The Platform for the Connected Home and Business. February 2018

The Platform for the Connected Home and Business February 2018 1 Safe harbor statement Forward-Looking Statements This presentation contains forwar...
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The Platform for the Connected Home and Business February 2018

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Safe harbor statement Forward-Looking Statements This presentation contains forward-looking statements that involve risks and uncertainties. All statements other than statements of historical fact contained in this presentation, including, but not limited to, statements regarding our possible or expected future results of operations, our financial position, our business strategy, our product development plans, including product and feature releases and related benefits, our competitive position, addressable markets, industry trends, potential growth opportunities, our ability to successfully expand in existing markets including internationally, our ability to attract new subscribers, development and growth in our partner ecosystem, and our future financial performance, including our target financial model and expected future revenue, are forward-looking statements. Any such statements are not guarantees of future performance, but are based on our assumptions, expectations and beliefs as of the date of this presentation and are subject to substantial risks, uncertainties, assumptions, and changes in circumstances that may cause our actual results, performance, or achievements to differ materially from those expressed or implied in any forward-looking statement. Investors should not place undue reliance on our forwardlooking statements. For more information about factors that may cause our actual results to differ materially from these forward-looking statements, please refer to the reports we file with the Securities and Exchange Commission (the SEC ) from time to time, including our most recent Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on February 28, 2018, our most recent Quarterly Report on 10-Q for the quarter ended September 30, 2017, filed with the SEC on November 9, 2017 and our subsequent filings with the SEC. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in the forward-looking statements, even if new information becomes available in the future. The information in this presentation on new products, features or functionality is intended to outline our general product direction. The information on new products, features, and functionality is not a commitment, promise or legal obligation to deliver any feature or functionality. The development, release, and timing of any features or functionality described for our products remains at our sole discretion.

Non-GAAP Financial Measures This presentation also contains certain non-GAAP financial measures as defined by the SEC rules. These non-GAAP financial measures are in addition to, and not a substitute for or superior to, measures of financial performance prepared in accordance with GAAP. As required by Regulation G, we have provided a reconciliation of those measures to their most directly comparable GAAP measures, which is available in the Appendix slides to this presentation. Please refer to our November 8, 2017 press release for information as to why we believe these non-GAAP financial measures are useful to investors and others in assessing our operating results. We urge investors not to rely on any single financial measure to evaluate our business.

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Company Overview Market Opportunity

AGENDA

Alarm.com Solution Competitive Advantages Growth Drivers Financial Overview

3

COMPANY OVERVIEW • Founded in 2000 • IPO in June 2015; NASDAQ: ALRM • Go-to-market via 7,000+ service provider partners

• 5.5 million+ subscribers Smart Home and Business Solutions to intelligently protect, monitor and manage properties worldwide

• Connect business acquired in March 2017 • 784 employees

Note: Data as of December 31, 2017 4

Key Investment Highlights Large & Growing Market

SaaS Recurring Revenue Model

Market Leader & Innovator

Strong Growth & Profitable

5

Market Leading Innovation

6

Largest Platform for Intelligently Connected Properties

5.5

+ Million Subscribers

80

50

+ Billion Data Points in the last year alone

+ Millions of Connected Devices

7

This might be the smartest and safest house in Greater Washington

Alarm.com’s Business Intelligence service that helps its dealer partners lower attrition

Alarm.com’s enterprise services support the end-to-end needs of Smart Home Security Dealers.

We are making the video camera smarter

One of the coolest integrations we saw was all the smart home stuff you can control through Alarm.com.

FEATURED IN: 8

MARKET OPPORTUNITY

9

Security: TOP SMART HOME CONSUMER BENEFIT 41%

Personal and family security Energy/resource management

16%

Property loss protection

16%

Indoor convenience

13%

Smart Home Considerations: Who installs, integrates and supports a security-centric smart home system?

Source: Business Insider, 2016

Who can create and manage a tightly controlled ecosystem for these devices to work well together?

How can the data from these devices be leveraged?

10

Home Security Market - 2016 ACCOUNT TYPES (North American households)

SMART HOME SECURITY • Controlled and managed via mobile apps • High subscriber value and engagement

8 million smart home security

14 million traditional security

TRADITIONAL SECURITY • Controlled and managed locally • Limited capabilities and low engagement

Source: Parks Associates

11

Projected Home Security Market in 2021 ACCOUNT TYPES

SMART HOME ADOPTION

(North American households)

DRIVEN BY THE SECURITY CHANNEL

16 million smart home security

10 million

• Nearly two-thirds of smart home devices are attached to a centralized controller provided by a security company

traditional security

Source: Parks Associates

12

Residential Security Projected to Grow Globally

55%

45%

48%

52%

13

ALARM.COM SOLUTION

14

Unified Experience

Intelligent Solutions Security

Access

Video

Energy

Lights

Garage

Water

Internet of Things Ecosystem

Advanced Cloud Platform 15

Interactive security

INTELLIGENT

Energy management

Video monitoring

SOLUTIONS

Intelligent automation 16

Go to Market Strategy Residential ~22 million homes in the US have monitored home security (Parks Associates)

7,000+ Service Provider Partners

Commercial ~4 million commercial buildings in the US are less than 10,000 square feet (EIA)

17

Comprehensive Platform for Our Service Providers Sales & Marketing

Installation & Support

Customer Acquisition

Customer Service

Business Intelligence Retention & Upsell

18

Partner First Analytics Descriptive to Prescriptive Analytics Integrated into Dealer Tools Maximize Customer Engagement and Account Quality

19

COMPETITIVE ADVANTAGES

20

Competitive Advantages DIY, RETAIL PRODUCTS

SMART HOME SECURITY PLATFORMS

Point products

Limited service and functionality

Analytics platform and data-driven services

Basic device integrations

Closed device ecosystems

Open device ecosystem

Difficult to install and maintain

Lack support tools and resources

Trusted service provider network and support services

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GROWTH DRIVERS

22

Compelling growth drivers

Add more subscribers! (Currently 5.5 million+)

Upsell and cross sell existing subscribers (Smart Home Products & Services)

Add New Service Providers!

(Currently 7,000+)

Expand Commercial through existing dealer base

Grow International

Add Verticals Property Mgmt. & Vacation Rental, Demand Response, Wellness, Etc.

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Growth Opportunities

1.4B-1.5B

5.3%

households worldwide

Global smart home penetration

Global Markets

Commercial Services

Property Management

Alarm.com services are available

Energy Management

Targeted future expansion

Source: United Nations Statistical Division

24

Growth Opportunities Global Markets

~4 million target properties in US

High penetration of traditional services

Commercial Services

2015 Property Management

2017 Energy Management

200%

Source: U.S. Energy Information Agency

25

Growth Opportunities

27 million Multi-family units

16 million Single-family rental households

~1 million Vacation rental properties

Global Markets

Commercial Services

High Growth Potential for Untapped Vacation Rental and Property Management Markets

Property Management

Energy Management

Source: National Multifamily Housing Council, Urban Institute, and Wall Street Journal

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Growth Opportunities Global Markets

Commercial Services

Property Management

>4 million smart thermostats sold in 2015

>32 million smart thermostats in 2020

Energy Management

Source: Navigant Research

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FINANCIAL OVERVIEW

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Q4’17 Snapshot – Continued Strong Execution Year-over-Year Growth SaaS & LICENSE REVENUE

ADJUSTED EBITDA (NON-GAAP)

TOTAL REVENUE

GROSS MARGIN

NET INCOME (NON-GAAP)

LTM FREE CASH FLOW

Current data represents results as of fiscal quarter ended December 31, 2017. Free cash flow defined as operating cash flows less Cap Ex. 29

Consistent Revenue Growth ($ in millions)

$103

$87 $68

$56 $236

$47 $41

$55 2012

$83

2013

$111

2014

SaaS and License Revenue

$141

2015

$174

2016

2017

Hardware and Other Revenue 30

Track Record of Profitability (Non-GAAP) ($ in millions) 21%

22% 17%

19% 16%

21%

$72

$49 $34 $28

$28

2013

2014

$21

2012

Note: We define Adjusted EBITDA as net income before interest and other income / (expense), net, provision for income taxes, amortization and depreciation expense, stock-based compensation expense, acquisition-related expense and legal costs incurred in connection with non-ordinary course litigation, particularly costs involved in ongoing intellectual property litigation.

2015

2016

Adj. EBITDA

2017

Adj. EBITDA margin

31

Key Financial Highlights Scale

• • • •

Growing

• Strong compound annual revenue growth • TAM expanding with Smart Home Adoption

Recurring

• High SaaS and license recurring revenue model • SaaS and license revenue renewal rate of 93%

Profitable

• Strong cash flow and profitable • Increased operating leverage as business scales • Favorable unit Economics: CLTV/CAC ratio of 5.8 LTM; payback of S&M in 12 months

Highly scalable platform 5.5 million+ subscribers 80 million+ connected devices 50 billion+ data points processed in 2017

32

APPENDIX

33

Supplemental Financial Data

Alarm.com Holdings, Inc. Supplemental Financial Data | Fiscal Year Ended December 31 | ($ in thousands)

Supplemental Financial Data: SaaS and license revenue Hardware and other revenue Total revenue Cost of SaaS and license revenue Cost of hardware and other revenue Total cost of revenue

$236,283 102,654 338,937

Q1 2016 $40,012 19,031 59,043

Q2 2016 $42,010 22,413 64,423

Q3 2016 $44,630 23,216 67,846

Q4 2016 $46,888 22,906 69,794

Q1 2017 $50,226 23,968 74,194

Q2 2017 $58,928 27,060 85,988

Q3 2017 $61,924 28,038 89,962

Q4 2017 $65,205 23,588 88,793

30,229 69,151

35,610 80,578

6,781 14,335

7,211 17,972

7,787 18,579

8,450 18,265

8,092 18,543

8,500 21,335

9,545 22,288

9,473 18,412

2015

2016

2017

$140,936 67,952 208,888

$173,540 87,566 261,106

25,722 51,652 77,374

99,380

116,188

21,116

25,183

26,366

26,715

26,635

29,835

31,833

27,885

Sales and marketing General and administrative Research and development Amortization and depreciation

32,240 35,473 40,002 5,808

38,980 57,926 44,272 6,490

43,490 55,396 72,755 17,734

8,976 13,129 9,970 1,591

9,851 14,191 10,777 1,613

10,705 14,804 11,477 1,659

9,448 15,802 12,048 1,627

10,314 15,375 14,521 2,864

11,899 13,450 20,062 4,846

10,426 12,974 19,257 5,071

10,851 13,597 18,915 4,953

Total operating expenses

113,523

147,668

189,375

33,666

36,432

38,645

38,925

43,074

50,257

Operating income Interest expense Other income / (expense), net Income before income taxes Provision for income taxes Net income Stock-based compensation expense data: Sales and marketing General and administrative Research and development Total stock-based compensation expense As a percent of revenue: Cost of SaaS and license revenue as a percentage of SaaS and license revenue Cost of hardware and other revenue as a percentage of hardware and other revenue Sales and marketing General and administrative Research and development Amortization and depreciation Total operating expenses Operating income Net income

17,991 (178) (348)

14,058 (190) 513

33,374 (2,199) 1,066

4,261 (41) 111

2,808 (47) 88

2,835 (49) 139

4,154 (53) 175

4,485 (216) 237

47,728

48,316

5,896 (674) 137

10,401 (658) 342

12,592 (651) 350

17,465 5,697 $11,768

14,381 4,227 $10,154

32,241 2,990 $29,251

4,331 1,593 $2,738

2,849 976 $1,873

2,925 358 $2,567

4,276 1,300 $2,976

4,506 543 $3,963

5,359 (4,506) $9,865

10,085 (5,018) $15,103

12,291 11,971 $320

$372 2,486 1,266 $4,124

$536 1,430 2,035 $4,001

$561 2,638 4,214 $7,413

$141 227 484 $852

$151 236 555 $942

$130 444 512 $1,086

$114 523 484 $1,121

$113 569 631 $1,313

$65 755 1,095 $1,915

$181 584 1,141 $1,906

$202 730 1,347 $2,279

18%

17%

15%

17%

17%

17%

18%

16%

14%

15%

15%

76%

79%

78%

75%

80%

80%

80%

77%

79%

79%

78%

15% 17% 19% 3%

15% 22% 17% 2%

13% 16% 21% 5%

15% 22% 17% 3%

15% 22% 17% 3%

16% 22% 17% 2%

14% 23% 17% 2%

14% 21% 20% 4%

14% 16% 23% 6%

12% 14% 21% 6%

12% 15% 21% 6%

54%

57%

56%

57%

57%

57%

56%

58%

58%

53%

54%

9%

5%

10%

7%

4%

4%

6%

6%

7%

12%

14%

6%

4%

9%

5%

3%

4%

4%

5%

11%

17%

0%

34

Investor Data Sheet (1/3) Alarm.com Holdings, Inc. Select Financial Data | Fiscal Year End December 31, | ($ in thousands)

SaaS and license rev enue

$140,936

$173,540

$236,283

Q1 2016 $40,012

Hardware and other rev enue Total revenue

67,952 208,888

87,566 261,106

102,654 338,937

19,031 59,043

22,413 64,423

23,216 67,846

22,906 69,794

23,968 74,194

27,060 85,988

28,038 89,962

23,588 88,793

25,722 51,652

30,229 69,151

35,610 80,578

6,781 14,335

7,211 17,972

7,787 18,579

8,450 18,265

8,092 18,543

8,500 21,335

9,545 22,288

9,473 18,412

77,374

99,380

116,188

21,116

25,183

26,366

26,715

26,635

29,835

31,833

27,885

$11,768 $(0.30)

$10,154 $0.21

$29,251 $0.59

$2,738 $0.06

$1,873 $0.04

$2,567 $0.05

$2,976 $0.06

$3,963 $0.08

$9,865 $0.20

$15,103 $0.31

$320 $0.01

24,108,362

47,875,522

49,153,948

47,303,896

47,523,187

48,319,952

48,025,847

48,758,774

49,000,553

49,259,701

49,341,091

$128,358

$140,634

$96,329

$135,845

$134,164

$135,050

$140,634

$63,150

$68,916

$84,640

$96,329

$34,370

$49,034

$71,628

$10,823

$12,079

$11,821

$14,311

$14,103

$15,881

$19,478

$22,166

20,577

31,138

45,104

6,124

7,132

9,260

9,057

7,822

10,654

13,335

13,030

common stockholders 7,066 31,126 45,095 6,119 7,130 9,257 9,055 7,821 10,651 13,330 Adjusted EBITDA, adjusted net income and adjusted net income attributable to common stockholders are non-GAAP financial measures - see nex t page for reconciliation to GAAP.

13,030

Statement of Operations Data:

Cost of SaaS and license rev enue Cost of hardware and other rev enue Total cost of revenue Net income Net income (loss) per share, diluted Weighted-av erage common shares outstanding - diluted Balance Sheet Data (as of): Cash and cash equiv alents

2015

2016

2017

Q2 2016 $42,010

Q3 2016 $44,630

Q4 2016 $46,888

Q1 2017 $50,226

Q2 2017 $58,928

Q3 2017 $61,924

Q4 2017 $65,205

Non-GAAP financial measures1 : Adjusted EBITDA

1 1

Adjusted net income Adjusted net income attributable to 1

1

35

Investor Data Sheet (2/3) Alarm.com Holdings, Inc. Non-GAAP Reconciliations | Fiscal Year Ended December 31 | ($ in thousands) Adjusted EBITDA: Net income Adjustments: Interest ex pense and other income / (ex pense), net Prov ision for income tax Amortization and depreciation ex pense Stock-based compensation ex pense Acquisition-related ex pense Litigation ex pense Total adjustments Adjusted EBITDA Adjusted net income: Net income, as reported Prov ision for income tax Income before income tax es Adjustments: Other income / (ex pense), net Amortization ex pense Stock-based compensation ex pense Acquisition-related ex pense Litigation ex pense Non-GAAP adjusted income before income tax es Income tax 1 Non-GAAP adjusted net income Non-GAAP adjusted net income per share - diluted

$29,251

Q1 2016 $2,738

Q2 2016 $1,873

Q3 2016 $2,567

Q4 2016 $2,976

Q1 2017 $3,963

Q2 2017 $9,865

Q3 2017 $15,103

Q4 2017 $320

(323) 4,227 6,490 4,001 11,098 13,387 38,880 $49,034

1,133 2,990 17,734 7,413 5,895 7,212 42,377 $71,628

(70) 1,593 1,591 852 570 3,549 8,085 $10,823

(41) 976 1,613 942 2,040 4,676 10,206 $12,079

(90) 358 1,659 1,086 3,187 3,054 9,254 $11,821

(122) 1,300 1,627 1,121 5,301 2,108 11,335 $14,311

(21) 543 2,864 1,313 3,648 1,793 10,140 $14,103

537 (4,506) 4,846 1,915 1,973 1,251 6,016 $15,881

316 (5,018) 5,071 1,906 221 1,879 4,375 $19,478

301 11,971 4,953 2,279 53 2,289 21,846 $22,166

$11,768 5,697 17,465

$10,154 4,227 14,381

$29,251 2,990 32,241

$2,738 1,593 4,331

$1,873 976 2,849

$2,567 358 2,925

$2,976 1,300 4,276

$3,963 543 4,506

$9,865 (4,506) 5,359

$15,103 (5,018) 10,085

$320 11,971 12,291

348 2,151 4,124 100 6,347 30,535

(513) 1,750 4,001 11,098 13,387 44,104

(1,066) 12,282 7,413 5,895 7,212 63,977

(111) 498 852 570 3,549 9,689

(88) 435 942 2,040 4,676 10,854

(139) 435 1,086 3,187 3,054 10,548

(175) 382 1,121 5,301 2,108 13,013

(237) 1,493 1,313 3,648 1,793 12,516

(137) 3,530 1,915 1,973 1,251 13,891

(342) 3,682 1,906 221 1,879 17,431

(350) 3,577 2,279 53 2,289 20,139

(9,958) $20,577 $0.27

(12,966) $31,138 $0.65

(18,873) $45,104 $0.92

(3,565) $6,124 $0.13

(3,722) $7,132 $0.15

(1,288) $9,260 $0.19

(3,956) $9,057 $0.19

(4,694) $7,822 $0.16

(3,237) $10,654 $0.22

(4,096) $13,335 $0.27

(7,109) $13,030 $0.26

2015

2016

2017

$11,768

$10,154

526 5,697 5,808 4,124 100 6,347 22,602 $34,370

36

Investor Data Sheet (3/3) Alarm.com Holdings, Inc. Non-GAAP Reconciliations | Fiscal Year Ended December 31 | ($ in thousands) Adjusted net income attributable to common stockholders: Net income (loss) attributable to common stockholders, as reported Provision for income taxes Income (loss) attributable to common stockholders before taxes Adjustments: Dividends paid to participating securities

2015

2016

($7,219) $10,142 5,697 (1,522)

4,227 14,369

2017

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

$29,238

2016 $2,733

2016 $1,871

2016 $2,564

2016 $2,974

2017 $3,960

2017 $9,860

2017 $15,097

2017 $320

2,990 32,228

1,593 4,326

976 2,847

358 2,922

1,300 4,274

543 4,503

(4,506) 5,354

(5,018) 10,079

11,971 12,291

18,987





















Other income / (expense), net Amortization expense

348 2,151

(513) 1,750

(1,066) 12,282

(111) 498

(88) 435

(139) 435

(175) 382

(237) 1,493

(137) 3,530

(342) 3,682

(350) 3,577

Stock-based compensation expense Acquisition-related expense

4,124 100

4,001 11,098

7,413 5,895

852 570

942 2,040

1,086 3,187

1,121 5,301

1,313 3,648

1,915 1,973

1,906 221

2,279 53

Litigation expense Non-GAAP adjusted income attributable to common stockholders before

6,347

13,387

7,212

3,549

4,676

3,054

2,108

1,793

1,251

1,879

2,289

income taxes

30,535

44,092

63,964

9,684

10,852

10,545

13,011

12,513

13,886

17,425

20,139

(9,958) (13,511)

(12,966) —

(18,869) —

(3,565) —

(3,722) —

(1,288) —

(3,956) —

(4,692) —

(3,235) —

(4,095) —

(7,109) —

$7,066

$31,126

$45,095

$6,119

$7,130

$9,257

$9,055

$7,821

$10,651

13,330

$13,030

1

Income tax Less: income allocated to participating securities Non-GAAP adjusted net income attributable to common stockholders

37

Security

Access

Video

Energy

Lights

Garage

Water

One Intelligent Platform

Users prefer these Smart Home applications over DIY device specific apps 2 01 6

R E P O R T 38

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