• Total Revenue: $4.9 billion for the full year, up 5%.
• Adjusted Net Income: $685 million, or $0.75 per diluted share, an increase of 25%.
• Adjusted Free Cash Flow: $744 million, up 42%.
• Fourth Quarter Revenue: $1.3 billion.
• Gross Customer Additions: 836,000 for the full year.
• New Recurring Monthly Revenue (RMR) Additions: $49.7 million for the full year.
• Installation Revenue: $605 million for the year, up 28%.
• Outright Sales Revenue: Up 50% for the year.
• Gross Revenue Attrition: 12.7%.
• Adjusted EBITDA: $2.6 billion for the year, up 4%.
• Net Debt: 2.9 times adjusted EBITDA.
• Ending Net Debt: $7.4 billion, down approximately $200 million from 2023.
• Weighted Average Interest Rate: Approximately 4.5%.
• Quarterly Dividend Distribution: $182 million during 2024, a 41% increase over 2023.
• Share Repurchase: 51 million shares retired for $345 million, including $104 million in January 2025.
• 2025 Revenue Guidance: $5.025 billion to $5.225 billion, an increase of 5% at the midpoint.
• 2025 Adjusted Free Cash Flow Guidance: $800 million to $900 million.
• 2025 Adjusted Earnings Per Share Guidance: $0.77 to $0.85, an increase of 8% at the midpoint.
• 2025 Adjusted EBITDA Guidance: $2.65 billion to $2.75 billion, up 5% at the midpoint.

• Warning! GuruFocus has detected 6 Warning Signs with ADT.

Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• ADT Inc (NYSE:ADT) reported a strong financial performance for 2024, with total revenue reaching $4.9 billion, a 5% increase from the previous year.
• The company achieved a record high recurring monthly revenue balance and record customer retention, contributing to strong cash generation.
• ADT Inc (NYSE:ADT) launched its proprietary ADT-plus platform nationwide, receiving positive feedback with an average rating of 4.8 stars on app stores.
• The company successfully reduced its leverage to below 3.0 times adjusted EBITDA, enhancing its capital structure and financial flexibility.
• ADT Inc (NYSE:ADT) announced a $500 million share repurchase authorization, reflecting confidence in its stock valuation and commitment to shareholder returns.

Negative Points

• The company faced higher nonpayment cancellations, which partially offset improvements in customer retention.
• ADT Inc (NYSE:ADT) is transitioning to become a cash taxpayer, which may pressure cash flow despite expected growth.
• The rollout of the ADT-plus platform involves a shift in subscriber acquisition costs to the P&L, impacting EBITDA growth.
• The company is exposed to potential tariff impacts, which could pressure its business, although it remains within guidance ranges.
• ADT Inc (NYSE:ADT) did not conduct any bulk account purchases in Q4 2024, which may affect growth opportunities compared to previous years.

Q & A Highlights

Q: Does ADT plan on acquiring more bulk accounts in 2025, and can you provide an update on capital allocation strategy? A: James DeVries, CEO, mentioned that ADT executed bulk deals for about 49,000 accounts in 2024 and is exploring alternatives with two or three parties, including a previous seller. Jeff Likosar, CFO, added that ADT's capital allocation priorities include investing in the business, strengthening the balance sheet, and returning capital to shareholders through dividends and share repurchases.

Q: Can you elaborate on the State Farm partnership and how 4Q sales compared to prior quarters? A: James DeVries, CEO, stated that ADT is now in 17 states with State Farm, representing about 45% of State Farm policies. Total sales through State Farm in 2024 were 18,000, up from 5,500 in 2023. The teams are finalizing plans for 2025, including state expansion.

Q: Can you expand on the progress and initiatives around optimizing the sales process and go-to-market strategies? A: Jeffrey Likosar, CFO, explained that ADT launched new offers on the ADT-plus platform, providing customers with new choices and bundled options. The company is optimizing these offers to improve economic outcomes and customer take rates, adjusting installation and recurring revenue prices as needed.

Q: What progress has been made on digitization and AI, particularly in virtual service and call center efficiency? A: James DeVries, CEO, highlighted that over 1 million virtual service jobs were completed in 2024, with customer satisfaction higher than traditional truck rolls. ADT is also leveraging AI in customer service, with 50% of customer service chats processed by AI agents, expected to reach 90% by the end of Q1 2025.

Q: What are the incremental opportunities in small to medium-sized businesses (SMBs) and other areas? A: James DeVries, CEO, noted that SMBs represent about 500,000 of ADT's 6.4 million customers. ADT is renewing efforts in this market with new leadership and product offerings. Additionally, ADT sees opportunities in adjacent spaces like aging in place and pet surveillance, leveraging its flexible offering set.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.