ADT(ADT) - 2025 Q2 - Quarterly Results

ADT Second Quarter 2025 Results Financial & Operational Highlights 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] - CEO Jim DeVries attributed the strong performance to the resilience of the business, effective strategy execution, and increasing adoption of the ADT+ platform[3] Business Highlights 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] - 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] - 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] Financial Performance 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] - 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] - Capital returns to shareholders in Q2 totaled $143 million, comprising $96 million in share repurchases and $47 million in dividends[10] 2025 Financial Outlook & Dividends 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] Detailed Financial Statements Condensed Consolidated Statements of Operations 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 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 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 Reconciliation of Free Cash Flow 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 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 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 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 |