The last day of the conference. It's been a great conference so far. We really appreciate all your participation and expect you to be extra lively today because this is your last chance, so we wanna keep it interactive, want questions if possible. We've got no slides here, just a fireside chat format. Very happy to have Daniel Kerzner, who is the President of Platforms Business, right? Yeah. At Alarm.com. Some of you may be familiar with Alarm.com. The story has become a little bit more diversified, I guess I would say, over the years, with, you know, what you probably know as the core residential or what we think about, when we think about Alarm.com. A lot of growth areas embedded that are becoming much larger in the company, so we're gonna kinda explore a lot of the different areas in this discussion. Dan, we do have a diverse audience here, obviously, many of which may be even entirely new to the Alarm.com story. For those less familiar, if you could just talk us through the elevator pitch on Alarm, core market, key value proposition, et cetera. Sure. Great. Nice to see everybody. Thanks for joining. Quickly, Alarm.com was founded in 2000, so we go back a ways. The kind of original insight was that you could take activity and data that was happening at a property, originally it was residential properties, from security systems and make them useful for things beyond just core intrusion, right? A lot of the things that you think of today as smart home or Internet of Things, connected property, these were things that Alarm envisioned from the very beginning and had written a whole series of white papers that kind of envisioned the future before these terms existed. The company set about making that happening by being a very early adopter of cellular technology and getting a data path into homes so that you could start to animate these things and add value to people's lives. You know, flash forward to today, we provide the software backend for 10 million properties across the world. We're largely focused in North America, but also have presence all around the rest of the world and all the continents. We participate heavily in the residential markets, but also have commercial offerings as well that are growing nicely, and then some subsidiaries that do things in other related Internet of Things fields where we took our kind of core platform and understanding and then used it to kind of broaden out over time. The thing to understand is that we are kind of a, you could almost think of us as a R&D co-op for our channel, right? We have lots of different service providers who go out into the market and provide services under their own brands, and then they use our technology to enable them to bring those services to market, and then we aggregate the R&D investment across this very diverse channel. We have 10,000 service providers that work with us, and then we provide a platform to all of them. There's a really significant kind of economy of scale that drives a very robust R&D engine that wouldn't be otherwise possible. Maybe just talk about how that story manifests itself in the financial model. Just introduce us to the Alarm.com story primarily in the financial metrics and talk about your very predictable recurring business and the KPIs that you focused on internally. Sure. Sure. We think of ourselves in the core as being a SaaS company, right? A software company. We just hit the milestone of having kind of $1 billion of top line revenue, which is, you know, a fun number to reach. We are about 70% software SaaS-based revenue and about 30% hardware. The way to think about that is that the hardware is really an enabler of the SaaS, right? We're not in the hardware game for the sake of being a hardware company. We're good at it. We do it in a specialized way that is enabling for our channel, but it's all done with the pursuit of creating durable recurring revenue. In the security industry, you end up having, you know, very long-lived accounts, right? If you just think about your own personal use of your home security system or if you're a business, you know, these are accounts that can be on for 5, 10, 15 years. We orient ourselves to have long-term durable relationships with our service providers. Our key metrics are, you know, top line revenue focused on SaaS and hardware. We look very closely at our revenue retention metrics, right? That we have very sustained and durable and predictable revenue. We're at around 95% revenue retention, right? We've had a focus on kind of being good stewards of capital and profitability going back a long time. The company has been profitable since around 2008. Right? Founded in 2000, went through a really relatively short period of investment, and then has been focused on being cash generative for a long time, in part because of the natural economic efficiency of our business model, right? You think about it every day, there are thousands of salespeople, trucks, marketing campaigns that are going on, in effect selling Alarm.com services, but none of those folks are directly on our books. We are a capital-efficient entity focused on R&D and bringing great technology to market. We take that profitability and we either reinvest it in organic growth or we use it to do kind of smart acquisitions 'cause we have a view that entrepreneurship and innovation, you can do some of it internally, but you also wanna be able to tuck those things in and bring new talent into the company. That's been the focus for us. The, the metric there is, you know, kind of cash flow and general profitability. We're about a 20%, you know, EBITDA margin, which is something that we've sort of marched up steadily over time. I want to double-click on the business model that you just kind of alluded to there. I think a lot of investors are kind of familiar with more of the solutions that we would get in a typical retailer. We just had Arlo here yesterday as an example, right? Sure. The Alarm.com business model is not through retail. I think Stephen Trundle initially said he thought about that. Right ... then pivoted and went to a different market. Just double click on the B2B2C go-to market and the resulting business model, how that gets priced, et cetera. Yeah, that's great. Definitely something to elaborate on. There is a good story. Steve, who's our founder and CEO, is a big guy, and imagine him in a blue shirt, like, in a Best Buy. He was testing out, like, retail, seeing if he could personally sell the boxes. we concluded that that was not the dominant strategy for us. Early on, what happened was the company was doing both. We were selling directly to consumers, taking kitted solutions and selling directly to consumers, and then also working with traditional members of the security channel, in this case at the time, residential security dealers. What we found was that the volume was all coming from the channel side on a relative basis, but the mental energy associated with trying to explain to the channel that we were both going direct and selling to the channel was totally disproportionate. We would sell 50 systems to the channel, and you would sell one system direct, and the channel would've thought, like, you know, you were totally on the wrong side of the fence. At some point the company said, "You know what? We're gonna embrace this and really focus on being the best in class provider of technology to the channel and become kind of the real expert in what it means to build a SaaS platform that is really channel oriented for something that involves physically being in people's homes and businesses, which is not quite the same thing as most other kind of SaaS companies that are out there or channel oriented companies, right? Because we are providing technologies that actually go on property, and then we are servicing those properties with our service providers over the duration of the account. You could think about a consumer who has a, say, a 10-year relationship over the course of a period of time when they live in a home with a service provider. Service provider is collecting revenue for that consumer for the monitoring. We are also provisioning the mobile application, the web application, helping to keep that system online. We're in lockstep with our service provider channel throughout the duration of that account. That B2B2C model where you have good long-term economic alignment with your dealer channel is relatively unique. In fact, I'm not even sure I've seen another company that has exactly the model that we have. What it drives is a ton of loyalty and alignment between us and our channel because our channel providers count on us to provide them great technology, but also realize that one way or another, we're going to be helping them to service their accounts over a very long period of time. We end up with a very kinda synergistic relationship between us and our service providers because they are highly incentivized to share market insights with us, to come to us with perspectives they have on things that they see that either we could do better or they could do better, and are constantly working with us to kind of tune up the model. That's how we're able to innovate and also stay very much in touch with kind of where are the opportunity sets that might be adjacent to what we're currently doing today. Yeah, the B2B2C thing is pretty unique to Alarm.com, but I think also very sticky. Yeah, I always find it amazing when I've, you know, gone to conferences or visited you guys and demoed the solutions and seeing some of, like, the backend stuff that you guys do to help reduce churn or predict churn and potentially reduce. Yeah ... software to do it. It's great, Adam. It's worth probably spending a moment on that. As you're thinking about our R&D investment, right, which is obviously the dominant expense that we have in the business, it's really kind of a barbell. You have all of the consumer and business facing capabilities, so this would be the mobile app, the website, the video cameras, the video analytics, all this great stuff that we do to enable the service. There's the other side of the barbell, which is all of this dealer facing capability, which is a whole management interface, which is plugging into their ERP systems, which is giving them analytics around what they could do around efficacy, mobile applications for their technicians. In some ways, the piece that you don't see on the website is as sticky and as valuable as anything else. For example, if you look at our international business, where we found we've succeeded the most is with mid and larger providers who look at our kind of full stack of services and say, "Wow, you can drive a lot of economic efficiency for me. You could help me take my business from being where I am today and do more and do it more efficiently because you've sort of figured this whole problem out." That's not something that you sort of see if you're just focused on the feature function of the individual capabilities. Any questions so far for Dan? Anybody have Alarm.com in their home? Yeah. Any feedback? Well, it's in the U.K. Works wonderfully and it's very easy. That's great. Thank you for your business. It's also possible you may have Alarm.com and you don't know it, right? Just to give you some context, ADT North America is a very big Alarm.com customer. We have many millions of homes on with them, but it's under the ADT brand on multiple different kind of instantiations of their offering. There are myriad local service providers across the country that go to market under their brand, but with Alarm.com under the covers. It's statistically speaking, more of you have Alarm.com, you just don't know it. Yeah. Once you see the layout of the app. Yeah. What's the clearest differentiation between your competitors, yourself and the competitor? Thinking specifically about Arlo and then obviously Ring. Sure. Yeah, I mean, from a business model standpoint, Arlo and Ring are really indirect competitors for us, which is probably the biggest sorta distinction to understand, right? We sell to service providers, and then our service provider partners compete in some way with Arlo and Ring. We don't compete with those folks directly. I would say that from an R&D perspective, we certainly are keenly aware of the offerings that are in the market and are trying to make sure that our service providers have access to technologies or solutions that are competitive or hopefully better than what you might get from an Arlo or Ring. The approach is slightly different, because what we're trying to do is package up solutions that are gonna allow a service provider to pull that solution in and offer it to you as an individual. Complementing what they bring to the service in terms of monitoring or their own sales and marketing activities, right? It's that collection of services that compete with an Arlo or a Ring. It's really kind of a slightly different go to market. The second thing probably help to understand is that our business is primarily what you call do it for me, right? This is where you call someone up or get in contact with them and they're gonna come to your house and really fit out your house with a complete solution that's properly installed, a kind of pro grade offering, if you will. We have a little bit of DIY that some of our service providers do, but mostly it's do it for me. Ring and Arlo are over here in kind of the DIY segment of the market, which has grown a lot over the last couple of years and is vibrant, but is sort of a different segment where we don't compete quite as directly. They're encroaching a little bit more so, and so the easy answer used to be, and I would explain to investors, you know, to buy Ring you go into Best Buy. Right ... and have to, you know, do this yourself. You know, for Alarm.com, you're having a service provider do a professional install. You know, Arlo as an example, has a partnership with ADT. They've got a partnership with Comcast. Google made a partnership with ADT as well, right? Some of those DIY solutions seem to be encroaching more in the dealer market. Arlo and Verisure are another example. Yeah ... I'm just thinking about. What do you think is driving that trend? You know, as you kinda like learn about some of these partnerships, are those opportunities for Alarm.com? Why, you know, why don't Alarm.com partner with Comcast, for example? Sure. Well, I mean, in some ways, look, it's an endorsement of our business model, right? I mean, principally, we look at that and we say, you know, it's great. Like, if you find yourself in a market where no one is trying to participate in your market, then you must not have a very good market, right? What we find is that our market is very healthy, and consequently, on like an every five-year basis, there's some new wave of folks who try to get into our market. Yet, you know, and I'm trying to be glib about it, but yet here we are 25 years later, you know, still doing it. You know, I would say that's the sort of dominant observation. Yeah, we're kind of in the mix all the time talking to various, you know, providers about what makes sense for them at, you know, at any given time. We obviously have a very broad relationship with ADT. You know, ADT will from time to time choose to do something internal or choose to work with, you know, Arlo, whomever it is. We see that as kind of a natural kinda back and forth in the market. To give you a kinda contrasting example, we have a thriving partnership with ADT right now on the SMB and commercial side. We've made a whole series of investments to really grow a SMB and commercial offering over the last, call it like 5 or 10 years. That part of the business is very active with them. There's also a kind of segmentation here that's useful to understand that the market is not one homogeneous thing. There are different segments that you can choose to participate in. I wanna go into those adjacencies, but any other questions on core residential before we do that? As we think about the connected home opportunity, potentially upselling or Yeah. The question, just in case you didn't hear, was for the connected home, kinda what are our kind of upsell and growth opportunities. You know, I think one of the things that's exciting for us right now is that the massive investment that the tech ecosystem collectively is making in AI, you know, call it a $1 trillion of investment going into all of these, you know, amazing technologies, are collectively actually a big tailwind for the security industry, and I would say in particular for Alarm.com. We have been making investments in AI for a long time. We acquired a video analytics company in 2017, and we're one of the first companies in the space to really bring out high fidelity video analytics that we then democratized across our entire customer base. Here I'm talking about, you know, something happens in your driveway, and we'll be able to tell you, is it a dog, is it an animal, is it a person? Like, what's going on? To do that in a cost-effective way. We already saw that even in that sort of first instantiation of AI, that was a significant driver of increase in adoption of the offering and consequently better ARPU, right? You could imagine going from conventional video to AI video is maybe a $1 or $2 increase in ARPU and then significantly more than that for our dealers. If you look at what's happening in AI in total right now, there's so much more that we can do and that we're kind of actively bringing out to our channel and to our customers, right? You have opportunities both to make the core AI offering much more high fidelity. Don't just tell me that there's a car in the driveway, but for example, we released a feature called Familiar Vehicle. So now I can give you an alert if your spouse has come home from work, or I could not give you that alert 'cause you don't need to know when your spouse is home from work, but you'd really like to know if there's some random car in your driveway. What you do is you're raising the signal-to-noise ratio because the AI is enabling you to do something that wouldn't otherwise be possible. That Familiar Vehicle use case is an example of something that we were leading on, but benefits from kind of the overall tech stack that's sort of evolving. Another trend or area that's building on this is a category called remote video monitoring, which if you're in the security space, has been around for a long time, but the idea behind it is that instead of the intrusion system being the trigger to dispatch the police or to cause an alarm event, the video camera itself is now the trigger, right? It's video monitoring, meaning if you were away on vacation and something happens, there's someone from a central station who's gonna take care of that for you. If you think about that in a pre-AI world. That's just very expensive. You're literally gonna have to have some person in a central station like watching the screen all the time. There's a ton of false positives, and that's gonna be kind of non-economic. You end up saving that offering for a bank or for some super, you know, high important facility, and you charge a lot of money for it. Consequently, it's narrowly deployed. Flash forward to AI, I can use AI to filter out a ton of that noise and to now give you a high fidelity signal where I'm only gonna alert the central station if something really interesting is going on. Now I can broaden out who's able to adopt that service quite significantly. We actually see some of the fastest growth right now in terms of remote video monitoring happening in the residential part of our business, meaning we have some of our partners who are making it part of their standard service plan or are using it as a very strong upsell lever or wedge. This is in addition to the kind of natural adoption that's happening in commercial. That's like a very intriguing trend because if I had told you five years ago that I was gonna see an acceleration in RVM happening even faster in residential versus commercial, like everyone would have said that you're crazy, right? What you see is AI as a tailwind to lower prices and consequently, you know, drive adoption. There was a big furor in the tech world about, you know, Jevons paradox, you know, this idea that as something gets cheaper, it actually drives more demand because you have it adopted so much more widely. I'm of the view that actually, you know, the security industry and Alarm.com in particular, because of the nature of our channel, because of our channel's ability to explain and deliver richer and more complicated services to customers, is very well positioned to benefit from that trend. We already see it starting to happen with RVM. We made an acquisition of a company called CHeKT that was specialized in that space specifically, so we'd be best positioned to get this technology into central stations around the world. Another example would be a really fun feature we developed called AI Deterrence. Here the use case would be someone comes into your driveway, they're about to break into your car, and the AI says, "Hey, you know, you in the brown hoodie standing next to the Honda, get away from the car. This property is you know, monitored by XYZ Security. It could even choose to say something more colorful, which I wouldn't do in this context, right? What's crazy about it is, you know, the first instantiation of this is just doing scene understanding. Now imagine that, you know, you've got two homes, one in Mississippi and one in Boston. Like, I think we can agree that the inflection of how those the folks talk in those two different regions is quite different, right? The voice coming over the camera is gonna sound like it's from Mississippi, or it's gonna sound like it's from Boston, right? The deterrent effect on that can be pretty significant. While the AI is providing that deterrent, you're buying time to then also relay that to the central station. Now we have this stack up, right? We have the opportunity to upsell video analytics, then we have the opportunity to upsell remote video monitoring, then we have the opportunity to upsell AI Deterrence, right? On and on. There's all sorts of interesting things happening, I think, in the property space, particularly around video, but even around kind of sensing generally that I think are gonna open up new opportunities for us. In some ways, I think if you had talked about this a couple of years ago, the focus might have been more on, you know, kind of smart home, like how many widgets am I gonna have and how many connected things am I gonna have. I think those things are interesting. We've certainly, add a lot of value in that space and invested cycles there, but I think there's some sort of asymptote on incremental value you have from connected widgets in your home. I think when you talk about, really having, active insight that can then allow you to live your life both, you know, more productively and more safely, which was always Alarm.com's kind of founding idea, then you get to a pretty great unlock. Any other questions? In terms of your client base, I know it's a heavily fragmented industry, so is private equity it gets involved and consolidates this, do you end up carrying the service to the larger, let's say, national private equity holding, or do they end up trying to do something else? Yeah. It varies. I would say for the most part, consolidation tends to kind of accrue favorably for us. Certainly, at least in the commercial space, that's what we've seen quite clearly because, as the consolidation happens, we have very positive relationship with our service providers, and in particular, our platform is open, so we support many of the controls that are kind of out there in the world. In those roll-up models, you inevitably end up getting a kind of heterogeneous customer base. There aren't many places to go if you wanna have a kind of robust way to manage a heterogeneous set of deployed solutions, right? For the most part, I think we see that when those things happen, they actually end up being standardization opportunities that kind of accrue in our favor. It, you know, in the, in the biggest cases, you know, there are from time to time cases where you'll see someone who decides that they wanna spend $100 million and build something for themselves, but those are the minority. The industry is fueled by a pretty healthy cycle of kind of consolidation and rebirth, where a company rolls up a bunch of entities, and then people leave that company and start a new company. That generally plays pretty well for us. How has Alarm.com thinking about long-term margin targets these days? I think historically they had a 20%-25% margin target on good job. You hit that and it steps it back down, and then you're getting back into that range. You have all these new different business models and opportunities underlying your business. I think your incremental margins for the upcoming year are 25%-30% range. You know, exactly. Right curious. Are thinking about it in future. I think, I mean, 10 years is a long time in the tech world, I think the direction of travel is that we want margins, you know, our margin profile to stay steady and then tick up, you know, some amount over time. Not at the expense of kind of overall growth or opportunity. I think our general disposition is, at least sitting here today, we see many very productive places to invest. We're very focused on having a kind of positive return on invested capital, we don't also lack for opportunities to do that. The guiding principle that we've had is to slowly move up margin, but also focus on doing it in a way where we give ourselves the cash flow necessary to do acquisitions, feed it back in, and do kind of organic and inorganic growth. Tactically, in the next couple of years, what I would just share with you is we're trying to, for the moment, target more, you know, call it like 2027 exit margin. Because we see some, you know, puts and takes happening in the margin profile as we do acquisitions, but then also gain efficiency in between that period of time. We'll see. I think, you know, 10 years from now, could I see us bumping up the profile more? I think it's possible. One of the things that we're looking for is, you know, where do we see true kind of, further economies of scale that would drive those type of economics? Maybe since we just have 3 minutes left, I'll at least mention to you, we've talked a lot about Alarm.com through the lens of our kind of traditional dealer-driven B2B2C model. It's worth understanding one of the businesses we acquired over time is a company called EnergyHub, which does demand response, which is when you turn the thermostat down on the hottest day of the summer and in effect, return power to the grid. EnergyHub is the largest aggregator of residential demand response capability in the country, and we just did an acquisition that made them even bigger. To give you a sense of scale, separate from the 10 million properties I told you about that Alarm.com manages, EnergyHub manages another 2.5 million properties specifically where they have connected thermostats, and now they're moving into managing cars and batteries and water heaters and things like that. They collectively have over kind of 3 gigawatts of capacity that they can contribute to the grid when there is a need for a demand response event. I know it's a little afield of like everything I just talked about with the security industry, but you have to understand, you know, 10 years ago when we were first looking at that business, we said the bones of this business from an R&D perspective look exactly like everything that we're good at and that we know, and we see an adjacency to do more with these devices, particularly thermostats, that we're already putting in our properties. We saw EnergyHub as a way to both get more economic value for our dealers and for our properties in the traditional alarm business, to also work with all of our competitors or even just other market participants. What we set up EnergyHub to do was to provide demand response services back to the Alarm.com base, which they do, but then they also work with ecobee and Honeywell and all the other major connected thermostat providers and have ended up being really the national leader in residential demand response. It, it actually makes a lot of sense when you think of it from an IoT platform perspective, but is a little bit more distinct when you think of it from kind of a line of business perspective. What's happened is as energy has become such a hot topic given everything that's going on with AI, EnergyHub is really one of the kind of key resources that utilities have to bring a new source of variable energy to the grid at a time when, you know, picks and shovels are just sort of so hard to come by. I just wanted to mention that 'cause it is part of an overall diversification theme with Alarm.com that I think is important to understand. In the 1 minute I've left, I'll just share with you. Think of it, you've got kind of core residential, and then we went and added international and commercial, and those are now kind of thriving businesses. We went and added EnergyHub and demand response, and that is now a thriving business. The overall picture that I leave you with of Alarm.com is that, despite our name, which is very specific, we are actually more a generalized, kind of IoT platform for connected devices in all manner of applications with a very long track record of kind of diligent allocation of capital focused on, you know, providing durable value, which we see a lot of runway to do in the future. A lot of asset value at this valuation when we start thinking about those different components and how fast they're growing, how much they're scaling. It's an exciting story. We really appreciate your time, Dan. Thank you. Yeah. Thanks, Adam. Thank you, everybody.