What happened

Shares of home-technology company Alarm.com (NASDAQ:ALRM) fell as much as 18% on Thursday, following the company's third-quarter earnings release. The stock is down about 15% at the time of this writing.

While Alarm.com's third-quarter revenue and adjusted earnings per share (EPS) were higher than expected, investors may be disappointed in Alarm.com's worse-than-expected outlook for full-year profitability. Alarm.com management said it expects full-year adjusted EPS to be between $0.87 and $0.88. On average, analysts were expecting full-year EPS of $0.97.

Home security automation from a smartphone

Image source: Getty Images.

So what

For Alarm.com's third quarter, the company reported revenue and adjusted EPS of $90 million and $0.27, respectively. These results compare to revenue and adjusted EPS of $62 million and $0.19 in the year-ago quarter.

"We achieved solid results in the third quarter as our service provider partners continued to drive good growth in their subscriber base," said Alarm.com CEO Steve Trundle about the quarter. "We also released exciting new versions of our web user interfaces, video service, and EnergyHub Mercury software platform."

The stock's sell-off follows a second-quarter earnings report this summer that sent the stock soaring higher.

Now what

Highlighting Alarm.com's growth story, management expects software-as-a-service (SaaS) and license revenue to be between $63.7 million and $63.9 million in the fourth quarter of 2017. This is up from SaaS and license revenue of $46.9 million in the fourth quarter of 2016. Management expects full-year 2017 revenue to be between $332.8 million and $334.0 million, up from $261.1 million in the year-ago quarter.

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool recommends Alarm.com Holdings. The Motley Fool has a disclosure policy.