ADT Inc.

Hello and thank you for standing by. My name is Tiffany and I will be your conference operator today. At this time, I would like to welcome everyone to the ADT second quarter 2025 earnings 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. If you would like to ask a question during that time, simply press star then the number one on your telephone keypad. I would now like to turn the call over to Elizabeth Landers, Vice President of Investor Relations. Elizabeth, please go ahead.

Good morning, and thank you for joining us to discuss ADT's second quarter 2025 results. Today's speakers are Jim DeVries, ADT's Chairman, President, and CEO, and Jeff Lucasar, our CFO. After their prepared remarks, we'll take analyst questions. This morning we issued a press release and presentation summarizing our financial results. Both are available at investor.adt.com. We'll reference our non-GAAP financial measures today. Reconciliations to the most comparable GAAP measures are included in the earnings presentation on our website. Unless noted otherwise, all financials and metrics discussed reflect continuing operations. Non-GAAP cash flow measures include amounts related to our former solar business through 2Q2024. Forward-looking statements included in today's remarks are subject to risks and uncertainties. Actual results may differ materially. Please refer to our SEC filings for more details. And now I'm happy to turn it over to Jim.

Thank you Elizabeth and good morning everyone. I am very pleased that is reporting yet another quarter of strong financial results and cash generation as we continue to execute on our 2025 strategic priorities. Our results continue to demonstrate the resilience of business model. ADT ended the second quarter with another record recurring monthly revenue balance of $363 million, which was up 2% year over year. We continued to grow total revenue up 7% while balancing profitability and investments for the future. We also delivered very strong adjusted earnings per diluted share of $0.23, an increase of 35%. Cash flow continues to be a highlight with adjusted free cash flow, including interest rate swaps of $500 million through the first half up 38%. This strong cash generation has enabled us to return $589 million year to date to ADT shareholders through share repurchases and dividends. Our customer retention also remained solid with attrition at 12.8%. down a tenth of a point from last year's second quarter and slightly higher than last quarter's record performance. I'd also like to note that during the second quarter, we completed a strategic customer portfolio acquisition of approximately 50,000 subscribers for $89 million. Jeff will provide more details about our results and full year outlook later in our call. First, I'd like to spend the next few minutes updating you on ADT strategic focus areas, which remain consistent with the themes we've discussed on previous earnings calls. We are very proud of our progress to date and our progress towards delivering on our full year 2025 commitments. As I mentioned earlier this year, our primary objectives in 2025 are to continue execution of our strategy and, importantly, optimize and complete the rollout of our newly developed and launched capabilities, platform, and offerings. ADT's mission remains clear, to empower people to protect and connect what matters most. Delivered through our differentiators, unrivaled safety, innovative offerings, and a premium, best-in-class customer service experience. As always, we are relentlessly focused on delivering unrivaled safety and peace of mind to our over 6 million customers who trust us to keep them safe every day. We continue to invest in our core monitoring capabilities, including the technologies and redundant infrastructure that have enabled 100% uptime throughout the first half of 2025. We also continue to advance new technologies and introduce features such as Alarm Messenger, which has enabled more than a 50% reduction in false alarms this year. One of the key components of our strategy has been investing in our product and experience ecosystem to develop new and innovative offerings for our customers. 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. We continue to see an increasing percentage of our new customers select our new ADT Plus platform who are also choosing larger and more comprehensive systems. With our reduced use of discounts and promotions, this is driving average installation revenue to approximately $1,500 per unit. Another contributor to this strong revenue is our trusted neighbor offering, which continues to generate positive customer feedback. As a reminder, this feature allows our customers to grant trusted individuals temporary access to their homes. In April, we enhanced this offering with the launch of the new Yale AssureTouch Smart Lock, which integrates seamlessly with ADT Plus and Trusted Neighbor for an elevated security experience utilizing fingerprint recognition. In addition to these innovative offerings, we remain focused on delivering the best in industry customer experience. We are pleased that ADT's customer satisfaction remains at a three-year high, including a record NPS during the month of June. ADT's results demonstrate the cumulative benefits from our focus on continuous improvement across customer experience metrics agent satisfaction, and areas such as virtual service, first call resolution, customer onboarding, and agent training. Additionally, our partnership with Google remains strong, and our Nest Aware subscriber base has now surpassed 1 million customers, highlighting the continued strength of our collaboration and growing smart home adoption. Turning to our State Farm partnership, Since our original launch, we have generated slightly more than 30,000 subscribers. While this volume is below the level we projected at this stage of the partnership, we're pleased that these customers report high satisfaction with the program. As we near the three-year anniversary of our partnership, we're working together on redesigning our approach and leveraging our combined learning to explore a new program related to prospective movers who are relocating. We hope to gain more traction with this new approach. We also remain pleased with our progress with ADT's remote assistance program and early artificial intelligence efforts. Approximately half of our service calls continue to utilize remote alternatives rather than requiring in-home service visits. allowing us to efficiently serve our customers while avoiding thousands of truck rolls, which ultimately contributes to reductions in our field service costs. Our initial AI efforts remain focused on our customer care operations with an emphasis on improving the customer service experiences for both our ADT customers and our employee agents, while also improving overall efficiency. We built on our first quarter AI progress with 90% of our customer service chats processed by AI agents. And we are now resolving nearly half of these chats without the need for a live agent interaction. Utilizing the knowledge we've gained from our experience with chat, we have now started our initial rollout of AI agents for voice calls. We remain excited about the opportunities to leverage AI to support and serve our customers more efficiently. In closing, I am confident in ADT's outlook and we remain committed to delivering value for our customers, employees, and shareholders. I want to say thank you to the entire ADT team for their dedication and performance. I remain incredibly proud of this team as well as encouraged for the opportunities that lie ahead. Thank you for your time today. I'll now turn the call over to Jeff.