Sign in

You're signed outSign in or to get full access.

AI

ADT Inc. (ADT)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered solid growth and cash generation: revenue rose 7% to $1.27B, Adjusted EBITDA reached $661M, and Adjusted EPS increased 11% to $0.21; record RMR ($360M) and record-low gross revenue attrition (12.6%) underscored customer retention strength .
  • Results beat Street on revenue and EPS; EBITDA was in line: revenue $1.267B vs $1.244B consensus, EPS $0.21 vs $0.19; EBITDA $661M vs $656M consensus (S&P Global) — a modest, broad-based beat driven by ADT+ outright sales and pricing .
  • FY25 guidance reiterated: Total Revenue $5.025–$5.225B, Adjusted EBITDA $2.65–$2.75B, Adjusted EPS $0.77–$0.85, and Adjusted FCF (incl swaps) $800–$900M; management flagged tariff uncertainty but expects to manage net exposure within ranges .
  • Capital returns and balance sheet actions: $445M returned in Q1 (53M shares repurchased for $397M + $49M dividend); $600M new term loan and partial $500M redemption of 2026 notes; dividend of $0.055/share declared for payment on July 8, 2025 .

What Went Well and What Went Wrong

What Went Well

  • Record RMR ($360M annualized $4.3B) and record retention (12.6% gross revenue attrition), highlighting resilient subscription economics and customer satisfaction improvements .
  • Strong cash generation: GAAP operating cash flow up 28% to $467M; Adjusted Free Cash Flow (incl swaps) up 105% to $226M, supported by timing, solar exit, and operating improvements .
  • ADT+ momentum and mix: installation revenue rose 45% to $184M, aided by customer-owned outright sales at higher average prices; installation revenue per unit ~ $1,500 as ADT sold on value over discounts .

Management quotes:

  • “ADT is off to a very solid start in 2025…record recurring monthly revenue balance and customer retention” — Jim DeVries, CEO .
  • “First quarter adjusted free cash flow…more than doubled…installation revenue was $184 million, up 45%…improved installation revenue per unit at approximately $1,500” — Jeff Likosar, CFO .

What Went Wrong

  • GAAP diluted EPS from continuing ops declined to $0.16 (vs $0.17 LY) driven by an unrealized loss on interest rate swaps; Adjusted EPS rose to $0.21 after adjustments .
  • Gross RMR additions fell ~7% YoY, with tighter credit standards in DIY and health channels; management emphasized discipline over volume and no bulk purchases in Q1 .
  • Tariff uncertainty could pressure margins mid-year; management plans supplier negotiations, inventory buffers, and potential pricing surcharges to mitigate impact .

Financial Results

MetricQ1 2024Q4 2024Q1 2025
Total Revenue ($USD Billions)$1.190 $1.260 $1.267
GAAP Diluted EPS – Continuing Ops ($)$0.17 $0.21 $0.16
Adjusted EPS ($)$0.19 $0.20 $0.21
Adjusted EBITDA ($USD Millions)$638 $653 $661
Adjusted EBITDA Margin (%)54% 52% 52%
Operating Cash Flow ($USD Millions)$364 $460 $467
Adjusted FCF (incl swaps) ($USD Millions)$111 $224 $226

Segment Revenue Breakdown

Segment ($USD Millions)Q1 2024Q4 2024Q1 2025
Monitoring & Related Services$1,063 $1,085 $1,083
Security Install, Product & Other$127 $175 $184
Total$1,190 $1,260 $1,267

Key KPIs

KPIQ1 2024Q4 2024Q1 2025
RMR ($USD Millions)$353 $359 $360
Gross Revenue Attrition (%)13.1% 12.7% 12.6%
Revenue Payback (Years)2.1 2.2 2.3

Actual vs Consensus (S&P Global)

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Billions)$1.244 vs $1.223 est$1.260 vs $1.233 est$1.267 vs $1.244 est
EPS ($)$0.20 vs $0.171 est$0.20 vs $0.188 est$0.21 vs $0.190 est
EBITDA ($USD Millions)$663 vs $645 est$657 vs $658 est$659 vs $656 est

Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total RevenueFY 2025$5.025–$5.225B $5.025–$5.225B Maintained
Adjusted EBITDAFY 2025$2.650–$2.750B $2.650–$2.750B Maintained
Adjusted EPSFY 2025$0.77–$0.85 $0.77–$0.85 Maintained
Adjusted FCF (incl swaps)FY 2025$800–$900M $800–$900M Maintained
DividendQ1 2025$0.055 declared (paid Apr 3 for prior Q) $0.055; record Jun 12; pay Jul 8 Maintained

Quarterly Phasing (Mgmt Commentary)

  • Q2 revenue “slightly higher” than Q1 due to more installation revenue; Q2 Adjusted FCF similar to Q1; Q2 Adjusted EBITDA/EPS similar to or slightly lower on timing and initial tariffs .

Earnings Call Themes & Trends

TopicQ3 2024 (Prev-2)Q4 2024 (Prev-1)Q1 2025 (Current)Trend
ADT+ platform & outright salesLaunch momentum; install revenue +32% YoY; outright sales +60% Outright sales doubled in Q4; FY install revenue +28% Higher average prices; install rev per unit ~$1,500; outright sales drove +45% install revenue Strengthening adoption, richer configurations
AI/virtual service>50% service requests resolved virtually; CCAI pilots planned AI customer care pilots expanding; Sierra partnership pilots 90% of chats processed by AI; ~50% resolved without human; voice AI containment targeted 20% by YE25 Scaling AI to improve CX and efficiency
Tariffs/macroNot highlighted as headwindGuidance includes tariff consideration Tariff uncertainty; mitigation via suppliers, inventory, sourcing, pricing; midpoints could be pressured but within ranges Emerging risk with mitigation levers
State Farm partnershipExpanding pilots (leak detection, DIY) Offers in 17 states; pilots and channel expansion Q1 gross adds 4k via State Farm vs 3.2k LY; pilots ongoing; DIY success Gradual channel contribution
Bulk acquisitionsPurchased ~49k accounts in Q3 (IRR high-teens) No Q4 bulk; exploring future deals No Q1 bulk; evaluating options, maintaining discipline Opportunistic, returns-focused
Small Business (SMB)Stable; focus on attrition Renewed focus; new leader; product updates planned SMB attrition flat; opportunity for incremental growth Stable, targeted growth initiatives
Customer retention/NPSAttrition 12.8% (record) Record retention; NPS improving Attrition record 12.6%; NPS at 3-year high; proactive retention programs Improving steadily

Management Commentary

  • “With our new and proprietary ADT+ offering now available to customers in all geographies, we are seeing an increasing percentage of our customers select our new ADT+ platform…at an overall higher average price.” — Jim DeVries .
  • “Installation revenue was $184 million, up $57 million or 45%…improved installation revenue per unit at approximately $1,500…sell on value and rely less on promotions” — Jeff Likosar .
  • “Despite current macroeconomic uncertainty, especially including the effect of tariffs, we are reaffirming the full year guidance ranges…we believe we can manage our net exposure within the ranges we've shared.” — Jeff Likosar .
  • “At the end of Q1, 90% of our customer service chats were processed by AI agents…We expect to have 20% of our voice calls completely contained by AI agents by the end of the year.” — Jim DeVries .

Q&A Highlights

  • Macro & demand: Business model resilient; lower relocations support retention; limited exposure to new home builds (~5% of gross adds) .
  • Tariffs: Exposure uncertain; mitigation levers include supplier negotiations, inventory buffers, sourcing changes (Vietnam/Mexico), and potential customer surcharges; expect to remain within guidance .
  • Gross adds: Down ~15k YoY; DIY (-9k) and health (-8k) from tighter credit; Pro Install direct adds +4%; no Q1 bulk; discipline emphasized .
  • Payback: Revenue payback uptick due to securitization timing; expected to reverse in Q2 after facility refresh .
  • Mix & margins: Monitoring revenue ~+2% for FY; installation carries lower margin and seasonality; guidance unchanged .

Estimates Context

  • ADT beat consensus on revenue and EPS; EBITDA in line to slight beat.
    • Revenue: $1.267B vs $1.244B; EPS: $0.21 vs $0.19; EBITDA: $659–$661M vs ~$656M. Drivers: outright sales uplift, pricing, retention; swaps impacted GAAP EPS but Adjusted EPS rose .
  • Prior quarters also showed beats on revenue/EPS (Q3/Q4), supporting positive estimate momentum.
    Values retrieved from S&P Global.

Key Takeaways for Investors

  • Earnings quality improving: Adjusted EPS up 11% and Adjusted FCF more than doubled; subscription metrics (RMR, attrition) at records indicate resilient cash annuity base .
  • ADT+ pivot is accretive to unit economics: higher upfront installation revenue and pricing with ~$1,500 per unit; expect continued mix shift into outright sales and richer configurations .
  • Near-term watch: tariff trajectory and Q2 phasing (EBITDA/EPS similar to or slightly lower; FCF similar); management has credible mitigation levers to stay within FY guidance .
  • Capital returns likely to continue: $148M repurchase capacity remaining post April buys; dividend maintained at $0.055/share with Q1 declaration for July payment .
  • Channel diversification: State Farm and DIY pilots show progress; SMB stable with planned product enhancements; bulk deals remain opportunistic .
  • Stock reaction catalysts: sustained estimate beats on revenue/EPS, evidence of tariff mitigation/pricing power, and continued retention/NPS gains should support multiple and cash yield .
  • Action: Monitor Q2 installation seasonality, tariff developments, and AI containment progress; positive bias if guidance maintained through mid-year with continued cash conversion .