Slide 1: Fourth Quarter 2022 Earnings Presentation
Fo u r t h Q u a r te r 2 0 2 2 Ea r n i n g s P re s e ntat i o n February 28, 2023
Slide 2: Forward Looking Statements and Non-GAAP Measures
Forward Looking Statements and Non-GAAP Measures ADT has made statements in this presentation and in other reports, filings, and other public written and verbal announcements that are forward-looking and therefore subject to risks and uncertainties, including under the heading — “2023 Guidance Demon
Slide 3: Table of Contents
Table of Contents 1. Company Overview Page 4 2. 4Q 2022 Page 10 3. Additional Financial Information Page 23 4. Non-GAAP Reconciliations Page 33 3
Slide 4: Company Overview
Company Overview
Slide 5: We are a Mission-Driven Company
Overview 4Q 2022 Additional Financial Information Non-GAAP Reconciliations We are a Mission-Driven Company Our mission has expanded beyond the traditional definition of security Safe Smart Sustainable We protect We deliver innovative, We make life better for the what matters most customer-focused pr
Slide 6: Our Mission Delivers Superior Results For All Stakeholders
Overview 4Q 2022 Additional Financial Information Non-GAAP Reconciliations Our Mission Delivers Superior Results For All Stakeholders ESG Pillars Our commitment to respect the environment, promote Customer and community health and safety social responsibility, and lead with responsible governance Sa
Slide 7: Well-Positioned For Strong Cash Generation and Profitability
Overview 4Q 2022 Additional Financial Information Non-GAAP Reconciliations Well-Positioned For Strong Cash Generation and Profitability Consumer & Small Commercial Solar Business (CSB) ✓ Poised to become a $48B market by ✓ Leading position with the market ✓ Home automation market growing 2025 with a
Slide 8: Gaining Momentum in the Business…
Overview 4Q 2022 Additional Financial Information Non-GAAP Reconciliations Gaining Momentum in the Business… CSB Subscribers Attrition Revenue Payback 7M+ 16%+ 2.7x 2.3x 13.1% 12.5% 2.1x < 2.0x 6.44M 6.38M ~12% 2021 2022 2025 Pre-IPO 2021 2022 2025 Pre-IPO 2021 2022 2025 Goal Goal Goal 2020 2020 and
Slide 9: …Which Accelerates Our Flywheel
Overview 4Q 2022 Additional Financial Information Non-GAAP Reconciliations …Which Accelerates Our Flywheel Enable customers to better manage Accelerate penetration and unlock the risks of everyday life and 1 2 greater share of wallet in fast protect what matters most growing markets Build upon our s
Slide 10: 4Q 2022
4Q 2022
Slide 11: 4Q 2022: Highlights
Overview 4Q 2022 Additional Financial Information Non-GAAP Reconciliations 4Q 2022: Highlights +19% $0.10 $629M Revenue Growth Adjusted EPS Adjusted EBITDA versus prior year, up 8% and adjusted net income of up 9% versus prior year excluding Solar $92 million, up $118 million versus prior year 12.5%
Slide 12: Key Financial and Operating Metrics
Overview 4Q 2022 Additional Financial Information Non-GAAP Reconciliations Key Financial and Operating Metrics For the three months ended Dec. 31, Dec. 31, Key Highlights Y/Y Change ($ in millions) 2022 2021 M&S Revenue $1,163 $1,103 $59 5% • M&S Revenue / End of Period RMR: Larger recurring revenue
Slide 13: Google Partnership Building Momentum into 2023
Overview 4Q 2022 Additional Financial Information Non-GAAP Reconciliations Google Partnership Building Momentum into 2023 • National rollout of Google Nest doorbell, Wifi, indoor/outdoor cameras and thermostats in 2022 – Doorbell attachment rate in 2022 of ~50%, helping drive a 26% increase in resid
Slide 14: State Farm Strategic Partnership Update
Overview 4Q 2022 Additional Financial Information Non-GAAP Reconciliations State Farm Strategic Partnership Update • Provide State Farm non-tenant homeowner policy holders with integrated offering to detect and mitigate losses related to water, fire, intrusion, and other homeownership risks Integrat
Slide 15: 2023 Guidance Demonstrating Continued Progress Towards 2025 Goals
Overview 4Q 2022 Additional Financial Information Non-GAAP Reconciliations 2023 Guidance Demonstrating Continued Progress Towards 2025 Goals Total Revenue Adjusted EBITDA Adjusted EPS $6.60-6.85B $6.4B $2.525-2.625B $0.30-0.40 $2.447B $0.24 $5.3B $2.213B ($0.25) 2021 2022 2023 Guidance 2021 2022 202
Slide 16: ADT has a Durable and Resilient Business Model
Overview 4Q 2022 Additional Financial Information Non-GAAP Reconciliations ADT has a Durable and Resilient Business Model • Large existing subscriber base generates $4.4B+ in annual recurring revenue Durable Recurring 1 • Retention at record high, driving ~8-year average subscriber life Revenue Base
Slide 17: Improving Customer Retention Increases Resiliency
Overview 4Q 2022 Additional Financial Information Non-GAAP Reconciliations Improving Customer Retention Increases Resiliency • Overall device count per direct subscriber is up ~20% in the past 3 years More Devices per • Subscribers with 10+ devices have shown materially higher retention rates Subscr
Slide 18: Key Financial and Operating Metrics
Overview 4Q 2022 Additional Financial Information Non-GAAP Reconciliations TOTA L CO M PA NY Key Financial and Operating Metrics Gross RMR Additions Total Company Statistics $ in Millions Total (11)% 4Q'22 Y/Y Change $14.9 $13.2 Ending Subscriber Count 6.7M 1% M&S Revenue $1,163M 5% 4Q'21 4Q'22 Inst
Slide 19: Segment Financials and Key Metrics: Consumer and Small Business
Overview 4Q 2022 Additional Financial Information Non-GAAP Reconciliations CONSUMER AND SMALL BUSINESS Segment Financials and Key Metrics Revenue Segment Statistics $ in Millions +6% Total $1,049 $1,117 $68 $93 4Q'22 Y/Y Change $981 $1,024 Ending Subscriber Count 6.4M 1% Interactive Customers 64% 40
Slide 20: Segment Financials and Key Metrics: Commercial
Overview 4Q 2022 Additional Financial Information Non-GAAP Reconciliations COMMERCIAL Segment Financials and Key Metrics Revenue Segment Statistics $ in Millions Total +15% $328 $284 $189 4Q'22 Y/Y Change $162 Ending Subscriber Count 260K 0% $122 $139 End of Period RMR $33M 6% 4Q'21 4Q'22 Security I
Slide 21: Segment Financials and Key Metrics: Solar
Overview 4Q 2022 Additional Financial Information Non-GAAP Reconciliations SOLAR Segment Financials and Key Metrics Revenue Segment Statistics $ in Millions Total (7)% $214 $200 4Q'22 Y/Y Change Solar Installations 5.0K (14%) 4Q'21 4Q'22 Revenue per Installation ~$40K 9% Solar Installation, Product,
Slide 22: Capital Structure Overview
Overview 4Q 2022 Additional Financial Information Non-GAAP Reconciliations Capital Structure Overview Highlights Capital Structure $ in Millions • First Lien Term Loan A Facility to be drawn in March to pay off $600 12/31/21 12/31/22 Actual Actual million of the $700 million ADT Notes due 2023; rede
Slide 23: Additional Financial Information & Non-GAAP Reconciliations
Additional Financial Information & Non-GAAP Reconciliations
Slide 24: Adjusted Free Cash Flow
Overview 4Q 2022 Additional Financial Information Non-GAAP Reconciliations Adjusted Free Cash Flow For the three months ended For the twelve months ended ($ in millions) Dec. 31, 2022 Dec. 31, 2021 Y/Y Change Dec. 31, 2022 Dec. 31, 2021 Y/Y Change Adjusted EBITDA $629 $574 $54 $2,447 $2,213 $234 Net
Slide 25: Net SAC Calculation
Overview 4Q 2022 Additional Financial Information Non-GAAP Reconciliations Net SAC Calculation For the three months ended For the twelve months ended Dec. 31, 2022 Dec. 31, 2022 ($ in millions) Capitalized Non-capitalized Total Capitalized Non-capitalized Total Selling, Advertising & Commissions $89
Slide 26: Key Financial and Operating Metrics
Overview 4Q 2022 Additional Financial Information Non-GAAP Reconciliations Key Financial and Operating Metrics For the three months ended For the twelve months ended Dec. 31, 2022 Dec. 31, 2021 Y/Y Change Dec. 31, 2022 Dec. 31, 2021 Y/Y Change ($ in millions) M&S Revenue $1,163 $1,103 $59 5% $4,589
Slide 27: Selected Statement of Operations Components
Overview 4Q 2022 Additional Financial Information Non-GAAP Reconciliations Selected Statement of Operations Components For the three months ended December 31, 2022 For the three months ended December 31, 2021 ($ in millions) Total Cost of SG&A Total Cost of SG&A (1) (1) Revenue Revenue and Other D&A
Slide 28: Additional Historical Quarterly Data
Overview 4Q 2022 Additional Financial Information Non-GAAP Reconciliations Additional Historical Quarterly Data ($ in millions) For the Three Months Ended Decem ber 31, Septem ber 30, June 30, March 31, Decem ber 31, 2022 2022 2022 2022 2021 Operating and Financial Measures Monitoring & Related Serv
Slide 29: Income Statement
Income Statement (in millions, except per share data) Three Months Ended December 31, Twelve Months Ended December 31, Revenue: 2022 2021 $ Change % Change 2022 2021 $ Change % Change Monitoring and related services $ 1,163 $ 1,103 $ 59 5% $ 4,589 $ 4,348 $ 242 6% Security installation, product, and
Slide 30: Balance Sheet
Balance Sheet December 31, 2022 December 31, 2021 Assets Current assets: Cash and cash equivalents $ 257 $ 24 Restricted cash and restricted cash equivalents 116 9 Accounts receivable, net 597 442 Inventories, net 329 277 Work-in-progress 81 71 Prepaid expenses and other current assets 341 169 Total
Slide 31: Cash Flow Statement
Cash Flow Statement Three Months Ended December 31, Twelve Months Ended December 31, 2022 2021 2022 2021 Cash flows from operating activities: Net income (loss) $ 151 $ (58) $ 173 $ (341) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation
Slide 32: Segment Information
Segment Information (in millions) Three Months Ended Twelve Months Ended December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021 Total revenue - CSB Monitoring and related services $ 1,024 $ 1,022 $ 1,011 $ 993 $ 981 $ 4,050 $ 3,873 Sec
Slide 33: Non-GAAP Measures
Non-GAAP Measures We sometimes use information (“non-GAAP financial measures”) that is derived from the consolidated financial statements, but that is not presented in accordance with accounting principles generally accepted in the U.S. (“GAAP”). Under SEC rules, non-GAAP financial measures may be c
Slide 34: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Adjusted EBITDA, Adjusted EBITDA prior to subscriber acquisition, and Adjusted EBITDA Margin We believe the presentation of Adjusted EBITDA provides useful information to investors about our operating profitability adjusted for certain non-cash items, non-routine ite
Slide 35: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Free Cash Flow, Adjusted Free Cash Flow, Adjusted Free Cash Flow including interest rate swaps, and Reconciliation to GAAP Net Cash Flows from Operating Activities We define Free Cash Flow as cash flows from operating activities less cash outlays related to capital e
Slide 36: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Adjusted Net Income (Loss), Adjusted Diluted Net Income (Loss) per Share, and Reconciliations to GAAP Net Income (Loss) and GAAP Diluted Net Income (Loss) per Share We define Adjusted Net Income (Loss) as net income (loss) adjusted for (i) merger, restructuring, inte
Slide 37: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Leverage Ratios and Reconciliation to GAAP Debt to Net Income (Loss) Leverage Ratio Net Leverage Ratio is calculated as the ratio of net debt to last twelve months ("LTM") Adjusted EBITDA. Net Leverage Ratio prior to subscriber acquisition is calculated as the ratio