Slide 1: Second Quarter 2023 Earnings and Divestiture of Commercial Business
S e c o n d Q u a r te r 2 0 2 3 Ea r n i n g s and D i ve st i t u re o f C o m m e rc i a l B u s i n e s s August 8, 2023
Slide 2: Forward Looking Statements and Non-GAAP Measures
Divestiture of Commercial Business Our Exciting Road Ahead 2Q 2023 & Outlook Financial Information & Non-GAAP Reconciliations Forward Looking Statements and Non-GAAP Measures ADT has made statements in this slide deck that are forward-looking and therefore subject to risks and uncertainties, includi
Slide 3: Table of Contents
Divestiture of Commercial Business Our Exciting Road Ahead 2Q 2023 & Outlook Financial Information & Non-GAAP Reconciliations Table of Contents 1. Divestiture of Commercial Business Page 4 2. Our Exciting Road Ahead Page 8 3. 2Q 2023 & Outlook Page 16 4. Additional Financial Information Page 25 & No
Slide 4: Divestiture of Commercial Business
Divestiture of Commercial Business
Slide 5: ADT to Divest Commercial Business for an Attractive Valuation and Focus
Divestiture of Commercial Business Our Exciting Road Ahead 2Q 2023 & Outlook Financial Information & Non-GAAP Reconciliations ADT to Divest Commercial Business for an Attractive Valuation and Focus on the Significant Residential and Small Business Opportunities Focus Portfolio on ADT’s Core Resident
Slide 6: Divestiture Expected to Unlock Shareholder Value by Enhancing Free Cash Flow
Divestiture of Commercial Business Our Exciting Road Ahead 2Q 2023 & Outlook Financial Information & Non-GAAP Reconciliations Divestiture of Commercial Business Expected to Unlock Shareholder Value by Enhancing Free Cash Flow and Accelerating Debt Reduction Goals Allows ADT to focus on the significa
Slide 7: Transaction Overview
Divestiture of Commercial Business Our Exciting Road Ahead 2Q 2023 & Outlook Financial Information & Non-GAAP Reconciliations Transaction Overview • All-cash sale of 100% of commercial business to GTCR • Transaction value of $1.6B represents attractive EV/Commercial Adjusted EBITDA multiple of 1 Tra
Slide 8: Our Exciting Road Ahead
Our Exciting Road Ahead ADT: Consumer, Small Business and Solar
Slide 9: Positioned to Serve High-Growth Smart Home and Solar Markets
Divestiture of Commercial Business Our Exciting Road Ahead 2Q 2023 & Outlook Financial Information & Non-GAAP Reconciliations Positioned to Serve High-Growth Smart Home and Solar Markets Focused Business, Well Positioned to Gain Share in High-Growth Markets Market Growth and Key Drivers U.S. Market
Slide 10: Continuing Our Evolution as the #1 Smart Home Solutions Provider
Divestiture of Commercial Business Our Exciting Road Ahead 2Q 2023 & Outlook Financial Information & Non-GAAP Reconciliations Continuing Our Evolution as the #1 Smart Home Solutions Provider Pro v i d i n g b e s t - i n - c l a s s , c o m p re h e n s i v e s m a rt h o m e Past 2023 Future securi
Slide 11: Core Strategy to Drive Customer Preference and Long-term Shareholder Value Remains Unchanged
Divestiture of Commercial Business Our Exciting Road Ahead 2Q 2023 & Outlook Financial Information & Non-GAAP Reconciliations Core Strategy to Drive Customer Preference and Long-term Shareholder Value Remains Unchanged Strategic Differentiators Enablers Co-marketing ADT Solar to existing customer ba
Slide 12: ADT Continues to Provide Customers Safe, Smart, and Sustainable Solutions
Divestiture of Commercial Business Our Exciting Road Ahead 2Q 2023 & Outlook Financial Information & Non-GAAP Reconciliations ADT Continues to Provide Customers Safe, Smart, and Sustainable Solutions Addressing the Expanding Customer Opportunity Delivering Superior Results Across Key CSB Metrics Tra
Slide 13: Partnerships Accelerate Innovation as Catalyst for Future Growth
Divestiture of Commercial Business Our Exciting Road Ahead 2Q 2023 & Outlook Financial Information & Non-GAAP Reconciliations Partnerships Accelerate Innovation as Catalyst for Future Growth • Accelerated innovation and product development with the launch of the ADT+ app — National rollout of ADT+ a
Slide 14: Our Growth Flywheel Accelerates as Smart Home Penetration Grows
Divestiture of Commercial Business Our Exciting Road Ahead 2Q 2023 & Outlook Financial Information & Non-GAAP Reconciliations As Our Penetration of the Smart Home Ecosystem Grows, Our Growth Flywheel Accelerates Enable Customers to Better Accelerate Penetration and Manage the Risks of Everyday Life
Slide 15: The investment thesis for ADT remains strong with an attractive financial profile
Divestiture of Commercial Business Our Exciting Road Ahead 2Q 2023 & Outlook Financial Information & Non-GAAP Reconciliations The investment thesis for ADT remains strong with an attractive financial profile Large and expanding addressable market with Medium-term target framework1 1 opportunities to
Slide 16: 2Q 2023 & Outlook
2Q 2023 & Outlook
Slide 17: Recent Highlights: 2Q 2023
Divestiture of Commercial Business Our Exciting Road Ahead 2Q 2023 & Outlook Financial Information & Non-GAAP Reconciliations Recent Highlights: 2Q 2023 1 Another record CSB performance with continued top-line growth and improved margins 2 Record revenue payback of 1.9 years, achieving 2025 goal mor
Slide 18: 2Q 2023: Highlights
Divestiture of Commercial Business Our Exciting Road Ahead 2Q 2023 & Outlook Financial Information & Non-GAAP Reconciliations 2Q 2023: Highlights +4% $0.16 $651M M&S Revenue Growth Adjusted EPS Adjusted EBITDA vs. prior year with CSB up 3% Adjusted Net Income of $148M, up 9% vs. prior year; & Commer
Slide 19: Key Financial and Operating Metrics
Divestiture of Commercial Business Our Exciting Road Ahead 2Q 2023 & Outlook Financial Information & Non-GAAP Reconciliations Key Financial and Operating Metrics For the three months ended June 30, June 30, Y/Y Change Key Highlights ($ in millions) 2023 2022 M&S Revenue $1,187 $1,146 $41 4% • M&S Re
Slide 20: 2023 Guidance and Annualized Impact of Commercial Divestiture
Divestiture of Commercial Business Our Exciting Road Ahead 2Q 2023 & Outlook Financial Information & Non-GAAP Reconciliations 2023 Guidance and Annualized Impact of Commercial Divestiture • Updated revenue guidance due to lower Solar outlook from installation volume and efficiency headwinds • Higher
Slide 21: Segment Financials and Key Metrics: Consumer and Small Business
Divestiture of Commercial Business Our Exciting Road Ahead 2Q 2023 & Outlook Financial Information & Non-GAAP Reconciliations CONSUMER AND SMALL BUSINESS Segment Financials and Key Metrics Revenue Segment Statistics $ in Millions +7% 2Q'23 Y/Y Change $1,088 $1,168 $77 $125 Ending Subscriber Count 6.
Slide 22: Segment Financials and Key Metrics: Commercial
Divestiture of Commercial Business Our Exciting Road Ahead 2Q 2023 & Outlook Financial Information & Non-GAAP Reconciliations COMMERCIAL Segment Financials and Key Metrics Revenue Segment Statistics $ in Millions 2Q'23 Y/Y Change +17% $348 $297 Ending Subscriber Count 260K 0% $204 $163 End of Period
Slide 23: Segment Financials and Key Metrics: Solar
Divestiture of Commercial Business Our Exciting Road Ahead 2Q 2023 & Outlook Financial Information & Non-GAAP Reconciliations SOLAR Segment Financials and Key Metrics Revenue Segment Statistics $ in Millions 2Q'23 Y/Y Change (64%) Solar Installations 2.0K (64%) $215 Revenue per Installation ~$39K 0%
Slide 24: Significant Changes to Capital Structure Expected Post Commercial Divestiture
Divestiture of Commercial Business Our Exciting Road Ahead 2Q 2023 & Outlook Financial Information & Non-GAAP Reconciliations Significant Changes to Capital Structure Expected Post Commercial Divestiture 2Q 2023 Highlights Capital Structure $ in Millions 12/31/22 6/30/23 6/30/23 • Net Leverage Ratio
Slide 25: Additional Financial Information & Non-GAAP Reconciliations
Additional Financial Information & Non-GAAP Reconciliations
Slide 26: Adjusted Free Cash Flow Bridge
Divestiture of Commercial Business Our Exciting Road Ahead 2Q 2023 & Outlook Financial Information & Non-GAAP Reconciliations Adjusted Free Cash Flow Bridge For the three months ended For the six months ended ($ in millions) June 30, 2023 June 30, 2022 Y/Y Change June 30, 2023 June 30, 2022 Y/Y Chan
Slide 27: Net SAC Calculation
Divestiture of Commercial Business Our Exciting Road Ahead 2Q 2023 & Outlook Financial Information & Non-GAAP Reconciliations Net SAC Calculation For the three months ended For the six months ended June 30, 2023 June 30, 2023 ($ in millions) Capitalized Non-capitalized Total Capitalized Non-capitali
Slide 28: Selected Statement of Operations Components
Divestiture of Commercial Business Our Exciting Road Ahead 2Q 2023 & Outlook Financial Information & Non-GAAP Reconciliations Selected Statement of Operations Components For the three months ended June 30, 2023 For the three months ended June 30, 2022 ($ in millions) Total Cost of SG&A Total Cost of
Slide 29: Additional Historical Quarterly Data
Divestiture of Commercial Business Our Exciting Road Ahead 2Q 2023 & Outlook Financial Information & Non-GAAP Reconciliations Additional Historical Quarterly Data For the Three Months Ended ($ in millions) June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 Operating and
Slide 30: Income Statement
Divestiture of Commercial Business Our Exciting Road Ahead 2Q 2023 & Outlook Financial Information & Non-GAAP Reconciliations Income Statement (in millions, except per share data) Three Months Ended June 30, Six Months Ended June 30, Revenue: 2023 2022 $ Change % Change 2023 2022 $ Change % Change M
Slide 31: Balance Sheet
Divestiture of Commercial Business Our Exciting Road Ahead 2Q 2023 & Outlook Financial Information & Non-GAAP Reconciliations Balance Sheet June 30, 2023 December 31, 2022 Assets Current assets: Cash and cash equivalents $ 146 $ 257 Restricted cash and restricted cash equivalents 114 116 Accounts re
Slide 32: Cash Flow Statement
Divestiture of Commercial Business Our Exciting Road Ahead 2Q 2023 & Outlook Financial Information & Non-GAAP Reconciliations Cash Flow Statement Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Cash flows from operating activities: Net income (loss) $ 92 $ 92 $ (27) $ 143 A
Slide 33: Segment Information
Divestiture of Commercial Business Our Exciting Road Ahead 2Q 2023 & Outlook Financial Information & Non-GAAP Reconciliations Segment Information (in millions) Three Months Ended Six Months Ended Twelve Months Ended June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 June
Slide 34: Non-GAAP Measures
Divestiture of Commercial Business Our Exciting Road Ahead 2Q 2023 & Outlook 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 acco
Slide 35: GAAP to Non-GAAP Reconciliations: Adjusted EBITDA
Divestiture of Commercial Business Our Exciting Road Ahead 2Q 2023 & Outlook Financial Information & Non-GAAP Reconciliations GAAP to Non-GAAP Reconciliations Adjusted EBITDA, Adjusted EBITDA Margin and Reconciliation to GAAP Net Income or Loss We believe the presentation of Adjusted EBITDA provides
Slide 36: GAAP to Non-GAAP Reconciliations: Free Cash Flow
Divestiture of Commercial Business Our Exciting Road Ahead 2Q 2023 & Outlook 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, and Reconciliation to GAAP Net Cash Flows fro
Slide 37: GAAP to Non-GAAP Reconciliations: Adjusted Net Income and EPS
Divestiture of Commercial Business Our Exciting Road Ahead 2Q 2023 & Outlook Financial Information & Non-GAAP Reconciliations GAAP to Non-GAAP Reconciliations Adjusted Net Income (Loss), Adjusted Diluted Net Income (Loss) per Share (or, Adjusted EPS), and Reconciliations to GAAP Net Income (Loss) an
Slide 38: GAAP to Non-GAAP Reconciliations: Leverage Ratios
Divestiture of Commercial Business Our Exciting Road Ahead 2Q 2023 & Outlook Financial Information & 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
Slide 39: GAAP to Non-GAAP Reconciliations: Commercial Adjusted EBITDA
Divestiture of Commercial Business Our Exciting Road Ahead 2Q 2023 & Outlook Financial Information & Non-GAAP Reconciliations GAAP to Non-GAAP Reconciliations Commercial Adjusted EBITDA including estimated allocation of certain corporate costs Commercial Adjusted EBITDA is our segment profit measure