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Other Assets
 6 Months Ended
Jun. 30, 2022
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]  
Other Assets Other Assets
Purchases of Patents and Patent Licenses

From time to time, we enter into agreements to purchase patents or patent licenses. The carrying value, net of amortization, of our purchased patents and patent licenses was $1.9 million and $2.2 million as of June 30, 2022 and December 31, 2021, respectively. As of June 30, 2022 and December 31, 2021, $0.5 million and $0.6 million of patent costs were included in other current assets and $1.4 million and $1.6 million of patent costs were included in other assets, respectively. We have $7.0 million of historical cost in purchased patents and patent licenses as of June 30, 2022. We are amortizing the patent costs over the estimated useful lives of the patents, which range from three years to 18 years. Patent amortization cost of $0.1 million and $0.2 million was included in cost of SaaS and license revenue in our condensed consolidated statements of operations for each of the three and six months ended June 30, 2022 and 2021, respectively. Patent amortization cost of $0.1 million was included in amortization and depreciation in our condensed consolidated statements of operations for each of the three and six months ended June 30, 2022 and 2021.

Loan to a Distribution Partner

In June 2020, we amended an existing term loan with our distribution partner and also amended an existing subordinated credit agreement with the affiliated entity of the distribution partner. At the time of the amended term loan and subordinated credit agreement in June 2020, the outstanding balance of the term loan was $3.0 million and the outstanding balance of the subordinated credit agreement was $3.0 million. Under the amended terms, the distribution partner paid us $2.0 million in principal for the term loan on June 9, 2020 and the remaining $1.0 million was transferred to the amended subordinated credit agreement with the affiliated entity of the distribution partner. As of June 30, 2022 and December 31, 2021, there was no remaining amount outstanding related to the amended term loan.

The amended subordinated credit agreement with the affiliated entity of the distribution partner matures on September 9, 2025 and interest on the outstanding principal balance accrues at a rate of 9.0% per annum and is payable in kind. As of June 30, 2022 and December 31, 2021, $4.8 million and $4.6 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, 2022, we recognized $0.9 million and $1.5 million of revenue from the distribution partner associated with these loans, respectively, as compared to $0.9 million and $1.6 million for the same periods in the prior year.
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, 2022 and December 31, 2021, $1.1 million and $1.2 million of principal was outstanding from the service provider partner under the loan agreement, respectively.

For three and six months ended June 30, 2022 and 2021, we recognized less than $0.1 million and $0.1 million of revenue, respectively, from the service provider partner associated with this loan.

Loan to a Technology Company

In May 2022, we entered into a loan agreement with a technology company, under which we agreed to loan the technology company $1.5 million, collateralized by the assets of the technology company. Interest on the outstanding principal accrues at a rate per annum equal to 7.0% and interest and principal payments are due on the maturity date of the loan, which is expected to be during the third quarter of 2022. As of June 30, 2022, $1.5 million of principal was outstanding from the technology company under the loan agreement.

For the three and six months ended June 30, 2022 and 2021, we did not record any revenue from the technology company 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, 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, 2022 and 2021, 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, 2022 and December 31, 2021, our investment in the hardware supplier was $5.6 million.

Investment in a Technology Partner

In December 2016, we paid $0.3 million for a convertible promissory note with a technology partner. In April 2018, the $0.3 million convertible promissory note converted into 135,135 shares of Series A-1 Preferred Stock. At the time of conversion, we determined there was no value related to the Series A-1 Preferred Stock. Based on observable price changes from orderly transactions for similar investments, we increased the amount of our investment by $0.7 million and recorded a gain within other income / (expense), net, in our consolidated statements of operations during the year ended December 31, 2020.

In February 2021, we paid $5.0 million in cash to purchase 1,000,000 shares of Series B-2 Preferred Stock from the same 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 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, 2022 and December 31, 2021, our investment in the technology partner was $5.7 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, 2022, 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, 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 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, 2022 and December 31, 2021 was less than $0.1 million, and is reflected in other current 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, 2022 and 2021.

There were no purchases or sales of financial assets during the three and six months ended June 30, 2022 and 2021. There were no significant changes in the amount of note receivable write-offs during the three and six months ended June 30, 2022, 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, 2022		Three Months Ended
June 30, 2021		Six Months Ended
June 30, 2022		Six Months Ended
June 30, 2021
Loan
Receivables		Hardware
Financing
Receivables		Loan
Receivables		Hardware
Financing
Receivables		Loan
Receivables		Hardware
Financing
Receivables		Loan
Receivables		Hardware
Financing
Receivables
Beginning of period balance$(1)$(1)$(73)$(5)$(79)$(1)$(73)$(16)
(Provision for) / recovery of expected credit losses(1)1 (1)1 77 1 (1)12 
Write-offs— — — — — — — — 
End of period balance$(2)$— $(74)$(4)$(2)$— $(74)$(4)

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, 2022
Loan Receivables:20222021202020192018PriorTotal
Current$3,000 $— $1,123 $3 $— $4,811 $8,937 
30-59 days past due— — — — — — — 
60-89 days past due— — — — — — — 
90-119 days past due— — — — — — — 
120+ days past due— — — — — — — 
Total$3,000 $— $1,123 $3 $— $4,811 $8,937 
December 31, 2021
Loan Receivables:20212020201920182017PriorTotal
Current$— $1,151 $7 $— $4,602 $— $5,760 
30-59 days past due— — — — — — — 
60-89 days past due— — — — — — — 
90-119 days past due— — — — — — — 
120+ days past due— — — — — — — 
Total$— $1,151 $7 $— $4,602 $— $5,760 
Hardware Financing Receivables:
Current$— $— $4 $— $— $— $4 
30-59 days past due— — 6 — — — 6 
60-89 days past due— — 11 — — — 11 
90-119 days past due— — — — — — — 
120+ days past due— — — — — — — 
Total$— $— $21 $— $— $— $21 

There were no notes receivables placed on nonaccrual status as of June 30, 2022 and December 31, 2021. During the three and six months ended June 30, 2022 and 2021, there was no interest income recognized related to notes receivables that were in nonaccrual status.

As of June 30, 2022 and December 31, 2021, there were no notes receivables placed in nonaccrual status for which there was not a related allowance for credit losses. As of June 30, 2022 and December 31, 2021, there were no notes receivables that were 90 days or greater past due for which we continued to accrue interest income.

Prepaid Expenses

As of June 30, 2022 and December 31, 2021, $17.9 million and $17.7 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.