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Introduction & Market Context
ADT Inc. (NYSE:ADT) reported strong first-quarter 2025 results on April 24, showing continued momentum in revenue growth and a significant boost in free cash flow. The home security leader maintained its position as the dominant player in a growing market while continuing to expand its product offerings and improve operational efficiency.
The company reported total revenue of $1.3 billion for Q1 2025, representing a 7% increase year-over-year, while adjusted free cash flow more than doubled to $226 million. These results align with ADT’s long-term growth strategy and support its recently raised dividend and ongoing share repurchase program.
Quarterly Performance Highlights
ADT’s first quarter showed solid performance across key financial metrics, with notable strength in cash flow generation and profitability.
As shown in the following summary of Q1 2025 highlights:
The company reported adjusted EBITDA of $661 million, up 4% year-over-year, while adjusted earnings per share increased 11% to $0.21. Revenue payback period increased slightly to 2.3 years, up 0.2 years compared to the same period last year. The company’s net leverage ratio improved to 2.9x, down 0.1x from Q1 2024.
A more detailed breakdown of the quarterly financials reveals the components of this growth:
While total revenue showed strong growth, the company’s adjusted EBITDA margin decreased slightly to 52.1% from 53.6% in the prior year period. This modest margin compression did not prevent substantial improvement in adjusted free cash flow, which increased by 105% to $226 million.
Market Position and Growth Strategy
ADT continues to leverage its strong brand position and nationwide presence to maintain leadership in the home security and smart home market. The company highlighted its competitive advantages, including its 150-year history and strong consumer preference.
The following slide illustrates ADT’s market leadership position:
With 6.4 million subscribers and an average customer tenure of approximately 8 years, ADT benefits from a stable recurring revenue base. The company’s strong brand recognition and trusted reputation provide a competitive advantage in a growing market.
ADT operates in an expanding industry, with the total annual revenue in residential security expected to grow from $17 billion in 2024 to $23 billion by 2029, representing a compound annual growth rate of approximately 6%.
As shown in this market opportunity overview:
Professional monitoring represents approximately 80% of total annual revenue in this market, providing ADT with a stable foundation while it expands into adjacent opportunities in security and smart home products.
Innovation and Product Development
ADT continues to invest in its proprietary ADT+ platform, which is now available nationwide. The company has launched several new features, including Trusted Neighbor, which has driven strong installation revenue per unit (IRPU) and recurring monthly revenue.
The company has demonstrated consistent improvement in key operational metrics over time:
Recurring monthly revenue has increased by 16% since 2019, while installation revenue per unit has more than doubled from approximately $500 to $1,300 over the same period. Customer attrition has improved by 100 basis points, reflecting enhanced customer satisfaction and retention.
Capital Allocation and Financial Outlook
ADT’s strong cash flow generation supports its balanced capital allocation strategy, which includes investing in the business, strengthening the balance sheet, and returning capital to shareholders.
The following chart illustrates how ADT’s cash flow supports its capital allocation priorities:
The company has reduced its leverage from 3.9x in 2022 to 2.9x in 2024 while simultaneously increasing shareholder returns. ADT raised its quarterly dividend by 57% to $0.055 per share in January 2024 and has repurchased $638 million in shares since January 2024.
Looking forward, ADT provided guidance for full-year 2025 that indicates continued growth:
The company expects total revenue of $5.025-$5.225 billion, representing approximately 5% growth from 2024. Adjusted EBITDA is projected to reach $2.65-$2.75 billion, also up about 5%. Adjusted earnings per share are expected to increase by 8% to $0.77-$0.85, while adjusted free cash flow is forecast to grow by 14% to $800-$900 million.
Forward-Looking Statements
ADT’s management expressed confidence in the company’s ability to continue executing its growth strategy while maintaining financial discipline. The company’s focus on innovation, operational efficiency, and capital allocation flexibility positions it well for long-term value creation.
The company’s value creation strategy is summarized in the following slide:
With $4.3 billion in annualized recurring monthly revenue, ADT has built a durable revenue base that generates significant adjusted free cash flow. The company’s efficient operations, with an adjusted EBITDA margin of approximately 50%, combined with its improved capital structure, support continued investment in growth initiatives and shareholder returns.
ADT’s investment thesis remains centered on its leading brand position in large, growing markets, stable recurring revenue base, and disciplined capital allocation approach. As the smart home security market continues to expand, ADT appears well-positioned to maintain its leadership role while delivering value to shareholders.
Full presentation:
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