ADT Inc.

Hello, and thank you for standing by. My name is Mark, and I will be your conference operator today. At this time, I would like to welcome everyone to the ADT Third 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. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. And to withdraw your question, press star one again. Thank you. Now, I would like to turn the call over to Elizabeth Landers, Vice President, Investor Relations. Please go ahead.

Good morning, and thank you for joining us to discuss ADT's third quarter 2025 results. Today's speakers are Jim DeVries, ADT's Chairman, President, and CEO, and Jeff Likasar, our CFO. After their prepared remarks, we'll open the call for 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'm very pleased to report that ADT delivered another quarter of solid revenue growth, robust cash flow, and very strong earnings per share, collectively reflecting the resilience of our business model and our team's continued execution of our 2025 strategy. Let me start with a few key financial highlights. Total revenue grew 4% to $1.3 billion. Adjusted EBITDA grew 3% to $676 million with adjusted earnings per diluted share of 23 cents, up a strong 15% year over year. Cash flow continues to be a highlight with adjusted free cash flow, including interest rate swaps, reaching $709 million year to date. Additionally, year to date, we have returned $746 million to ADT shareholders through share repurchases and dividends. We ended the third quarter with a recurring monthly revenue balance of $362 million, up 1% year over year. Turning to attrition, Earlier this year, ADT achieved record levels, and this quarter, we ticked up to 13%. While above our budget, our teams are focused on plans to continue improving customer retention, and those actions are underway. As we've executed in prior quarters, during Q3, we completed a small bulk account purchase of 15,000 accounts for $24 million. Overall, consumer sentiment remains cautious and relocations continue at low levels. We have remained disciplined in our SAC spending, which resulted in lower new subscriber and RMR ads. Jeff will provide more specific details about our results and full year outlook later in our call. I'd like to spend the next few minutes updating you on ADT's 2025 progress and strategic focus areas, which continue to build on the priorities we've shared throughout this year. ADT's commitment remains unchanged, delivering safety and peace of mind to our residential and small business customers. Our strategy is anchored in three core pillars, unrivaled safety, innovative offerings, and a premium best-in-class customer experience. Unrivaled safety is at the heart of everything we do at ADT, as it has been throughout our entire 150-year history. We are constantly strengthening the ways we protect ADT customers and provide them with confidence in their security, delivering peace of mind. As we execute on our near-term financial goals, we're also investing in our product and experience ecosystem. expanding and enhancing our differentiated offerings. These efforts give customers even more reasons to choose ADT and to remain loyal to our brand. Our ADT Plus platform continues to gain traction, enhancing the safety, convenience and experience we deliver to our customers. Our product and engineering teams are firing on all cylinders. In coordination with our strategic partners, to drive a continued pipeline of innovative releases. Our product roadmap is robust, and we expect to continue expanding our suite of unrivaled offerings every quarter to continue to gain share within the smart home. An increasing percentage of our new customers are now enjoying ADT+, and many of these customers are opting for larger, more comprehensive ADT systems leading to increased installation revenue, and we anticipate contributing to even stronger retention over time. During 2025, approximately 25% of our new customer additions have been installed with the ADTplus platform, and we are continuing to expand to more categories of customers and channels. This quarter, we launched the ADTplus Alarm Range Extender. further enhancing the capabilities, performance, and dependability of the ADT Plus platform. This device expands coverage between the ADT Plus base and other connected devices in larger or more complex homes with a 24-hour battery backup and tamper alerts. We also introduced new automation and AI-driven testing capabilities to streamline app development, reduce the need for manual testing, and deliver faster, high-quality releases. These innovations help ensure a smoother, more reliable experience for our ADT Plus customers. We are actively evaluating new features, use cases, and economic models, and will continue to share additional information as these come to market. I also have a few updates regarding our efforts to optimize our hardware portfolio. While we don't expect hardware savings to be material in 2025, we view this as a meaningful source of savings going into 2026. Beginning October 15th, ADT refreshed our smart home security portfolio, and we now offer five new Google Nest camera models. reflecting the continued expansion of our partnership with Google. And we are working closely with our suppliers to mitigate our tariff exposure, which we do not expect to be material during 2025. On the customer service front, we remain pleased with our progress with ADT's remote assistance program, which has eliminated approximately half of our in-home service calls reducing truck rolls and field service costs. Our current AI efforts remain focused on our customer care operations with an emphasis on improving the customer service experience for both our customers and our employee agents, while also improving overall efficiency. These AI initiatives continue to deliver positive results with an increasing number of customer service chats processed by AI agents with nearly half of those successfully resolved without live agent intervention. We're also continuing to expand the rollout of AI agents for voice calls, and early results are promising for both customer satisfaction and cost efficiency. AI-driven cost savings are beginning to materialize, particularly in our call center operations, and we expect to provide more quantitative detail as these benefits scale. Turning for a moment to State Farm. As mentioned during our last call, we have pivoted away from the past selling program and we're exploring new opportunities for a digital relocation focused approach to jointly pursue new customers. Despite some ongoing macroeconomic uncertainty, including tariff pressures and elevated interest rates, ADT's business model remains resilient and very well positioned for the future. In closing, we remain focused on execution, operational excellence, and positioning ADT for long-term value creation. I remain confident in ADT's outlook and our ability to deliver on our commitments for 2025. I want to thank our employees, partners, and customers for their dedication and trust in ADT. I'm proud of our team's performance and excited for the opportunities ahead. With that, I'll turn the call over to Jeff.