ADT - Earnings call transcript Q2 2020

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Operator

Greetings, welcome to ADT Incorporated Second Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to Derek Fiebig, Vice President of Investor Relations. begin. may you Derek,

Derek Fiebig

and This everyone press afternoon presentation results. a operator on release joining today’s slide financial our call. we on thank you, for you us and Thank issued a

we addition, related on presentation Google our issued In at our Monday a release a to are and materials These investor.adt.com. press partnership. website slide posted available on

update subject could of within Private among and forward-looking only speak in Securities the actual of remarks Our in others, XXXX. our statements, Please forward-looking the differ those meaning These described the with as materially today that statements, afternoon time will filings by expressed to include of this SEC. to the statements issued disclaim to our matters our results we we’ve note which or are Reform press are that cause made. such forward-looking Act they risks statements from Litigation that release obligation forward-looking implied any

also non-GAAP today’s make During reference we’ll financial to call measures.

and uncertainties. Our future are may upon dependent forward-looking items be mainly predict which include difficult to special and/or historic financial measures non-GAAP

For turn and over Rich CIO Jason With Jeff Jim. joining and please a Q&A the I’ll both Rot, press also to today’s call us Likosar and Business on of CFO, and Jim complete and also President the of this CEO, release as of to refer Operations; issued slide our our of presentation EVP our With of GAAP Smith, financial and our which non-GAAP me on most afternoon, DeVries; Field call to Finance. well comparable Don SVP reconciliation are website. measures, available historical our are Young, ADT’s that, available for SVP Operations; are as

Jim DeVries

welcome and Derek, pleasure a call. you, Thank everyone to to today’s it’s

partnership which in leap you long-term Google know believe announced development for us major our Monday, potential. with we forward positions a our long-term and on we As growth

on well industry recap in to to enable agreement combined were in the first but extraordinary to our you very environment. second hope more discussing many of our nearly transformational shift this Monday In I team effort we our you our early strong brief continue Google exciting share lead shared into discuss initiatives performance. with quarter our the some a center spend we a ADT’s like of partnership time May work-from-home where existing of moment, able call especially us the I’ll COVID-XX highlighted the to employees future. to Our to an a detail. by join I’d with X,XXX call by environment, alliance navigate

accomplished standpoint, pandemic our NPS These possible our year-over-year we to care level high. customer encouraged by achieved. through us we resulted are the towards field from healthy out quarter, we an during customer that As the the of service extraordinary has our allowed second and operations, all-time improvement high to entire provided we and thriving. a effectiveness rethink the service from a time challenging a progressed adjusting simply score in quickly From of pleased both by in and navigating efforts proud I’m many the business the ADT team organization. similar moved objectives including

the chatbot service During intelligence customer issues. also artificial introduced handle first we to quarter, our

technicians an response. new service In Additionally, resolution voice increase ever efficiently field and both to delivered and use customers. interactive our existing self-service first-call rate continued of we highest saw and ADT our our our safely in customers’ operations,

best represented productivity. quarter quarter The second also for technician our

as we our services to to customers. and service our direct ADT’s technicians customer through strong customer both track, and we While approximately In softer retention customer revenue overall across XX-month products strength many so category XX improvements our basis including continue in we and the the expect began balance in environment country, These team demand remained channels, XX.X%, sequentially improved and August. demand adding experienced commercial for points of the for customer economic relocations. actually the residential satisfaction to challenges to gross a acknowledging dealer and do by partially attrition May, firm supported with actually throughout levels offsetting and our every

in retention highlighted a quarter. drive long during run. we’ve progress strong with in the satisfaction number retention we earlier, I times before, the over As higher of which continue linear, shared pleased our initiatives not and performance will to service but always be expect customer customer the will I’m the result customer We’ll

each our month. residential to than prior month residential Turning new the business, finished with better quarter the also sales

As our positive quarter March and and for sales negatively and May the first the of year-over-year additions demand of spiked course June higher in the before April year. net late months With customer call, June. RMR shared up during COVID-XX our shelter-in-place impacted restrictions our remained in residential during additions U.S. a basis, on first business in six improved

broader characteristics of near-term the resilient Despite situation the peace value resurgence consumers the our mind. macroeconomic with We’re illustrated a the business of monitoring safety, placing carefully. uncertainty, COVID-XX and security and are high of on

recent exceptional for of also the to are Haven, encouraged short-term basis, household On bode time. partnership present include and for services and our the by These home over and additional increasingly and built and lights Record thermostats, by new largest current into and seeking well solutions and I’m security professionally per DR about Horton. nation’s now potential connected DR dealers ADT both with This exclusive ADT’s future, doorbells, home consumers Horton DR long-term to and years continue de-urbanization Through for Safe more further deliver for growing us. provider a continue the door will Horton, long-term helpful housing to low Looking population automation new trends. automation towards security. smart new is home we a most opportunities locks, video excited will homes expect desire for more rates, homebuilder. one and come. we long-term market that trends trend millennial trends all services homes macro interest

a stemming low Throughout pressure XXXX related to and growth now revenue to systems to and visits. We’re the demand business. experienced our years for partner commercial we The early COVID-XX be come. we Horton strength with from DR service offset excited in from in of residential many double-digit of and and a organic commercial ongoing the growth new XXXX large coming installation rates portion experienced weakness

a shared with commercial As to XX% into ago. business due the down our which approximately March revenue second a in previously, continued year-over-year decline from experienced quarter COVID-XX year ending

prospects However, XX,XXX announced our in we this than largest A Dollar. commercial diminished. anticipate believe We was progress this we they the deferred, position our commercial locations United our example and continue more ever of May long-term States. Dollar partnership growth Tree across not to while eventually make span many of in to growth are are with and partnership that Family great

While balance about part we’ve pockets in of our continued see progress the is experienced success of year guidance. business this of into the and to expect year-over-year we remain our and total during Company the cautious quarter, pressure factored which

describe will our XXXX pleased the in to integrating a to with details our strengthen look business our performance, our for through especially talent cash well continue future. acquiring position grow to However, the capabilities commercial will Overall, into additional existing to few new and we’re commercial and we Jeff and financial moments. generation operations, adding

and by trailing XX approximately mentioned, approximately a year our points ago sequentially. basis As XX%, basis revenue points at XX XX-month improving attrition from ended

past from over during efficiency with payback well SAC millions at along revenue down performed X.X dedicated efforts or Thanks acquisition trailing the improved coming well subscriber as accomplishments the to In summary, to employees XX-month customers of Our challenging tirelessly the ADT year in worked our years, X.X. who our services this and second to environment. with essential of in dealer partners quarter. our deliver very

business model features flow performance of and but recurring contractual to our prioritize health demonstrates ability the hand at continuing and to while in also business stay second our strong flexibility which cash revenues, only Our on safety. quarter focused team’s expenditures, resilience not strong the

turning Before technology as enhances significantly Over enable Jeff, a our to Google. we growth Monday, smart from days ADT’s home partnership over this ago groundbreaking long-term growing and take market. strategic transformational opportunities. moment new service you rapidly Google I’d already develop things long-term regarding partnership products revisit On to time with of us new announced offerings, that two will the most like announcement to a to to know,

Our complementary equity vision, provide customers, slide years significant presentation for for to success encourage for for Google. come. investment updated partnership more mutual our XXXX. information our and position second commitment on now with will details you turn on call further strengths, call to many Monday’s an I’d serving funding partnership reported and shared with review quarter along the to meaningful results, to Jeff outlook go-to-market to our over I

Jeff Likosar

for everyone joining Thank you, Jim, and today’s thank call. you

and results XXXX. we our half during are pleased very As overall Jim our the with quarter second first of accomplishments mentioned,

while fortitude our position the performance of in strengthening have strong our teams term macro the demonstrates of who Our challenging results our XXXX. despite delivered concurrently far environment the so resilience long-term and business near

installation Our by COVID-XX. of declined contributor by basis Canada. with disposition The commercial grew revenue higher main customers. the services offset total reported our of total than and effects revenue on sales quarter Company revenue Canada reported Monitoring other residential outright sales approximately mainly year-over-year XXXX X% in the more by driven the and softness and in revenue, which X% to a divestiture revenues despite to XXXX was

has even COVID-XX However, sales affected in related US to customers. with especially quarter down recurring monthly revenue X% grew slow which by approximately the the commercial

our pleased the that by grew X% of million compared approximately EBITDA to first are quarter. We adjusted $XXX sequentially

generated has primarily commercial result the $XXX a in $XXX from Canada basis. for the recognized last benefit and of was our flow Cash expected, quarter This adjusted year-over-year, compares on year. during of the a lower million highlight the down expenses of million As the Defenders by disposition first first quarter $XXX and quarter was P&L to the million a adjusted second acquisition, half generation, which in EBITDA and in again we our cash as volume of free the a acquisition, driven transactions. of it Defenders year-to-date

more inflows which trailing-XX describe RMR. to were time arrangement basis X.X on cash contributed XX% a and for a will the addition financing reduction costs As or benefits year-over-year flow to the $XX million first month or versus revenue in our from new improved subscriber down monthly of payback The revenue which contributed our SAC, in net X.X I bit Google in quarter. XX% recurring our detail to program on adjusted years. financing consumer later, efficiency net free consumer partnership Customer a acquisition the in includes

to Defenders our factors actions. the net efficiency pricing, efficiency contributing include ongoing Additional cost improved SAC acquisition and

net SAC shifted first sales. shift the the and the and residential due more between capitalized to in acquisition outright As to Defenders quarter, non-capitalized

basis. sequential which the and attrition attrition, to a fewer quarter last highlight points we approximately by gross driven trends factors, widespread customer approximately initiatives. And retention prior relocations, Another several basis demand improvements mentioned, From of the ended related on revenue as our positive effectiveness declined a with number XX described Jim year in by softness the due including in were our basis points quarter COVID-XX of XX service was improvement versus our and perspective, the shutdowns we call. on a

unit at above a run volumes However, June in demand versus account increase residential customer levels a saw in the strengthened year’s exited net versus during quarter May. rate and in moderately June. improving prior with quarter throughout April the We and new we strong May the

were in month quarter. increased down it year-over-year the additions full for RMR residential US of quarter, the last the While

overall Turning our materially sheet, now not capital did quarter. second during to change structure balance the the

during our of $XXX first as strong our repaid end quarter credit the facility the revolving result a quarter. of balance cash on million of second generation, we outstanding the As the

of In market of in term refinance per I markets addition, October. consideration that our early in accessing want we in $X.XXX share near recent the the dividend to strength in today notes October due declared also our to we considering quarterly are point X.XX% of out payable capital XXXX.

brief share for to XXXX. full-year update outlook Now our a I’ll

outlook economy face in trends to first execution have May. as a the financial improved ranges are continues to COVID-XX we exposure the favorable strong overall we other While and result benefit shared in characteristics, Consequently, our half. and we to the demonstrated relative fortunate to uncertainty from dynamics, of recession-resilient our

is billion is billion, to EBITDA range range our to $X.X $X.XX million $X.X is adjusted $XXX and to adjusted revenue flow million. range free billion $X.X $XXX new billion Our our cash

a of incremental always, period the continue returns. As on to will future with investments and balance we objectives longer-term pursuit short selected generate to focus

to turning mention results to a to I couple Before items our related outlook. other Q&A, and want

inflow, for which this receivables the results Due from included quarter second our new the to this earlier, our our inflows XXXX measure. materials. mentioned cash I described as can pricing quarter. time only First, flow inflow outlook, describe the earnings The using term our we primary detail cash cash and inclusion of in we first facility changes, you which change entered our new model free a more measure, the planned in financial adjusted inclusion to had original of the Mizuho to during into are now net non-GAAP consumer included we which the flow the is in new see

Secondly, flow caused approximately the as our hedges in call March changes of on to cash mark-to-market decrease our the in the recorded hedges May, first earnings. swap I interest in in resulted longer quarter highly be rate as interest mentioned This in quarter rates second were designated no in effective. $XX million certain

installation residential of will reported first first in transition which described half our equipment half. we year our quarter call, to revenues quarter during legacy sales to second ADT Third, model compared also began the the in second as result we ADT-owned during lower predominately back the a for the

ranges just consider partnership for Google. announced Lastly, near-term shared recurring of expectations effects our I outlook the newly with the

have However, signed partnership, and plans. longer-term recently announced investment this because we exciting we’re and the our stages building only of near early in

months front today’s of To with our our XXXX again positioning will and as six call. third term comments opportunities longer quarter and earnings. results through have are resulting excited We ADT by of pleased we our the in today, for the conclude strong in relevant we the share we progress on the being very my updates announce you Thank us. made, for first

Operator

Goldman first question Our Sachs. Instructions] from Tong George with [Operator is

George Tong

the of the implications potential Google into I financial new dive partnership. deeper to long-term wanted

partnership? Could to a and impact the then out laid corresponds around you see three partnership perhaps what horizons financial horizon put each you expect a your material time around which for the ramp. You’ve of the to is framework to what the would from timing perspective that horizons,

Jim DeVries

the and the a really working experience. aren’t transform how can It’s can Jim. Google for that necessarily Google Clarity we on first, with been and on horizon, horizons home, now advance We’ve industry, the and how a plus sequential. vision smart for technology customer create year almost special their the ADT

And Install. speak There necessarily legacy fully of utilizes is like the excited integrated of one enhanced horizon, the alarm that intelligence essentially additional me re-imagination our our months. home building products and sequential, experience platform two of the products solution not horizon over to and occur to of the available launch what in question. so That verification let Horizon the features the customers. introduction then today than we probably no about is it’s that a some net your and June Then, current next is but smart XX rethinking will that AI, a two that’s to And and later total using of the horizon Pro XXXX. about, all what machine we’re are all art together. ties call most possible,

timeframe like. for and you on We’re that’s a the those impacts look of but prepared little point not a horizons each give what to for at quantitative horizons, this descriptive

Jeff Likosar

add and just offerings got and monitoring, a could over excited this, And fundamentally the bit we’re being possibly that to It more to is growth - to mentioned it to even hours. the and We’ve this a with who us that’s differentiated the three, which inbound possible first addition it lot I’d smart us heart last way places two, the gives to now the security to just security prioritized have those horizon smart kind other XX a we’re over trajectory. differentiation consumers video market. in us point, it video thinking that response might emphasize and one some this in signed for thing our I’d in analytics, security but I’d about and to instead go later, quickly Hi, little of more XX in compelling more this. broader markets makes too of if add horizon of alarm our of of appeal growing It more be gives markets, set and core ideas home changes George, to Jim but first. of home is share motion time, customers first exposes more us long-term

George Tong

follow-up addressable just it from your differ Amazon fundamentally partnership the does partnership, And Amazon market the opportunity the How partnership differently Google a on how augment the and partnership. does the than did?

Jim DeVries

the So It around of fundamentally of outside the relationship, Alexa it’s audio swim Guard just orbited in was home the lanes detection partnership. really Amazon Amazon and that Alexa device involves different The relationship. and partnership using the as deep an extent integration. home Google

in and the is co-branding, really the still and million joint to roadmap, part the relationship funds. accelerator great involved but Amazon deep growth all about know is helpful investment product Google. the the what’s integration Google viewed and $XXX organization, for exceptionally incremental view a You us We marketing, relationship of with

Operator

question from Our Kaplan is proceed. Morgan Please next with Toni Stanley.

Toni Kaplan

rate you exceptionally during moving could but moves. little help attrition here. factors to think in that the bit number quarter talk sense hoping it relocations mentioned the could break that The makes drivers. strong. you us up from the it the through fewer by know fewer fewer COVID lead Thanks. I down I I was looks the driven would how was I is people and just period, if the a sustainable tick expect potentially and since

Jim DeVries

Thanks, Toni.

was That us for shared to times, factors. one context attrition. extremely retention, it’s more proud like improvement in balancing just drive of that acquire balancing the region but and in metrics fewer of than we record receives capital did first with then number improvement country and customer levels, attention customers and it every like voluntary is we’re attrition, we number a the unbelievably driver, a obviously important will our satisfaction in sometimes know, what it first-call We’ve at retention for a non-pay objective our act QX. saw service near tracked, direct as growth. relocations number that’s So not of we locked level, is, of we of and level capital growth serve, generated efficient at bit is customer competition, be involves other said, and from number to cost we and to was a the you a in record every cost linear, certainly on because improved a little improved us efficient dealer. a Attrition unimportantly customers, in category warranted we record but was in resolution and MPDS, have of was single agents

So on QX place and is an retention value to we proof resistance our highlight the think excellent point service. customers that recession

So but won’t quarter. great great we in linear the linear, improvement won’t about know that We we the long-term. be performance be feel attrition attrition - feel

Toni Kaplan

you people on each on and we’ve Google is your unit, could That’s to a the what profit-sharing have great. of mean also that’s revenue- be clarify received if a pricing Thank well. could And you. the could Pro share Install hoping also something you there your if of sale asked there for questions that. of partnership, it perspective resi I about business. any if cannibalization or the would number on component was as And us

Jim DeVries

isn’t segment. DIY involve the agreement the our per segment Google se. aspect to So relationship a and our revenue-sharing There will both Do-It-For-Me

reason both was frankly and but attracted of attention we why most segments, to segment. our and was Google Google our do We’re with of of say about us in because would Do-It-For-Me most excited I attention can the what the

what the home Google so for or reputation ability in are curator - strategic brand, at expertise is the be the we Google their X,XXX it of deep day smart in the our to trusted the great was of choose focused end of distribution, to us really and tipped be deal product partner. to Our and experienced as technicians a the and ADT where attention,

Jeff Likosar

launched rely we first Toni, you as quarter to that course your nationally the and we to to solution. rolled solution to progress end and had have Google enable sales good more It out enabled focus continue quarter the structure. and financing where was to was pricing comprehensive our quarter towards pricing to our And of to of in on place really first the to quarter customers pricing add structure quarter, second all I to that in teams make we less question too, model on by there was in first related may and new our the our a but new want discounting, recall the simple sell of not availability

us has having just give with meaningful SAC the it average services might you played, which differentiation in is year-over-year. the So other realizing a that improvement to for the pleased we us going there. that after our more that more residential because out And first additional products contributor to Google revenue installation, that very installed progress see led quarter you revenue see us the to is us be payback help solutions and both relative that to think gives that we’re

Operator

is Seth question with next RBC Please Our Capital proceed. from Markets. Weber

Seth Weber

to the on then business, little pretty ask the customer in color rate a trend XX% through - flat. as to us The like looks down bit wanted quarter the it the you any just give account just was and I of commercial Can I side business. quarter. guess commercial the

going worse they you get forward? better a Thanks. expecting are before to here little get So things bit

Jim DeVries

Thanks, Seth. It’s Jim.

XX% the quarter. significantly COVID-XX Again, maybe the the changed business by three four QX. in for in grew the impact takeaways commercial So trajectory Obviously, by business commercial or the on you. second pretty

of EBITDA into revenue we the remainder essentially First, that’s year, softness in expect guidance. through the our and baked

think we the Secondly, temporary. softness is

position bullish we part the term As term. to navigates we’re time be this this Commercial over to the And using even of country third, pandemic, stronger the business. our about ADT through long are long

We Red of this integration past systems had big We milestone Hawk. completed focused are weekend. just a the on

We net part we especially market then strategy here important acquisition continue work. the still we’re the in are those M&A, options. and opportunistically And standpoint, focus we’ll at ongoing on tuck-in and technician that look a front on talent remains continue actually our to from reviewing to commercial of

this sweet When and on bullish here spot share ultimately we’re service business. the think about gaining diminishing. opportunity customer as deferred, not I our So, think and it’s we about here, we that’s mentioned is

Jeff Likosar

grow And doing it business, we our performing in that essential as is diversify the that’s portfolio the part to and started our to commercial, definitely that of well quite acquisitions while world. part grew of was COVID-XX -

sales have the diversification the that more and for has some residential the of the us that side the our peace to guidance and to in suburbanization, earlier which remain dynamics in the into resilience the to COVID-XX strong being customers risk goes mind, fortunate led customers our in relocations residential of Jim affecting trends retention have a despite demand described very raise position, even to We’re fewer about period. commercial

Seth Weber

whether I trends fine, really was to the or get point just April, trying basis, of the get that’s spirit finer from but if a that’s I quarter to a improvement if address May, any on you’re granular, want just year-over-year willing the don’t to June were through whether as question. different you saw that to Right. appreciate in you that. the that

Jim DeVries

- of and remarks say we mentioned in the residential well say, uncertainty and we I’d at than of It normally That’s our quarter. we the as that to we as the likely year. on there’s commercial how between is improved clear course the would the point prepared was now macroeconomic play I side the Yes, would. in rest to trends range out clarity, have guidance over the wider have this the

Seth Weber

that aware credit commercial business that you’re on talk the the on call sorry, you the I’m you of. should on of side - collections would challenges Thank can just to credit be we side there out you. whether seeing quality, And the anything

Jeff Likosar

of read though diversed less segments through reasonably those our would some you exposure quarter change did the We our difficult had commercial are that Yes, some of quarter. kinds to are in loss it’s add in some closely. something we’re and about, businesses the we’ve the economy second it provision exposures that exposures increased watching affected. materially some are credit the first to of everyone that and is I of time. We the

it’s closely, maybe this expected than watching objectives. better managing risk we’re a would to have closely, with trying I’d bit far. So - played it our the in. we little But balance say out so so going growth

Jim DeVries

commercial is expressed. about side. our know business what small of year-to-date higher through I cancels SMB Seth, segment mix environment. year to was retention where predominantly similar well might has Year-to-date overall, as XX, probably the current talking June in the the business you been It’s is, as some retention, and Jeff mentioning last expect concern XX. there worth same June is in our shift through SMB year, But as even there a economic last slight the the

dues, SMB pay monitoring feel whether on we that bit closely. and expected, last a we’re than So past to good that. On it’s year flat higher but it’s about

Operator

Kessler is question Imperial Capital. next Our proceed. with Please from Jeffrey

Jeffrey Kessler

take been the what I call technology. the a you what beginning greater because then get broader their keep types telling on good clients are little and have down have can pretty the doing terms yourselves them that you both in are to marketplace, the and of what - of a doing you you and and give you’re assuming doing service can’t of on elaborate national Can you you installation showed What and from competition share the of are your you you Can them? would to accounts - you get potential had boost advantage begins what give technology describe a to implementing in who basis, it to that doing with from XXXX - there. relax the the - what the winning take to installation done of positioning being have commercial, one bit the further COVID are incumbent Dollar in you terms of group, you of what did advantage technology through get the

Jim DeVries

Yeah.

important a here as we and over earlier, one no in that has of color of Hawk single mentioned continue Don. that of bit service little we level, this for service our a Jeff, see and and high - be together I Red most then gain been it So, I’ll does, and space provides then source hand will us. at ADT share and and of growth that customer like Ultimately, to to the give do, think level that ADT the

question that your was The to Specifically, largest our on we Family partnership announced and announced. national Dollar ever in Dollar, May that Tree already has started. work

again We as have that could principally locations and XX,XXX large in that accounts national Ultimately, as continues a quarter. the to opportunity on service. there impact by material the think be world-class space, pretty we significant be driven

Don Young

Don. So, is Jeff, this

for they They Let alternatives their we focus. [inaudible] phone seeking the from and primary a levels. to standpoint, close combined our the offered for came other on our Family service was offer service, just up broadband me to technology solution able a with shopping and alternative - phone based then Dollar like just service had basically them and shifted the cetera. new broadband, et deal And a one-stop prowess reason the security,

Jeffrey Kessler

this if you That actually fines - customers know providers scoring progress want so you So the Where that - have in of a - you asking past what I you, alarms. but hit or marketplace question their are of Sandy hit police up follow-up am are the you response - the satisfy get alarms. not that to clients verification court appeals and putting their together call that upheld fine by your police that of I’m of the question point? don’t my is, top put the onerous quarter from system don’t types brings differentiation Springs false capability this Don, make to an going be will in that suit at get you where who process rules for and is to for it, and they’ll so there at at and false

Don Young

for years, with own months try we’re arms different to version technology intrusion The Yes, importantly, have an help, to a but last more category about Typically of six fire before, literally a the comfortable this we’ve working talked so their analytic or and really accelerates their us progress prioritized alarms. on where place of so to it’s difficult been been deploying prioritize. we intrusion Jeff, alarm. Google’s very response have

to positioned we’re and up. a comp think and it that add to this industry to So it, into the out with well a to standard technology basically categorizing a go lines not prioritization go support that in but point. foreign standards up the with also within only the market we Combined really match

Jeff Kessler

is And is hope you out to XXXX? on time this general a something this, there in frame roll

Don Young

data. time - picture roll a the the technology I it expect first horizon would standard prioritize scoring I available, is of from alarms, say or me portion The and paint for how way, at leads go information. least mainly video in difficult followed XXXX far a we a intrusion the standpoint. video location how other question Probably can to fast sources in to at least quickly by that some would portion. the on be to of of that remains and version the

Operator

proceed. Bisbee Bank America. Gary from Please of is with question next Our

Unidentified Analyst

This is Jay Gary Hannon [ph] on for today.

next the reflected more we partnerships to expect just is we’ll should from two your you going that Google slide, how expect initial just we that like some should there take conversation, integration and guidance in first to quarters combined immediate the Just step of cost there back that DIY just the Is the in updated? some cost the offerings. on process, is be going

Jeff Likosar

Jeff but the and include recently outlook it’s associated being year prepared we’re formerly consideration I because for announced the aligned. with Jay, expense new I initial guidance agree may of so remarks, partnership in the my Hi to mentioned have our

can the as imagine. you We process are in

changes is are could longer-term. a thought most what materially over a us you term We outside anything In see I the if near as it by if on investments set and we’ll bigger for and meaningfully just different, meaningfully wouldn’t the about are expect specifics different doing, material drive we’re term, of details course our opportunities we to really next we difference talk near on shared is of call. those the through excited working

Unidentified Analyst

some Okay, great. in forward. QX. that more And credit Is me on then It crop up consumer perceive side the it on just next customer sounded the obligations the any offering, quickly offer nicely concern additive like strikes couple there might was elsewhere might have quarters. the typical of that that to in going it financing

Jeff Likosar

that and to accept make very will far potentially we are to To things watch every weeks runs close. the don’t evaluate payment so we we a and question financing months, out rates of offer, because all some stick how earlier accept Yes, those on is we and and you about losses, single watch rates adjustments. as have But it imagine, don’t we’re range super coming new, the something credit it’s continued watching credit and rates in can customer the depending commercial and ACH the perform stimulus closely credit attuned it’s okay. continue we card standards your program and performs closely that going as offer we to the and in economy to to

Operator

with We more be Lim And question. Credit Bryan would one have Please Suisse. proceed. time for that

Kevin McVeigh

Difficulty] [Technical

Jim DeVries

Kevin, you we most make what couldn’t Could repeat said. please? out that you of

Kevin McVeigh

the [Technical to thinking or looks of announced? allows to Difficulty] determine partnership the accelerate mix Google or shift you what business you whether trying about partnership to residential Just just post you commercial it are not like business the percentage versus how

Jim DeVries

of Okay. every Kevin, four I got about words. out one

the now The answer partnership SMB. and is volume we [Technical residential are Difficulty] some question think the side is on principally We on optionality future, I commercial focused there small ADT. focused business high to residential in asked. now right right and the going I’m Google that but So parts think the you of

Kevin McVeigh

guess And about then retention how think do to of retention? than retention, or we look the should already the of better Difficulty], there you I context the out put get some with you that the [Technical at this within

Jim DeVries

advantage a with SAC the be the another recur their Absolutely, interact devices we improve. installation customer. but system, And that we from know that the is smart only advantageous that rate more to will We that there, home and able customer as acquire more revenue uses home their were retention retention perspective, a have their a not the system, cost the stickier more in has home higher they customer efficiently. a and the retention higher more Kevin, customers smart will

your yes. answer our is to So question, retention

retention us a for it tailwind be and characteristics would also revenue, because installed our expect We improved in SAC.

Kevin McVeigh

And [Technical retention what of versus is retention there smart Difficulty]? home any way to is average think the an about

Jeff Likosar

equal, - lead more to and using to Yes, Kevin, was to I this systems going better what say, to is all that retention we’re their is back things going go Jim to to that confident earlier customers saying would over the time. lead

that that can managing customers. possibility customers We’re felt of the also that terms that with then, always you envision the against different balancing cost different to into contractual the models have that, also we serving acquire the And future.

trajectory different back customers are our we is value this said both lead one enable NPV meaningfully take the is would partnership together. growth that that at customer on, to So us do being beginning confident the lifetime highly also as I at job of and fully what that to to to the partnership comes way long-term we going optimize about number Jim to look and

Operator

like remarks. our We end conference the reached have of back closing turn session. the to for question-and-answer I over to would management

Jim DeVries

Thank you, operator.

So very especially us, it of COVID-XX. of was the strong for in environment obviously context the quarter

anticipated very announcements outstanding of feeling strong financials, had We benefits as We’re good about the recent QX well. generation. our cash

levels. is service record As at I customer earlier, mentioned

largest that the extensive week, of Tree/Family their builder are And also more as largest to We with long-term revenue A strong. us was number successfully relationship Horton, in announced retailers and both the partner. operating DR the couldn’t were excited then, then with be terrific. accelerate week the America, pointed KPIs about right one Dollar course partnership Dollar. growth. in most our know, partnered direction. of last Our And as customer we just what of payback country Technician do this retention productivity, will selected you in of Google

for pandemic Finally, I our we and to serve to customers. dealer all our want ADT as and navigate continue partners relentless commitment thank the the employees their

in time interest We ADT. So, thanks for appreciate taking the your this evening. Good everyone. night,

Operator

conference. today’s conclude does This you. Thank

lines and may a time this good at have your You disconnect evening.

Derek Fiebig	Vice President, IR
Jim DeVries	President and CEO
Jeff Likosar	Chief Financial Officer
Don Young	Chief Information Officer and EVP, Field Operations
Rich Rot	Senior Vice President, Business Operations
Jason Smith	Senior Vice President, Finance
George Tong	Goldman Sachs
Toni Kaplan	Morgan Stanley
Seth Weber	RBC Capital Markets
Jeffrey Kessler	Imperial Capital
Kevin McVeigh	Credit Suisse

ADT (ADT) 5 Aug 202020 Q2 Earnings call transcript