ADT Inc. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total revenue increased 4% year-over-year to $1.349 billion for the quarter, driven by a 32% increase in security installation, product, and other revenue to $265 million, partially offset by a 1% decrease in monitoring and related services revenue to $1.084 billion.
• GAAP income from continuing operations rose 7% to $153 million ($0.20 per diluted share), compared to $144 million ($0.17 per diluted share) in the prior year period.
• Adjusted income from continuing operations decreased 6% to $176 million ($0.24 per diluted share), compared to $187 million ($0.23 per diluted share) in the prior year period.
• Adjusted EBITDA from continuing operations declined 2% to $665 million, with an adjusted EBITDA margin of 49% compared to 52% in the prior year.
• Net cash provided by operating activities was $440 million, a decrease of $40 million (8%) from the prior year.
• Adjusted Free Cash Flow (including interest rate swaps) increased 4% to $217 million, up from $208 million in the prior year.
• Year-to-date GAAP operating cash flows increased 16%, and year-to-date Adjusted Free Cash Flow (including swaps) increased 46%.
• Trailing twelve-month gross customer revenue attrition was 13.1%, an increase of 10 basis points from 13.0% in the prior year.
• Trailing twelve-month revenue payback remained stable at 2.3 years.
• End-of-period recurring monthly revenue (RMR) was $360 million, down 1% from $362 million in the prior year.

Guidance and Future Outlook:

• The Company is not providing financial guidance and has withdrawn previously issued guidance due to the pending acquisition by Thrive Holdings.
• Commercialization of next-generation presence sensing capabilities is planned for a 2027 launch.
• The Company intends to continue operating independently as a public company until the transaction closes.

Business Segments and Product Lines:

• Intelligent Home Innovation: Introduced Unusual Activity Alerts in ADT+ to identify meaningful changes in household activity.
• Next-Generation Sensing: Advanced Origin AI-powered presence sensing capabilities, including ADT+ integration and future security and aging-in-place use cases.
• AI Expansion: Expanded AI-enabled sales and service capabilities, including intelligent call routing, inbound/outbound sales pilots, and agent assist transcription.
• Distribution Channels: Expanded ADT Blu availability to Walmart.com and continued the phased rollout of ADT+ for dealer-generated new customer additions.
• Professional Installation: Launched ADT Partner Services, bringing ADT's brand and field expertise to other companies, including an agreement to install and service products for Apple Retail in the U.S.
• Bulk Purchases: Completed a bulk purchase of approximately 8,000 customer accounts for $9 million cash.

Market and Competitive Landscape:

• The Company serves residential and small business customers in the U.S. through the largest network of smart home security professionals in the country.
• Revenue growth in installation and products reflects a shift in mix toward professionally installed systems under the outright sales model.
• Monitoring revenue decline was attributed to lower sales volume, including revenue loss from the October 2025 divestiture of the multifamily business, partially offset by higher average prices.

Risks and Challenges:

• The proposed transaction with Thrive Holdings may not be completed in a timely manner or at all, subject to stockholder and antitrust approvals.
• Risks include potential termination of the agreement, competing offers, stockholder litigation, and diversion of management attention from ongoing operations.
• Operational risks include the ability to integrate the Origin AI acquisition, execute transformation initiatives, and maintain customer base conversion.
• Cybersecurity risks, regulatory changes, interest rate volatility, and reliance on third-party providers remain key concerns.

Management Commentary and Tone:

• Jim DeVries, Chairman, President, and CEO, described the results as "solid," citing revenue growth, strong cash generation, and stable core operating metrics.
• Management emphasized progress in transforming ADT into an intelligent and connected platform through investments in AI, next-generation sensing, and digital distribution.
• The tone focused on the durability of the business and the dedication of over 12,000 employees.

Other Key Points:

• Pending Acquisition: On October 29, 2026, ADT entered into a definitive agreement to be acquired by Thrive Holdings in an all-cash transaction. Stockholders will receive $10.00 per share upon completion, expected in the first quarter of 2027.
• Shareholder Returns: The Company returned $748 million to shareholders year-to-date through share repurchases and dividends.
• Share Repurchases: During the quarter, the Company repurchased and retired 3 million shares for $23 million; year-to-date, 89 million shares were repurchased for $617 million.
• Dividends: The Company paid $41 million in dividends during the quarter.
• Debt and Liquidity: In August, the Company secured $100 million of incremental borrowings under its First Lien Term Loan A due 2030. Total cash and cash equivalents were $228 million as of September 30, 2026, with no amounts outstanding under the First Lien Revolving Credit Facility.
• Conference Call: Management will host a conference call but will not take questions due to the pending transaction.