Alarm.com Holdings, Inc. Price & Performance (ALRM)

In addition, several non GAAP financial measures will be discussed on the call. A reconciliation of GAAP to non GAAP measures can be found in today's press release our Investor Relations website. I'll now turn the call over to Steve Trundle, Steve?

Thank you, Matt. Good afternoon and welcome to everyone. We are pleased to report fourth quarter and full year results that Our SaaS and license revenue in the fourth quarter was $165,700,000 up 11.7% over the last year. Our adjusted EBITDA for the quarter was $46,400,000 I want to thank our service provider partners and our employees their contributions to our 2024 continue to see nice momentum in the business as we finished out 2024 particularly in the commercial security and energy hub parts of our business. On today's call, I'll review our performance, in the primary areas of the business and then provide more details on our recently announced acquisition of ChekT, In 2024, our North American residential business continued to be the largest component of our diversified business. Our advantage in this area comes from our scale, the quality of our offerings and the outstanding relationships we have built over the years with our service provider partners. We've been focused on this market with a sustained commitment of resources for longer than anyone else. While the market remains competitive, our service providers generally have little patience for less complete offerings. Consumer demand for professionally installed and service smart home security solutions remain solid.

One product that we recently released for residential and particularly for the residential rental market is the new Pro Thermostat HQ, This unique thermostat product connects to our cloud directly via an onboard cellular The Pro HQ does not depend on a WiFi network to provide connected thermostat capabilities. So a builder that builds a home and wants to remotely control the temperature and humidity of the property before it's sold, now has a connected thermostat solution that does not require an Internet subscription for the property. Similarly, rental property managers frequently want to remotely manage the HVAC system for a property between tenants.

These temporarily vacant properties often do not have Wi Fi service. Property managers can now install and use the Pro Thermostat HQ to manage and monitor vacant properties all the time.

Our growth initiatives also continued to scale during 2024. These include our commercial business, the international business and energy hub. Collectively, 26% of our total SaaS in 2024 was generated by these businesses.

And collectively their SaaS revenue grew nearly 25% on a year over year basis. I'll review each of these businesses and highlight several recent developments that provide a nice backdrop for 2025. I'll start with our commercial business, which produced over $80,000,000 in SaaS revenue in 2024. Physical security solutions continue to evolve into cloud based software that are more capable and cost effective. Alarm.com Alarm.com designed our commercial offering to seamlessly integrate across access control, intrusion, and video monitoring all into a single cohesive accessible and easily managed through a single app. We believe that our solutions align with what the market wants and our service provider partners offered professional design, installation maintenance services that the commercial market requires. Included in our commercial business is OpenEye, our enterprise video business.

OpenEye continues to post strong growth generating nearly $20,000,000 in SaaS revenue in 2024.

As I have discussed on recent calls, remote video monitoring service or RBM should also further expand the addressable opportunity we have in the commercial market Historically, the primary use case for video solutions was to support investigations and determine when an incident occurred and who was involved. RVM is transforming video surveillance cameras by enabling them to now also deter crime One method that we use for deterrence is to apply AI to identify certain types of activities that appear suspicious. Our system can then engage the potential perpetrator with a generative AI voice that is dynamically tailored to the environment and the individual. We do all this in real time.

Our recent acquisition of Chex takes this a step further and expands our position in the RVM space. We believe that Checked has built the best SaaS software solution for control rooms to professionally monitored properties through an array of security video cameras. The ChekT platform can ingest active surveillance events from nearly any video camera enable those events to be effectively escalated and handled by control room personnel.

Operators can focus on critical events, initiate deterrent activities, reduce false alarms and speed response to threatening scenarios and improve overall security outcomes. ChekT also provides a bridge appliance for installation at the customer site that service providers can use to connect legacy video cameras directly to the central station control room.

Chek supports most OpenEye cameras today and will continue to support many third party cameras. Over time, Alarm.com cameras will also be integrated into the Check Control Room solution. The company is small, but has nice momentum in the RVM space.

We've been impressed by the entrepreneurial energy, and culture of the team and are very pleased that they will now be joining Alarm.com Alarm.com.

Shifting to our international business for a moment, we continue to see solid contributions to our growth in 2024 as we expanded our product offerings and our service provider footprint in over 70 countries, In 2024, total revenue from outside of of our consolidated total revenue as reported in our 10 ks. We have the right set of marquee service provider partners internationally to support further growth in this area. In 2025, we'll continue to focus on growing our support for regional and local service providers to further grow and diversify our international revenue streams. The final element of our growth strategy is the continued development of our venture businesses. These SaaS based businesses consist of EnergyHub, Building thirty six, PointCentral and Shooter Detection Systems. Each is developing Innovative IoT enabled applications that further expand our addressable markets. I'll spend a moment discussing EnergyHub, which is the most developed of these businesses. EnergyHub provides software technology for grid level energy management. Now more than a $50,000,000 SaaS business and growing nicely. The EnergyHub platform interfaces to various IoT devices to aggregate distributed energy resources such as smart thermostats, residential batteries, electric vehicles and charging infrastructure.

Power plant that provides great flexibility and load management during periods of supply and demand imbalance. In 2024, EnergyHub began introducing dynamic load shaping.

This first to market capability uses machine learning algorithms to automatically dispatch granular groups of grid edge devices provide more precise and sustained load shaping.

With dynamic load shaping, utilities have greater flexibility for leveraging the virtual power plant production [indiscernible] Dynamic load shaping functionality proved successful across three proof of concept tests last summer.

EnergyHub pioneered the residential derm's space enrolled grid edge devices for over 70 utility clients in The U. S. The business is in a strong position to unlock additional value streams in the rapidly evolving energy ecosystem. Finally, I would like to let our investors know that my colleagues, Steve Valenzuela, our CFO has decided that he will be retiring from Alarm.com Alarm.com. Are very thankful for all of Steve's contributions over the years, which I would like to recognize. Steve joined Alarm.com in November 2016 At that time, Alarm.com was a much smaller company with total revenue of just $248,000,000 and earnings of $44,000,000 Under Steve's financial leadership, have grown revenue by 280% Today, as Steve's thirty third earnings report with us, and we are reporting more SaaS revenue this quarter than the business generated in the entire twelve months preceding his arrival. He has led countless calls with our investors and ensured that we always provide high fidelity reporting on our business.

As importantly, he has built a great finance team at Alarm.com that is geared up to continue executing our plan going forward.

We will immediately begin a process to identify our next CFO. We are grateful that Steve will stay with us as long as needed to support the transition to a new CFO. It's important to note that Steve's decision to leave is not due any disagreement concerning the company's financial statements, operations, policies or practices. So we get to have him help us. For a while longer but he will be retiring from the company this year.

Steve? I've enjoyed working with you and we thank you for your service to Alarm.com. And with that, let me turn things over to you to report on how we finished out 2024.

Thank you, Steve, for your very kind words and confidence in me.

It's been a true partnership which for me has been very special. After nearly eight point five years, this is a good time for me to retire from Alarm.com and consider the next chapter in my journey.

I'm committed to remaining in my role for a sufficient period of time to ensure a smooth transition.

It's been my greatest pleasure to play a part in Alarm.com's growth from $248,000,000 to over $900,000,000 in annual revenue and raising over $1,000,000,000 in cash. Leaving the company with a strong balance sheet.

I'd like to thank the employees of Alarm.com in particular the finance team for their support. I'm especially proud of the strong finance team that I've had the pleasure of developing and leading over these years.

This gives me great satisfaction knowing that Alarm.com will be in very good hands.

I'd also like to thank the BoardofAlarm.com our partners, investors and analysts for their support I am confident that Alarm.com will continue to be the leading platform for of connected properties for the next decade and beyond. I look forward to following Alarm.com's progress. And with that, let me turn to review our fourth quarter and full year 2024 financial results and then provide guidance for 2025, before opening the call for questions. Fourth quarter SaaS and license revenue of $165,700,000 grew 11.7% from the same quarter last year as we continue to see good growth in our commercial, international and energet market For the full year of 2024, SaaS and license revenue of $631,200,000 grew 10.9% over 2023.

Our SaaS and license revenue visibility remains high with a revenue retention rate of 95% in the fourth quarter, above our historical trend and higher than our long term target range of 92% to 94%.

Hardware and other revenue in Q4 twenty twenty four was $76,600,000 compared to $77,900,000 in the year ago quarter mainly due to slightly fewer sales of cameras and thermostats. Total revenue $242,200,000 for the fourth quarter, grew 7.1% from Q4 twenty twenty three. For the full year of 2024, total revenue grew 6.6% year over year to $939,800,000 SaaS license gross margin of 85.6% for the fourth quarter increased approximately 100 basis points from the year ago quarter mainly due to the contribution of license revenue Hardware gross margin was 22% for the fourth quarter compared to 25% for Q4 twenty twenty three mainly due to product mix.

Total gross margin was 65.5% for the fourth up from 64.1% for Q4 twenty twenty three, mainly due to a higher percentage of SaaS and license revenue. Turning to operating expenses. R and D expenses in the fourth quarter were $62,000,000 up slightly from 61,300,000.0 in the fourth quarter of twenty twenty three. We ended 2024 with eleven twenty seven employees in R and D, up from eleven eighteen employees, the end of 2023.

Total headcount increased to twenty ten employees compared to nineteen eighty nine employees at the end of 2023.

Sales and marketing expenses in the fourth quarter $30,900,000 or 12.8% of total revenue compared to $25,900,000 or 11.5% of revenue in the same quarter last year, As we increased our investment in some marketing programs, to help drive awareness of our professional service providers for smart property installations. Non GAAP adjusted EBITDA in the fourth quarter was $46,400,000 compared to $45,600,000 in Q4 twenty twenty three. For all of 2024, adjusted EBITDA was $176,200,000 an increase of 14.5% from adjusted EBITDA of $154,000,000 for 2023.

In the fourth quarter, GAAP net income was $30,100,000 compared to GAAP net income of 31,200,000.0 for Q4 twenty twenty three. Non GAAP adjusted net income was $32,600,000 or $0.58 per diluted share in the fourth quarter compared to 33,900,000.0 or $0.62 per share for the fourth quarter of twenty twenty three.

GAAP net income for the full year of 2024 was 122,500,000.0 compared to GAAP net income of $80,300,000 for 2023.

Non GAAP adjusted net income for 2024 was $127,100,000 or $2.28 per diluted share compared to non GAAP net income of $113,200,000 or $2.07 per share for 2023.

Turning to our balance sheet. We ended 2024 with $1,220,000,000 of cash and cash equivalents up from $697,000,000 at 12/31/2023. Through the twelve months ended 12/31/2024, we generated $206,400,000 of cash flow from operations up from $136,000,000 for 2023.

Our free cash flow for 2024 was $196,300,000 dollars compared to $128,400,000 for 2023. The increases in operating free cash flows for 2024 were mainly due to our higher profitability levels and positive working capital trends. Now turning to our financial outlook. For the first quarter of twenty twenty five, we expect SaaS of license revenue of $160,200,000 to $160,400,000 For the full year 2025, we expect SaaS and license revenue to be between 671.26 hundred and $71,800,000 We are projecting total revenue for 2025 of $978,200,000 to $980,800,000 which includes estimated hardware and other revenue of $3.00 $7,000,000 to $3.00 $9,000,000 We estimate that adjusted EBITDA for 2025 will be between $188 to $192,000,000 We expect adjusted EBITDA for the first quarter of twenty to represent approximately 20.5% to 21% of our annual guide. Non GAAP adjusted net income for 2025 is projected to be $130,000,000 to $131,000,000 were $2.28 to $2.29 per diluted share.

EPS is based on an estimate of 60,600,000 weighted average diluted shares outstanding.

We currently project our non GAAP tax rate for 2025 to remain at 21% under current tax rules. We expect full year 2025 stock based compensation expense of $43,000,000 to 45,000,000 In summary, we are focused on executing on our business plan and investing in our long term strategy while continuing to deliver profitable growth. And with that, operator, please open the call for Q and A. Our first question comes from Saket Kalia with Barclays. Your line is open. Okay, great. Hey, guys. Thanks for taking my questions here. And congrats Steve Valenzuela on your retirement.

Thanks, Zach. It's been great to work with you. I'll be around for a little bit while longer though. Yes, absolutely.

Listen, tip by cap to you nonetheless.

Thank you. Steve, maybe for you. You. On the quarter, it was great to see SaaS and license revenue growth accelerate versus the growth that you saw in Q3 Can you just maybe talk about what drove that acceleration? And how you sort of marry that growth versus the the guided growth for SaaS in 2025 at somewhere between 67% growth?

Sure. I would point to first and foremost Energy Hub over in the quarter. Typically, Energy Up has a strong seasonal Q4 they actually overperformed in terms of their savings for the utilities. They also brought on a new utility partner as well. And so that was a very good contribution.

I would also point out to OpenEye OpenEye continues to roll out SaaS to their new subscribers and new customers. And they performed really well So those are really some of the major contributions to Q4.

You also saw international is now 5% of our total revenue.

And the past has been 4% of total revenue. Those are the key points. 6% of total revenue in the quarter, right? It was 5%. So so those are some of the points that I would point out for over performance in the fourth quarter.

Comparing to 2025, in the past, we've talked about some of the headwinds from ADT plus. So we've in on '25, the transition to ADT plus. That's about a 200 basis point headwind And also with the license revenue, in '25 being mostly flat to 24, that's another 200 basis point headwind to growth.

And then we also modeled in a stronger dollar We've seen the dollar strengthened over the last couple of months, especially related to the Canadian dollars. We modeled in a 20 or 30 basis points headwind against growth for 25% related to currency. Got it.

It. That's super helpful. Very helpful bridge. Steve T maybe for my follow-up for you. Obviously, hardware is not the core business here, but just to make sure the question is asked, curious if you could just talk about any potential impact of tariffs on that hardware business?

Sure.

Yes, good question. Wasn't that long ago that we were spending a lot of time dealing with tariffs. So we're in a posture now where we're sort of reviewing tweets and other news releases each morning to to anticipate what type of what type of reaction we should have. Fortunately, we made a lot of effort previously to move the majority of any manufacturing we do out of China So very little exposure to China. At the moment. Most of that Most of the hardware that we produce is made either in Southeast Asia, The U. S, there's a little bit in Mexico and a little bit in Europe So obviously watched sort of the back and forth on Mexico, but it's fairly minor. So we're not at the moment sitting where I sit today, but again, waking up each morning and reading the news and being ready to react. But at the moment, we're not We're not impacted by much by the new tariff activity. That said, we have taken steps to bring in some inventory. Over the last quarter and expect to continue to do that where possible. So you may see a little bit of a trend line in our financials actually that reflects our desire to bring in inventory and be in a little bit more of a defensive posture should there be tariff activity that that Very helpful.

One moment for our next question. Our next question comes from Adam Tindle with Raymond James. Your line is open.

Okay. And my congrats to Steve B as well. I know you're not done quite yet and look forward to having you at our conference here in a couple of weeks. But congratulations on the announcement. We'll certainly miss you.

Thanks, Adam. Looking forward to seeing you in a couple of weeks. Yes. So I wanted to ask on the growth businesses collectively have become obviously a big part of the story growing about 25%, I think you said last year. For Steve V, I wonder if you could maybe just touch on the growth be embedded in your 2025 guidance and the contribution from the acquisition [indiscernible] And then for Steve T, maybe a bigger picture question in light of this.

Just the strategic view on that bucket of the business it's almost as if we've got kind of two different businesses we're running here, one that's growing over 20% and when we back into the other piece of the business growing closer to mid single digits, wonder if you might just kind of assess the two different pieces of business that you have there the synergies between the two and what would prompt you to think about maybe strategic options, whether that's spinning, splitting, those sorts of things? Hey, Adam. I guess I'll start with the growth initiatives for 2025. We're essentially modeling the same growth we've seen in 2024 And we did talk about the acquisition of Chek. It is an early stage company. It is included in our guidance for $25,000,000 There's a modest contribution in of '25 We bumped up our guidance for 25% for SaaS from the initial look [indiscernible] Now I'll turn it over to Steve Trundle.

Sure. So yes, on the strategic view, Our view is that one of the primary sort of intangible assets of the company are the set of relationships that we've developed around the world in the channel. And when we when we got started, of course, we were almost exclusively focused on the residential intrusion part of the market. And what we're focused on doing now is unlocking the potential of that channel [indiscernible] a broader set of areas. And almost everything we're doing kind of maps directly to that with the exception of of Energyhub, but even there there's some overlap. So So I think And there is a lot of synergy between the R and D piece on residential and commercial. Oftentimes we find features that we did for someone that [indiscernible] three homes that are now relevant for someone that has three business locations. As a very simple example. So we think it's what the market is asking us do. It's what our service providers are asking us to do. We it gives us a way to [indiscernible] the capital that we're producing in the core residential component of the business and it's allowing us to sustain growth rate with a lot with a lot more diversity in our revenue streams.

On the EnergyHub piece specifically, we just think we have a a nice business there that is still strategic and has a long runway ahead.

So there's some overlap. The more people we can enroll, in the different types of [indiscernible] The more valuable EnergyHub becomes. And of course, the rest of our channel is installing IoT devices every day and we'll continue to do that. So we get this kind of unique opportunity to drive enrollment up and enable the EnergyHub business to be even more valuable. So there, there's not quite as much overlap on the R and D, but it's it's a business that we think is continue to be strategic Got it. That's helpful. Maybe just as a follow-up, appreciated all the additional disclosures on kind of breaking out those growth businesses. Certainly caught my eye, I think I heard it correctly that OpenEye is nearly $20,000,000 at this point. And I was going back through my notes and I think it was about a tenth of that size.

Five ish years ago when you acquired it. So I guess the heart of that question case study presuming that we're going to continue to invest in sort of growth areas like an OpenEye, What were the key attributes that led to this level of a successful outcome And as you think about opportunities to potentially replicate the OpenEye type of growth trajectory, where would be the key areas of focus?

I'd say in terms of key attributes and something we look for every time is the quality of leadership. So We're very pleased with that the founder of the business, the OpenEye business still leads the business. And has been very adept helping the business, continue to grow.

Now the special sauce, I guess, that we have brought to that business and we look for opportunities where we can do this.

We know how to build a SaaS business. So in this case, with OpenEye, we had a great company with a great set of primarily focused on monetizing through through hardware cells [indiscernible] we saw an opportunity to shift into much more of a cloud format and render services in the cloud and from that, have been able really nice growth, albeit off a small base, but now it's becoming on a SaaS basis pretty relevant and that $20,000,000 doesn't capture the hardware piece that also exists there. So So we'll continue to look look for that. And I think when we both of those are key attributes. When we look at the business we just acquired, we feel very good about leadership there. We think we're early and we think we can help format the business to drive even more contribution in SaaS and meet the needs of the market. So that's that's kind of what we're Got it. Thank you.

Our next question comes Mason Marion with Jefferies. Your line is open.

Thanks for taking my questions and congrats to you Steve on the retirement. So I wanted to stick to the 2025 outlook here. So residential home sales have remained pretty subdued What are you guys assuming regarding churn, NRR Should we continue to expect stability [indiscernible] around that like 95% level. Yes.

I mean that's the high end of what we've seen. So it's hard for us to say, hey, we think it's going to get even better. But certainly that But just exactly what you said, the softness in people moving is contributing to a high revenue retention rate at the 95% level We think that probably holds this year. We also have a dynamic the more [indiscernible] Are typically using a larger component of our services and almost more than half are also using video services. So that results in two things. The subscribers a bit more sticky because they're using the system every day. The other dynamic at play though is the ARPU is higher. So what attrition we do have right now tends to be of the lower ARPU accounts And what's sticking around are the higher ARPU accounts. So We think those two dynamics probably persist into 2025.

Understood. And then you launched your AI deterrence product at CES. What's the initial feedback been from customers and partners so far? And then do you think this can help drive your video penetration higher in 2025 and beyond?

Yes.

I think so. To answer the last question, first, I think That type of functionality is currently novel in the industry. So gives you something to talk about, get people excited about. It has the capacity to really unlock a lot of the costs associated with remote video monitoring and take that offering from being sort of a commercial, maybe high end residential niche offering and turn it into more of a mass market small business and residential offerings. So the enthusiasm is definitely there. And as you know, if you've followed us for a while, it ticks our channel a of time from the time we release something sort of build enthusiasm to the point where they have it on the price list that all their salespeople using every day when they go out and visit customers. So it will be a little bit of a lag, but we I would say, enthusiasm around the product and it actually is being installed [indiscernible] some set of installations already today and working, which is good. So so far so good. Great. Thank you. Thanks. One moment for our next question. Our next question comes from Adam Hochska with Goldman Sachs.

Your line is open. Great. Thanks so much for taking the questions. And Stevie, I'll add my well wishes to you as well going forward. I guess to start with you, I wanted to dig in on margins for next year. I know you we've talked historically historically about the sort of 18% margin level and you outperformed that in Q3 and we're a little bit ahead of that in Q4. I think the guide next year is for around 19%. What are the puts and takes there? Where are areas of investment next year that you're really focused on? And how should we think about sources of upside?

Sure. Hey, Adam, this is Steve Key speaking. [indiscernible] at the moment, we're in a pattern where I would say R and D expense, which primary expense driver that impacts EBITDA margin and is going to grow at roughly the same level as revenue. And we are getting increasingly some Operating leverage out of out of our G and A cost structure and then sort of out of the increasing maturity of some of the some of the growth venture businesses.

We did notably. So you're seeing a slightly higher telegraph on the EBITDA margins end of this year, a little bit of a walk up seems to be continuing. And I do want to point out that that's happening even after just completed an acquisition of an early stage business, which you can imagine probably has some associated associated with it given where they are today. So we're going to continue to kind of rationalize costs, look for efficiencies, and and gradually move this number forward. But what we're comfortable with is we look at 25 is sort of this 19% to 19.5% margin level.

Okay, got it. That's super helpful. And then Steve, Pete, just another follow-up for you. On ADT, I think you mentioned for the second consecutive quarter, you're still expecting that roughly 200 bps headwind for the year. Just maybe any changes from three months ago in terms of what seeing in the beginning of the year or year to date around the ADT component and that headwind would be helpful. Thank you.

Sure.

No real changes. I mean, this quarter they report I think after us in a about a week or so. So we'll look for their public updates on on on where things are. We're still modeling though that The corporate residential business will move off entirely.

The Alarm.com platform. As we've said before, there are other parts of of ADT that we expect will continue to be contributing and we continue to have a good partnership there. So, some of those areas are certain facets of the dealer channel potentially and and then potentially some of the areas in small business may may not be right for transition just just yet, but we'll let them update on where that rollout is.

Understood. Thank you very much.

Sure. One moment for our next question. Our next question comes from Stephen Sheldon with William Blair. Your line is open. [indiscernible] thanks. And I'll pass along my congrats to Steve on the retirement as well.

On the maybe just on the international side, can you talk some about expanding service provider partners there? How much that might help your distribution and what that might mean to the growth profile within the international piece over coming years, which as you kind of mentioned, 6% of revenue now up from 5% before, just how are you thinking about the growth outlook there now with better distribution?

Yes.

So we continue to to believe that we can drive a higher growth rate on the international piece than on the rest of the business in aggregate. So we're going to continue to focus there. At the moment, If I think about sort of the last five, six years, we've probably been mostly focused on the the whales, if you will, internationally, the largest service providers that oftentimes have a multi country footprint and therefore have a much more complex and sophisticated platform need than an operator that is regional in nature, doesn't have to deal with multiple languages, localizations, that sort of thing. So So that's been our focus. As we get to a little bit more scale, which is where we are now, I just want to build out [indiscernible] ballast in that business, which requires really opening our arms to more of the regional players and the smaller in some cases smaller local players often times those are the ones that are handling the most bespoke solutions that leverage the most components of our platform for a single installation. So So we're going to work towards that. It should be a long term If you look at North America, the long tail of our partner base drives a lot of business.

And over time, we would hope to assemble a similar similar long tail internationally and it doesn't happen overnight.

It's sort of steady commitment of four, five years, but should be an additional an additional contributor to international growth through time.

Good to hear. It makes sense. Maybe just as a follow-up, On the within the kind of core residential piece, in SaaS and license, I guess, how are you thinking about the ARPU expansion opportunity 2025, 2026, some of the bigger factors that could help near term as we think about increasing attach rates, especially for things like video solutions, pricing increases, etcetera. Are you you think you can drive the ARPU higher here as we think about the next couple of years?

Yes. Yes, good question. So with when we think about the residential piece, we just have to remember we have a pretty Massive base of existing subscribers there. And while we can upsell some of those subscribers, you still have sort of an anchor on the overall average ARPU that we report. It's hard to move that average number too much That said, new subscribers are coming on with a richer set of Services. Over half of all new subscribers, residentially now are are being installed with an Alarm.com video system in addition to an intrusion system And 99% of those customers are getting our video analytics package. So those two things [indiscernible] drive a little bit of ARPU lift on your new installs. And as we look at the emergence of this RVM space and what we can do with AI deterrence, would hope that we find an additional sort of tailwind to ARPU The benefit though in the macro number sort of unfolds through a long period of time as older accounts, a trade off and the newer accounts sort of become the average and that will take a bit Makes sense. Thank you.

Yes. One moment for our next question.

Our next question comes from Darren Aftahi with Roth. Your line is open.

Yes. Thanks for taking my questions. And I'll offer my congratulations Great to work with you, Steve. Two if I may. In the past, you guys have talked about the acquisition of EBS out of Poland and integrating your software with the communicator there. I I guess where we stand with that integration, is that going to be a needle mover in '25 or is that something that's still kind of a work in progress? Then second question, just a clarification on the SaaS bump. Relative to your preliminary outlook. That entirely from the Chek acquisition or is it part of that organic?

Thanks, Darren. I guess I'll start with the with the EBS question. And I probably know the answer on the other one too. But [indiscernible] So [indiscernible] This should be the year that we start seeing meaningful some meaningful sales. I believe probably mid year [indiscernible] Just to refresh memories that the EBS platform is designed to be a very low cost [indiscernible] we're not going to see it as a place where we're driving a ton of ARPU It's designed to allow service providers and a bigger set of service providers to take over legacy accounts that run on a bunch of different platforms.

So we should start to see some contribution I believe already seeing a little bit. I think that will step up around the mid year point. And be not quite not quite a massive bluebird, but it will be a little bit of a bluebird the international business in the second half of the year.

On the SaaS Bob, I guess what I'd say on that is we did not need to complete an acquisition to to hit our initial number. So there is some SaaS contract [indiscernible] check that we're modeling in, but it's less than less than the aggregate of the initial look increase. We at this point, there's also potentially some hardware contribution. At this point though, the hardware contribution is still pretty minor.

And we don't like to be too aggressive in forecasting hardware sales. So we didn't bump that number at this point either. And I guess I should make the point, we also didn't lower EBITDA. Despite it being sort of an earlier stage business that will require some investment as they ramp. I think it will be a fast growing but early stage business this year.

That's helpful. Thank you. Sure.

And I'm not showing any further questions at this time. So ladies and gentlemen, this does [indiscernible]