Strong quarter, making progress against 2021 objectives
Residential subscriber growth continues and Commercial rebound underway
Durable recurring revenue model with strengthening, long term growth engine
Affirming 2021 financial outlook
BOCA RATON, Fla., May 05, 2021 (GLOBE NEWSWIRE) -- ADT Inc. (NYSE: ADT), the most trusted brand in smart home and small business security, today reported results for the first quarter of 2021.
FIRST QUARTER 2021 OPERATIONAL HIGHLIGHTS
- New recurring monthly revenue (RMR) additions up 25% versus prior year
- Commercial recovery continues; improved year-over-year results
- Quarterly net subscriber growth of 76 thousand
- Attrition remained at 13.1% and improved 40 bps from Q1 2020
- Continued progress on ADT | Google partnership and next generation platform development
“The priority for ADT in 2021 is to drive revenue expansion through investments in new subscriber growth, strategic partnerships, and exceptional customer service. Our first quarter results show that the strategy is working – we grew RMR additions by double-digits and increased our net subscribers, while also maintaining our revenue payback at 2.2 years,” stated Jim DeVries, ADT’s President and CEO. “We have good momentum in the business as we continue to expand and enhance our offerings to protect our customers at home, at work, and on the go.”
FIRST QUARTER 2021 RESULTS
Total revenue declined 5% year over year to $1,305 million, driven primarily by the $82 million decrease in installation and other revenue which largely reflects the non-cash impact of ownership model changes made in 2020. Monitoring and related services revenue was up $17 million or 2%, driven by an increase in recurring monthly revenue and improved customer retention. Commercial installation and other revenue increased from a year ago reflecting higher outright sales revenue.
With strong customer satisfaction and lower than normal customer relocation activity, trailing twelve-month gross customer revenue attrition remained at 13.1%. Trailing twelve-month customer revenue payback remained at 2.2 years.
The Company reported a net loss of $48 million, an improvement to prior year’s net loss of $300 million. The decrease was largely a result of lower interest expense related to swap valuation, a significant reduction in debt extinguishment costs, and lower merger and integration costs. Diluted net loss per share of common stock was $(0.06) compared to $(0.40) a year ago, and diluted net loss per share of Class B common stock was $(0.06). As detailed below, diluted net loss per share before special items was $(0.07) versus $(0.09) in the prior year.
Adjusted EBITDA was $542 million, relatively flat to the prior year, driven primarily by improved Commercial performance, partially offset by a lower volume of outright sales to residential customers.
Net cash provided by operating activities was $359 million and net cash used in investing activities was $399 million. These amounts compare to $250 million and $338 million, respectively, for the first quarter 2020. The increase in cash provided by operating activities reflects the non-recurrence of a 2020 payment related to the Defenders acquisition and the impact of lower outright sales to residential customers in 2021. The increase in investing activities reflects additional spending for dealer and bulk account purchases and subscriber system asset expenditures, partially offset by the non-recurrence of the Defenders acquisition. Net cash used in financing activities was $41 million compared to cash provided of $158 million a year ago.
Adjusted Free Cash Flow was $64 million, down from $173 million in the prior year period. The decrease was driven by higher subscriber acquisition costs to fund significant customer and RMR additions.
BUSINESS HIGHLIGHTS
ADT is a trusted consumer brand, driving profitable growth through innovative technology, strategic partnerships, and premium products and service. Key highlights from the quarter show the Company’s focus on making life safe and simple for our customers at home, at work, and on the go.
Technology and Innovation
- Google Nest Product Integration – ADT customers can now purchase Google Nest Mini, Nest Hub, and Nest Hub Max products and have them professionally installed by ADT’s nationwide network of smart home technicians. Customers with ADT Command & Control and Blue by ADT smart home security systems can now control their systems via voice when using compatible Google Nest products. Voice control can be used for system arming and disarming, connected lights, locks, ADT thermostats, and system status queries. The integration also enables control of ADT-compatible smart devices through touch control using the Nest Hub and Nest Hub Max.
- Accelerating Innovation – ADT has a long and proud history of innovation, with a robust and growing internally-developed portfolio of patents and other valuable intellectual property, as well as the developers, engineers and other innovators who help turn ADT’s proprietary data and insights into innovative new services and products for its customers. The Company is increasing its innovation investments this year, planning an initial $50 million on next-generation solutions that will power future services, products and customer experience. With ADT-owned and developed solutions, combined with Google’s hardware and technologies, ADT aims to further differentiate itself in the eyes of consumers.
Strategic Partnerships
- More value for customers – ADT partnered with traditional insurance companies and insurance tech companies such as Branch and Hippo, leading a new standard of care and protection for homeowners. The partnerships bring homeowners even greater ways to help save on their homeowners’ insurance and offer better protection for their life, property, family, and assets.
- Increasing scale in our commercial business – During the first quarter, ADT Commercial continued to expand its nationwide geographic footprint with the acquisition of SAFE Electronics, Inc., based out of Las Vegas, Nevada. SAFE Electronics specializes in the system design and installation of fire alarm and suppression systems, security alarms, video surveillance, and access control for a wide range of commercial industries. Additionally, ADT Commercial became the U.S. distributor and service provider for WG Security Products. This addition enhances the electronic article surveillance (EAS) market and ADT Commercial will install and service WG Security Products’ comprehensive EAS portfolio in the U.S., including a full range of detection systems, hard tags, specialty tags, disposable labels, deactivation devices, and detachers.
Delivering for our owners
- Cash dividend declared – Effective May 5, 2021, the Company’s board of directors declared a cash dividend of $0.035 per share to holders of the Company’s common stock and Class B common stock of record as of June 17, 2021. This dividend will be paid on July 1, 2021.
2021 FINANCIAL OUTLOOK (2)(3)
The Company is reaffirming its full-year 2021 guidance given in February 2021. With strong demand for our products and services, ADT is increasing spending on subscriber acquisition costs and other technology investments, which the company believes will drive full year RMR growth in the mid-teens.
(in millions)
Total Revenue: $5,050 - $5,250
Adjusted EBITDA: $2,100 - $2,200
Adjusted Free Cash Flow: $450 - $550
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Conference Call
Management will discuss the Company’s first quarter of 2021 results during a conference call and webcast today beginning at 5:00 p.m. (ET). The conference call can be accessed as follows:
- By dialing 1-877-300-8521 (domestic) or 1-412-317-6026 (international) and requesting the ADT First Quarter 2021 Earnings Conference Call
- Live webcast accessed through ADT’s website at investor.adt.com.
An audio replay of the conference call will be available from approximately 8:00 p.m. ET on Wednesday May 5, 2021 until 11:59 p.m. ET on Wednesday May 19, 2021, and can be accessed by dialing 1-844-512-2921 (domestic) or 1-412-317-6671 (international), and providing the passcode, 10155778 or by accessing ADT's website at investor.adt.com. A slide presentation highlighting the Company’s results will also be available on the Investor Relations section of the Company’s website. From time to time, the Company may use its website as a channel of distribution of material Company information. Financial and other material information regarding the Company is routinely posted on and accessible at investor.adt.com.
About ADT Inc.
ADT is the most trusted brand in smart home and small business security. Through innovative products, partnerships and the largest network of smart home security professionals in the United States, we connect and protect what matters most to our customers at home, work and on the go. For more information, visit www.adt.com.
FORWARD-LOOKING STATEMENTS
ADT has made statements in this press release and 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 2021 Financial Outlook. All statements, other than statements of historical fact, included in this document are, or could be, “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and are made in reliance on the safe harbor protections provided thereunder. These forward-looking statements relate to anticipated financial performance, management’s plans and objectives for future operations, business prospects, outcome of regulatory proceedings, market conditions, our ability to successfully respond to the challenges posed by the COVID-19 pandemic, our strategic partnership and ongoing relationship with Google, the expected timing of product commercialization with Google or any changes thereto, the successful internal development, commercialization and timing of our next generation platform and other matters. Any forward-looking statement made in this press release speaks only as of the date on which it is made. ADT undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise. Forward-looking statements can be identified by various words such as “expects,” “intends,” “will,” “anticipates,” “believes,” “confident,” “continue,” “propose,” “seeks,” “could,” “may,” “should,” “estimates,” “forecasts,” “might,” “goals,” “objectives,” “targets,” “planned,” “projects,” and similar expressions. These forward-looking statements are based on management’s current beliefs and assumptions and on information currently available to management. ADT cautions that these statements are subject to risks and uncertainties, many of which are outside of ADT’s control, and could cause future events or results to be materially different from those stated or implied in this document, including among others, risk factors that are described in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other filings with the Securities and Exchange Commission, including the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained therein.