Company Performance - ADT has gained approximately 25.5% year-to-date, outperforming the average gain of 6.5% for Industrial Products stocks [4] - The Zacks Consensus Estimate for ADT's full-year earnings has increased by 8% over the past quarter, indicating improved analyst sentiment and a more positive earnings outlook [3] - ADT currently holds a Zacks Rank of 1 (Strong Buy), suggesting strong potential for future performance [3] Industry Context - ADT is part of the Security and Safety Services industry, which consists of 16 stocks and is currently ranked 55 in the Zacks Industry Rank [5] - The average gain for stocks in the Security and Safety Services industry this year is 18.8%, indicating that ADT is performing better than its peers in this specific sector [5] - Ashtead Group PLC, another stock in the Industrial Products sector, has returned 18.9% year-to-date and has a Zacks Rank of 2 (Buy) [4][5]

Group 1 - ADT is a stock that has shown strong performance, returning 20.7% year-to-date, significantly outperforming the average return of 9.2% for the Industrial Products sector [4] - The Industrial Products group is currently ranked 1 within the Zacks Sector Rank, which evaluates the strength of 16 different groups based on the average Zacks Rank of individual stocks [2] - ADT holds a Zacks Rank of 1 (Strong Buy), indicating a positive earnings outlook, with the consensus estimate for its full-year earnings increasing by 8% over the past three months [3] Group 2 - The Security and Safety Services industry, to which ADT belongs, has an average year-to-date return of 13.7%, indicating that ADT is performing better than its industry peers [5] - Ashtead Group PLC, another stock in the Industrial Products sector, has also outperformed with a year-to-date return of 12.7% and holds a Zacks Rank of 1 (Strong Buy) [4][5] - The Industrial Services industry, which includes Ashtead Group PLC, is currently ranked 14 and has returned 7.6% year-to-date, showing a contrast in performance compared to ADT's industry [6]

Group 1 - The article discusses the strong performance of ADT Inc. (NYSE: ADT) in 1Q25, highlighting growth across key metrics and suggesting that growth can continue to accelerate if execution remains strong [1] - The author emphasizes a diverse investing background, incorporating fundamental, technical, and momentum investing strategies to enhance the investment process [1] Group 2 - There is no disclosure of any stock, option, or similar derivative positions in the companies mentioned, nor any plans to initiate such positions within the next 72 hours [2] - The article expresses the author's personal opinions and is not influenced by any business relationships with the companies discussed [2]

PART I. FINANCIAL INFORMATION [ITEM 1. FINANCIAL STATEMENTS.](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS.) Unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive income, equity, and cash flows, are presented with detailed notes [Condensed Consolidated Balance Sheets (Unaudited)](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(Unaudited)) Condensed Consolidated Balance Sheets (in thousands) | Assets/Liabilities & Equity | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | **Assets** | | | | Total current assets | $940,258 | $1,004,920 | | Property and equipment, net | $240,770 | $247,183 | | Subscriber system assets, net | $2,914,895 | $2,981,161 | | Intangible assets, net | $4,875,837 | $4,854,099 | | Goodwill | $4,903,899 | $4,903,899 | | Deferred subscriber acquisition costs, net | $1,390,392 | $1,324,376 | | Other assets | $706,019 | $735,319 | | **Total assets** | **$15,972,070** | **$16,050,957** | | **Liabilities and stockholders' equity** | | | | Total current liabilities | $2,051,886 | $1,263,780 | | Long-term debt | $6,751,094 | $7,511,282 | | Deferred subscriber acquisition revenue | $2,090,428 | $2,067,608 | | Deferred tax liabilities | $1,169,753 | $1,167,213 | | Other liabilities | $235,549 | $224,384 | | Noncurrent liabilities of discontinued operations | $13,981 | $15,889 | | **Total liabilities** | **$12,312,691** | **$12,250,156** | | Total stockholders' equity | $3,659,379 | $3,800,801 | | **Total liabilities and stockholders' equity** | **$15,972,070** | **$16,050,957** | [Condensed Consolidated Statements of Operations (Unaudited)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20(Unaudited)) Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Monitoring and related services revenue | $1,090,241 | $1,068,065 | $2,173,345 | $2,130,717 | | Security installation, product, and other revenue | $196,794 | $136,494 | $381,181 | $263,514 | | **Total revenue** | **$1,287,035** | **$1,204,559** | **$2,554,526** | **$2,394,231** | | Total cost of revenue | $250,186 | $196,234 | $490,308 | $390,539 | | Selling, general, and administrative expenses | $356,138 | $390,291 | $724,738 | $760,507 | | Depreciation and intangible asset amortization | $338,734 | $333,859 | $678,251 | $666,861 | | Operating income (loss) | $341,977 | $284,175 | $661,229 | $576,324 | | Interest expense, net | $(115,798) | $(109,700) | $(236,677) | $(197,150) | | Income (loss) from continuing operations | $168,233 | $126,185 | $310,710 | $290,076 | | Income (loss) from discontinued operations, net of tax | $(3,054) | $(33,791) | $(5,285) | $(106,131) | | **Net income (loss)** | **$165,179** | **$92,394** | **$305,425** | **$183,945** | | Net income (loss) per share - diluted (Common Stock) | $0.18 | $0.10 | $0.34 | $0.19 | [Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)%20(Unaudited)) Condensed Consolidated Statements of Comprehensive Income (Loss) (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $165,179 | $92,394 | $305,425 | $183,945 | | Other comprehensive income (loss), net of tax | $(1,258) | $1,527 | $86 | $3,235 | | **Comprehensive income (loss)** | **$163,921** | **$93,921** | **$305,511** | **$187,180** | [Condensed Consolidated Statements of Stockholders' Equity (Unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20(Unaudited)) Key Changes in Stockholders' Equity (Six Months Ended June 30, 2025 vs. 2024) (in thousands) | Metric | 2025 | 2024 | | :-------------------------------- | :----------- | :----------- | | Beginning balance | $3,800,801 | $3,788,646 | | Net income (loss) | $305,425 | $183,945 | | Other comprehensive income (loss), net of tax | $86 | $3,235 | | Dividends | $(93,081) | $(100,218) | | Share-based compensation expense | $32,170 | $29,387 | | Repurchases of common stock (including excise tax) | $(394,617) | $(94,119) | | Transactions related to employee share-based compensation plans and other | $8,595 | $(2,666) | | **Ending balance** | **$3,659,379** | **$3,808,210** | - Common stock repurchases significantly increased in the six months ended June 30, 2025, totaling **$394,617 thousand** compared to **$94,119 thousand** in the prior year, leading to a decrease in total stockholders' equity[17](index=17&type=chunk) [Condensed Consolidated Statements of Cash Flows (Unaudited)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) Condensed Consolidated Statements of Cash Flows (Six Months Ended June 30) (in thousands) | Cash Flow Activity | 2025 | 2024 | | :-------------------------------- | :----------- | :----------- | | Net cash provided by (used in) operating activities | $1,030,525 | $927,005 | | Net cash provided by (used in) investing activities | $(622,559) | $(632,693) | | Net cash provided by (used in) financing activities | $(459,589) | $(275,345) | | Net increase (decrease) in cash and cash equivalents and restricted cash | $(51,623) | $18,967 | | Beginning balance | $204,065 | $129,950 | | **Ending balance** | **$152,442** | **$148,917** | - Net cash provided by operating activities increased by **$103,520 thousand (11.2%)** in the first six months of 2025 compared to 2024, primarily due to lower outflows from the former Solar Business and improved operating performance[19](index=19&type=chunk)[260](index=260&type=chunk) - Net cash used in financing activities increased significantly by **$184,244 thousand (66.9%)** in the first six months of 2025, mainly driven by higher share repurchases[19](index=19&type=chunk)[263](index=263&type=chunk) [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) Detailed notes cover business operations, accounting policies, revenue, segment reporting, divestitures, goodwill, debt, derivatives, income taxes, equity, share-based compensation, EPS, commitments, leases, and related party transactions - ADT Inc. provides security, interactive, and smart home solutions to consumer and small business customers in the U.S.[21](index=21&type=chunk) - As of June 30, 2025, affiliates of Apollo Global Management, Inc. owned approximately **22%** of the Company's outstanding Common Stock[22](index=22&type=chunk) - The Company's exit from the residential solar business in 2024 and the sale of its commercial business in 2023 are classified as discontinued operations[28](index=28&type=chunk) Total Revenue by Source (Six Months Ended June 30) (in thousands) | Source of Revenue | 2025 | 2024 | YoY Change | | :--------------------------------------- | :----------- | :----------- | :--------- | | Recurring monthly revenue | $2,109,326 | $2,077,071 | +$32,255 | | Other related services | $64,019 | $53,646 | +$10,373 | | Installation revenue | $202,692 | $93,956 | +$108,736 | | Amortization of deferred subscriber acquisition revenue | $178,489 | $169,558 | +$8,931 | | **Total revenue** | **$2,554,526** | **$2,394,231** | **+$160,295** | - As of June 30, 2025, total remaining unsatisfied performance obligations for monitoring and related services amounted to **$3,666,144 thousand**[58](index=58&type=chunk) - The Company operates and reports as a single operating segment, with the CODM evaluating performance and allocating resources on a consolidated basis[68](index=68&type=chunk) - During the six months ended June 30, 2024, the ADT Solar Exit incurred aggregate exit charges of **$89 million**, primarily from inventory write-downs, installation pipeline disposition, employee separation, and contract termination costs[79](index=79&type=chunk) - Goodwill carrying amounts remained unchanged since December 31, 2024, while net other intangible assets increased from **$4,854,099 thousand** to **$4,875,837 thousand**[87](index=87&type=chunk)[88](index=88&type=chunk) Total Debt Principal (excluding finance leases) (in thousands) | Debt Type | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | First Lien Term Loan B due 2030 | $1,974,169 | $1,984,090 | | First Lien Term Loan B-2 due 2032 | $598,500 | — | | First Lien Notes due 2026 | $850,000 | $1,350,000 | | First Lien Notes due 2027 | $1,000,000 | $1,000,000 | | First Lien Notes due 2029 | $1,000,000 | $1,000,000 | | Second Lien Notes due 2028 | $1,300,000 | $1,300,000 | | ADT Notes due 2032 | $728,016 | $728,016 | | ADT Notes due 2042 | $21,896 | $21,896 | | 2020 Receivables Facility | $439,772 | $407,901 | | **Total debt principal, excluding finance leases** | **$7,912,353** | **$7,791,903** | - In March 2025, the Company issued a new **$600 million** First Lien Term Loan B-2 due 2032 and redeemed **$500 million** of First Lien Notes due 2026. An additional **$550 million** redemption of First Lien Notes due 2026 is planned for July 2025, funded by new term loans[103](index=103&type=chunk)[104](index=104&type=chunk) - The total notional amount of interest rate swap contracts increased from **$3,800,000 thousand** at December 31, 2024, to **$4,350,000 thousand** at June 30, 2025, with new cash flow hedges designated in June 2025[108](index=108&type=chunk) - The effective tax rate for continuing operations was **26.1%** for the six months ended June 30, 2025, down from **28.6%** in the prior year[118](index=118&type=chunk)[120](index=120&type=chunk) - Under the 2025 Share Repurchase Plan, authorized for up to **$500 million** through April 2026, the Company repurchased **64,801 thousand** common shares for **$394,617 thousand** during the six months ended June 30, 2025. Approximately **$112 million** remained under the plan as of June 30, 2025[17](index=17&type=chunk)[127](index=127&type=chunk)[132](index=132&type=chunk) - The Company granted approximately **3.4 million** Restricted Stock Units (RSUs) and **8.3 million** options in the first quarter of 2025 as part of its long-term incentive plan[135](index=135&type=chunk)[136](index=136&type=chunk) - The Company received **$15 million** in reimbursements from Google Success Funds during the six months ended June 30, 2025, primarily for joint marketing and customer acquisition expenses[151](index=151&type=chunk) - The Company has a commitment to purchase **$200 million** of Google Cloud Platform services over seven years and a **$370 million** commitment for security system equipment through December 2025, with **$91 million** purchased in the first half of 2025[154](index=154&type=chunk)[156](index=156&type=chunk) - As of June 30, 2025, the accrual for ongoing claims and lawsuits within the scope of an insurance program totaled **$90 million**[160](index=160&type=chunk) - Apollo's sale of **45 million** shares in June 2025 reduced its ownership to less than **25%**, terminating the Management Investor Rights Agreement (MIRA)[174](index=174&type=chunk) - The Opportunity Fund, a strategic investment by State Farm, had a balance of **$82 million** as of June 30, 2025, with **$4 million** in payments made during the six months ended June 30, 2025[180](index=180&type=chunk)[181](index=181&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=32&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, condition, and outlook, highlighting the shift to outright sales, macroeconomic impacts, key performance indicators, revenue/expense analysis, non-GAAP measures, and liquidity management - ADT provides security, interactive, and smart home solutions to consumer and small business customers in the U.S., serving approximately **6.4 million** security monitoring service subscribers as of June 30, 2025[185](index=185&type=chunk)[189](index=189&type=chunk) - The company is experiencing a growing number of direct channel new customer adds through outright sales, particularly with the national launch of its ADT+ platform, which is expected to be an increasing proportion of transactions[190](index=190&type=chunk) - Management is actively evaluating cost-saving opportunities, such as leveraging technology, reducing headcount, and cutting non-essential spend, to offset inflationary pressures and rising costs[195](index=195&type=chunk) - An ownership change occurred in Q2 2025, but the company does not expect a material impact on its ability to utilize tax attributes due to the limitation significantly exceeding the value of these attributes[197](index=197&type=chunk) Key Performance Indicators (Three Months Ended June 30) (in thousands, except per share data) | Metric | 2025 | 2024 | $ Change | | :------------------------------------------------ | :----------- | :----------- | :--------- | | Total revenue | $1,287,035 | $1,204,559 | $82,476 | | Operating income (loss) | $341,977 | $284,175 | $57,802 | | Net income (loss) | $165,179 | $92,394 | $72,785 | | Diluted income (loss) from continuing operations per share of Common Stock | $0.19 | $0.13 | $0.06 | | RMR | $362,750 | $355,179 | $7,571 | | Gross customer revenue attrition (percent) | 12.8% | 12.9% | N/A | | Adjusted EPS | $0.23 | $0.17 | $0.06 | | Adjusted EBITDA | $673,624 | $629,287 | $44,337 | Key Performance Indicators (Six Months Ended June 30) (in thousands, except per share data) | Metric | 2025 | 2024 | $ Change | | :------------------------------------------------ | :----------- | :----------- | :--------- | | Total revenue | $2,554,526 | $2,394,231 | $160,295 | | Operating income (loss) | $661,229 | $576,324 | $84,905 | | Net income (loss) | $305,425 | $183,945 | $121,480 | | Diluted income (loss) from continuing operations per share of Common Stock | $0.35 | $0.30 | $0.05 | | RMR | $362,750 | $355,179 | $7,571 | | Gross customer revenue attrition (percent) | 12.8% | 12.9% | N/A | | Adjusted EPS | $0.44 | $0.36 | $0.08 | | Adjusted EBITDA | $1,334,425 | $1,266,978 | $67,447 | - Monitoring and related services revenue increased due to higher average prices, while security installation, product, and other revenue saw a significant increase driven by a higher mix of professionally installed outright sales under the ADT+ platform[212](index=212&type=chunk) - Selling, general, and administrative expenses decreased due to lower general and administrative costs (including a legal settlement in the prior year and cost savings initiatives) and reduced share-based compensation, partially offset by an increase in the allowance for credit losses[213](index=213&type=chunk) Adjusted EPS Reconciliation (Six Months Ended June 30) | | 2025 | 2024 | $ Change | | :------------------------------------------------ | :--- | :--- | :------- | | Diluted income (loss) from continuing operations per share of Common Stock | $0.35 | $0.30 | $0.05 | | Share-based compensation expense | 0.04 | 0.03 | 0.01 | | Merger, restructuring, integration, and other | 0.01 | 0.01 | — | | Interest rate swaps, net | 0.05 | — | 0.05 | | Loss on extinguishment of debt | 0.01 | — | 0.01 | | Tax impact on adjustments | (0.03) | (0.01) | (0.02) | | **Adjusted EPS (from continuing operations)** | **$0.44** | **$0.36** | **$0.08** | Adjusted EBITDA Reconciliation (Six Months Ended June 30) (in thousands) | (in thousands) | 2025 | 2024 | $ Change | | :------------------------------------------------ | :----------- | :----------- | :--------- | | Income (loss) from continuing operations | $310,710 | $290,076 | $20,634 | | Interest expense, net | 236,677 | 197,150 | 39,527 | | Income tax expense (benefit) | 109,781 | 116,270 | (6,489) | | Depreciation and intangible asset amortization | 678,251 | 666,861 | 11,390 | | Amortization of deferred subscriber acquisition costs | 122,507 | 109,335 | 13,172 | | Amortization of deferred subscriber acquisition revenue | (178,489) | (169,558) | (8,931) | | Share-based compensation expense | 32,170 | 29,359 | 2,811 | | Merger, restructuring, integration, and other | 7,122 | 13,504 | (6,382) | | Unrealized (gain) loss on interest rate swaps | 7,845 | 9,878 | (2,033) | | Loss on extinguishment of debt | 6,443 | 4,509 | 1,934 | | Other, net | 1,408 | (406) | 1,814 | | **Adjusted EBITDA (from continuing operations)** | **$1,334,425** | **$1,266,978** | **$67,447** | - The company expects its cash position, available borrowing capacity under credit facilities, and cash from operating activities to be adequate for both short-term and long-term liquidity needs[237](index=237&type=chunk) - The next significant debt maturity is the First Lien Notes due 2026 in April 2026, which the company intends to redeem before maturity through ongoing liquidity sources and a refinancing transaction expected in July 2025[239](index=239&type=chunk) - The 2025 Share Repurchase Plan authorizes up to **$500 million** in common stock repurchases through April 30, 2026, with approximately **$112 million** remaining as of June 30, 2025[242](index=242&type=chunk)[246](index=246&type=chunk) - The company began making federal cash tax payments in the second quarter of 2025[249](index=249&type=chunk) - As of June 30, 2025, the company was in compliance with all financial covenant and other maintenance tests for its debt obligations[257](index=257&type=chunk) [INTRODUCTION](index=32&type=section&id=Introduction) [BUSINESS AND BASIS OF PRESENTATION](index=32&type=section&id=Business%20and%20Basis%20of%20Presentation) - ADT provides security, interactive, and smart home solutions to consumer and small business customers in the U.S.[185](index=185&type=chunk) - The company reports its results as a single operating and reportable segment, with financial information prepared in U.S. dollars in accordance with GAAP[186](index=186&type=chunk) - Results of former Solar and Commercial businesses are presented within discontinued operations for current and historical periods[186](index=186&type=chunk) [FACTORS AFFECTING OPERATING RESULTS](index=32&type=section&id=Factors%20Affecting%20Operating%20Results) - As of June 30, 2025, the company served approximately **6.4 million** security monitoring service subscribers, with a significant upfront investment required to acquire new subscribers[189](index=189&type=chunk) - A growing number of direct channel new customer additions are outright sales, particularly with the national launch of the ADT+ platform, shifting from a Company-owned equipment model[190](index=190&type=chunk) - Operating results are impacted by new customer additions, customer attrition (influenced by relocations and macroeconomic conditions), and increasing costs from product diversification, technological advancements, supply chain disruptions, and inflationary pressures[192](index=192&type=chunk)[193](index=193&type=chunk)[194](index=194&type=chunk) - The company is evaluating cost-saving opportunities and has largely offset rising costs through these initiatives and price increases to customers[195](index=195&type=chunk) - An ownership change occurred in Q2 2025, but no material impact on the company's ability to utilize tax attributes is expected[197](index=197&type=chunk) [KEY PERFORMANCE INDICATORS](index=34&type=section&id=Key%20Performance%20Indicators) - The company evaluates its results using End-of-Period Recurring Monthly Revenue (RMR), Gross Customer Revenue Attrition, Adjusted Earnings per Share (Adjusted EPS), and Adjusted EBITDA[199](index=199&type=chunk) - RMR measures the volume of revenue under contract at a given point in time, useful for forecasting future revenue performance[202](index=202&type=chunk) - Gross customer revenue attrition is calculated on a trailing twelve-month basis and evaluates retention and customer satisfaction performance[204](index=204&type=chunk)[205](index=205&type=chunk) [RESULTS OF OPERATIONS](index=35&type=section&id=Results%20of%20Operations) Summary of Results of Operations (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenue | $1,287,035 | $1,204,559 | $2,554,526 | $2,394,231 | | Operating income (loss) | $341,977 | $284,175 | $661,229 | $576,324 | | Net income (loss) | $165,179 | $92,394 | $305,425 | $183,945 | | Diluted income (loss) from continuing operations per share of Common Stock | $0.19 | $0.13 | $0.35 | $0.30 | | RMR | $362,750 | $355,179 | $362,750 | $355,179 | | Gross customer revenue attrition (percent) | 12.8% | 12.9% | 12.8% | 12.9% | | Adjusted EPS | $0.23 | $0.17 | $0.44 | $0.36 | | Adjusted EBITDA | $673,624 | $629,287 | $1,334,425 | $1,266,978 | - Total revenue increased by **$82,476 thousand (6.8%)** for the three months and **$160,295 thousand (6.7%)** for the six months ended June 30, 2025, driven by higher recurring monitoring and related services revenue and increased security installation, product, and other revenue from outright sales[207](index=207&type=chunk)[212](index=212&type=chunk) - Operating income increased by **$57,802 thousand (20.3%)** for the three months and **$84,905 thousand (14.7%)** for the six months ended June 30, 2025[207](index=207&type=chunk) - Net income significantly increased by **$72,785 thousand (78.8%)** for the three months and **$121,480 thousand (66.0%)** for the six months ended June 30, 2025, partly due to a substantial reduction in losses from discontinued operations[207](index=207&type=chunk) - Selling, general, and administrative expenses decreased by **$34,153 thousand (8.8%)** for the three months and **$35,769 thousand (4.7%)** for the six months ended June 30, 2025, primarily due to lower general and administrative costs and reduced share-based compensation[207](index=207&type=chunk)[213](index=213&type=chunk) - Interest expense, net, increased due to unrealized losses on interest rate swaps, while other income (expense) decreased due to lower Commercial TSA income[211](index=211&type=chunk)[214](index=214&type=chunk) - The effective tax rate for continuing operations was **25.9%** for the three months and **26.1%** for the six months ended June 30, 2025, lower than the prior year periods[215](index=215&type=chunk)[217](index=217&type=chunk) [NON-GAAP MEASURES](index=37&type=section&id=Non-GAAP%20Measures) - Adjusted EPS is defined as diluted income (loss) from continuing operations per share, adjusted for share-based compensation, merger/restructuring items, impairment charges, unrealized gains/losses on interest rate swaps, other non-cash/non-routine adjustments, and their tax impacts[220](index=220&type=chunk) Adjusted EPS Reconciliation (Six Months Ended June 30) | | 2025 | 2024 | $ Change | | :------------------------------------------------ | :--- | :--- | :------- | | Diluted income (loss) from continuing operations per share of Common Stock | $0.35 | $0.30 | $0.05 | | Share-based compensation expense | 0.04 | 0.03 | 0.01 | | Merger, restructuring, integration, and other | 0.01 | 0.01 | — | | Interest rate swaps, net | 0.05 | — | 0.05 | | Loss on extinguishment of debt | 0.01 | — | 0.01 | | Tax impact on adjustments | (0.03) | (0.01) | (0.02) | | **Adjusted EPS (from continuing operations)** | **$0.44** | **$0.36** | **$0.08** | - Adjusted EBITDA is defined as income (loss) from continuing operations, adjusted for interest, taxes, depreciation and amortization, amortization of deferred subscriber acquisition costs/revenue, share-based compensation, merger/restructuring items, impairment charges, and other non-cash/non-routine adjustments[228](index=228&type=chunk) Adjusted EBITDA Reconciliation (Six Months Ended June 30) (in thousands) | (in thousands) | 2025 | 2024 | $ Change | | :------------------------------------------------ | :----------- | :----------- | :--------- | | Income (loss) from continuing operations | $310,710 | $290,076 | $20,634 | | Interest expense, net | 236,677 | 197,150 | 39,527 | | Income tax expense (benefit) | 109,781 | 116,270 | (6,489) | | Depreciation and intangible asset amortization | 678,251 | 666,861 | 11,390 | | Amortization of deferred subscriber acquisition costs | 122,507 | 109,335 | 13,172 | | Amortization of deferred subscriber acquisition revenue | (178,489) | (169,558) | (8,931) | | Share-based compensation expense | 32,170 | 29,359 | 2,811 | | Merger, restructuring, integration, and other | 7,122 | 13,504 | (6,382) | | Unrealized (gain) loss on interest rate swaps | 7,845 | 9,878 | (2,033) | | Loss on extinguishment of debt | 6,443 | 4,509 | 1,934 | | Other, net | 1,408 | (406) | 1,814 | | **Adjusted EBITDA (from continuing operations)** | **$1,334,425** | **$1,266,978** | **$67,447** | - The increase in Adjusted EBITDA was primarily driven by a decrease in general and administrative costs, higher monitoring and related services revenue (net of costs), and increased installation revenue (net of costs and commissions)[232](index=232&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity and Capital Resources (in thousands) | Metric | June 30, 2025 | | :------------------------------------------------ | :------------ | | Cash and cash equivalents | $45,195 | | Restricted cash and restricted cash equivalents | $107,247 | | Availability under First Lien Revolving Credit Facility | $800,000 | | Uncommitted available borrowing capacity under 2020 Receivables Facility | $110,228 | | Carrying amount of total debt outstanding, including finance leases | $7,815,392 | - The company expects ongoing liquidity from cash generated from operations, borrowings under credit facilities, and potential equity/debt issuances, believing these sources are adequate for both short-term and long-term needs[234](index=234&type=chunk)[237](index=237&type=chunk) - The next significant debt maturity is the First Lien Notes due 2026 in April 2026, which the company intends to redeem before maturity[239](index=239&type=chunk) - Under the 2025 Share Repurchase Plan, the company repurchased **12 million** shares for **$96 million** during Q2 2025, with **$112 million** remaining under the plan as of June 30, 2025[246](index=246&type=chunk) - The company began making federal cash tax payments in Q2 2025, with amounts fluctuating based on financial results and tax positions[249](index=249&type=chunk) - In March 2025, the company issued a new **$600 million** First Lien Term Loan B-2 due 2032 and partially redeemed **$500 million** of First Lien Notes due 2026. An additional **$550 million** redemption of First Lien Notes due 2026 is planned for July 2025[251](index=251&type=chunk)[253](index=253&type=chunk)[254](index=254&type=chunk) - The 2020 Receivables Facility was amended in March 2025 to extend the revolving period, reduce interest rates, and increase the advance rate on pledged collateral; the outstanding balance was **$440 million** as of June 30, 2025[256](index=256&type=chunk) - The company was in compliance with all financial covenant and other maintenance tests for its debt obligations as of June 30, 2025[257](index=257&type=chunk) Cash Flow Analysis (Six Months Ended June 30) (in thousands) | Cash Flow Activity | 2025 | 2024 | $ Change | | :-------------------------------- | :----------- | :----------- | :--------- | | Net cash provided by (used in) operating activities | $1,030,525 | $927,005 | $103,520 | | Net cash provided by (used in) investing activities | $(622,559) | $(632,693) | $10,134 | | Net cash provided by (used in) financing activities | $(459,589) | $(275,345) | $(184,244) | [CRITICAL ACCOUNTING ESTIMATES](index=42&type=section&id=Critical%20Accounting%20Estimates) - There have been no material changes to the company's critical accounting estimates as disclosed in its 2024 Annual Report[262](index=262&type=chunk) [CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS](index=43&type=section&id=Cautionary%20Statements%20Regarding%20Forward-Looking%20Statements) - This section contains forward-looking statements about the company's business, operations, and financial performance, which are subject to risks, uncertainties, and assumptions that could cause actual results to differ materially[264](index=264&type=chunk) - Key uncertainties include the ability to retain personnel, risks related to divestitures, keeping pace with technological changes, implementing strategic partnerships (State Farm, Google), supply chain disruptions, market competition, regulatory changes, economic conditions, cybersecurity incidents, and the development/deployment of AI[266](index=266&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=42&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks, mainly from interest rate changes on debt, managed through hedging instruments, with a larger portion of variable-rate debt as of June 30, 2025 - The company's operations expose it to market risks, primarily from changes in interest rates on its fixed-rate and variable-rate debt[268](index=268&type=chunk) - As of June 30, 2025, approximately **38%** of the total carrying amount of the company's debt (excluding interest rate swaps) was subject to variable interest rates, a larger portion compared to December 31, 2024[270](index=270&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of June 30, 2025, with no material changes to ICFR, despite an ongoing multi-year IT transformation project - Management concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025[272](index=272&type=chunk) - There were no material changes in internal control over financial reporting (ICFR) during the three months ended June 30, 2025[273](index=273&type=chunk) - The company is engaged in a multi-year IT transformation project to migrate its infrastructure, including customer relationship management and enterprise resource planning systems, to the cloud[274](index=274&type=chunk) PART II. OTHER INFORMATION [ITEM 1. LEGAL PROCEEDINGS.](index=46&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS.) Legal proceedings information refers to Note 12 'Commitments and Contingencies,' with no new material disclosures beyond what is already presented - For information on legal proceedings, refer to Note 12 'Commitments and Contingencies' in the condensed consolidated financial statements[277](index=277&type=chunk) [ITEM 1A. RISK FACTORS.](index=46&type=section&id=ITEM%201A.%20RISK%20FACTORS.) No material changes to the company's risk factors have occurred since those disclosed in its 2024 Annual Report - There have been no material changes in the company's risk factors from those disclosed in its 2024 Annual Report[278](index=278&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.](index=46&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS.) No unregistered equity sales or proceeds from registered sales occurred; common stock repurchases under the 2025 plan totaled 11,833 thousand shares for $96 million in Q2 2025 - No unregistered sales of equity securities occurred during the six months ended June 30, 2025[279](index=279&type=chunk) - The company did not receive any proceeds from sales of registered equity securities during the six months ended June 30, 2025[280](index=280&type=chunk) Issuer Purchases of Equity Securities (Three Months Ended June 30, 2025) (in thousands) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (in thousands) | | :-------------------------------- | :------------------------------- | :--------------------------- | :----------------------------------------------------------------- | :--------------------------------------------------------------------------------- | | April 1, 2025 - April 30, 2025 | 7,487 | $8.05 | 7,487 | $147,600 | | May 1, 2025 - May 31, 2025 | 1,161 | $8.29 | 1,161 | $137,980 | | June 1, 2025 - June 30, 2025 | 3,185 | $8.28 | 3,185 | $111,632 | | **Total** | **11,833** | **$8.14** | **11,833** | **$111,632** | [ITEM 3. DEFAULTS UPON SENIOR SECURITIES.](index=46&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES.) The company reported no defaults upon senior securities - There were no defaults upon senior securities[283](index=283&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES.](index=46&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES.) The company reported no mine safety disclosures - There were no mine safety disclosures[284](index=284&type=chunk) [ITEM 5. OTHER INFORMATION.](index=47&type=section&id=ITEM%205.%20OTHER%20INFORMATION.) No directors or executive officers adopted or terminated Rule 10b5-1 trading arrangements during Q2 2025 - During the three months ended June 30, 2025, none of the company's directors or executive officers adopted or terminated any Rule 10b5-1 trading arrangements[285](index=285&type=chunk) [ITEM 6. EXHIBITS.](index=47&type=section&id=ITEM%206.%20EXHIBITS.) This section lists exhibits filed with the Quarterly Report on Form 10-Q, including organizational documents, debt agreements, employment letters, and certifications - Exhibits include Amended and Restated Certificate of Incorporation, Bylaws, debt agreements (Incremental Assumption and Amendment Agreement No. 19, Seventh Amendment to Receivables Financing Agreement), employment letters, and CEO/CFO certifications[289](index=289&type=chunk) [SIGNATURES](index=48&type=section&id=Signatures) The report is signed by Jeffrey Likosar, President, Corporate Development and Transformation, and Chief Financial Officer, on July 24, 2025 - The report was signed by Jeffrey Likosar, President, Corporate Development and Transformation, and Chief Financial Officer, on July 24, 2025[295](index=295&type=chunk)

Financial Data and Key Metrics Changes - ADT reported a record recurring monthly revenue balance of €363 million, up 2% year over year [6] - Total revenue increased by 7% to $1.3 billion, with adjusted earnings per diluted share rising by 35% to $0.23 [7][17] - Adjusted free cash flow for the first half reached $500 million, up 38% [7][16] - Customer retention remained solid with attrition at 12.8%, down 10 basis points from last year [7][46] Business Line Data and Key Metrics Changes - Monitoring and services revenue grew by 2%, driven by the record RMR balance [17] - Installation revenue increased by $60 million to $197 million, attributed to the shift towards the ADT plus platform [17] - The company added 242,000 new subscribers, contributing $14.3 million in new RMR [18] Market Data and Key Metrics Changes - The Nest Aware subscriber base surpassed 1 million, indicating strong collaboration with Google [11] - The State Farm partnership generated slightly over 30,000 subscribers, with plans for a new approach targeting prospective movers [12][26] Company Strategy and Development Direction - ADT's strategic focus includes optimizing and completing the rollout of new capabilities and offerings [8] - The company aims to enhance customer experience through innovative products like Alarm Messenger and Trusted Neighbor [9][10] - Continued investment in core monitoring capabilities and technology to ensure 100% uptime [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year 2025 objectives despite macroeconomic uncertainties [20][57] - The company is monitoring tariff pressures closely but believes it can manage exposure within guidance ranges [56] - Management remains optimistic about long-term attrition improvements and customer satisfaction metrics [49] Other Important Information - ADT completed a strategic customer portfolio acquisition of approximately 50,000 subscribers for $89 million [7] - The company returned $589 million to shareholders year-to-date through share repurchases and dividends [7][19] Q&A Session Summary Question: Bulk account purchase attractiveness - Management highlighted that the recent bulk account purchase was economically attractive due to high density and good credit scores of the accounts [24] Question: Update on State Farm partnership - Management acknowledged that subscriber growth from the State Farm partnership was below expectations but is working on a new approach focused on movers [26] Question: Incremental value from bulk purchases - Management confirmed a well-established playbook for converting bulk customers, with a focus on high-density accounts and quality equipment [32][34] Question: Trusted Neighbor product feedback - Initial feedback on the Trusted Neighbor product has been positive, with significant installation revenue reported [38] Question: Sales process optimization - Management discussed ongoing efforts to optimize sales processes, including the introduction of tech engineers for simultaneous sales and installations [43] Question: Drivers of attrition - Management provided insights into attrition drivers, noting modest increases in nonpayment cancellations and a focus on improving customer satisfaction [46][49] Question: Macro environment impact - Management described the business as resilient, with a modest increase in nonpay cancellations being monitored closely [55][57] Question: Subscriber growth and market share - Management remains bullish on core DIFM business and is making changes to compete more effectively in the DIY space [62][63]

Financial Data and Key Metrics Changes - ADT reported a record recurring monthly revenue balance of €363 million, up 2% year over year [6] - Total revenue increased by 7% to $1.3 billion [17] - Adjusted earnings per diluted share rose by 35% to $0.23 [7] - Adjusted free cash flow for the first half reached $500 million, up 38% [7][16] - Customer retention remained solid with attrition at 12.8%, down 10 basis points from last year [7][48] Business Line Data and Key Metrics Changes - Monitoring and services revenue increased by 2%, driven by the record RMR balance [17] - Installation revenue rose to $197 million, up $60 million, attributed to the shift towards the ADT plus platform [17] - New subscriber additions totaled 242,000, contributing $14.3 million in new RMR [18] Market Data and Key Metrics Changes - The Nest Aware subscriber base surpassed 1 million customers, indicating strong collaboration with Google [12] - The State Farm partnership generated slightly more than 30,000 subscribers, with plans for a new approach targeting prospective movers [12][13] Company Strategy and Development Direction - ADT's strategic focus areas include optimizing and completing the rollout of new capabilities and offerings [8] - The company aims to enhance customer experience through innovative offerings like the Trusted Neighbor program and the ADT plus platform [11][12] - Continued investment in core monitoring capabilities and new technologies to reduce false alarms and improve service efficiency [9][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year 2025 objectives despite macroeconomic uncertainties [20][58] - The company noted a modest increase in non-payment cancellations but remains optimistic about long-term attrition improvements [50][55] - Management reaffirmed full-year guidance for total revenue, adjusted EBITDA, and adjusted free cash flow, while increasing adjusted EPS guidance [20][58] Other Important Information - ADT completed a strategic customer portfolio acquisition of approximately 50,000 subscribers for $89 million [7] - The company returned $589 million to shareholders year-to-date through share repurchases and dividends [7][19] Q&A Session Summary Question: Bulk account purchase details - The bulk account purchase of 50,000 accounts was economically attractive due to high density and good credit scores, with a strong pipeline for future acquisitions [24][25] Question: Update on State Farm partnership - The partnership has generated around 33,000 subscribers, with a new focus on prospective movers to improve traction [27][28] Question: Incremental value from bulk purchases - The company has a well-established playbook for converting bulk customers, focusing on high-density accounts and quality equipment [32][34] Question: Feedback on Trusted Neighbor product - Initial feedback has been positive, with Trusted Neighbor representing over 10% of installations and higher average installation revenue [37][38] Question: Sales process and optimization initiatives - The company is focusing on a new sales process involving tech engineers to improve installation revenue and customer experience [43][44] Question: Drivers of attrition - Attrition was influenced by modestly higher non-payment cancellations and lower relocation losses, with overall performance remaining stable [47][50] Question: Macro environment impact - The business model is resilient, with management monitoring non-payment trends and tariff pressures closely [55][56] Question: Subscriber growth and market share strategies - The company is optimistic about its core DIFM business and is making changes to compete more effectively in the DIY space [63][64]

Financial Performance - Total revenue for Q2 2025 was $1287 million, up 7% year-over-year[64, 66] - Adjusted EBITDA for Q2 2025 was $674 million, a 7% increase year-over-year[64, 66] - Adjusted EPS for Q2 2025 increased by 35% to $023[64, 66] - Adjusted Free Cash Flow (including interest rate swaps) for Q2 2025 was $274 million, up 9% year-over-year[64, 66] - The company returned $143 million to shareholders through share repurchases and dividends in Q2 2025[68] Key Metrics - End of period RMR including wholesale increased by 2% to $363 million[75] - Gross RMR additions increased by 14% to $143 million[75] - Revenue payback period lengthened slightly to 23 years[64, 75] - Gross customer revenue attrition improved by 10 bps to 128%[28, 75] 2025 Guidance - The company reiterated its 2025 guidance, with total revenue expected to be between $5025 billion and $5225 billion, representing a 5% increase[81] - Adjusted EBITDA is projected to be between $2650 billion and $2750 billion, also a 5% increase[81] - Adjusted Free Cash Flow (including interest rate swaps) is expected to be between $800 million and $900 million, a 14% increase[81]

Core Insights - ADT reported quarterly earnings of $0.23 per share, exceeding the Zacks Consensus Estimate of $0.19 per share, and showing an increase from $0.17 per share a year ago, resulting in an earnings surprise of +21.05% [1] - The company achieved revenues of $1.29 billion for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 1.11% and up from $1.21 billion year-over-year [2] - ADT shares have increased approximately 22% since the beginning of the year, outperforming the S&P 500's gain of 8.1% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.21 on revenues of $1.28 billion, and for the current fiscal year, it is $0.82 on revenues of $5.11 billion [7] - The estimate revisions trend for ADT was mixed prior to the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Security and Safety Services industry, to which ADT belongs, is currently ranked in the bottom 15% of over 250 Zacks industries, suggesting potential challenges for stock performance [8] - SoundThinking (SSTI), another company in the same industry, is expected to report a quarterly loss of $0.09 per share, reflecting a year-over-year decline of -28.6% [9]

[ADT Second Quarter 2025 Results](index=1&type=section&id=ADT%20Reports%20Second%20Quarter%202025%20Results) [Financial & Operational Highlights](index=1&type=section&id=Financial%20%26%20Operational%20Highlights) ADT reported strong Q2 2025 results with 7% revenue growth to $1.3 billion, record RMR, and robust cash generation, staying on track for full-year guidance Q2 2025 Financial Highlights | Financial Metric | Q2 2025 Value ($) | Change (YoY) (%) | | :--- | :--- | :--- | | Total Revenue | $1.3 billion | +7 | | End-of-period RMR | $363 million | +2 | | GAAP Income from Continuing Operations | $168 million | +$42 million | | GAAP EPS from Continuing Operations | $0.19 | +$0.06 | | Adjusted Income from Continuing Operations | $191 million | +$35 million | | Adjusted EPS from Continuing Operations | $0.23 | +$0.06 | | Net Cash from Operating Activities | $564 million | +$1 million | | Adjusted Free Cash Flow (incl. swaps) | $274 million | +$23 million | - The company has returned **$589 million** to shareholders year-to-date through a combination of share repurchases and dividends[2](index=2&type=chunk) - CEO Jim DeVries attributed the strong performance to the resilience of the business, effective strategy execution, and increasing adoption of the ADT+ platform[3](index=3&type=chunk) [Business Highlights](index=2&type=section&id=Business%20Highlights) ADT strengthened its market position in Q2 2025 through strategic account acquisitions, strong customer retention, shareholder value initiatives, and innovative product and service enhancements - **Foundation for Growth** - End-of-period RMR increased **2%** to **$363 million** - Maintained gross customer revenue attrition at **12.8%** with a **2.3-year** revenue payback - Closed a strategic bulk purchase of **~50,000** customer accounts for **$89 million** in cash[5](index=5&type=chunk) - **Unlocking Shareholder Value** - Repurchased **12 million shares** for **$96 million** in Q2 - Secured commitments for a new **$550 million** First Lien Term Loan to redeem notes due in 2026[5](index=5&type=chunk) - **Innovative Offerings & Experience** - Launched the new Yale Assure Touch smart lock integrated with ADT+ - Surpassed **1 million subscribers** for the Nest Aware service, highlighting the strength of the Google partnership - The ADT Remote Assistance program handles over **50%** of service requests virtually - Implemented AI-powered virtual agents in customer care chat and voice interactions[5](index=5&type=chunk) [Financial Performance](index=3&type=section&id=Financial%20Performance) Q2 2025 saw total revenue grow 7% to $1.287 billion, driven by installation revenue, with GAAP income up 33% to $168 million and Adjusted Free Cash Flow increasing 9% to $274 million Q2 2025 Financial Performance Overview | Metric | Q2 2025 ($M) | Q2 2024 ($M) | % Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | $1,287 | $1,205 | 7 | | - M&S Revenue | $1,090 | $1,068 | 2 | | - Installation & Other | $197 | $136 | 44 | | Income from Cont. Ops. | $168 | $126 | 33 | | Adjusted EBITDA | $674 | $629 | 7 | | Adjusted Free Cash Flow (incl. swaps) | $274 | $251 | 9 | - The increase in Security installation, product, and other revenue was primarily due to a higher mix of professionally installed systems under the outright sales model and higher average prices associated with the ADT+ platform transition[6](index=6&type=chunk) - The rise in income from continuing operations was mainly attributable to revenue growth and the non-recurrence of a legal settlement charge from the prior year[7](index=7&type=chunk) - Capital returns to shareholders in Q2 totaled **$143 million**, comprising **$96 million** in share repurchases and **$47 million** in dividends[10](index=10&type=chunk) [2025 Financial Outlook & Dividends](index=4&type=section&id=2025%20Financial%20Outlook%20%26%20Dividends) ADT reiterated its full-year 2025 guidance for revenue, Adjusted EBITDA, and Adjusted Free Cash Flow, updated Adjusted EPS to $0.81-$0.89, and declared a $0.055 per share quarterly dividend Full-Year 2025 Financial Guidance | Metric | 2025 Guidance Range | | :--- | :--- | | Total Revenue | $5,025M - $5,225M | | Adjusted EBITDA | $2,650M - $2,750M | | Adjusted EPS | $0.81 - $0.89 | | Adjusted Free Cash Flow (incl. swaps) | $800M - $900M | - The Board of Directors declared a cash dividend of **$0.055 per share**, payable on October 2, 2025, to shareholders of record as of September 11, 2025[13](index=13&type=chunk) [Detailed Financial Statements](index=7&type=section&id=Detailed%20Financial%20Statements) [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q2 2025 total revenue grew 7% to $1,287 million, with a 9% decrease in SG&A leading to a 20% increase in operating income and a 33% rise in net income from continuing operations to $168 million Condensed Consolidated Statements of Operations | (in millions) | Q2 2025 ($M) | Q2 2024 ($M) | % Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | $1,287 | $1,205 | 7 | | Total Cost of Revenue | $250 | $196 | 27 | | SG&A Expenses | $356 | $390 | (9) | | Operating Income | $342 | $284 | 20 | | Income from Cont. Ops. | $168 | $126 | 33 | | Net Income | $165 | $92 | 79 | [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets were $15.97 billion, total liabilities increased to $12.31 billion due to higher current debt maturities, and stockholders' equity decreased to $3.66 billion Condensed Consolidated Balance Sheets | (in millions) | June 30, 2025 ($M) | Dec 31, 2024 ($M) | | :--- | :--- | :--- | | **Assets** | | | | Total Current Assets | $940 | $1,005 | | Total Assets | $15,972 | $16,051 | | **Liabilities & Equity** | | | | Total Current Liabilities | $2,052 | $1,264 | | Long-term Debt | $6,751 | $7,511 | | Total Liabilities | $12,313 | $12,250 | | Total Stockholders' Equity | $3,659 | $3,801 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash from operating activities increased to $1.03 billion, while financing activities used $460 million, primarily due to common stock repurchases Condensed Consolidated Statements of Cash Flows | (in millions) | Six Months Ended June 30, 2025 ($M) | Six Months Ended June 30, 2024 ($M) | | :--- | :--- | :--- | | Net cash from operating activities | $1,031 | $927 | | Net cash used in investing activities | $(623) | $(633) | | Net cash used in financing activities | $(460) | $(275) | | Net (decrease) in cash | $(52) | $19 | [Non-GAAP Financial Measures](index=10&type=section&id=Non-GAAP%20Financial%20Measures) [Reconciliation of Free Cash Flow](index=11&type=section&id=Reconciliation%20of%20Free%20Cash%20Flow) Q2 2025 Adjusted Free Cash Flow (including interest rate swaps) increased 9% to $274 million, reconciled from $564 million in net cash from operating activities, primarily adjusted for $328 million in capital expenditures Reconciliation of Free Cash Flow | (in millions) | Q2 2025 ($M) | Q2 2024 ($M) | | :--- | :--- | :--- | | Net cash provided by operating activities | $564 | $563 | | Free Cash Flow | $198 | $231 | | Adjusted Free Cash Flow | $257 | $229 | | Adjusted Free Cash Flow (incl. swaps) | $274 | $251 | [Reconciliation of Adjusted EBITDA](index=12&type=section&id=Reconciliation%20of%20Adjusted%20EBITDA) Q2 2025 Adjusted EBITDA from continuing operations increased 7% to $674 million, reconciled from GAAP income of $168 million, with a stable Adjusted EBITDA margin of 52% Reconciliation of Adjusted EBITDA | (in millions) | Q2 2025 ($M) | Q2 2024 ($M) | | :--- | :--- | :--- | | Income from continuing operations | $168 | $126 | | Interest expense, net | $116 | $110 | | Depreciation and intangible asset amortization | $339 | $334 | | Adjusted EBITDA from continuing operations | $674 | $629 | | Adjusted EBITDA Margin (%) | 52 | 52 | [Reconciliation of Adjusted EPS](index=13&type=section&id=Reconciliation%20of%20Adjusted%20EPS) Q2 2025 Adjusted EPS from continuing operations increased to $0.23, reconciled from GAAP diluted EPS of $0.19, primarily adjusted for interest rate swaps and share-based compensation Reconciliation of Adjusted EPS | (per share data) | Q2 2025 ($) | Q2 2024 ($) | | :--- | :--- | :--- | | Diluted income from cont. ops. per share | $0.19 | $0.13 | | Adjustments (net) | $0.04 | $0.04 | | Adjusted EPS | $0.23 | $0.17 | [Leverage Ratios](index=14&type=section&id=Leverage%20Ratios) As of June 30, 2025, ADT's net leverage ratio improved to 2.8x, calculated based on net debt of $7.48 billion and LTM Adjusted EBITDA of $2.65 billion Leverage Ratios | (in millions, except ratio) | June 30, 2025 ($M) | Dec 31, 2024 ($M) | | :--- | :--- | :--- | | Total Debt (Face Value) | $7,968 | $7,861 | | Less: Cash & Cash Equivalents | $(45) | $(96) | | Less: Receivables Facility | $(440) | $(408) | | **Net Debt** | **$7,483** | **$7,357** | | LTM Adjusted EBITDA | $2,646 | $2,578 | | **Net Leverage Ratio (x)** | **2.8** | **2.9** |

Core Insights - ADT Inc. reported a strong financial performance for the second quarter of 2025, with total revenue increasing by 7% year-over-year to $1.287 billion, driven by record recurring monthly revenue and robust cash flow generation [2][5][7]. Financial Performance - Total revenue for the second quarter was $1,287 million, up 7% from $1,205 million in the prior year [7]. - Monitoring and related services revenue grew by 2% to $1,090 million, while security installation and product revenue surged by 44% to $197 million [7]. - GAAP income from continuing operations was $168 million, or $0.19 per diluted share, reflecting a 33% increase from the previous year [8][27]. - Adjusted income from continuing operations rose to $191 million, or $0.23 per diluted share, up 23% year-over-year [8][27]. Cash Flow and Shareholder Returns - Year-to-date GAAP Operating Cash Flow increased by 11%, while Adjusted Free Cash Flow (including swaps) surged by 38% [1][10]. - The company returned $589 million to shareholders through share repurchases and dividends year-to-date, with $143 million returned in the second quarter alone [1][12]. - During the second quarter, ADT repurchased 12 million shares for $96 million, with a total of 65 million shares repurchased under its $500 million share repurchase plan [6][12]. Strategic Developments - ADT closed a strategic bulk purchase of approximately 50,000 customer accounts for $89 million, which is expected to yield attractive returns and enhance economies of scale [6]. - The company launched the Yale Assure Touch smart lock, integrating it with the ADT+ platform to enhance security features [6]. Customer Metrics - The end-of-period recurring monthly revenue (RMR) increased by 2% to $363 million, equating to an annualized figure of $4.4 billion [6]. - Customer retention remained solid, with a gross revenue attrition rate of 12.8% and a revenue payback period of 2.3 years [6][7]. Financial Outlook - ADT reiterated its 2025 financial guidance for Total Revenue, Adjusted EBITDA, and Adjusted Free Cash Flow, while updating the range for Adjusted EPS due to a lower share count from repurchases [13][14].