ADT (ADT) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue grew 3% year-over-year to $1.2 billion, driven by recurring monitoring revenue and outright sales, with strong cash flow and $150 million in debt reduction achieved during the quarter.

• Adjusted EBITDA for Q2 was $629 million, with Adjusted Free Cash Flow up 14% year-over-year to $251 million and $362 million year-to-date, over 50% higher than last year.

• Adjusted net income for Q2 was $156 million ($0.17 per share); GAAP net income was $92 million, flat year-over-year, as higher revenue was offset by increased SG&A and legal settlement costs.

• The company completed its exit from the Solar and Commercial businesses, incurring $89 million in Solar exit charges year-to-date, and now focuses on consumer and small business security.

• Full-year 2024 guidance was reaffirmed, supported by strong recurring revenue, high retention, and disciplined capital allocation.

Financial highlights

• Q2 total revenue was $1.2 billion, up 3% year-over-year; monitoring and related services revenue was $1.07 billion, up 2%, and installation/product revenue was $136 million, up 9%.

• Adjusted EBITDA margin was 52% in Q2; Adjusted Free Cash Flow (including interest rate swaps) rose 14% year-over-year to $251 million.

• Adjusted EPS was $0.17 for Q2; year-to-date Adjusted EPS increased 38% to $0.36.

• Gross revenue attrition was 12.9%, with revenue payback at 2.2 years.

• Net cash from operating activities for the first half of 2024 was $927 million, up $128 million year-over-year.

Outlook and guidance

• 2024 guidance reiterated: total revenue $4.8–$5.0 billion, Adjusted EBITDA $2.525–$2.625 billion, Adjusted EPS $0.65–$0.75, and Adjusted Free Cash Flow $700–$800 million.

• Guidance reflects discontinued operations for solar and commercial segments and a focus on customer retention and cost controls.

• Q3 Adjusted EBITDA expected to be similar to Q1 due to legal settlement timing; higher SAC spending anticipated for a potential bulk account purchase.