ADT (ADT) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue rose 5% year-over-year to $1.24 billion, with record recurring monthly revenue of $359 million and strong customer retention.

• Adjusted EBITDA for Q3 was $659 million, up 6% year-over-year, driven by higher monitoring and installation revenues and cost discipline.

• Adjusted EPS for Q3 was $0.20, up 25% year-over-year; year-to-date Adjusted EPS rose 33% to $0.56.

• Net income for Q3 2024 was $127 million, compared to a net loss of $86 million in Q3 2023, reflecting improved operating performance and the absence of large discontinued operations losses.

• Strategic focus on core residential business, with completed exits from the Solar and Commercial segments.

Financial highlights

• Monitoring and related services revenue increased 2% to $1.08 billion; security installation and product revenue rose 32% to $166 million.

• Adjusted Free Cash Flow for Q3 was $158 million and $520 million year-to-date, up 28% year-over-year.

• Installation revenue rose $40 million, with outright sales revenue up 60% and deferred subscriber acquisition revenue up 14%.

• Adjusted EBITDA margin was 53% for the quarter.

• Net leverage ratio improved to 2.9x, down from 3.6x a year ago and below the 2024 target.

Outlook and guidance

• 2024 guidance tightened: total revenue expected at $4.85–$4.95 billion, Adjusted EBITDA at $2.55–$2.6 billion, Adjusted EPS at $0.70–$0.75, and Adjusted Free Cash Flow at $725–$775 million.

• Midpoint for EPS guidance increased, trending toward the higher end of the original range.

• Fourth quarter to reflect normal seasonality and timing, with some impact from recent hurricanes considered in guidance.

• Management expects remaining charges and cash expenditures related to the Solar exit to be immaterial.

• The company anticipates becoming a federal cash taxpayer in 2025 as net operating losses are utilized.