ADT - Earnings call transcript Q3 2024

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Operator

Thank you for standing by. I would like to welcome everyone to the ADT Third Quarter 2024 Earnings Conference Call. I would -- now I'd like to turn the call over to Elizabeth Landers, the Head of Investor Relations. Please go ahead.

Elizabeth Landers

Thank you, operator, and good morning, everyone. today's discuss joining XXXX Third you results. appreciate call ADT's to Quarter We

call Chairman, prepared Likosar. be Jim on join Young, will Speaking today's will Officer, ADT's we Business and our also take Financial Chief questions. Operating Chief following DeVries; Chief President as Officer, Thorsen, Jeff the Wayne us Officer; Don remarks and CEO, and analyst

investor.adt.com. financial on a morning, release and at our we our summarizing available are issued press results. this materials Earlier presentation These website slide

Before for to are former as metrics we like Commercial and quarter periods include discontinued sale date and be flow of the operations, to of cash begin, everyone that solar through non-GAAP call measures, historical I'd remind amounts Financials on and Solar the through XXXX. reported for the this will and discussed which second segment except current the continuing operations. for related commercial business

that future and statements beliefs include Today's our or represent also could that uncertainties subject about expectations to are actual cause forward-looking differ remarks results materially. forward-looking These to statements events. risks

in the described cause factors may filings. SEC differences that are of Some our

found at We to GAAP directly measures our a measures with on discuss reconciliation financial the presentation on Investor be call. Relations comparable The along can earnings non-GAAP will the also most those measures website.

I'll to that, Jim. turn over with the call And

James DeVries

$XXX quarter monthly at outlined ended deliver strong which our to on quarter ADT's morning, pleased financial and deliver we Good February. out in thank revenue objectives. to million, with is full you XX.X%. the benefited joining X%, we record the results us year from results. a close I'm third continuing we're to positioned that up to attrition to recurring the balance discuss And for today year, of well We everyone guidance report as ADT XXXX

deliver total and balancing Adjusted strong focused up to for X% up we We EBITDA was X%, while and grow continue profitability flows. the future. prior on year continue to versus free investments cash revenue remaining the

A at the is our quarter leverage is debt that now ratio, X.Xx. for net EBITDA highlight to adjusted

to business, ongoing I'll note $XX growth as complementary option acquisition allocation. year-over-year subscribers. our attractive capital bulk such customer was In included comprised pro customer portfolio an gross and in for are and for our footprint addition to We add is that purchase existing that account results strategic a million. book of this our install believe XX,XXX one This residential deals

year business first share Jeff but more full outlook will progress. moments, financials to provide about and a like strategic details our about comments I'd our few and in several

know, and stay choose investing been you we've to create more the reasons and customers ADT on of focused in to for product with ADT. even and many differentiated As experience more ecosystem offerings

component As the now which our of app, for growing future across we've flexibility shared portion + includes new configurability. of a refreshed before, available a several new a ADT and is The including installation is platform, enhanced and residential proprietary our advantages, customers. hardware and key platform the country ADT+

such Google's also with additional it and home integrations Importantly, as stronger Nest smart ecosystem. devices offers

build and as platform on to foundation this which innovate experiences will customers' unique needs. individual built We've the tailored we our

is grant like the individuals trusted familiar everyday a Trusted officially access for Nest's with urgent or Trusted in and more neighbor's of we're to customers access on We're as codes, innovative secure about feature. homes phone, excited Neighbor, first issues ADT+ ways water to with experiences we like Neighbor to delivery, such leaks. face essentially able The in these combination events allows grant launched or their mid-August. which package

to be launch, early with response coming biometrics, all the our of there's pleased working our Neighbor but unit with to months. to introduce through process, Yale partners will very the the virtually available optimism. economics It's grants customer reason Trusted a We're at we're that aspects access for field in lock in satisfaction, everything which from

product just we over time. develop roll first to plan out is and Importantly, many introduction innovations of the this

as are currently previously, operations. several on Additionally, I've Google business exploring early across opportunities relationship their our focused with and shared platform we efforts our to CCAI call include have center expanded

also We in on this to advancing Farm self-setup and later closely partnership quarter. DIY on Washington focused or alternative remain We're with Farm. we currently our expect State working Georgia, focused State this expand the in offering

We're We're pleased we've focused the foundation developing innovative the detection and for in products overall Michigan progress this coming the Maryland on also leak offering made, with new for customers an provides launching and and in future. and the services our weeks.

as use focus these detection on and a protecting providing customers our a solutions national risk for expand and prevention. we learnings we'll Importantly, audience with proactive

on focused on our delivery both remain customer improving experience enhancing focus a the service our we Additionally, efficiency. operating with and

network and initiatives systems end, continue We remediate this calls of service our issues core the their to remotely, resolve customer our advance our of capabilities ability to half the home more interface toward to including security diagnose beyond and of than processes. streamlining customers' expansion

turning and Before efforts of customers Jeff, for team country. want recent storms the Southeast during to assist and extraordinary affected thank our and partners the members continuity the acknowledge maintain that our also I to part their to of service

I core our And It work especially dedication the safe, these to especially everyone employees is resonates. on of commitments to of such deserves XX,XXX belief during are than events am to as customers. deliver hard proud our more and that feel

investors lead achieve journey August, we to empowering As accomplishments. this of help what protect reflected past employees, humbled people our and most. ADT's our have mission business to collectively XXXth very and and I'm connect communities matters thankful on for historic our marked company I us in this year and who partners,

over the Jeff. call And I'll with to that, turn

Jeffrey Likosar

our call and today. for Jim, joining thanks, Thanks, everyone,

continuing are We quarters. with XXXX the our through very strong results X progress first

and our performance achieve guidance. Our are year we overall plans, consistent track is our on full with to

includes the flow we full basis, strategic purchase. $XXX year cash $XXX have $XX This a cash quarter. flow, strong flow, adjusted million million. $XXX our free last XX% with up account million On million including adjusted and already outflow in exceptionally highlight generated swaps from year's in rate year-to-date a the of Our near cash interest remains bulk free

drivers revenue include X%. last per for improvement late with $X.XX factors wind XX%. sold account we the the the or have $X.XX, These interest income share. up from and down and generation than net lower our business. year's share up Services X% was generated former profitability, cash purchase was Monitoring of Adjusted year. $X.X Year-to-date, $XXX debt million billion, Total outflow quarter the up quarter revenue from earnings per offset The for of business, bulk we cash overall more our this reduction solar which commercial our and

balance resulted million, purchase average higher the X%, $XXX up RMR retention. of and pricing, customer also record Our strong from book strategic

customers gross of purchase, XXX,XXX compared We grew growth capital which base in our new RMR part quarter of with This and and the of million $XX.X strategy. is $XX.X bulk benefits the subscriber the million last our to account added new includes allocation year. disciplined

superior and This resulting Our than improved retention gross revenue headwinds more offset attrition higher improvements. commitment from payment some at customer XX.X% cancellations. continued service and reflects related to our delinquencies

up sales deferred new percentage Amortization as quarter transition XX% revenue a company-owned larger to Installation from in revenue acquisition subscriber total a the model was XX%. $XX XX%. by model, million of installations to revenue the customer continue installations outright our customer-owned up of was or up also under was in

continue company-owned from expect As as our we we've this legacy our evolve model. to new shift described offerings away equipment previously,

services from We our share material reflect this will XXXX. which margins, for revenue higher a truck. our benefiting calls driver the X%. as especially resulting and and and up was we our strong remains more discipline. of EBITDA cost quarter A strong large virtually now than more resolve the becomes highlight percentage service monitoring rather cost, a was operating Adjusted rolling in million, detail key $XXX The

approximately a revenue. we as and and to mix installation percentage longer-term invest lower-margin point, to in was and key further investments continue EBITDA technologies our initiatives Importantly, and the of growth. the revenue these differentiation discipline drive product profitability higher of to flat offset capabilities as

enhanced very from and of with allocation, our also to improved we capital disciplined benefit continue structure. We remain capital the flexibility

to EBITDA debt at is been our here Xx had X.Xx ratio we highlight is adjusted threshold targeting. below now A that the net

extended lower million X-year a Another and borrowing costs. highlight upsized new that our with and $XXX in October, fees we is facility commitment revolver with

net is a cost overall until a XXXX. billion year average ago, X.X% $X.X of debt weighted with from down significant maturities $X.X Our no billion of and

quarter $XXX just the million cash and no under finished with hand on balance. revolver unrestricted of We outstanding

generation earlier this share recent Our capability allocation. shares cash prices. liquidity and under strong in capital very stock structure, remain available believe continue We at Approximately stock is flexibility of significant repurchase $XXX our X to us million our repurchased authorization. capital attractive month, and million afford

beginning to of year. out As XXXX, we we guidance the results deliver with the close track we consistent shared look on at to are the

adjusted We increased adjusted is tightened for end the original have free while range. cash trending same of which the higher we've flow, EPS, guidance our the and the consequently midpoint revenue, midpoint towards around ranges for EBITDA

Our interest, fourth normal fourth second timing. than quarters the seasonal due lower and example, to timing will and Cash quarter first and for dynamics. coupon reflect results in the is third

and And bulk additions hurricanes that we new of will had [indiscernible] this in tend quarter. the to the had recent still adds note of are our a higher customer while be the I therefore, similar New SAC in fourth we of quarter assessing we quarter. the in year spending year, the account around third in a also the holidays. transaction purchase subscriber last than year the fourth effect middle mix

ranges. our these considered factors in have outlook We all

are our the and our our new the As to with and very capabilities. focus delivering excited This is of progress. we capital. progress XXXX and our result in longer-term includes balanced early with trends disciplined year-end, objectives a and confidence allocating approach year-to-date near-term having year This approach from results, our our a objectives results full offerings encouraging we by

our please for progress generating closing look returns. And a full open about the our enabled improved year increasingly sharing enthusiastic with next and outlook flexibility joining everyone, our and focus structure, Operator, business our line to and year on very and again, again, today. you the on I'm capital forward our strong Thank to to results by and are shareholder call. strong XXXX questions.

Operator

[Operator the George first Tong Instructions] of from question Goldman Sachs. comes Our from line

Keen Fai Tong

as along to ask more on elaborate wanted your bit come financial I for deal with as it. you a the bulk economics quarter. that in deal that about you little bulk Can the did impact well expected the

James DeVries

Sure, George.

you're was seller So a acquired a a cost same pointing purchased accounts $XX last that of from it million. The December. at from for was roughly out, bulk as executed bulk XX,XXX we the we bulk

In terms are business. with of returns, generally, consistent bulk our returns dealer

of IRRs. in teens high So terms

lot a continue And comparing always us. we're when bulk We've density done This particular, X of ads. expect opportunity have of incremental X think to last dealer allocation we're to to the one, buy direct in decisions, I capital has so, We to for years. bulk. making to

We expect it will well. perform

Keen Fai Tong

it. for are how prevailing seeing your helpful. then talk That's market little you And more those bit a in informing subscriber trends spending the conditions intentions can you're Got and and about costs? acquisition conditions residential

Jeffrey Likosar

George, it's one. Jeff. I'll answer that

related challenges in really some what relative was. as there. what once Somewhat the also some of out look underwrite, Jim's seeing ecosystem, to it which in the new as fewer rates platform customers things customer to the macro rolling process in to of that of excited we describing the we're not really at basis. our as higher, credit on we're moves; a bulks. about highlight seen cases, interest quality we're It's some great and We've quite as early I'd attractiveness environment,

p of part we will capital while deemphasized that, deploying as of example, with take our not that we we've new older hardware. making to arts much customers we're as transition, then to we're transition the health health, talk there's quite don't ultimately, of platform. on a couple But many that about the as for And business health

quarter, a total RMR XX%, maybe they're that period detail with the the basis, up bit And also, bulk, also really we last adds the it's for point point but out all we're nothing has we professionally those found the the attractive. installed, is a So just I'd with residential relatively strong year-on-year little in normally RMR. we up we're ending and more customers, than bulk, if including on adds up core, our excluding share, then do to also which a a And to record look were year-to-date bulk. at that related reasons bulk deeper our

portfolio So the we overall about and good feel of adds. the really management our

Operator

question next Sabadra the comes from RBC. of Ashish line from Our

David Paige Papadogonas

like the cognizant the be and then also maybe we with on you the should provide potential was This is David from and Google. Page and product an Any could partnership longer-term Congrats puts there on Ashish. on I for wondering Google of? you progress quarter. that made takes it what's good with And update -- looks rollouts? new nice some partnerships if the like

James DeVries

to Jim. I'll on for go -- Thanks, of in ask David. We colleague, a this then infusion the my partnership. and this comment quarter continue or I'll to Overall, is had provide another an Thorsen, things weigh funds million. Google $X.X well. Wayne X success Google

that's $XX.X million think I year-to-date.

engineering marketing teams work Our continue teams together. and to

And him Google AI. the I'll lot done integrate roll I Neighbor, product. And give great and colleagues to weigh do and work, Wayne to in [ grades and product. of and We're some new his we're that partnership with are a their of particular in out working see way what to going ask ]. leading excited the our I'm And They've work in. leveraging CCAI Trusted to on

Wayne Thorsen

question. you Thanks, for Jim, and thank the

Google on quarter. of we making Cloud, number mentioned we're the of We with are and a initiatives, the excited some partnership progress last really great about which

we should virtual be help be in from pilots significantly out should to the we'll plan beginning through there and our first rolling the coming the care. expand will year, then that XXXX. in deflection agents So Those with of

and in mentioned conversational by ton give cost also high continue and Bret at as a we're direct with confidence similar on But really But products of hardened really with down started these AI, have I are too Clay a achieving clear centers, as pretty sierra.ai, savings call with Taylor. other excited some guidance quarter, the of such record Bavor, companies level last early there. platform It's track to large excited about also we we partnerships, many AI as some we're that.

launched chat traffic of over already weeks that coming just we percentage metrics. last we a as So with they're our small first be them and pilot increasing to and improve week, our starting the will take dramatically

with grow. results, been the the positive this to really we're terrific seeing They've with, been impressed already both to we're and and technology excited we've and rapidly work watch So and improve extremely people.

there great the partnership another So front. AI on

Operator

Our Stanley. the question Kaplan Morgan from comes next of line from Toni

Toni Kaplan

had those Jeff, type some about you you about maybe talked the could evaluating be? and that at hurricanes it's on the like other if just end were what of you're one-timer remarks, items. one, talk impacts the of of would your Maybe there the And impact end some big third of if have enough in moved the raised XQ. that the that fourth think I quarter And or were there for there? quarter and at then to you guide, quarter, not some hurricanes not the have early very would or the needle

Jeffrey Likosar

a consider effect Yes, like happened for for it very challenges, helping events third to teams, of manage to and quarter, personal that. through what in factors range not but exactly really past the course, a EBITDA the time any as accommodations. among don't a service lot lot our material, of than grateful course, We range. it's employees, still expect customers manage have having in this little in of that lot in it terribly measures. of What that our is customers has had we, revenue, assess we're those might then of you're make to guidance and effect even typically some a other described, be and the takes We Jim we and to more of around a disruptions the probably bit of have our

highlight, would great to we would where respect we of would beginning we the And are what guidance, the about overall with we do year. feel just then I -- at of speaking I'm said too, while really delivering

effect that them reasons make tighter. the the we we that all the tightened midpoints, around was even hurricane So ranges exact among did

Toni Kaplan

latest M&A or of wanted kind look domestic would what on primarily really and to international well an update your like on like more both get Terrific. as security target ideal views traditional the looking And I or technology.

to your the strategic latest around wanted get on thinking Just targets? M&A

James DeVries

would and generally in say, speaking, keep to the say say, in the open, But -- obviously on focus I'd the Thanks. our substantial. would I'd anything industry generally Tony. than more is focus going We're size and we're speaking, in I like domestic. main, tuck-in be options

out commercial being a benefits M&A And waters is of we has we again, in solar the One renewed the suspect there. And that the on the it would our lot and see business core. of if focus be of our business to wait our of were core. of out of into I really opportunity it

Jeffrey Likosar

And flexibility from opportunistic I'd to about add progress emphasize we've to that, talked down too, made just more leverage repeat is Having got the line, to where you X.Xx. all we've our and the in than a lot in this that to we're capital that but we have spot X.X reduced more we to be billion, compelled our so below debt that at structure. our feel $X by a

of that we're versus M&A dividend and as in normal with that returning far have share always then And capital repurchases longer capabilities spending course, more generates between technologies, capital evaluating year. near-term and our the our example then, acquisition deployment to so increase and shareholders also this subscriber an to deployed invest of capital returns, might term

Operator

Our [Operator queue. closing for turn Instructions] back next in just are the no would the dropped. like more to There team questions I the remarks. over question ADT to call

James DeVries

again today. great in to closing taking operator. the everyone, strong. a you, the good I'd employees and join on day. year time and an everyone, dealer the excellent momentum very again, Thanks Congratulations business, Thank Okay. to to us We for partners. about our express feel my Thanks, quarter. ADT appreciation like have

Operator

Thank for a that for gentlemen, and concludes joining, have and today. Ladies you presentation our day. wonderful

ADT (ADT) 24 Oct 242024 Q3 Earnings call transcript