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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2023
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission File Number: 001-37461
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ALARM.COM HOLDINGS, INC.

(Exact name of registrant as specified in its charter)
 
Delaware26-4247032
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
8281 Greensboro DriveSuite 100TysonsVirginia
22102
(Address of principal executive offices)
(Zip Code)
Tel: (877) 389-4033
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $0.01 par value per shareALRMThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. þ Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). þ Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated FilerþAccelerated Filer¨
Non-Accelerated Filer¨
Smaller Reporting Company
¨
Emerging Growth Company
¨




If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  ¨ Yes þ No

As of August 2, 2023, there were 49,906,142 outstanding shares of the registrant's common stock, par value $0.01 per share.



ALARM.COM HOLDINGS, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE FISCAL QUARTER ENDED JUNE 30, 2023

TABLE OF CONTENTS
 Page
1


PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS (unaudited)

ALARM.COM HOLDINGS, INC.
Condensed Consolidated Statements of Operations
(in thousands, except share and per share data)
(unaudited)
 Three Months Ended
June 30,
Six Months Ended
June 30,
 2023202220232022
Revenue:
SaaS and license revenue$140,432 $129,475 $275,826 $252,700 
Hardware and other revenue83,443 83,370 157,765 165,582 
Total revenue223,875 212,845 433,591 418,282 
Cost of revenue(1):
Cost of SaaS and license revenue21,576 18,688 41,159 35,582 
Cost of hardware and other revenue64,791 68,648 121,380 141,841 
Total cost of revenue86,367 87,336 162,539 177,423 
Operating expenses:
Sales and marketing23,772 22,933 50,417 46,125 
General and administrative28,799 29,309 57,298 53,303 
Research and development60,918 54,156 122,826 105,646 
Amortization and depreciation7,860 7,775 15,533 15,536 
Total operating expenses121,349 114,173 246,074 220,610 
Operating income16,159 11,336 24,978 20,249 
Interest expense(827)(785)(1,695)(1,569)
Interest income7,417 1,016 12,599 1,159 
Other (expense) / income, net(631)105 (779)118 
Income before income taxes22,118 11,672 35,103 19,957 
Provision for income taxes6,507 844 5,285 226 
Net income15,611 10,828 29,818 19,731 
Net loss attributable to redeemable noncontrolling interests188 14 397 190 
Net income attributable to common stockholders$15,799 $10,842 $30,215 $19,921 
Per share information attributable to common stockholders:
Net income per share:
Basic$0.32 $0.22 $0.61 $0.40 
Diluted$0.30 $0.21 $0.58 $0.38 
Weighted average common shares outstanding:
Basic49,859,615 49,931,689 49,723,012 50,068,176 
Diluted54,446,275 54,757,020 54,423,047 55,054,970 
_______________
(1)Exclusive of amortization and depreciation shown in operating expenses below.


See accompanying notes to the condensed consolidated financial statements.





2



ALARM.COM HOLDINGS, INC.
Condensed Consolidated Statements of Comprehensive Income
(in thousands)
(unaudited)
 Three Months Ended
June 30,
Six Months Ended
June 30,
 2023202220232022
Net income$15,611 $10,828 $29,818 $19,731 
Other comprehensive income
Foreign currency translation adjustment658  828  
Total other comprehensive income658  828  
Comprehensive income16,269 10,828 30,646 19,731 
Comprehensive loss attributable to redeemable noncontrolling interests188 14 397 190 
Comprehensive income attributable to common stockholders$16,457 $10,842 $31,043 $19,921 

See accompanying notes to the condensed consolidated financial statements.
3

ALARM.COM HOLDINGS, INC.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
(unaudited)

June 30,
2023
December 31,
2022
Assets
Current assets:
Cash and cash equivalents$627,041 $622,165 
Accounts receivable, net of allowance for credit losses of $3,159 and $2,835, and net of allowance for product returns of $2,146 and $1,551 as of June 30, 2023 and December 31, 2022, respectively
123,285 124,283 
Inventory117,763 115,584 
Other current assets, net of allowance for credit losses of $0 as of June 30, 2023 and December 31, 2022
29,748 29,056 
Total current assets897,837 891,088 
Property and equipment, net56,832 57,172 
Intangible assets, net87,841 82,458 
Goodwill153,997 148,183 
Deferred tax assets121,207 84,185 
Operating lease right-of-use assets28,136 28,933 
Other assets, net of allowance for credit losses of $2 as of June 30, 2023 and December 31, 2022
36,870 37,356 
Total assets$1,382,720 $1,329,375 
Liabilities, redeemable noncontrolling interests and stockholders’ equity
Current liabilities:
Accounts payable, accrued expenses and other current liabilities$120,792 $119,657 
Accrued compensation23,224 25,582 
Deferred revenue9,671 7,540 
Operating lease liabilities12,242 12,157 
Total current liabilities165,929 164,936 
Deferred revenue11,789 10,792 
Convertible senior notes, net491,940 490,370 
Operating lease liabilities25,452 27,380 
Other liabilities15,511 13,050 
Total liabilities710,621 706,528 
Commitments and contingencies (Note 12)
Redeemable noncontrolling interests27,868 23,988 
Stockholders’ equity
Preferred stock, $0.001 par value, 10,000,000 shares authorized; no shares issued and outstanding as of June 30, 2023 and December 31, 2022
  
Common stock, $0.01 par value, 300,000,000 shares authorized; 51,525,244 and 50,985,454 shares issued; and 49,858,244 and 49,452,709 shares outstanding as of June 30, 2023 and December 31, 2022, respectively
515 510 
Additional paid-in capital518,249 497,199 
Treasury stock, at cost; 1,667,000 and 1,532,745 shares as of June 30, 2023 and December 31, 2022, respectively
(90,719)(83,993)
Accumulated other comprehensive income828  
Retained earnings215,358 185,143 
Total stockholders’ equity644,231 598,859 
Total liabilities, redeemable noncontrolling interests and stockholders’ equity$1,382,720 $1,329,375 

See accompanying notes to the condensed consolidated financial statements.
4

ALARM.COM HOLDINGS, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 Six Months Ended
June 30,
Cash flows from operating activities:20232022
Net income$29,818 $19,731 
Adjustments to reconcile net income to net cash flows from operating activities:
Provision for credit losses on accounts receivable616 547 
Reserve for product returns2,498 1,715 
Recovery of credit losses on notes receivable (78)
Inventory write-down1,181  
Amortization on patents and tooling637 701 
Amortization and depreciation15,533 15,536 
Amortization of debt issuance costs1,570 1,560 
Amortization of operating leases5,621 5,065 
Deferred income taxes(36,870)(22,734)
Change in fair value of contingent liability27  
Stock-based compensation24,617 24,899 
Gain on investment (140)
Changes in operating assets and liabilities (net of business acquisitions):
Accounts receivable(583)(4,970)
Inventory(523)(33,045)
Other current and non-current assets432 (2,485)
Accounts payable, accrued expenses and other current liabilities(4,696)10,046 
Deferred revenue3,105 2,404 
Operating lease liabilities(6,796)(6,100)
Other liabilities(2,920)(394)
Cash flows from operating activities33,267 12,258 
Cash flows used in investing activities:
Business acquisition, net of cash acquired(9,696) 
Additions to property and equipment(3,393)(26,302)
Issuances of notes receivable(300)(3,000)
Receipt of payments on notes receivable28 32 
Capitalized software development costs(115) 
Purchase of investment in unconsolidated entity(200) 
Proceeds from sale of investment 140 
Purchases of developed technology and other assets(5,915) 
Cash flows used in investing activities(19,591)(29,130)
Cash flows used in financing activities:
Payments of deferred consideration for acquisitions(1,655) 
Purchases of treasury stock, including transaction costs(6,726)(51,499)
Purchases of redeemable noncontrolling interest(832) 
Payments of acquired debt (389) 
Issuances of common stock from equity-based plans1,513 1,663 
Cash flows used in financing activities(8,089)(49,836)
Effect of exchange rate changes on cash, cash equivalents and restricted cash (124) 
Net increase / (decrease) in cash, cash equivalents and restricted cash5,463 (66,708)
Cash, cash equivalents and restricted cash at beginning of the period622,879 710,621 
Cash, cash equivalents and restricted cash at end of the period$628,342 $643,913 
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents$627,041 $643,380 
Restricted cash included in other current assets and other assets1,301 533 
Total cash, cash equivalents and restricted cash$628,342 $643,913 

See accompanying notes to the condensed consolidated financial statements.
5

ALARM.COM HOLDINGS, INC.
Condensed Consolidated Statements of Equity
(in thousands)
(unaudited)

Redeemable Noncontrolling InterestsAdditional Paid-In CapitalAccumulated Other Comprehensive IncomeRetained EarningsTotal Stockholders’ Equity
Common StockTreasury Stock
 SharesAmountSharesAmount
Balance as of December 31, 2022$23,988 50,985 $510 $497,199 1,533 $(83,993)$ $185,143 $598,859 
Common stock issued in connection with equity-based plans— 270 3 1,308 — — — — 1,311 
Stock-based compensation expense— — — 12,686 — — — — 12,686 
Accretion adjustments of redeemable noncontrolling interest to redemption value2,061 — — (2,061)— — — — (2,061)
Net income / (loss) attributable to common stockholders(209)— — — — — — 14,416 14,416 
Other comprehensive income — — — — — — 170 — 170 
Balance as of March 31, 2023$25,840 51,255 $513 $509,132 1,533 $(83,993)$170 $199,559 $625,381 
Common stock issued in connection with equity-based plans— 270 2 200 — — — — 202 
Purchase of treasury stock— — — — 134 (6,726)— — (6,726)
Stock-based compensation expense— — — 11,965 — — — — 11,965 
Purchases of redeemable noncontrolling interest(1,238)— — 406 — — — — 406 
Accretion adjustments of redeemable noncontrolling interest to redemption value3,454 — — (3,454)— — — — (3,454)
Net income / (loss) attributable to common stockholders(188)— — — — — — 15,799 15,799 
Other comprehensive income— — — — — — 658 — 658 
Balance as of June 30, 2023$27,868 51,525 $515 $518,249 1,667 $(90,719)$828 $215,358 $644,231 




6

ALARM.COM HOLDINGS, INC.
Condensed Consolidated Statements of Equity — (Continued)
(in thousands)
(unaudited)
Redeemable Noncontrolling InterestsCommon StockAdditional Paid-In CapitalTreasury StockRetained EarningsTotal Stockholders’ Equity
 SharesAmountSharesAmount
Balance as of December 31, 2021$12,888 50,407 $504 $498,979 147 $(5,149)$118,833 $613,167 
Adoption of accounting standard on debt with conversion and other options— — — (56,515)— — 9,972 (46,543)
Common stock issued in connection with equity-based plans— 85 1 1,079 — — — 1,080 
Purchase of treasury stock — — — — 354 (23,331)— (23,331)
Stock-based compensation expense— — — 12,110 — — — 12,110 
Accretion adjustments of redeemable noncontrolling interest to redemption value2,569 — — (2,569)— — — (2,569)
Net income / (loss) attributable to common stockholders(176)— — — — — 9,079 9,079 
Balance as of March 31, 2022$15,281 50,492 $505 $453,084 501 $(28,480)$137,884 $562,993 
Common stock issued in connection with equity-based plans— 205 2 581 — — — 583 
Purchase of treasury stock — — — — 481 (28,168)— (28,168)
Reclassification of subsidiary long-term incentive plan liability related to modification — — — 3,104 — — — 3,104 
Stock-based compensation expense— — — 12,789 — — — 12,789 
Accretion adjustments of redeemable noncontrolling interest to redemption value860 — — (860)— — — (860)
Net income / (loss) attributable to common stockholders(14)— — — — — 10,842 10,842 
Balance as of June 30, 2022$16,127 50,697 $507 $468,698 982 $(56,648)$148,726 $561,283 

See accompanying notes to the condensed consolidated financial statements.
7

ALARM.COM HOLDINGS, INC.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
June 30, 2023 and 2022

Note 1. Organization

Alarm.com Holdings, Inc. (referred to herein as Alarm.com, the Company, or we) is the leading platform for the intelligently connected property. Our cloud-based platform offers an expansive suite of Internet of Things, or IoT, solutions addressing opportunities in the residential, multi-family, small business and enterprise commercial markets. Alarm.com’s solutions include security, video and video analytics, energy management, access control, electric utility grid management, indoor gunshot detection, water management, health and wellness and data-rich emergency response. Our solutions are delivered through an established network of trusted service provider partners, who are experts at selling, installing and supporting our solutions. The number of our service provider partners exceeded 11,000 as of December 31, 2022. We derive revenue from the sale of our cloud-based Software-as-a-Service, or SaaS, services, license fees, software, hardware, activation fees and other revenue. Our fiscal year ends on December 31.

Note 2. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include our accounts and those of our majority-owned and controlled subsidiaries after elimination of intercompany accounts and transactions.

These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP, for interim financial information and the applicable rules and regulations of the Securities and Exchange Commission, or SEC. Accordingly, they do not include all the information and footnotes required by GAAP for annual financial statements. They should be read together with our audited consolidated financial statements and related notes thereto for the year ended December 31, 2022 included in our Annual Report on Form 10-K filed with the SEC on February 24, 2023, or the Annual Report. The condensed consolidated balance sheet as of December 31, 2022 was derived from our audited financial statements but does not include all disclosures required by GAAP for annual financial statements.

In the opinion of management, these condensed consolidated financial statements include all normal recurring adjustments necessary for a fair statement of the results of operations, financial position and cash flows for the periods presented. However, the global economy, credit markets and financial markets have and may continue to experience significant volatility as a result of significant worldwide events, including public health crises, such as the COVID-19 pandemic, and geopolitical upheaval, such as Russia’s incursion into Ukraine, disruptions to global supply chains, rising interest rates, risk of recession and inflation (collectively, the Macroeconomic Conditions). These Macroeconomic Conditions have and may continue to create supply chain disruptions, inventory disruptions, and fluctuations in economic growth, including fluctuations in employment rates, inflation, energy prices and consumer sentiment. It remains difficult to assess or predict the ultimate duration and economic impact of the Macroeconomic Conditions. The results of operations for the three and six months ended June 30, 2023 are not necessarily indicative of the results that can be expected for our entire fiscal year ending December 31, 2023, which is increasingly true in periods of extreme uncertainty, such as the uncertainty caused by the Macroeconomic Conditions. Prolonged uncertainties could cause further economic slowdown or cause other unpredictable events, each of which could adversely affect our business, results of operations or financial condition.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. As of the date of issuance of these financial statements, we are not aware of any specific event or circumstance that would require us to update our estimates, assumptions and judgments or revise the carrying value of our assets or liabilities. However, our estimates, judgments and assumptions are continually evaluated based on available information and experience and may change as new events occur and additional information is obtained. Because of the use of estimates inherent in the financial reporting process and in light of the continuing uncertainty arising from the Macroeconomic Conditions, actual results could differ from those estimates and any such differences may be material. Estimates are used when accounting for revenue recognition, allowances for credit losses, allowance for hardware returns, estimates of obsolete inventory, long-term incentive compensation, the lease term and incremental borrowing rates for leases, stock-based compensation, income taxes, legal reserves and goodwill, intangible assets and other long-lived assets.

Significant Accounting Policies

Other than those disclosed herein, there have been no other material changes to our significant accounting policies during the three and six months ended June 30, 2023 from those disclosed in our Annual Report.

8


ALARM.COM HOLDINGS, INC.
Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued)
June 30, 2023 and 2022
Comprehensive Income

Comprehensive income consists of net income and other comprehensive income. Other comprehensive income refers to gains and losses that are recorded as an element of stockholders' equity and excluded from net income. Our other comprehensive income consists of foreign currency translation adjustments.

Foreign Currency

For foreign operations where substantially all monetary transactions are in the local currency, we use the local currency as our functional currency. For these foreign operations, assets and liabilities are translated at period-end exchange rates and revenue and expense items are translated at weighted-average exchange rates prevailing during the periods being reported. The effects of translating financial statements of foreign operations into our reporting currency are recognized as a cumulative translation adjustment within accumulated other comprehensive income, a separate component of stockholders’ equity. Gains or losses from foreign currency remeasurements that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in our results of operations.

Redeemable Noncontrolling Interests

Noncontrolling interests with redemption features that are not solely within our control are considered redeemable noncontrolling interests. Our redeemable noncontrolling interests relate to our 86% equity ownership interest in PC Open Incorporated, a Washington corporation, doing business as OpenEye and our 85% equity ownership interest in Noonlight, Inc., or Noonlight, a Delaware corporation. The OpenEye and Noonlight stockholder agreements contain a put option that gives the minority stockholders the right to sell their shares to us based on the fair value of the shares and also contain a call option that gives us the right to purchase the remaining shares from the minority stockholders based on the fair value of the shares. The put and call options related to OpenEye can each be exercised beginning in the first quarter of 2023. The put and call options related to Noonlight can each be exercised beginning in the first quarter of 2026. These redeemable noncontrolling interests are considered temporary equity and we report them between liabilities and stockholders’ equity in the consolidated balance sheets. The amount of the net income or loss attributable to the redeemable noncontrolling interests is recorded in the consolidated statements of operations and the accretion of the redemption values is recorded as an adjustment to additional paid-in capital. We account for purchases of redeemable noncontrolling interest as a component of stockholders' equity when control is maintained. We recognize the difference between the consideration paid for the acquired redeemable noncontrolling interest and the fair value of the acquired redeemable noncontrolling interest as an adjustment to additional paid-in capital.

Note 3. Revenue from Contracts with Customers

Contract Assets

The changes in our contract assets are as follows (in thousands):
Three Months Ended
June 30,
Six Months Ended
June 30,
2023202220232022
Beginning of period balance$13,879 $4,480 $13,975 $4,520 
Commission costs and upfront payments to a customer capitalized in period1,547 3,921 3,220 4,727 
Amortization of contract assets(1,845)(986)(3,614)(1,832)
End of period balance$13,581 $7,415 $13,581 $7,415 

Contract Liabilities

The changes in our contract liabilities are as follows (in thousands):
Three Months Ended
June 30,
Six Months Ended
June 30,
2023202220232022
Beginning of period balance$20,231 $15,619 $18,332 $14,837 
Revenue deferred in period5,719 5,387 11,659 9,377 
Revenue recognized from amounts included in contract liabilities(4,490)(3,765)(8,531)(6,973)
End of period balance$21,460 $17,241 $21,460 $17,241 
9


ALARM.COM HOLDINGS, INC.
Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued)
June 30, 2023 and 2022

Note 4. Accounts Receivable, Net

The components of accounts receivable, net are as follows (in thousands):
June 30,
2023
December 31,
2022
Accounts receivable$128,590 $128,669 
Allowance for credit losses(3,159)(2,835)
Allowance for product returns(2,146)(1,551)
Accounts receivable, net$123,285 $124,283 

For the three and six months ended June 30, 2023, we recorded a provision for credit losses of $0.1 million and $0.6 million, respectively, as compared to $0.4 million and $0.5 million for the same periods in the prior year.

For the three and six months ended June 30, 2023, we recorded a reserve for product returns of $1.3 million and $2.5 million in our hardware and other revenue, respectively, as compared to $0.9 million and $1.7 million for the same periods in the prior year. Historically, we have not experienced write-offs for uncollectible accounts or sales returns that have differed significantly from our estimates.

Allowance for Credit Losses - Accounts Receivable

The allowance for credit losses is a valuation account that is deducted from the accounts receivable and notes receivable amortized cost basis (see Note 8) to present the net amount expected to be collected. We estimate the allowance balance by applying the loss-rate method using relevant available information from internal and external sources, including historical write-off activity, current conditions and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for changes in economic conditions, such as changes in unemployment rates. We use projected economic conditions over a period no more than twelve months based on data from external sources. For periods beyond the twelve-month reasonable and supportable forecast period, we revert to historical loss information immediately.

The allowance for credit losses is measured on a pooled basis when similar risk characteristics exist. When assessing whether to measure certain financial assets on a pooled basis, we considered various risk characteristics, including the financial asset type, size and the historical or expected credit loss pattern. We identified the following two portfolio segments for our accounts receivable: (i) outstanding accounts receivable balances within Alarm.com and certain subsidiaries and (ii) outstanding accounts receivable balances within all other subsidiaries. There were no changes to our portfolio segments for our accounts receivable during the three and six months ended June 30, 2023, and no changes to our policies or practices that influenced our estimate of expected credit losses for accounts receivable. Additionally, there were no significant changes in the amount of accounts receivable write-offs during the three and six months ended June 30, 2023, as compared to historical periods.

Expected credit losses are estimated over the contractual term of the financial assets and we adjust the term for expected prepayments when appropriate. For the three and six months ended June 30, 2023, we recorded credit loss expense for accounts receivable and notes receivable of less than $0.1 million and $0.5 million, respectively, in general and administrative expense in our condensed consolidated statements of operations. For the three and six months ended June 30, 2022, we recorded credit loss expense of $0.4 million and $0.3 million, respectively, in general and administrative expense in our condensed consolidated statements of operations. The contractual term excludes expected extensions, renewals and modifications because extension and renewal options are unconditionally cancelable by us. Write-offs of the amortized cost basis are recorded to the allowance for credit losses. Any subsequent recoveries of previously written off balances are recorded as a reduction to credit loss expense.
10


ALARM.COM HOLDINGS, INC.
Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued)
June 30, 2023 and 2022

The changes in our allowance for credit losses for accounts receivable are as follows (in thousands):
Three Months Ended
June 30, 2023
Three Months Ended
June 30, 2022
Six Months Ended
June 30, 2023
Six Months Ended
June 30, 2022
 Alarm.com
and Certain
Subsidiaries
All Other
Subsidiaries
 Alarm.com
and Certain
Subsidiaries
All Other
Subsidiaries
 Alarm.com
and Certain
Subsidiaries
All Other
Subsidiaries
Alarm.com
and Certain
Subsidiaries
All Other
Subsidiaries
Beginning of period balance$(3,102)$(97)$(2,122)$(31)$(2,755)$(80)$(2,035)$(133)
Recovery of / (provision for) expected credit losses19 (96)(464)(29)(487)(130)(619)72 
Write-offs115 2 136 2 274 19 204 3 
End of period balance$(2,968)$(191)$(2,450)$(58)$(2,968)$(191)$(2,450)$(58)

Note 5. Inventory

The components of inventory are as follows (in thousands):
June 30,
2023
December 31,
2022
Raw materials$38,218 $38,098 
Work-in-process420  
Finished goods79,125 77,486 
Total inventory$117,763 $115,584 

Inventory values include a write-down of $1.2 million during the three months ended June 30, 2023, which is reflected in cost of hardware and other revenue within our condensed consolidated statements of operations. The inventory write-down is the result of a lower of cost or net realizable value adjustment for finished goods.


11


ALARM.COM HOLDINGS, INC.
Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued)
June 30, 2023 and 2022
Note 6. Acquisitions

Asset Acquisition

On April 21, 2023, Alarm.com Incorporated, one of our wholly-owned subsidiaries, acquired certain assets of Vintra, Inc., or Vintra. Substantially all of the acquired assets consisted of developed technology. We believe the acquisition of the developed technology will expand Alarm.com's learning program and accelerate deployment of advanced video analytics solutions for the Alarm.com and OpenEye platforms.

In consideration for the purchase of the acquired assets, we paid $5.5 million in cash on April 21, 2023, after deducting $0.3 million related to the settlement of an outstanding loan issued to Vintra during March 2023 and $1.0 million related to an agreed holdback provision. The holdback is expected to be paid by the third quarter of 2024, subject to offset for any indemnification obligations. Additionally, we incurred $0.4 million in direct transaction costs related to legal fees during 2023 that were capitalized as a component of the consideration transferred. The $7.1 million purchase price consideration allocated to developed technology was recorded as an intangible asset at the time of the asset acquisition and is being amortized on a straight-line basis over an estimated useful life of five years. The remaining $0.1 million purchase price consideration was allocated to property and equipment.

Acquisition of a Business - EBS

On January 18, 2023, one of our wholly-owned subsidiaries acquired 100% of the issued and outstanding shares of capital stock of EBS Spółka z ograniczoną odpowiedzialnością, or EBS, an international producer of universal smart communicator devices, headquartered in Warsaw, Poland. We believe this acquisition will assist in the continued expansion of our international operations as well as benefit our supply chain operations.

In consideration for the purchase of EBS, we paid $9.8 million in cash on January 18, 2023, after deducting $2.2 million related to agreed holdback provisions. An earn-out up to an additional $2.5 million is payable if certain performance targets are met, which was initially recorded at the acquisition date fair value of $2.0 million. The acquisition was accounted for as a business combination within our Alarm.com segment. The purchase price allocation was not finalized as of the filing date of this Quarterly Report on Form 10-Q and is pending the final determination of the tax adjustments. The overall impacts to our condensed consolidated financial statements were not considered material for the three and six months ended June 30, 2023.

Acquisition of a Business - Noonlight

On September 23, 2022, Alarm.com Incorporated acquired 85% of the issued and outstanding shares of capital stock of Noonlight. Noonlight provides a connected safety and event management software and services platform that enables new applications and provides enhanced emergency response capabilities. We believe the acquisition of Noonlight will enhance our comprehensive suite of interactive cloud-based services and allow us to expand markets for emergency response services as well as accelerate innovation in those services.

In consideration for the purchase of 85% of the issued and outstanding shares of capital stock of Noonlight, we paid $31.9 million in cash on September 23, 2022, after deducting $1.5 million related to an outstanding loan issued to Noonlight during May 2022 and $4.9 million related to agreed holdback provisions. The working capital adjustment was finalized during the first quarter of 2023 and $0.4 million was paid during the second quarter of 2023. The remaining amount of the holdback of $4.6 million is expected to be paid to the stockholders of Noonlight by the end of the first quarter of 2024, subject to offset for any indemnification obligations.

12


ALARM.COM HOLDINGS, INC.
Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued)
June 30, 2023 and 2022
The table below sets forth the purchase consideration and the fair value allocation of the tangible and intangible net assets acquired (in thousands):
September 23, 2022
Calculation of Purchase Consideration:
Cash paid, net of working capital adjustment$31,805 
Outstanding principal and interest of loan provided to Noonlight1,537 
Holdback consideration4,910 
Total consideration$38,252 
Tangible and Intangible Net Assets:
Cash$188 
Accounts receivable 291 
Other current and non-current assets200 
Property and equipment45 
Deferred tax assets424 
Developed technology9,335 
Trade names150 
Accounts payable(321)
Accrued expenses and other current liabilities(318)
Deferred revenue(67)
Redeemable noncontrolling interest(6,770)
Goodwill35,095 
Total tangible and intangible net assets$38,252 

Goodwill of $35.1 million reflects the value of acquired workforce and synergies we expect to achieve from integrating Noonlight's suite of emergency response cloud-managed application program interfaces into our existing comprehensive suite of interactive cloud-based services. None of the goodwill recognized is expected to be deductible for income tax purposes in future periods. We allocate goodwill to reporting units based on expected benefit from synergies and have allocated the goodwill to the Alarm.com segment.

Fair Value of Net Assets Acquired and Intangibles

The acquired activities and assets in the purchase of Noonlight constituted a business and with the exception of contract liabilities accounted for under Topic 606, in accordance with Accounting Standards Codification, or ASC 805, "Business Combinations," the assets and liabilities were recorded at their respective fair values as of September 23, 2022. We developed the fair value of intangible net assets using a multi-period excess earnings method for developed technology and the relief from royalty method for the trade name.

Developed Technology

Developed technology primarily consists of intellectual property of proprietary software that is marketed for sale. We valued the developed technology using the multi-period excess earnings method, an income approach. The significant assumptions used in the income approach include estimates about future expected cash flows from the developed technology, the obsolescence factor and the discount rate. We are amortizing the Noonlight developed technology, valued at $9.3 million, on an attribution method based on the discounted cash flows of the model over an estimated useful life of seven years.

Trade Names

We valued the trade names acquired using a relief from royalty method. The significant assumptions used in the income approach include future expected cash flows from the trade name, the royalty rate and the discount rate. We are amortizing the trade names, valued at $0.2 million, on an attribution basis derived from the discounted cash flows of the model over an estimated useful life of five years.

13


ALARM.COM HOLDINGS, INC.
Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued)
June 30, 2023 and 2022
Redeemable Noncontrolling Interest

We have a redeemable noncontrolling interest related to our 85% equity ownership interest in Noonlight. The Noonlight stockholder agreement contains a put option that gives the minority Noonlight stockholders the right to sell their remaining 15% equity ownership interest to us based on the fair value of the shares and also contains a call option that gives us the right to purchase the remaining Noonlight shares from the minority Noonlight stockholders based on the fair value of the shares. The put and call options can each be exercised beginning in the first quarter of 2026. This redeemable noncontrolling interest was recorded at fair value on September 23, 2022, by applying the income approach using unobservable inputs for projected cash flows, including projected financial results and a discount rate, which are considered Level 3 inputs. This redeemable noncontrolling interest is considered temporary equity and we report it between liabilities and stockholders’ equity in the condensed consolidated balance sheets. The redemption value of the Noonlight noncontrolling interest was $6.8 million as of September 23, 2022 and $6.5 million as of June 30, 2023.

Business Combinations in Operations - Noonlight

The operations of the Noonlight business combination discussed above were included in the condensed consolidated financial statements as of the acquisition date. The pro forma information as well as the revenue and net losses of the business combination were not material to the condensed consolidated financial statements in the year of acquisition.

Note 7. Goodwill and Intangible Assets, Net

The changes in goodwill by reportable segment are outlined below (in thousands):
Alarm.comOtherTotal
Balance as of January 1, 2023
$148,183 $ $148,183 
Goodwill acquired7,200  7,200 
Measurement period adjustments(1,760) (1,760)
Foreign currency translation adjustment 374  374 
Balance as of June 30, 2023$153,997 $ $153,997 

On January 18, 2023, we acquired 100% of the issued and outstanding shares of capital stock of EBS and initially recorded $7.2 million of goodwill in the Alarm.com segment. The measurement period adjustments relate to the Noonlight and EBS working capital and tax adjustments during the three and six months ended June 30, 2023.

The following table reflects changes in the net carrying amount of the components of intangible assets (in thousands):
Customer
Relationships
Developed
Technology
Trade NameCapitalized Software Development CostsTotal
Balance as of January 1, 2023
$47,522 $33,553 $1,383 $ $82,458 
Intangible assets acquired2,395 11,583 537  14,515 
Capitalized software development costs    149 149 
Amortization(5,265)(3,677)(339) (9,281)
Balance as of June 30, 2023$44,652 $41,459 $1,581 $149 $87,841 

We recorded $4.7 million and $9.3 million of amortization related to our intangible assets for the three and six months ended June 30, 2023, respectively, as compared to $4.5 million and $9.1 million for the same periods in the prior year. There were no impairments of long-lived intangible assets during the three and six months ended June 30, 2023 and 2022. During the six months ended June 30, 2022, we wrote-off $0.7 million in fully amortized intangible assets in the Alarm.com segment that were acquired in 2014 related to customer relationships, developed technology, trade name and other intangible assets that no longer existed as of January 1, 2022.

14


ALARM.COM HOLDINGS, INC.
Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued)
June 30, 2023 and 2022
The following tables reflect the weighted average remaining life and carrying value of finite-lived intangible assets (in thousands, except weighted-average remaining life):
 June 30, 2023
 Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Value
Weighted-
Average
Remaining Life
(in years)
Customer relationships$128,280 $(83,628)$44,652 6.6
Developed technology70,061 (28,602)41,459 5.2
Trade name4,474 (2,893)1,581 2.8
Capitalized software development costs149  149 3.0
Total intangible assets$202,964 $(115,123)$87,841 5.9
 December 31, 2022
 Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Value
Weighted-
Average
Remaining Life
(in years)
Customer relationships$125,885 $(78,363)$47,522 7.0
Developed technology58,478 (24,925)33,553 5.8
Trade name3,937 (2,554)1,383 2.4
Total intangible assets$188,300 $(105,842)$82,458 6.5
Note 8. Other Assets

Loan to a Distribution Partner

In December 2022, we amended a subordinated credit agreement with the affiliated entity of one of our distribution partners. The amended subordinated credit agreement with the affiliated entity of the distribution partner matures on June 18, 2027 and interest on the outstanding principal balance accrues at a rate of 12.0% per annum and is payable in kind. As of June 30, 2023 and December 31, 2022, $4.3 million and $4.0 million of the notes receivable balance related to the subordinated credit agreement was included in other assets in our condensed consolidated balance sheets, respectively.

For the three and six months ended June 30, 2023, we recognized $0.8 million and $1.6 million of revenue from the distribution partner associated with this loan, respectively, as compared to $0.9 million and $1.5 million for the same periods in the prior year.

15


ALARM.COM HOLDINGS, INC.
Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued)
June 30, 2023 and 2022
Loan to a Service Provider Partner

In July 2020, we entered into a loan agreement with a service provider partner, under which we agreed to loan the service provider partner up to $2.5 million, collateralized by the assets of the service provider partner. Interest on the outstanding principal accrues at a rate per annum equal to 9.0% and monthly interest and principal payments began in April 2021. The maturity date of the loan is July 24, 2025. As of June 30, 2023 and December 31, 2022, $1.1 million of principal was outstanding from the service provider partner under the loan agreement.

For three and six months ended June 30, 2023 and 2022, we recognized less than $0.1 million and $0.1 million, respectively, of revenue from the service provider partner associated with this loan.

Loan to a Technology Partner

In June 2022, we entered into a convertible promissory note with a technology partner, under which we agreed to loan the technology partner $1.5 million. Interest on the outstanding principal accrues at a rate per annum equal to 6.5%, starting one year from the effective date of the loan. Interest and principal payments are due on the maturity date of the loan, which is June 27, 2029, unless the loan is converted prior to the maturity date, which may occur upon a qualified financing event, as defined in the convertible promissory note, upon a sale of the technology partner or upon our election on the maturity date of the loan. As of June 30, 2023 and December 31, 2022, $1.5 million of principal was outstanding from the technology partner under the convertible promissory note.

For the three and six months ended June 30, 2023 and 2022, we did not record any revenue from the technology partner associated with this convertible promissory note.

Investment in a Hardware Supplier

In October 2018, we entered into a subordinate convertible promissory note with one of our hardware suppliers. In July 2019, we converted the outstanding notes receivable balance of $5.6 million into 9,520,832 shares of Series B preferred stock in the hardware supplier. We concluded that the $5.6 million equity investment, which is included in the Alarm.com segment, does not meet the criteria for consolidation and will be accounted for using the measurement alternative. Under the alternative, we measure investments without readily determinable fair values at cost, less impairment, adjusted for observable price changes from orderly transactions for identical or similar investments. As of June 30, 2023 and December 31, 2022, our investment in the hardware supplier was $5.6 million.

Investments in Technology Partners

In February 2021, we paid $5.0 million in cash to purchase 1,000,000 shares of Series B-2 Preferred Stock from a technology partner as part of a financing round that included other investors. The $5.0 million equity investment, which is included in the Alarm.com segment, does not meet the criteria for consolidation and is accounted for using the measurement alternative. Under the measurement alternative, we measure investments without readily determinable fair values at cost, less impairment, adjusted for observable price changes from orderly transactions for identical or similar investments. As of June 30, 2023 and December 31, 2022, our investment in the technology partner was $5.7 million.

In December 2022, we paid $5.1 million in cash to another technology partner to purchase 4,231,717 shares of its Series A Preferred Stock. The $5.1 million equity investment, which is included in the Alarm.com segment, does not meet the criteria for consolidation and is accounted for using the measurement alternative. As of June 30, 2023 and December 31, 2022, our investment in the technology partner was $5.1 million.

Allowance for Credit Losses - Notes Receivable

We identified the following two portfolio segments for our notes receivable: (i) loan receivables and (ii) hardware financing receivables. There were no changes to our portfolio segments for our notes receivable during the three and six months ended June 30, 2023, and no changes to our policies or practices involving the issuance of notes receivable, customer acquisitions or any other factors that influenced our estimate of expected credit losses for notes receivable. There were no hardware financing receivables outstanding as of June 30, 2023 and December 31, 2022.

We do not accrue interest on notes receivable that are considered impaired or are 90 days or greater past due based on their contractual payment terms. Notes receivable that are 90 days or greater past due are placed on nonaccrual status. Notes receivable may be placed on nonaccrual status earlier if, in management’s opinion, a timely collection of the full principal and interest becomes uncertain. After a note receivable has been placed on nonaccrual status, interest will be recognized when cash is received. A note receivable may be returned to accrual status after all of the customer’s delinquent balances of principal and interest have been settled, and collection of all remaining contractual amounts due is reasonably assured. We have elected not to measure an allowance for credit losses for accrued interest receivables. We write-off any accrued interest on notes receivable
16


ALARM.COM HOLDINGS, INC.
Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued)
June 30, 2023 and 2022
that are considered impaired or are 90 days or greater past due based on their contractual payment terms by reversing interest income. The accrued interest receivable as of June 30, 2023 and December 31, 2022 was less than $0.1 million, and is reflected in other current assets and other assets within our condensed consolidated balance sheets and excluded from the amortized cost basis of the notes receivable. We did not write-off any accrued interest receivable during the three and six months ended June 30, 2023 and 2022.

There were no purchases or sales of financial assets during the three and six months ended June 30, 2023 and 2022. There were no significant changes in the amount of note receivable write-offs during the three and six months ended June 30, 2023, as compared to historical periods.

The changes in our allowance for credit losses for notes receivable are as follows (in thousands):
Three Months Ended
June 30, 2023
Three Months Ended
June 30, 2022
Six Months Ended
June 30, 2023
Six Months Ended
June 30, 2022
Loan
Receivables
Hardware
Financing
Receivables
Loan
Receivables
Hardware
Financing
Receivables
Loan
Receivables
Hardware
Financing
Receivables
Loan
Receivables
Hardware
Financing
Receivables
Beginning of period balance$(2)$ $(1)$(1)$(2)$ $(79)$(1)
Recovery of / (provision for) expected credit losses  (1)1   77 1 
Write-offs        
End of period balance$(2)$ $(2)$ $(2)$ $(2)$ 

We manage our notes receivables using delinquency as a key credit quality indicator. The following tables reflect the current and delinquent notes receivable by class of financing receivables and by year of origination (in thousands):
June 30, 2023
Loan Receivables:20232022202120202019PriorTotal
Current$ $1,500 $ $1,066 $1 $4,259 $6,826 
30-59 days past due       
60-89 days past due       
90-119 days past due       
120+ days past due       
Total$ $1,500 $ $1,066 $1 $4,259 $6,826 

December 31, 2022
Loan Receivables:20222021202020192018PriorTotal
Current$1,500 $ $1,093 $1 $ $4,015 $6,609 
30-59 days past due       
60-89 days past due       
90-119 days past due       
120+ days past due       
Total$1,500 $ $1,093 $1 $ $4,015 $6,609 

There were no notes receivable placed on nonaccrual status as of June 30, 2023 and December 31, 2022. During the three and six months ended June 30, 2023 and 2022, there was no interest income recognized related to notes receivable that were in nonaccrual status.

As of June 30, 2023 and December 31, 2022, there were no notes receivable placed in nonaccrual status for which there was not a related allowance for credit losses. As of June 30, 2023 and December 31, 2022, there were no notes receivable that were 90 days or greater past due for which we continued to accrue interest income.

17


ALARM.COM HOLDINGS, INC.
Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued)
June 30, 2023 and 2022
Prepaid Expenses

As of June 30, 2023 and December 31, 2022, $14.7 million and $14.5 million of prepaid expenses were included in other current assets, respectively, primarily related to software licenses and long lead-time parts related to our inventory.

Note 9. Fair Value Measurements

The following tables present our assets and liabilities measured at fair value on a recurring basis (in thousands):
Fair Value Measurements on a Recurring Basis
Assets:Level 1Level 2Level 3Total
Money market accounts as of June 30, 2023
$612,955 $ $ $612,955 
Money market accounts as of December 31, 2022
510,326   510,326 
Liabilities:
Contingent consideration liability from acquisition as of June 30, 2023
$ $ $2,020 $2,020 
Contingent consideration liability from acquisition as of December 31, 2022
    

The following table summarizes the change in fair value of the Level 3 liabilities with significant unobservable inputs (in thousands):
Three Months Ended
June 30,
Six Months Ended
June 30,
2023202220232022
Contingent Consideration Liability from AcquisitionSubsidiary Long-Term Incentive Plan Contingent Consideration Liability from AcquisitionSubsidiary Long-Term Incentive Plan
Beginning of period balance$2,006 $3,104 $ $3,351 
Acquired liabilities  1,993  
Changes in fair value included in earnings14  27 (247)
Reclassification to additional paid in capital upon modification (3,104) (3,104)
End of period balance$2,020 $ $2,020 $ 
    
As of June 30, 2023, $611.7 million of our money market accounts was included in cash and cash equivalents and $1.3 million was included in other assets in our condensed consolidated balance sheets. As of December 31, 2022, $509.6 million was included in cash and cash equivalents and $0.7 million was included in other assets in our condensed consolidated balance sheets. Our money market assets are valued using quoted prices in active markets. See Note 12 for the carrying amount and estimated fair value of our convertible senior notes as of June 30, 2023 and December 31, 2022.

The liability for the subsidiary long-term incentive plan consisted of the potential cash payment contingent upon meeting certain financial milestones related to the agreement established with certain employees of one of our subsidiaries. This incentive plan was established in November 2017 and the amount of compensation awarded to employees depended on the fair market value of the subsidiary, which was determined in part by the subsidiary’s projected financial results. We accounted for the subsidiary long-term incentive plan using fair value and established liabilities for the future payments under the terms of the incentive plan based on estimating revenue, EBITDA and EBITDA margin of the subsidiary over the period of the incentive plan through the anticipated achievement of the milestones. We estimated the fair value of the liability by using a Monte Carlo simulation model which involves several Level 3 unobservable inputs. The significant unobservable inputs used in the valuation included a weighted average revenue volatility and the revenue risk adjustment. The revenue volatility was weighted using revenue volatility results from the subsidiary’s peer group as well as market transaction metrics. The revenue risk adjustment was calculated using capital structure allocations from the subsidiary’s peer group, market transaction metrics as well as United States Treasury yields.

In May 2022, we terminated the subsidiary long-term incentive plan. The fair value of the liability related to the subsidiary long-term incentive plan as of the termination date was consistent with the liability as of March 31, 2022. Concurrent with the termination of the subsidiary long-term incentive plan, we granted performance-based restricted stock units to those employees who previously participated in the subsidiary long-term incentive plan. We accounted for the termination of the subsidiary long-term incentive plan and concurrent grant of performance-based restricted stock units as a modification of the original subsidiary
18


ALARM.COM HOLDINGS, INC.
Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued)
June 30, 2023 and 2022
long-term incentive plan. As a result, we reclassified the $3.1 million liability related to the subsidiary long-term incentive plan to additional paid-in capital during the three months ended June 30, 2022. Additionally, we recorded $1.2 million in incremental compensation costs as additional stock-based compensation expense to the applicable operating expense category based on the respective employee’s function (sales and marketing, general and administrative or research and development) during the three months ended June 30, 2022. The incremental compensation costs represented the excess of the fair value of the performance-based restricted stock units over the fair value of the subsidiary long-term incentive plan as of the modification date of the subsidiary long-term incentive plan.

The contingent consideration liability consists of the potential earn-out payment related to our acquisition of 100% of the issued and outstanding capital stock of EBS on January 18, 2023. The earn-out payment is contingent on the satisfaction of certain performance targets related to the integration of EBS's hardware into the Alarm.com platform by December 31, 2025 and has a maximum potential payment of up to $2.5 million. We account for the contingent consideration using fair value and established a liability for the future earn-out payment based on an estimation of the probability of the future achievement of the performance targets. The contingent consideration liability was valued with Level 3 unobservable inputs, including the probability of expected achievement of the performance targets. At January 18, 2023, the fair value of the liability was $2.0 million. At each reporting date until December 31, 2025, or the achievement of the performance targets, we will remeasure the liability, using the same valuation approach. Changes in fair value resulting from information that existed subsequent to the acquisition date are recorded in general and administrative expense in the condensed consolidated statements of operations. During the three and six months ended June 30, 2023, the contingent consideration liability did not materially change from the acquisition date fair value of $2.0 million as there were no changes in the expected probability of achievement for the performance targets. The unobservable inputs used in the valuation as of June 30, 2023 included a weighted average expected achievement percentage of 89.5%, weighted by the potential payout of the performance targets, including a range of 80.0% to 99.0%. The valuation also included a weighted average discount rate of 6.5%, weighted by the probability of achievement of the performance targets at various dates, including a range of 6.4% to 6.6%. Selecting another probability of expected achievement or discount rate within an acceptable range would not result in a significant change to the fair value of the contingent consideration liability.

We monitor the availability of observable market data to assess the appropriate classification of financial instruments within the fair value hierarchy. Changes in economic conditions or model-based valuation techniques may require the transfer of financial instruments from one fair value level to another. There were no transfers into Level 3 or reclassifications between levels of the fair value hierarchy during the three and six months ended June 30, 2023 and 2022. We also monitor the value of the investments for other-than-temporary impairment on a quarterly basis. No other-than-temporary impairments occurred during the three and six months ended June 30, 2023 and 2022.

Note 10. Leases

We lease office space, data centers and office equipment under non-cancelable operating leases with various expiration dates through 2030. In August 2014, we signed a lease for office space in Tysons, Virginia, where we relocated our headquarters to in February 2016. We have subsequently entered into amendments to this lease to provide us with additional office space. The lease term ends in 2026, includes a five-year renewal option and a cumulative tenant improvement allowance of $12.1 million.

Supplemental information related to leases is presented in the table below (in thousands, except weighted-average term and discount rate):
Three Months Ended
June 30,
Six Months Ended
June 30,
2023202220232022
Operating lease cost$2,871 $2,592 $5,621 $5,065 
Cash paid for amounts included in the measurement of operating lease liabilities3,434 3,125 6,796 6,100 
Operating lease right-of-use assets obtained in exchange for new operating lease liabilities