ADT Inc.

Hello and welcome to the ADT first quarter 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. And if you would like to ask a question during this time, please press star one on your telephone keypad. I would now like to turn the conference over to Elizabeth Landers, head of investor relations. You may begin.

Good morning, everyone, and thank you for joining us to discuss ADT's first quarter 2025 results. On today's call, we'll hear from ADT's Chairman, President, and CEO, Jim DeVries, and our Chief Financial Officer, Jeff LeCassar. Following the prepared remarks, we'll have time for analyst questions. Earlier this morning, we issued a press release and slide presentation summarizing our financial results. These materials are available on our website at investor.adt.com. We will also discuss non-GAAP financial measures on this call. The most directly comparable GAAP measures, along with a reconciliation to those measures, can be found in our earnings presentation on the ADT Investor Relations website. As a reminder, financials and metrics for current and historical periods discussed on this call will be for continuing operations, except for non-GAAP cash flow measures, which include amounts related to solar through the second quarter of 2024. Today's remarks also include forward-looking statements that represent our beliefs or expectations about future events. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially. Some of the factors that may cause these differences are described in our SEC filings. And with that, I'm happy to turn the call over to Jim.

Good morning, everyone, and thank you for joining us today. I am pleased to report that ADT is off to a very solid start in 2025, delivering results consistent with our expectations and demonstrating the resilience of our business model. ADT ended the quarter with a record recurring monthly revenue balance of $360 million, up 2%, which benefited from another record in our customer retention with gross attrition at just 12.6%. Both accomplishments are a testament to the continued strong demand for ADT's innovative offerings and premium customer experience. Total revenue also continued to grow up 7% versus the prior year. Of note, our growth comes while we remain focused on balancing profitability and investing for the future. We delivered adjusted earnings per diluted share of 21 cents, an increase of 11%. ADT also continued to deliver strong free cash flows with adjusted free cash flow, including interest rate swaps, more than double last year's level. In our first quarter, we returned $445 million to ADT shareholders through share repurchases and dividends. Jeff will provide more detail on our financial results later in the call. I'd like to spend the next few minutes updating you on ADT's performance and strategic focus which is consistent with the themes I discussed on our February earnings call. We remain centered on delivering safety and peace of mind to our residential and small business customers with our strategy anchored in three areas, unrivaled safety, innovative offerings, and a premium, best-in-class customer service experience. Our focus on unrivaled safety is and will always remain core to who we are and what we do. And ADT will continue to strengthen the means by which we deliver peace of mind to our customers. While delivering our near-term financial objectives, we are continuing to invest in the product and experience ecosystem to develop additional differentiated customer offerings which create even more reasons for customers to choose ADT and stay with ADT. A key component of our strategy has been investing in our product and experience ecosystem to create innovative offerings for our customers. As I mentioned on our last call, our primary objectives in 2025 are to continue execution of our strategy and importantly, optimize our newly developed and launched capabilities. This includes further expansion of our ADT Plus platform to a larger percentage of our new customers, increased availability across additional sales channels, and enhanced capabilities to enable existing customers to enjoy some of the features available to new customers. With our new and proprietary ADT Plus offering now available to customers in all geographies, We are seeing an increasing percentage of our customers select our new ADTplus platform, including substantially all new direct residential customer locations where ADTplus is the most efficient solution to meet customer needs. We are also seeing these new customers choose ADTplus professional installation at an overall higher average price. As part of ADT's disciplined capital allocation strategy, and as we roll out our new platform in a somewhat unpredictable macroeconomic environment, we continue to optimize economic value creation balanced with new subscriber additions. The successful launch of ADT Trusted Neighbor remains a highlight. This convenient feature allows our customers to grant trusted individuals temporary access to their homes for everyday events like package delivery or more urgent issues like water leaks. As mentioned last quarter, we continue to explore innovative and secure ways our customers are able to grant access to their home, such as with the ADT Plus app on a neighbor's phone, codes, or in combination with Nest's familiar face feature. We are excited that this innovation will also be available through a touch lock feature later this quarter. Recently, we also launched the ADT Plus Translator, which makes it possible to convert signals from certain legacy ADT sensors into a format that ADT Plus can also process, allowing many of our existing customers the ability to utilize components and features of our new ecosystem. The translator provides a faster, lower cost transition from ADT legacy equipment designed to function seamlessly with our new ADT Plus platform. We will also be launching an additional feature which allows an automated home away status to trigger certain Trusted Neighbor automations and features. We are pleased with the results and positive customer feedback we are receiving on Trusted Neighbor. and the overall ADT Plus customer experience, averaging 4.8 stars across thousands of reviews in the Apple App Store and Google Play Store. Consistent with ADT's strategic objective of delivering the best in class customer experience, we are pleased that our customer satisfaction is at a three-year high. This record high results from our commitment to continuous improvement across several areas, especially including improved agent satisfaction and almost all of our customer experience metrics. Our progress has been aided by actions including virtual service, first call resolution initiatives, the customer onboarding processes, and agent training enhancements. These combined successes contribute to the record level customer attention I mentioned earlier. We are also pleased with the progress we've made with our remote assistance program and early artificial intelligence efforts. Continuing our 2024 progress, we are resolving over half of our service calls utilizing cost-efficient remote alternatives rather than conducting in-home service visits, avoiding thousands of truck rolls and contributing to reductions in our field service costs. Our initial AI efforts are focused in our customer care operations to improve the customer service experiences for both our customers and our agents, while also improving efficiency. First quarter results show 90% of our customer service chats are being processed by AI agents, with nearly half of these chats being resolved for our customers without the need for a live agent interaction. Examples of the types of resolutions our AI chats are handling include general troubleshooting, rescheduling or canceling appointments, and even ordering a yard sign. We are excited about the many opportunities to leverage AI to support our virtual agent capabilities and serve our customers efficiently. As the year progresses, we plan to leverage AI to expand this capability to even more agents and processes. Concurrent with the launch of ADT+, we also continue to evolve and optimize our go-to-market processes. We are now able to offer more flexibility in product bundles, configurations, and pricing to appeal to different segments of customers. and we are accordingly enhancing our marketing messages to highlight relevant features and differentiators. We made adjustments during late fourth quarter and into the first quarter, which contributed to strong insulation revenues and overall subscriber economics. ADT's partnership with State Farm remains a promising sales channel, showing continued progress during the first quarter. Our joint offering is available in 17 states, including innovative solutions in select states focused on leak detection along with DIY alternatives. Before closing, I would like to mention two recent additions to our executive leadership team. We appointed Fawad Ahmad as our chief operating and customer officer, along with Omar Khan as our chief business officer. While both are new to our ADT family, they bring strong, relevant talent and experience, and I know they will complement our existing team very well. We also announced during the quarter that Don Young will be leaving ADT in June, and I want to thank him for his many contributions at ADT and wish him well in his next chapter. I've had the great privilege of knowing Don for over 30 years. and the camaraderie, professionalism, and support he's provided has been unwavering and deeply appreciated. In closing, I want to take just a moment to express my gratitude to our nearly 13,000 employees, our dealers, and our equity and business partners, State Farm and Google. I'm incredibly proud of our ADT team and their accomplishments. We remain encouraged for the opportunities that lie ahead. Thank you for your time today. I'll now turn the call over to Jeff.