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Introduction & Market Context
ADT Corporation (NYSE:ADT) delivered strong second-quarter 2025 results, as revealed in its earnings presentation on July 24, 2025. The home security leader continues to benefit from its position in a growing market, with total annual industry revenue projected to expand at a ~6% CAGR from $17 billion in 2024 to $23 billion by 2029.
As shown in the following chart, ADT operates in large, growing markets with significant adjacency opportunities:
The company maintains its position as the #1 security system brand in the U.S., serving over 6 million subscribers with an average customer tenure of approximately 8 years. ADT’s scale gives it a significant competitive advantage, with twice as many users as its next closest competitor.
Quarterly Performance Highlights
ADT reported solid financial results for Q2 2025, with total revenue reaching $1.3 billion, up 7% year-over-year. Adjusted EBITDA increased 7% to $674 million, while adjusted earnings per share jumped 35% to $0.23. The company also generated $274 million in adjusted free cash flow, a 9% improvement from the prior year.
The following slide summarizes these key financial highlights:
A more detailed breakdown of quarterly financials shows consistent improvement across key metrics:
ADT’s operational metrics also demonstrated positive momentum. While the subscriber count remained stable at 6.4 million, end-of-period recurring monthly revenue (RMR) grew 2% to a record $363 million. Gross RMR additions increased 14% to $14.3 million, and gross unit additions rose 14% to 242,000 units.
The following slide provides a comprehensive view of these operational metrics:
Strategic Initiatives
ADT continues to focus on differentiating itself through product innovation and enhanced customer experience. The company has made significant progress with its ADT+ platform, introducing new features like Trusted Neighbor and Touch Lock capabilities, which provide biometric access. The Home | Away automation feature has also been rolled out to enhance user convenience.
The company has expanded its digital capabilities, with virtual service calls now representing approximately 50% of total service interactions. Virtual agents handle 90% of customer service chats, improving efficiency and customer satisfaction.
ADT’s performance has improved significantly across several key metrics over recent years. Installation revenue per unit has more than doubled from approximately $500 in 2019 to $1,300 in 2024, while revenue payback decreased from 2.5 years to 2.2 years over the same period. Customer attrition has also improved by 100 basis points, from 13.7% to 12.7%.
As shown in the following chart, these improvements demonstrate ADT’s successful execution of its strategic initiatives:
Capital Allocation & Balance Sheet
ADT maintains a disciplined approach to capital allocation, balancing investments in growth, debt reduction, and shareholder returns. The company returned $143 million to shareholders during the second quarter through dividends and share repurchases. Since January 2024, ADT has repurchased $733 million in shares and increased its quarterly dividend by 57% to $0.055 per share.
The company has strengthened its balance sheet, reducing its net leverage ratio to 2.8x, down 0.2x from the previous quarter. Since 2022, ADT has reduced its debt by $2 billion and maintained an effective cost of debt of approximately 4.4%.
The following slide illustrates ADT’s value creation strategy focused on driving shareholder returns:
ADT’s capital structure has been optimized with a balanced debt maturity profile. The company recently upsized its 2032 Term Loan B and executed an interest rate swap. It is also redeeming $550 million of 5.75% 2026 Notes and expects to have the capacity to repay the remaining $300 million of 2026 Notes.
Forward-Looking Statements
ADT reaffirmed its full-year 2025 guidance, projecting total revenue of $5.025-$5.225 billion (up 5% year-over-year), adjusted EBITDA of $2.65-$2.75 billion (up 5%), adjusted EPS of $0.81-$0.89 (up 13%), and adjusted free cash flow of $800-$900 million (up 14%).
The following slide details ADT’s 2025 guidance:
The company’s long-term growth strategy is supported by several key drivers, including its durable and growing RMR base, higher outright sales mix, continued efficiency and cost controls, customer service and retention focus, and improvements in subscriber acquisition cost efficiency.
ADT’s projected financial performance through 2025 shows consistent growth in revenue, adjusted EBITDA, and free cash flow:
The company’s investment thesis remains strong, based on its position in large, growing, and highly resilient markets, its status as the #1 brand in smart home security, a stable recurring revenue base, accelerating differentiation, and an attractive debt profile.
ADT continues to demonstrate resilience in various market conditions, with demand for home security typically increasing during uncertain economic times. With its strong brand, innovative product portfolio, and disciplined capital allocation strategy, ADT is well-positioned to deliver sustainable growth and shareholder value.
Full presentation:
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