Slide 1: Third Quarter 2024 Earnings Presentation
Third Quarter 2024 Earnings Presentation October 24, 2024
Slide 2: Forward Looking Statements and Non-GAAP Measures
Forward Looking Statements and Non-GAAP Measures ADT has made statements in this presentation that are forward-looking and therefore subject to risks and uncertainties, including those described below. All statements, other than statements of historical fact, included in this document are, or could
Slide 3: Table of Contents
Table of Contents • Company Overview Page 4 • Quarterly Results & Outlook Page 17 • Additional Financial Information Page 24 • Non-GAAP Reconciliations Page 31
Slide 4: Company Overview
Company Overview
Slide 5: ADT: Delivering Safe, Smart, Sustainable Solutions
Company Overview Quarterly Results & Outlook Additional Financial Information Non-GAAP Reconciliations ADT: Delivering Safe, Smart, Sustainable Solutions Market Leader #1 brand in smart home security with national footprint and scale Well-Positioned Opportunity to increase share in large, growing, a
Slide 6: Leading Brand in Home Security and Smart Home
Company Overview Quarterly Results & Outlook Additional Financial Information Non-GAAP Reconciliations Leading Brand in Home Security and Smart Home Scaled Nationwide Monitoring and #1 Technical Support Presence Smart Home of innovative Security Provider1 protection 2X 98% more preferred brand aware
Slide 7: Large, Growing, Highly Attractive Markets
Company Overview Quarterly Results & Outlook Additional Financial Information Non-GAAP Reconciliations Large, Growing, Highly Attractive Markets Increasing Security Demand Among Growing Consumer Spend Smart Home Represents Significant New and Existing Homeowners on Home Security Incremental Opportun
Slide 8: Business Model is Durable, Resilient, and Flexible
Company Overview Quarterly Results & Outlook Additional Financial Information Non-GAAP Reconciliations Business Model is Durable, Resilient, and Flexible… Durable Recurring • Large existing subscriber base generates ~$4.3B in annualized recurring monthly revenue Revenue Base • Retention remains near
Slide 9: Strong Returns on Capital Through Three Key Levers
Company Overview Quarterly Results & Outlook Additional Financial Information Non-GAAP Reconciliations … And Generates Strong Returns on Capital Through Three Key Levers… Efficient Customer Profitable Service Customer Loyalty Acquisition of Customers and Retention Long-Term Value and Cash Generation
Slide 10: With Improved Performance Across Key Metrics
Company Overview Quarterly Results & Outlook Additional Financial Information Non-GAAP Reconciliations …With Improved Performance Across Key Metrics Recurring Monthly Revenue Installation Revenue Per Unit +16% >2x $359M ~$1,300 $310M $328M ~$975 ~$500 2019 2021 3Q'24 2019 2021 3Q'24 Revenue Payback
Slide 11: Accelerating Differentiation Through Focused Initiatives
Company Overview Quarterly Results & Outlook Additional Financial Information Non-GAAP Reconciliations Accelerating Differentiation Through Focused Initiatives to Drive Growth, Profitability, and Loyalty • ADT+ proprietary platform Recent Highlights Use Cases • New security and lifestyle-oriented so
Slide 12: Innovating on the new proprietary ADT+ Platform
Company Overview Quarterly Results & Outlook Additional Financial Information Non-GAAP Reconciliations Innovating on the new proprietary ADT+ Platform Strengthening our Smart Home Security Offerings Trusted Neighbor launched nationally on the ADT+ platform, driving a growing percentage of sales and
Slide 13: Delivering Top-Line Growth and Strong Free Cash Flow
Company Overview Quarterly Results & Outlook Additional Financial Information Non-GAAP Reconciliations Delivering Top-Line Growth and Strong Free Cash Flow Total Revenue Adjusted EBITDA Adjusted Free Cash Flow (including interest rate swaps) +6% $4.85-4.95B +6% +18% $2.55-2.60B $4.7B $2.5B $725-775M
Slide 14: Disciplined and Balanced Capital Allocation Framework
Company Overview Quarterly Results & Outlook Additional Financial Information Non-GAAP Reconciliations Disciplined and Balanced Capital Allocation Framework Investing Strengthening Returning Capital in the Business the Balance Sheet to Shareholders • Organic RMR growth • Leverage reduction • Dividen
Slide 15: Strong Cash Flow Supports Capital Allocation Strategy
Company Overview Quarterly Results & Outlook Additional Financial Information Non-GAAP Reconciliations Strong Cash Flow Supports Capital Allocation Strategy Investing in Strengthening Returning Capital the Business the Balance Sheet to Shareholders • Capital-efficient subscriber acquisition • Reduce
Slide 16: Investment Thesis for ADT is Strong
Company Overview Quarterly Results & Outlook Additional Financial Information Non-GAAP Reconciliations Investment Thesis for ADT is Strong Large, growing, and highly resilient markets underpinned by secular tailwinds with opportunity 1 to meaningfully increase share 2 #1 brand in smart home security
Slide 17: Quarterly Results & Outlook
Quarterly Results & Outlook
Slide 18: 3Q 2024 Highlights
Company Overview Quarterly Results & Outlook Additional Financial Information Non-GAAP Reconciliations 3Q 2024 Highlights $1.2B $659M Total Revenue Adjusted EBITDA YTD $3.6B, up 5% YTD $1.9B, up 4% $0.20 2.2 years Adjusted EPS Revenue Payback YTD $0.56, up 33% up 0.2 years $359M 2.9x End of Period R
Slide 19: Key Quarterly Financials
Company Overview Quarterly Results & Outlook Additional Financial Information Non-GAAP Reconciliations Key Quarterly Financials Total Revenue Adjusted EBITDA & Margin Highlights +5% $ in Millions $ in Millions $1,180 $1,244 +6% $126 $166 • Increase in recurring revenue primarily due to higher averag
Slide 20: Key Year-to-Date Financials
Company Overview Quarterly Results & Outlook Additional Financial Information Non-GAAP Reconciliations Key Year-to-Date Financials Total Revenue Adjusted EBITDA & Margin $ in Millions $ in Millions +5% $3,638 +4% $3,480 $355 $430 $1,854 $1,926 $3,125 $3,208 Monitoring and Related Services Security I
Slide 21: Additional Key Metrics
Company Overview Quarterly Results & Outlook Additional Financial Information Non-GAAP Reconciliations Additional Key Metrics 3Q'24 3Q'23 Y/Y Change Highlights Ending Subscriber Count 6.4M 6.4M 0% • Increase in RMR driven by higher average Interactive Customers 71% 66% 500 bps pricing and strategic
Slide 22: Capital Structure with Balanced Maturity Profile
Company Overview Quarterly Results & Outlook Additional Financial Information Non-GAAP Reconciliations Capital Structure with Balanced Maturity Profile • 2.9x Net Leverage Ratio, down 0.7x versus prior year, and below 3.0x 2024 target • Issued new 5-year $800M revolving credit facility in October (c
Slide 23: 2024 Guidance
Company Overview Quarterly Results & Outlook Additional Financial Information Non-GAAP Reconciliations 2024 Guidance • Based on performance through the end of the third quarter, the Company is tightening guidance within prior full year guidance ranges • Total Revenue, Adjusted EBITDA, and Adjusted F
Slide 24: Additional Financial Information & Non-GAAP Reconciliations
Additional Financial Information & Non-GAAP Reconciliations
Slide 25: Quarterly Financial & Operating Measures
Company Overview Quarterly Results & Outlook Additional Financial Information Non-GAAP Reconciliations Quarterly Financial & Operating Measures For the Three Months Ended September 30, June 30, March 31, December 31, September 30, June 30, March 31, ($ in millions) 2024 2024 2024 2023 2023 2023 2023
Slide 26: Adjusted Free Cash Flow Detail
Company Overview Quarterly Results & Outlook Additional Financial Information Non-GAAP Reconciliations Adjusted Free Cash Flow Detail For the Three Months Ended September 30, June 30, March 31, December 31, September 30, June 30, March 31, ($ in millions) 2024 2024 2024 2023 2023 2023 2023 Adjusted
Slide 27: Net Subscriber Acquisition Cost Calculation
Company Overview Quarterly Results & Outlook Additional Financial Information Non-GAAP Reconciliations Net Subscriber Acquisition Cost Calculation For the three months ended For the twelve months ended September 30, 2024 September 30, 2024 ($ in millions) Capitalized Non-capitalized Total Total Sell
Slide 28: Statements of Operations
Company Overview Quarterly Results & Outlook Additional Financial Information Non-GAAP Reconciliations Statements of Operations (in millions, except per share data) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 $ Change % Change 2024 2023 $ Change % Change Revenue: Monit
Slide 29: Balance Sheets
Company Overview Quarterly Results & Outlook Additional Financial Information Non-GAAP Reconciliations Balance Sheets September 30, 2024 December 31, 2023 Assets Current assets: Cash and cash equivalents $ 95 $ 15 Restricted cash and restricted cash equivalents 109 115 Accounts receivable, net 397 3
Slide 30: Statements of Cash Flows
Company Overview Quarterly Results & Outlook Additional Financial Information Non-GAAP Reconciliations Statements of Cash Flows Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Cash flows from operating activities: Net income (loss) $ 127 $ (86) $ 311 $ (113) Adju
Slide 31: Non-GAAP Measures
Company Overview Quarterly Results & Outlook Additional Financial Information Non-GAAP Reconciliations Non-GAAP Measures ADT sometimes uses information (“non-GAAP financial measures”) that is derived from the consolidated financial statements, but that is not presented in accordance with accounting
Slide 32: GAAP to Non-GAAP Reconciliations
Company Overview Quarterly Results & Outlook Additional Financial Information Non-GAAP Reconciliations GAAP to Non-GAAP Reconciliations Free Cash Flow, Adjusted Free Cash Flow, Adjusted Free Cash Flow including interest rate swaps The Company defines Free Cash Flow as cash flows from operating activ
Slide 33: GAAP to Non-GAAP Reconciliations
Company Overview Quarterly Results & Outlook Additional Financial Information Non-GAAP Reconciliations GAAP to Non-GAAP Reconciliations Adjusted EBITDA from Continuing Operations ("Adjusted EBITDA") and Adjusted EBITDA Margin from Continuing Operations ("Adjusted EBITDA Margin") The Company believes
Slide 34: GAAP to Non-GAAP Reconciliations
Company Overview Quarterly Results & Outlook Additional Financial Information Non-GAAP Reconciliations GAAP to Non-GAAP Reconciliations Historical Adjusted EBITDA (including discontinued operations) The Company believes the presentation of historical Adjusted EBITDA provides useful information to in
Slide 35: GAAP to Non-GAAP Reconciliations
Company Overview Quarterly Results & Outlook Additional Financial Information Non-GAAP Reconciliations GAAP to Non-GAAP Reconciliations Adjusted Income (Loss) from Continuing Operations ("Adjusted Income (Loss)") and Adjusted Diluted Income (Loss) per Share (or, Adjusted EPS) The Company defines Adj
Slide 36: GAAP to Non-GAAP Reconciliations
Company Overview Quarterly Results & Outlook Additional Financial Information Non-GAAP Reconciliations GAAP to Non-GAAP Reconciliations Leverage Ratios Net Leverage Ratio, Net Leverage Ratio prior to subscriber acquisition, and Net Debt / Annualized RMR are calculated as the ratio of net debt to las
Slide 37: GAAP to Non-GAAP Reconciliations
Company Overview Quarterly Results & Outlook Additional Financial Information Non-GAAP Reconciliations GAAP to Non-GAAP Reconciliations Historical Leverage Ratios (including discontinued operations) Net Leverage Ratio (historical), Net Leverage Ratio prior to subscriber acquisition (historical), and