ADT Inc.

Hello and welcome to ADT First Quarter 2026 Earnings Conference Call. Please note that this call is being recorded. You will have the opportunity to ask questions to our speaker later on during the Q&A session. If you'd like to ask a question by that time, please press star followed by the number one on your telephone keypad. I will now hand the call over to Elizabeth Landers, Vice President of Investor Relations. Please go ahead.

Good morning, and thank you for joining us today to discuss ADT's first quarter 2026 results. Speaking on today's call are Jim DeVries, our chairman, president, and chief executive officer, and Jeff Lekasar, our chief financial officer. Following their prepared remarks, we'll be joined by Omar Khan, our chief business officer, and we'll open the call for analyst questions. Earlier today, we issued a press release and an earnings presentation summarizing our results. Those are available on the investor relations section of our website. During today's call, we'll reference certain non-GAAP financial measures. Reconciliation to the most comparable GAAP measures can be found in the earnings presentation. Unless otherwise noted, all financials and metrics discussed reflect continuing operations. Our remarks today also include forward-looking statements made under the safe harbor provisions of the Private Securities Litigation Reform Act. These statements are subject to risks and uncertainties that are described in the earnings presentation and in our SEC filings. Actual results may differ materially. Please refer to our SEC filings for more details. And with that, I'm happy to turn the call over to Jim.

Thank you, Elizabeth. Good morning, everyone, and thank you for joining us today. I'll focus my remarks this morning mainly on the key highlights from our first quarter. I will also build on the strategic update and longer-range outlook we shared on our last call in March. Then I'll turn the call over to Jeff, to walk through our financials and outlook. Let me start with a few key financial highlights. I'm pleased to report that ADT delivered a strong start to the year. Our results were consistent with our plans with particularly strong cash generation. Adjusted free cash flow, including swaps, was at $414 million, and adjusted earnings per diluted share was 23 cents up 10 percent year-over-year. Our durable recurring monthly revenue was $359 million flat versus prior year. Gross revenue attrition remained at 13.1 percent, and our revenue payback period was 2.3 years. Cumulatively, these results reinforce the durability of our model and progress strengthening ADT's business, prioritizing high quality ads and more efficient acquisition channels. Turning to our key initiatives, the strategic update we shared on our last call emphasized the consistency in our overall mission. We also outlined how we are reshaping and redefining the delivery of smart home security. Our mission remains clear to protect and connect what matters most and to provide our customers with peace of mind. Our overall strategy remains anchored in three core differentiators, unrivaled safety, premium experience, and innovative offerings. As we described during 2026, we are accelerating progress with investments in three key areas, product technology, service excellence, and customer acquisition. Together, these investments support our vision to deliver always-on security and convenience with split-second and proactive response and solutions that evolve with our customers, whether they're at home or away. First, on product technology, our proprietary ADT Plus platform continues to gain traction. ADT Plus brings together professional monitoring with leading smart home devices, including Google Nest and Yale products, enabling a more flexible and modern experience for customers. In the first quarter, approximately 30% of our new customer additions included ADT+. We expect to continue expanding penetration of our ADT Plus ecosystem and app to more channels. including, most importantly, our third-party network of dealers who will begin transitioning to ADT Plus this summer. Dealers represented more than a third of our total gross additions last year, and as they adopt ADT Plus, we expect more than two-thirds of new subscribers will be on our proprietary platform. We also expanded ADT Plus features in the first quarter with the launch of two new innovations that extend the platform's capabilities. Live light is the industry's first illuminated wireless yard sign that directly connects to the ADT Plus system and illuminates during an alarm event, giving first responders an immediate visual signal and letting potential intruders know a home is actively protected. MySafety is a personal mobile safety service in the ADT Plus app that provides customers with the same protection they know and trust from ADT at home, but while they are on the go, including seamless connection to ADT's nationwide monitoring network wherever they are. We already have 35,000 customer activations. With innovative features such as these, ADT is improving security and demonstrating our belief that safety is not just about intrusion detection. It's about awareness, visibility, and response, and most importantly, peace of mind. As discussed on our last call, we acquired Origin AI in February, which will add AI-driven ambient intelligence technology into the ADT Plus platform, creating a new layer of home intelligence. This privacy-first, Wi-Fi-based sensing technology allows customers to understand what's happening in their homes without cameras or wearables. Over time, this will become an integrated part of the ADT Plus experience. enabling richer resolution and awareness while continuing to protect our customers' privacy. Concurrent with this acquisition, we also entered into a long-term technology licensing agreement with VeriShare, reinforcing the global relevance and scalability of this platform and the practical use cases already deployed in Europe. Since closing the acquisition, we are rapidly progressing both technical development and commercialization plans. And during the first quarter, we completed the design of a smart plug that will enable integration into our core offerings. Key priorities over the next two quarters include initial manufacturing and pilots of these smart plugs and technical development for integration into our ADTplus platform, for security and aging-in-place use cases and integration into a third-party router. As we deepen our plans to deploy this sensing technology and work with the team, I'm even more excited about the role these capabilities will play in our evolution to proactive peace of mind. Next, our second area of investment, service excellence. ADT's best in class team of employees continue to deliver outstanding service and support for our customers. Alongside the AI enabled features in our product offering, we are also increasingly using AI to deliver better service for our customers while delivering better economics for the business. We're deploying AI powered virtual agents across both chat and voice interactions to improve responsiveness and consistency, enabling customers to get accurate answers faster while allowing our human teams to focus on the highest value customer interactions. As of the first quarter, all chat interactions and approximately half of our phone calls are initially routed through AI. Containment continues to improve, meaning more issues are resolved without any human intervention. These efforts are both improving the customer experience and beginning to structurally lower our cost base. Additionally, our unique combination of AI capabilities and human expertize have lifted our net promoter score. We're also seeing record levels of customer self-service powered by an expansion of AI use cases, enabling deeper customer engagement and a significant reduction in high cost field service appointments. Importantly, ADT employees continue to handle situations where human expertise matters most, such as during emergencies or when an onsite highly trained service technician is the best way to resolve a customer issue. And finally, our investment in customer acquisition. While ADT already enjoys the benefits of a very strong and trusted brand in a variety of routes to market, I'm excited about several areas we will advance this year. One highlight is our expansion into e-commerce with the launch of ADT Blue, a new product line designed to appeal to more value conscious and DIY oriented customers. This launch includes lower cost cameras, expanding our product portfolio and enabling lower price points to appeal to a different segment of customers. ADT Blue will debut on our own website in late May and then in additional e-tail channels, including Amazon, over the summer. We're excited to unlock these new routes to market and to begin targeting this segment of customers, which we believe represents incremental TAM. We anticipate more volume from more price-conscious or DIY-oriented customers from this launch. And while some prospective customers may choose these lower-priced DIY solutions, we also envision converting a subset of them to our more traditional, professionally installed solutions. Additionally, we are continuing to drive efficiency in our overall go-to-market approach, including rationalization of our marketing spend and our highest cost channels. So far, we've lowered third-party affiliate lead fees by $100 per installation, and we're working on efficiency changes to our dealer model. As I mentioned on our last call, these changes may temporarily impact subscriber additions, but they're designed to improve long-term efficiency. As we've shared previously, we will also continue to evaluate bulk account purchase options and potentially full acquisition opportunities in our industry at Attractive Economics. In closing, we remain focused on executing on these initiatives which we have outlined and positioning ADT for long-term value creation. I am confident in ADT's outlook and our ability to deliver on our commitments for 2026 and beyond. 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.