628 $122,513 $80,340 
Net loss attributable to redeemable noncontrolling interests946 1,603 703 
Net income attributable to common stockholders - basic (A)132,574 124,116 81,043 
Add back total interest expense, net of tax, attributable to convertible senior notes
12,098 8,573 2,367 
Net income attributable to common stockholders - diluted (B)
$144,672 $132,689 $83,410 
Denominator:
Weighted average common shares outstanding — basic (C)49,795,191 49,641,763 49,818,448 
Dilutive effect of convertible senior notes, stock options and restricted stock units9,128,624 8,351,256 4,806,986 
Weighted average common shares outstanding — diluted (D)58,923,815 57,993,019 54,625,434 
Net income attributable to common stockholders per share:
Basic (A/C)$2.66 $2.50 $1.63 
Diluted (B/D)$2.46 $2.29 $1.53 

The following securities have been excluded from the calculation of diluted weighted average common shares outstanding as the inclusion of these securities would have an anti-dilutive effect:
 Year Ended December 31,
 202520242023
Stock options774,004 579,678 626,976 
Restricted stock units11,300 1,700 255,325 

Our redeemable noncontrolling interests relate to our 89% equity ownership interest in OpenEye, our 99% equity ownership interest in Noonlight and our 81% equity ownership interest in CHeKT. See Note 2 for details on the put options and call options contained in the OpenEye, Noonlight and CHeKT stockholder agreements.
We use the treasury stock method when calculating the dilutive impact of the stock options and restricted stock units on net income per share. We use the if-converted method when calculating the dilutive impact of the 2026 Notes and 2029 Notes on net income per share. On or after August 15, 2025, we must pay cash to satisfy the principal portion of our conversion obligation and must deliver shares to satisfy any excess conversion value on the 2026 Notes. As a result, we included 2,103,317 shares related to the 2026 Notes and 5,728,550 shares related to the 2029 Notes within the weighted average shares outstanding when calculating the diluted net income per share for the year ended December 31, 2025. We included 3,396,950 and 3,365,132 shares related to the 2026 and 2029 Notes, respectively, within the weighted averages shares outstanding when calculating the diluted net income per share for the year ended December 31, 2024. We included 3,396,950 shares related to the 2026 Notes within the weighted averages shares outstanding when calculating the diluted net income per share for the year ended December 31, 2023. Additionally, we included $12.1 million, $8.6 million and $2.4 million of interest expense and debt issuance cost amortization, net of tax, within the numerator of the diluted net income per share for the years ended December 31, 2025, 2024 and 2023, respectively.

Historical Timeline

Fiscal YearFiled
2025Feb 19, 2026Showing above
2024Feb 20, 2025

About Earnings Per Share Disclosures

The earnings per share disclosure breaks down the calculation from net income to both basic and diluted EPS, revealing the full impact of a company's capital structure on per-share economics. The reconciliation between basic and diluted share counts exposes how many stock options, RSUs, convertible securities, and warrants are potentially dilutive to existing shareholders.

Key signals: a widening gap between basic and diluted shares indicates growing dilution from equity compensation or convertible instruments. Anti-dilutive securities excluded from the diluted calculation deserve attention — they represent latent dilution that will materialize if the stock price rises. Watch for the effect of share buybacks on per-share metrics: EPS growth driven primarily by repurchases rather than income growth signals weakening fundamentals. Compare year-over-year changes in the diluted share count against equity compensation expense to assess whether management is effectively managing dilution.

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