This article first appeared on GuruFocus .
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SaaS and License Revenue:$188.8 million, up 11% year-over-year.
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Adjusted EBITDA:$57.7 million, up 15.7% year-over-year.
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Adjusted EBITDA Margin:20.8%, up approximately 115 basis points year-over-year.
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Hardware and Other Revenue:Approximately $89 million, up 5.5% year-over-year.
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Hardware Gross Margin:Expanded 180 basis points year-over-year.
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GAAP Net Income:Approximately $24.2 million, or $0.48 per diluted share.
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Non-GAAP Adjusted Net Income:$41.1 million, up approximately 17% year-over-year.
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Non-GAAP EPS:$0.77 per diluted share, up 24% year-over-year.
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Free Cash Flow:$37 million in the quarter.
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Cash Position:$479.4 million at quarter end.
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Revenue Retention:Remained in the 95% range for the third consecutive quarter.
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Commercial and EnergyHub Growth:Collectively grew more than 30% year-over-year.
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International Subscribers:Surpassed 1 million active subscriber accounts.
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Share Repurchases:Approximately 570,000 shares for $25 million during the quarter.
Release Date: August 06, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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SaaS and license revenue grew 11% year-over-year to $188.8 million, exceeding guidance by $3.2 million.
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Adjusted EBITDA grew 15.7% year-over-year to $57.7 million, with margin expansion of 115 basis points.
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Commercial and EnergyHub initiatives collectively grew more than 30% year-over-year, contributing to diversified growth.
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International business surpassed 1 million active subscriber accounts, a key milestone for global expansion.
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Launched new Fire Communicator product, addressing a large addressable market of 4-5 million fire panels in the US and Canada.
Negative Points
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GAAP net income declined to $24.2 million from $34.6 million a year ago, partly due to lower interest income after retiring convertible notes.
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Third-quarter SaaS and license revenue growth is expected to slow to approximately 8.3% year-over-year, down from 11% in Q2.
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Hardware and other revenue growth was modest at 5.5% year-over-year, with hardware gross margins lower for the new Fire Communicator.
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Free cash flow in Q2 was affected by working capital timing, though full-year conversion is still expected at 90%.
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The Fire Communicator is a new product with uncertain adoption, and management expects it will take time to scale and size up steady-state demand.
Q & A Highlights
Q: Could you provide more detail on the EnergyHub market? Is this a rising tide market given utility trends, or is EnergyHub taking market share? A: Steve Trundle (CEO) stated that the overall market is growing due to energy supply shortages, data center demand, and electrification. Utilities must choose between expensive build-outs or solutions like EnergyHub that harvest supply off the grid. The value of the solution increases as supply variability grows with more wind and solar. EnergyHub is benefiting as the market leader, expanding from thermostat demand response to include EVs, chargers, and batteries. The company is only about 2% penetrated in the North American TAM, leaving significant headroom for growth.
Q: How much of the recent acceleration in SaaS revenue is from EnergyHub versus the broader emerging solutions? A: Kevin Bradley (CFO) explained it is a mix of both, but more so EnergyHub. The growth initiatives collectively represent about 35% of revenue and grew over 30% year-over-year in Q2, contributing roughly 900 basis points of growth. EnergyHub's growth rate impact is accelerating the quickest, while commercial is also contributing to an accelerating growth rate due to its weighting. International is contributing a steady growth rate.
Q: Why launch the Fire Communicator now, and what is the advantage versus incumbents? How does the business model compare to residential? A: Steve Trundle (CEO) said the launch was driven by dealer demand as the partner base has shifted more commercial. The company leveraged R&D from its Universal Communicator to create the fire product with minimal incremental investment. The advantage is efficiency for service providers managing on the Alarm.com platform and a single pane of glass for customers. Kevin Bradley (CFO) added that the delivery model is channel-based like residential, with hardware sold at a gross profit neutral level and services representing roughly 2 times the ARPU of a typical residential account.
Q: With international surpassing 1 million subscribers, will the next million come faster, similar to the core business trajectory? A: Steve Trundle (CEO) acknowledged the first million in the core business was a long process, and he hopes the same applies internationally. The company has built critical infrastructure, localized the product for 70 markets, and developed a partner base. While there have been ups and downs, including partner change-of-control events, the company now has momentum and knowledge of what works. He expects the next million to come more easily and faster than the first.
Q: Where are you seeing outsized strength in commercial video, and how are you enabling the sales force to sell newer offerings? A: Steve Trundle (CEO) noted strength was more on the enterprise side with larger video deployments. Customers are installing AI-powered products to future-proof their businesses, and there is a shift from video as surveillance to video as an operational data-gathering tool. The mix includes both new logos and ongoing demand from existing customers adding facilities. The company has worked to enable cross-selling opportunities and align sales efforts.
Q: How should we think about the cadence of sales and marketing hiring and margin leverage going forward? A: Kevin Bradley (CFO) said the base case is that S&M as a percentage of revenue will stay roughly flat. Total employees have been flat since mid-2024, growing at a CAGR of about 0.4%. Leverage is coming from G&A and, to a smaller extent, R&D. Over the next year or two, total employees will likely remain roughly flat, with a slight shift in complexion towards sales and marketing spend.
Q: Can you frame the addressable market for the Fire Communicator and how meaningful it could become to growth? A: Steve Trundle (CEO) estimated the addressable market of commercial buildings in North America at $4 million to $5 million. About 3,000 of the company's service providers are engaged in commercial fire and could deploy the product. Since launch, nearly 1,000 units are in the ground. The company will use 2027 to size up steady-state demand and better estimate long-term market capture.
Q: What does the current M&A pipeline look like, and how are you thinking about share repurchases after the stock rally? A: Kevin Bradley (CFO) said the company was aggressive in buybacks at a 12 PE, which is rare for SaaS. They will remain active at a minimum to offset stock-based compensation dilution. Steve Trundle (CEO) added that the M&A process is active, with opportunities being evaluated in the energy and commercial security markets, ranging from tuck-ins to sizable deals, though nothing is ready to announce.
Q: What are the new potential residential and commercial ARPU drivers outside of commercial fire? A: Steve Trundle (CEO) identified remote video monitoring (RVM) as the biggest near-term driver on the residential side, where live operators can respond to events like an arson attempt before they escalate. On the commercial side, RVM and active shooter detection sensors are key ARPU drivers. Longer term, the company will partner with players bringing autonomous devices, including drones, to the security market.
Q: Can you confirm the growth initiatives (international, commercial, EnergyHub) are accelerating, and are the numbers around 35% of revenue growing 30% plus correct? A: Kevin Bradley (CFO) confirmed the numbers are correct. He noted that for the full year 2026, the prior guidance of 35% of revenue growing 25% to 30% is about right. EnergyHub's revenue is annual and recurring, creating seasonal dynamics. Q2 happens to be a faster-growing quarter because programs launched in Q2 are growing faster, which explains the acceleration.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
