ADT Inc. (ADT) Earnings & Analysis

Latest quarter

ADT reported Q2 FY2026 revenue of $1.3 billion, above the consensus by 1.56%. Adjusted earnings per share were $0.23, compared with the consensus estimate of $0.22. Diluted earnings per share were $0.19, up from $0.18 a year earlier.

In its filing, ADT attributed higher installation revenue partly to more professionally installed systems sold under its outright equipment sales model. The company said lower monitoring and related services revenue reflected reduced volume, including the sale of its multifamily business, partly offset by higher prices.

ADT’s gross margin was 79.9%, compared with 80.6% a year earlier, while operating margin declined to 24.1% from 26.6%. Free cash flow rose to $541.1 million from $422.5 million. The filing attributed higher operating cash flow primarily to lower cash tax and interest payments, payroll timing and changes in other operating receipts and payments.

At June 30, ADT’s recurring monthly revenue was $360 million, compared with $363 million a year earlier; the filing cited the multifamily sale, partly offset by higher average prices.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

The latest available earnings call covered Q1, before ADT reported its Q2 results. CEO Jim DeVries said subscriber additions were affected by softer dealer activity, the multifamily sale, tighter credit standards and reduced reliance on high-cost channels. He said the company was investing in product technology, artificial intelligence and new routes to customers.

Asked about customer attrition, DeVries said nonpayment cancellations were slightly higher than a year earlier, while voluntary cancellations had improved. He said tighter credit standards put some pressure on additions but could support retention over time. CFO Jeff Likosar said ADT was weighing whom to offer credit and how much to provide against potential credit losses and installation revenue.

Likosar said the shift to outright equipment sales brought revenue recognition forward and required ADT to record an appropriate bad-debt provision earlier. On pricing, he said higher average prices across the subscriber base had largely offset the absence of multifamily revenue in Q1.

DeVries said ADT was expanding into e-commerce with ADT Blue, aimed at price-conscious and do-it-yourself customers. He said some customers might later move to professionally installed systems, which he described as more profitable. Likosar said the company was also moving away from higher-cost lead sources and channels.

When asked about AI savings, Likosar described the benefit as being in the millions, potentially tens of millions including fewer field-service visits. DeVries said ADT was using AI in customer service and planned to extend it into marketing and sales.

For the then-upcoming Q2, Likosar expected adjusted free cash flow to decline sequentially because of seasonal subscriber acquisition spending, working-capital timing and tax payments. In the Q&A, he said ADT did not expect revenue to fall sequentially.

Guidance

In its Q2 filing, ADT said it had refined its sales approach for certain residential transactions. The company expects the shift to outright equipment sales to continue increasing installation and product revenue and related costs in subsequent periods.