XML 28 R17.htm IDEA: XBRL DOCUMENT v3.25.3
Fair Value Measurements
 9 Months Ended
Sep. 30, 2025
Fair Value Disclosures [Abstract]  
Fair Value Measurements 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 September 30, 2025
$1,055,376 $— $— $1,055,376 
Money market accounts as of December 31, 2024
1,209,474 — — 1,209,474 
Equity securities with readily determinable fair value as of September 30, 2025
11,550 — — 11,550 
Equity securities with readily determinable fair value as of December 31, 2024
7,425 — — 7,425 
Liabilities:
Contingent consideration liability from acquisition as of September 30, 2025
$— $— $1,155 $1,155 
Contingent consideration liability from acquisition as of December 31, 2024
— — 2,169 2,169 

The following table summarizes the change in fair value of the Level 3 contingent consideration liability with significant unobservable inputs (in thousands):
Three Months Ended
September 30,		Nine Months Ended
September 30,
2025202420252024
Beginning of period balance$613 $2,105 $2,169 $2,061 
Performance target achievement payment— — (1,266)— 
Changes in fair value included in earnings542 61 252 105 
End of period balance$1,155 $2,166 $1,155 $2,166 

As of September 30, 2025, $1.05 billion of our money market accounts was included in cash and cash equivalents, $6.2 million was included in other assets and $1.9 million was included in other current assets in our condensed consolidated balance sheets. As of December 31, 2024, $1.20 billion of our money market accounts was included in cash and cash equivalents, $6.2 million was included in other assets and $1.9 million was included in other current assets in our condensed consolidated balance sheets. Our assets from money market accounts are valued using quoted prices in active markets. Our equity securities with readily determinable fair value represent our investments in publicly traded companies, which are valued using quoted prices in active markets. During the three and nine months ended September 30, 2025, we recorded an unrealized gain on equity securities of $3.6 million and an unrealized loss on equity securities of $0.1 million, respectively, as compared to an unrealized loss of $0.2 million for the same periods in the prior year. Our investments in public entities are recorded at fair value within other current assets in our condensed consolidated balance sheets and changes in fair value of the investments are recorded within other income / (expense), net within our condensed consolidated statements of operations. See Note 13 for the carrying amounts and estimated fair values of our convertible senior notes as of September 30, 2025 and December 31, 2024.

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 two performance targets related to the integration of EBS's hardware into the Alarm.com platform by December 31, 2026, 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, 2026, or the achievement of the performance targets, we will remeasure the liability, using the same valuation approach. The fair value of the contingent consideration liability as of September 30, 2025 was included within accounts payable, accrued expenses and other current liabilities within our condensed consolidated balance sheet. 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. One of the performance targets was achieved during the nine months ended September 30, 2025, and the related payment of $1.3 million was made during the second quarter of 2025. The unobservable inputs used in the valuation for the remaining performance target as of September 30, 2025 included an expected achievement percentage of 95.0%. The valuation also included a weighted average discount rate of 5.0%, weighted by the probability of achievement of the performance targets at various dates, including a range of 5.0% to 5.1%. 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 or out of Level 3 or reclassifications between levels of the fair value hierarchy during the three and nine months ended September 30, 2025 and 2024.