What Happened:
Shares of home security and automation software provider Alarm.com (NASDAQ:ALRM) jumped 7.96% in the morning session after the company reported a "beat and raise" quarter. First-quarter results exceeded analysts' expectations for revenue, adjusted EBITDA, and earnings per share (EPS). While the topline growth remained muted on an absolute basis, the SaaS and license division led the charge, driving reported double-digit growth in the mid-teens, excluding the Vivint license income from Q1 2022. However, the company recorded a cash burn, as free cash flow turned negative. Despite this, guidance for revenue and adjusted EBITDA were raised for the full year, with both metrics in line with Consensus. The overall results were positive, considering the improved outlook and the strength of the SaaS and license segment, which continues to account for a bigger share of total revenue. After the initial pop the shares cooled down to $50.19, up 4.87% from previous close.
What is the market telling us:
Alarm.com's shares are not very volatile than the market average and over the last year have had only six moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
Alarm.com is up 1.7% since the beginning of the year, but at $50.19 per share it is still trading 34.6% below its 52-week high of $76.79 from August 2022. Investors who bought $1,000 worth of Alarm.com's shares five years ago would now be looking at an investment worth $1,260.
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