ADT Inc.
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ITEM 1. BUSINESS.
TABLE OF CONTENTS
COMPANY OVERVIEW
Our Business
ADT Inc., together with its wholly-owned subsidiaries (collectively, the “Company,” “we,” “our,” “us,” and “ADT”), is a leading provider of security, interactive, and smart home solutions serving residential and small business customers in the United States (“U.S.”).
Our mission is to empower people to protect and connect what matters most through innovative offerings, unrivaled safety, and a premium experience because we believe that everyone deserves to feel safe.
We are strategically evolving toward a platform-centric model focused on integrated home intelligence. Our efforts are increasingly centered on our proprietary ADT+ application, which is designed to serve as a foundational ecosystem for both professionally installed and self-installed solutions, integrating human expertise with ambient sensing capabilities.
We primarily conduct business under the ADT brand, which we believe is a key competitive advantage for us and a contributor to our success due to the importance customers place on reputation and trust when purchasing home security products and services. The strength of our brand, which first became associated with home security services in 1874, is based upon a long-standing record of delivering high-quality, reliable products and services; expertise in system sales, installation, and monitoring; and superior customer care, all driven by our industry-leading experience and knowledge.
As of December 31, 2025, we had approximately 6.1 million security monitoring service subscribers. We serve our customers through our nationwide sales and service offices (“SSOs”), monitoring and support centers, and large network of installation and service professionals.
Formation and Organization
ADT Inc. was incorporated in the State of Delaware in May 2015 as a holding company with no assets or liabilities. In July 2015, we acquired Protection One, Inc. and ASG Intermediate Holding Corp. (collectively, the “Formation Transactions”), which were instrumental in the commencement of our operations. In May 2016, we acquired The ADT Security Corporation (formerly named The ADT Corporation) (“The ADT Corporation”) (the “ADT Acquisition”), which significantly increased our market share in the security systems industry, making us one of the largest monitored security companies in the U.S.
In January 2018, we completed an initial public offering (“IPO”), and our common stock, par value $0.01 per share (“Common Stock”), began trading on the New York Stock Exchange (the “NYSE”) under the symbol “ADT.”
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As of December 31, 2025, our three largest shareholders were State Farm Fire & Casualty Company (”State Farm”), owning approximately 16%, Apollo Global Management, Inc. (“Apollo”), owning approximately 12%, and The Vanguard Group, owning approximately 8% of our outstanding Common Stock, inclusive of the Class B common stock, par value $0.01 per share (“Class B Common Stock”) (on an as-converted basis), owned exclusively by Google LLC (“Google”), and unvested shares of Common Stock.
KEY BUSINESS DEVELOPMENTS
Origin AI Acquisition
On February 20, 2026, ADT acquired Origin Wireless, Inc. (“Origin AI”), a provider of AI-enabled presence detection and ambient sensing technology (the “Origin AI Acquisition”). Origin AI’s technology uses artificial intelligence and radio frequency signals to detect and classify human presence and activity within the home without the use of cameras, audio, or wearable devices. This technology is expected to enhance our ability to deliver improved alarm verification, reduce false alarms, and support new intelligent security and smart home use cases over time.
The purchase price for the Origin AI Acquisition was $170 million in cash, subject to customary purchase price adjustments. Following the acquisition, Origin AI became an indirect wholly owned subsidiary of ADT.
We believe the acquisition of Origin AI supports our strategy to further differentiate our security and smart home offerings over time.
Google Update
On July 31, 2020, we entered into a Master Supply, Distribution, and Marketing Agreement with Google (as amended, the “Google Commercial Agreement”) with an initial term expiring on November 15, 2030. As part of our partnership with Google, each company agreed to contribute $150 million upon the achievement of certain milestones toward the joint marketing of devices and services; acquisition of customers; training of ADT employees for the sale, installation, customer service, and maintenance of the product and service offerings; and updates to technology for products included in such offerings. In August 2022, pursuant to an amendment to the Google Commercial Agreement, Google agreed to commit an additional $150 million (together with the initial amounts, the “Google Success Funds”) to fund growth, data and insights, product innovation, technology advancements, customer acquisition, and marketing, as mutually agreed by the Company and Google. The Google Commercial Agreement provided that each of the $150 million tranches of the Google Success Funds would be triggered in three equal tranches, respectively, subject to the attainment of certain milestones. From inception through December 31, 2025, the Company had incurred expenses of approximately $100 million related to the initiatives funded from the initial tranche of the Google Success Funds, and had received $90 million of reimbursement from the Google Success Funds with the remaining $10 million reimbursed during January 2026.
In January 2024, we again amended the Google Commercial Agreement to, among other things, remove exclusivity for DIY products and services, limit exclusivity for do-it-for-me (“DIFM”) products and services, and restructure the commitment from the Google Success Funds to pay a portion of the remaining amount due to ADT as a quarterly marketing reimbursement (with the balance to be used towards unlocking certain opportunities).
In September 2020, we issued and sold 54,744,525 shares of Class B Common Stock to Google in a private placement pursuant to a securities purchase agreement, dated July 31, 2020. In connection with that issuance of Class B Common Stock to Google, the Company and Google entered into an investor rights agreement (the “Google Investor Rights Agreement”), pursuant to which Google agreed to be bound by customary transfer restrictions and drag-along rights, and be afforded customary registration rights with respect to shares of Class B Common Stock held directly by Google. Under the terms of the Google Investor Rights Agreement, which was amended for the second time in December 2023, Google was prohibited, subject to certain exceptions, from transferring any shares of Class B Common Stock or any shares of Common Stock issuable upon conversion of the Class B Common Stock until June 2025. Refer to Note 10 “Equity” in the Notes to Consolidated Financial Statements.
Additionally, in December 2023, the Company and Google entered into an addendum to the Company’s existing agreement for using Google cloud services (the “Google Cloud Agreement Addendum”), pursuant to which Google has agreed to provide certain credits, discounts, and other incentives for use of the Google Cloud Platform to the Company, and the Company has committed to purchasing $200 million of Google Cloud Platform services over seven years (through December 2030) (the “Google Cloud Commitment”). Refer to Note 13 “Commitments and Contingencies” in the Notes to Consolidated Financial Statements.
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State Farm Update
In October 2022, we entered into a development agreement with State Farm (the “State Farm Development Agreement”), pursuant to which State Farm committed up to $300 million to fund product and technology innovation, customer growth, and marketing initiatives. We initially received $100 million of such commitment from State Farm, which was restricted to use for investment, as agreed upon with State Farm, in accordance with the State Farm Development Agreement (the “Opportunity Fund”). The State Farm Development Agreement expired on October 13, 2025. On October 24, 2025, we repaid to State Farm substantially all of the balance of the Opportunity Fund held by us. State Farm has no obligation to fund the Opportunity Fund in the future. In addition, we ended our State Farm partnership programs in existing states in connection with the expiration of the State Farm Development Agreement.
Pursuant to an investor rights agreement with State Farm (the “State Farm Investor Rights Agreement”), dated as of October 13, 2022, State Farm agreed to be bound by customary transfer and standstill restrictions and drag-along rights, and be afforded customary registration rights with respect to shares of our Common Stock owned by State Farm. State Farm’s contractual lock-up period restricting the transfer of the shares of Common Stock owned by State Farm terminated on October 13, 2025.
Refer to Note 16 “Related Party Transactions” in the Notes to Consolidated Financial Statements.
SEGMENT AND GEOGRAPHIC INFORMATION
We evaluate and report our segment information based on the manner in which our Chief Executive Officer (“CEO”), who is our chief operating decision maker (“CODM”), evaluates performance and allocates resources. Our CODM manages the business on a consolidated basis, and as such, we report results in a single operating and reportable segment.
For further information, refer to Note 3 “Segment Information” in the Notes to Consolidated Financial Statements.
Revenue generated by customers outside of the U.S. is not material.
PRODUCTS AND SERVICES
Security and Automation Offerings
Our core security offerings include burglar and life safety alarms, smart security cameras, smart home automation systems, and video surveillance systems (referred to collectively as security systems, solutions, or offerings). Our security offerings are designed to detect intrusion; control access; sense movement, smoke, fire, carbon monoxide, leaks, temperature, and other environmental conditions and hazards; and address personal medical emergencies such as injuries or unanticipated falls. We offer our customers routine maintenance and the installation of upgraded or additional equipment, which provide additional value to the customer and generate incremental recurring monthly revenue. Additionally, our personal emergency response system products and services utilize our security monitoring infrastructure to provide customers with solutions that help to sustain independent living, detect when a fall occurs, and provide protection while on the go with geolocation capability.
Our proprietary ADT+ app is a comprehensive interactive technology platform designed to provide customers with a seamless experience through a common application across security, life safety, automation, and analytics, and integrate the user experience, customer service experience, and back-end support. We began a phased rollout of our ADT+ app along with a new interactive and hardware lineup during the fourth quarter of 2023. During 2024 and 2025, we continued the phased rollout across the country. As part of our partnership with Google, we have also integrated certain Google devices into our offerings.
Our Trusted NeighborTM offering allows customers to verify a trusted individual and grant that individual secure, temporary access to their home through homeowner-authorized credentials, including assigned Yale lock PIN codes, biometric (fingerprint) authentication on supported devices, and the ADT+ application.
The vast majority of new residential customers choose our automation and smart home solutions, which provide customers the ability to remotely monitor and manage their spaces through our smart phone applications, customized web portal, or touchscreen panels in their homes.
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Our automation and smart home solutions allow customers to:
•remotely arm and disarm their security systems;
•receive programmed event notifications from their security systems;
•record and view real-time video;
•program their systems to react to defined events;
•integrate their systems with various third-party connected devices such as cameras, lights, thermostats, appliances, and garage doors; and
•automate custom schedules for these connected devices.
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Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Table of Contents
INTRODUCTION
The following section contains forward-looking statements about our business, operations, and financial performance based on current plans and estimates that involve risks, uncertainties, and assumptions, which could differ materially from actual results. Factors that could cause such differences are discussed in the sections of this Quarterly Report on Form 10-Q titled “Cautionary Statements Regarding Forward-Looking Statements” and Item 1A “Risk Factors.”
The discussion and analysis below focuses on significant or material items to the Company. To obtain a more comprehensive understanding of our financial condition, changes in financial condition, and results of operations, the following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q, as well as our audited consolidated financial statements and the related notes included in our 2025 Annual Report.
BUSINESS AND BASIS OF PRESENTATION
Our Business
ADT (or “we,” “our,” and “us”), provides security, interactive, and smart home solutions to consumer and small business customers in the U.S.
Our mission is to empower people to protect and connect what matters most with safe, smart, and sustainable solutions, delivered through innovative offerings, unrivaled safety, and a premium experience because we believe that everyone deserves to feel safe.
Basis of Presentation
We report our results as a single operating and reportable segment. All financial information presented in this section has been prepared in U.S. dollars in accordance with GAAP, excluding any non-GAAP measures, and includes the accounts of ADT Inc. and its wholly-owned subsidiaries. All intercompany transactions have been eliminated.
Results of our former Solar and Commercial businesses are presented within discontinued operations for current and historical periods, as applicable.
KEY PERFORMANCE INDICATORS
We evaluate our results using certain key performance indicators, including operating metrics such as recurring monthly revenue and gross customer revenue attrition, as well as GAAP total revenue and the non-GAAP measures Adjusted Earnings per Share (“Adjusted EPS”) and Adjusted EBITDA (“Adjusted EBITDA”), both from continuing operations.
Computations of our key performance indicators may not be comparable to other similarly titled measures reported by other companies.
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Certain operating metrics are approximated, as there may be variations to reported results due to certain adjustments we might make in connection with the integration over several periods of acquired companies that calculated these metrics differently or periodic reassessments and refinements in the ordinary course of business, including changes due to system conversions or historical methodology differences in legacy systems.
End-of-Period Recurring Monthly Revenue (“RMR”)
RMR is generated by contractual recurring fees for monitoring and other recurring services provided to our customers, including contracts monitored but not owned.
We use RMR to evaluate our overall sales, installation, and retention performance. Additionally, we believe the presentation of RMR is useful to investors because it measures the volume of revenue under contract at a given point in time, which is useful for forecasting future revenue performance as the majority of our revenue comes from recurring sources.
Gross Customer Revenue Attrition
Gross customer revenue attrition is defined as RMR lost as a result of customer attrition, net of dealer charge-backs and reinstated customers, excluding contracts monitored but not owned and self set-up/do-it-yourself (“DIY”) customers. Customer sites are considered canceled when all services are terminated. Dealer charge-backs represent customer cancellations charged back to the dealers because the customer canceled service during the charge-back period, which is generally thirteen months.
Gross customer revenue attrition is calculated on a trailing twelve-month basis, the numerator of which is the RMR lost during the period due to attrition, net of dealer charge-backs and reinstated customers, and the denominator of which is total annualized RMR based on an average of RMR under contract at the beginning of each month during the period, in each case, excluding contracts monitored but not owned and self set-up/DIY customers.
We use gross customer revenue attrition to evaluate our retention and customer satisfaction performance, as well as evaluate subscriber trends by vintage year. Additionally, we believe the presentation of gross customer revenue attrition is useful to investors as it provides a means to evaluate drivers of customer attrition and the impact of retention initiatives.
Total Revenue
Management and the Board use total revenue, which is calculated in accordance with GAAP, to evaluate the performance of employees (including members of management) and the Company as a whole, as well as to allocate resources. Refer to the section titled “Results of Operations—Revenue” for additional information.
Adjusted EPS
Adjusted EPS (from continuing operations) is a non-GAAP measure. Our definition of Adjusted EPS, a reconciliation of Adjusted EPS to diluted income (loss) from continuing operations per share (the most directly comparable GAAP measure), and additional information, including a description of the limitations relating to the use of Adjusted EPS, are provided under “Results of Operations—Non-GAAP Measures.”
Adjusted EBITDA
Adjusted EBITDA (from continuing operations) is a non-GAAP measure. Our definition of Adjusted EBITDA, a reconciliation of Adjusted EBITDA to income (loss) from continuing operations (the most directly comparable GAAP measure), and additional information, including a description of the limitations relating to the use of Adjusted EBITDA, are provided under “Results of Operations—Non-GAAP Measures.”
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TRENDS, UNCERTAINTIES, AND FACTORS AFFECTING OPERATING RESULTS
The information described herein could have a material effect on our business, financial condition, results of operations, cash flows, and key performance indicators.
Subscribers
As of March 31, 2026, we served approximately 6.1 million security monitoring service subscribers. Generally, a significant upfront investment is required to acquire new subscribers that in turn provide ongoing and predictable recurring revenue (RMR) generated from our monitoring services and other subscriber-based offerings. Although the economics of each installation may vary depending on the customer type, acquisition channel, and product and service offerings, we generally achieve revenue break-even in approximately two years.
New subscriber additions and customer attrition have a direct impact on our financial results, including revenue, operating income, and cash flows. A portion of our recurring subscriber base can be expected to cancel its service each year for a variety of reasons, including relocation, cost, loss to competition, or service issues, or we may disconnect service due to non-payment. A 100 basis point change in customer attrition typically has approximately a $40 million impact on recurring revenue on an annualized basis.
As of March 31, 2026, gross customer revenue attrition was 13.1%, as compared to 12.6% in the prior year, driven by higher non-payment disconnects slightly offset by fewer relocations and voluntary disconnects.
Relocations are sensitive to changes in the residential housing market, and fewer relocations generally lead to improvements in customer attrition, but fewer subscriber additions. Additionally, non-payment disconnects generally increase in a weaker macroeconomic environment. We may experience fluctuations in these or other trends in the future as changes in the general macroeconomic environment or housing market develop.
Revenue and Offerings
The mix, price, offerings, sales and distribution channel, and equipment ownership of transactions impacts our results. For example, our results are impacted by the mix of transactions accounted for under a Company-owned equipment model versus a customer-owned equipment model (referred to as outright sales), as there are different accounting treatments applicable to each model, as discussed in Note 2 “Revenue and Receivables.” Historically, the majority of professional installation transactions occurred under a Company-owned model. However, since the second quarter of 2024, a growing percentage of our direct channel new subscriber adds are outright sales in connection with the national launch of our ADT+ platform.
As a result, we have continued to experience an increase in both security installation, product, and other revenue and related costs due to the transition to our ADT+ platform, in which the equipment is sold outright to the customer. Currently, approximately 30% of new subscribers are outright sales. In early 2026, the Company refined its go-to-market approach for certain non-ADT+ residential transactions and transitioned such transactions to an outright sales model where equipment will be customer owned, which aligns with the equipment ownership model for ADT+ transactions. Accordingly, we expect this to continue to result in an increase in security installation, product, and other revenue and cost of revenue recognized in the statements of operations in subsequent periods.
The mix of professional installation solutions versus self set-up solutions may impact our results in future periods, as professional installation solutions typically have higher contractual fees than our self set-up solutions as a result of differences in pricing, offer tactics, and level of products and services. As we refine our go-to-market approach and explore additional sales channels, we may experience an increase in the proportion of ADT self set-up customers, which are considered outright sales. Although the DIY market typically has lower monthly recurring fees than our professional installations, we believe this approach will allow us to grow our subscriber base.
Changes in our recurring revenue base, including subscriber count, price escalations, or change in offerings, can also impact our results.
As of March 31, 2026, RMR was $359 million, as compared to $360 million in the prior year period, primarily reflecting lower recurring monthly revenue due to the sale of our multifamily business in October 2025 (the “Multifamily Divestiture”), partially offset by an increase in average prices.
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Macroeconomic and Other Trends and Uncertainties
We may also experience an increase in other costs associated with factors such as (i) offering a wider variety of products and services; (ii) providing a greater mix of interactive and smart home solutions; (iii) replacing or upgrading certain system components due to technological advancements, cybersecurity upgrades, software or hardware end-of-life or otherwise; (iv) supply chain disruptions or other impacts such as tariffs or trade restrictions; (v) inflationary pressures on costs such as materials, labor, and fuel including those related to the ongoing conflict in the Middle East; and (vi) other changes in prices, interest rates, or terms from our suppliers, vendors, or third-party lenders.
We are currently monitoring, and will continue to monitor, macroeconomic trends and uncertainties such as the ongoing global memory chip shortage, potential supply chain disruptions and fuel shortages stemming from the ongoing conflict in the Middle East, key components of inflation, the status and effects of recently implemented or threatened tariffs and other trade restrictions, as well as potential changes to these tariffs or the imposition of reciprocal or other tariffs or trade restrictions by other countries. In February 2026, the U.S. Supreme Court ruled that certain tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”) were unauthorized. However, the ruling did not establish a process or timing for any potential refunds. We have not recorded a receivable for any refund of IEEPA tariffs, and the amount of IEEPA tariff refunds that we ultimately recover may differ from the full amount we previously paid. In addition, subsequent actions by the U.S. government to impose tariffs under alternative authorities, along with the possibility of further changes in trade policy, continue to create uncertainty in the global trade environment.
Any of these may have negative consequences for our supply chain due to price increases from our vendors or suppliers or supply chain delays. At this time, we do not anticipate material negative impacts that cannot be mitigated through arrangements with our vendors and suppliers, price increases to our customers, or other actions but there is no guarantee that we will be able to successfully mitigate the negative effects of any such macroeconomic trends and uncertainties. We are also unable at this time to determine any future negative impacts from reduced consumer spending as a result of inflationary or other pressures or uncertainty that may result from the imposition of current or future tariffs or other trade restrictions.
As part of our response to changes or pressures in the current macroeconomic environment, we have been evaluating, and continue to evaluate, cost-saving opportunities such as leveraging technology, reducing headcount or our physical facilities footprint when appropriate, and reducing non-essential spend. While we have experienced some increase in costs as a result of inflation, we have, for the most part, been able to offset the rising costs through cost-saving opportunities, as well as price increases to our customers.
Origin AI Acquisition
In February 2026, we acquired Origin AI, a provider of patented AI‑enabled presence detection and ambient sensing technology. Origin AI’s technology uses artificial intelligence and proprietary algorithms to analyze ubiquitous radio frequency signals to detect and classify human presence and activity within the home or other premises without the use of cameras, audio, or wearable devices. This technology is expected to enhance our ability to improve alarm verification, reduce false alarms, and support new intelligent security and smart home use cases over time.
Total consideration transferred in connection with the Origin AI Acquisition was $164 million, of which we recognized $114 million of goodwill.
The Company does not expect a material impact to revenue or cost of revenue from the Origin AI Acquisition during 2026.
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RESULTS OF OPERATIONS
| Three Months Ended March 31, | |||||||||||||||||||||||||||||||||
(in thousands, except per share data or as otherwise indicated) | 2026 | 2025 | $ Change | ||||||||||||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||||||||||||
| Monitoring and related services | $ | 1,080,476 | $ | 1,083,104 | $ | (2,628) | |||||||||||||||||||||||||||
| Security installation, product, and other | 198,053 | 184,387 | 13,666 | ||||||||||||||||||||||||||||||
| Total revenue | 1,278,529 | 1,267,491 | 11,038 | ||||||||||||||||||||||||||||||
Cost of revenue (exclusive of depreciation and amortization shown separately below): | |||||||||||||||||||||||||||||||||
| Monitoring and related services | 155,690 | 157,850 | (2,160) | ||||||||||||||||||||||||||||||
| Security installation, product, and other | 87,165 | 82,272 | 4,893 | ||||||||||||||||||||||||||||||
| Total cost of revenue | 242,855 | 240,122 | 2,733 | ||||||||||||||||||||||||||||||
| Selling, general, and administrative expenses | 364,769 | 368,600 | (3,831) | ||||||||||||||||||||||||||||||
| Depreciation and intangible asset amortization | 345,486 | 339,517 | 5,969 | ||||||||||||||||||||||||||||||
| Operating income (loss) | 325,419 | 319,252 | 6,167 | ||||||||||||||||||||||||||||||
Interest expense, net | (98,381) | (120,879) | 22,498 | ||||||||||||||||||||||||||||||
| Other income (expense) | 426 | (4,864) | 5,290 | ||||||||||||||||||||||||||||||
| Income (loss) from continuing operations before income taxes | 227,464 | 193,509 | 33,955 | ||||||||||||||||||||||||||||||
| Income tax benefit (expense) | (58,113) | (51,032) | (7,081) | ||||||||||||||||||||||||||||||
| Income (loss) from continuing operations | 169,351 | 142,477 | 26,874 | ||||||||||||||||||||||||||||||
Income (loss) from discontinued operations, net of tax | (977) | (2,231) | 1,254 | ||||||||||||||||||||||||||||||
| Net income (loss) | $ | 168,374 | $ | 140,246 | $ | 28,128 | |||||||||||||||||||||||||||
| Diluted income (loss) from continuing operations per share of Common Stock | $ | 0.20 | $ | 0.16 | $ | 0.04 | |||||||||||||||||||||||||||
| Diluted weighted-average shares outstanding of Common Stock | 821,857 | 871,312 | (49,455) | ||||||||||||||||||||||||||||||
Key Performance Indicators: (1) | |||||||||||||||||||||||||||||||||
RMR (2) | $ | 358,899 | $ | 359,534 | $ | (635) | |||||||||||||||||||||||||||
Gross customer revenue attrition (percent) (2) | 13.1% | 12.6% | N/A* | ||||||||||||||||||||||||||||||
Adjusted EPS (3) | $ | 0.23 | $ | 0.21 | $ | 0.02 | |||||||||||||||||||||||||||
Adjusted EBITDA (3) | $ | 673,750 | $ | 660,801 | $ | 12,949 | |||||||||||||||||||||||||||
(1)Refer to the “—Key Performance Indicators” section for the definitions of these key performance indicators.
(2)Refer to the “—Factors Affecting Operating Results” section for additional details and comparison of current to prior period results.
(3)Refer to the “—Non-GAAP Measures” section for the definitions of these non-GAAP measures and reconciliations to the most comparable GAAP measures.
* Not applicable.
Period‑over‑period changes in income (loss) from continuing operations, including on a per share basis, are discussed through the analysis of the underlying GAAP components below:
Revenue
The three months ended March 31, 2026, as compared to the prior year period, primarily reflects:
•Monitoring and related services revenue (“M&S Revenue”): (i) lower recurring revenue of $7 million primarily driven by a decrease in volume, including the Multifamily Divestiture, of $28 million, partially offset by an increase in price of $20 million, and (ii) higher revenue of $4 million primarily attributable to an increase in time and materials billings.
•Security installation, product, and other revenue: higher installation revenue of $12 million primarily driven by a higher mix of professionally installed systems under the outright sales model in connection with our refined equipment ownership go-to-market approach.
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Cost of Revenue
The three months ended March 31, 2026, as compared to the prior year period, primarily reflects:
•Monitoring and related services costs (“M&S Costs”): a decrease in M&S Costs of $2 million primarily due to lower customer service and maintenance costs of $4 million partially offset by higher interactive fees of $2 million.
•Security installation, product, and other costs: an increase in installation and product costs of $5 million primarily due to a higher mix of professionally installed systems under the outright sales model discussed above.
Selling, General, and Administrative Expenses
The three months ended March 31, 2026, as compared to the prior year period, primarily reflects:
•a decrease in general and administrative costs of $27 million primarily as a result of a loss recovery from a legal settlement during the current period, partially offset by
•an increase in the allowance for credit losses of $19 million.
Depreciation and Intangible Asset Amortization
The three months ended March 31, 2026, as compared to the prior year period, primarily reflects:
•an increase in the amortization of customer contracts acquired under our authorized dealer program and from other third parties of $5 million and
•an increase in the depreciation of property, plant, and equipment of $5 million, partially offset by
•a decrease in depreciation of subscriber system assets of $5 million.
Interest Expense, Net
The three months ended March 31, 2026, as compared to the prior year period, primarily reflects a decrease in unrealized losses on interest rate swaps of $17 million, with the remaining change due to lower interest rates on our long-term debt.
Other Income (Expense)
The three months ended March 31, 2026, as compared to the prior year period, primarily reflects a loss on extinguishment of debt of $6 million recorded in the prior year period.
Income Tax Benefit (Expense)
The Company’s income tax expense for the three months ended March 31, 2026 was $58 million, resulting in an effective tax rate for the period of 25.5%. The effective tax rate primarily represents the federal statutory tax rate of 21.0% and a state tax rate, net of federal benefits, of 4.9%.
The Company’s income tax expense for the three months ended March 31, 2025 was $51 million, resulting in an effective tax rate for the period of 26.4%. The effective tax rate primarily represents the federal statutory tax rate of 21.0%, and a state tax rate, net of federal benefits, of 5.6%.
NON-GAAP MEASURES
To provide investors with additional information in connection with our results as determined in accordance with GAAP, we disclose the following non-GAAP measures. These measures are not financial measures calculated in accordance with GAAP, and should not be considered as a substitute for net income, income (loss) from continuing operations, operating income, or their respective per share amounts as applicable, or any other measure calculated in accordance with GAAP, and may not be comparable to similarly titled measures reported by other companies.
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Adjusted EPS
We define Adjusted EPS as diluted income (loss) from continuing operations per share adjusted for the per share amounts related to (i) share-based compensation expense; (ii) merger, restructuring, integration, and other items; (iii) impairment charges; (iv) unrealized (gains) or losses on interest rate swaps; (v) other non-cash or non-routine adjustments not necessary to operate our business; and (vi) the impact these items have on taxes.
The diluted weighted average shares outstanding used in Adjusted EPS is equal to diluted weighted average shares outstanding of Common Stock calculated in accordance with GAAP.
We believe Adjusted EPS is a benchmark used by analysts and investors in our industry to compare our performance against the performance of other companies, although this measure may not be directly comparable to similar measures reported by other companies. We believe the presentation of Adjusted EPS is useful to investors as it provides additional information about how our management evaluates the business, including the performance of employees (including members of management).
There are material limitations to using Adjusted EPS as it does not include certain significant items, including the adjustments discussed above, which directly affect our diluted income (loss) from continuing operations per share (the most comparable GAAP measure). These limitations are best addressed by considering the economic effects of the excluded items independently and by considering Adjusted EPS in conjunction with diluted income (loss) from continuing operations per share as calculated in accordance with GAAP.
The table below reconciles Adjusted EPS to diluted income (loss) from continuing operations per share of Common Stock:
| Three Months Ended March 31, | |||||||||||||||||||||||||||||||
| 2026 | 2025 | $ Change | |||||||||||||||||||||||||||||
Diluted income (loss) from continuing operations per share of Common Stock | $ | 0.20 | $ | 0.16 | $ | 0.04 | |||||||||||||||||||||||||
| Share-based compensation expense | 0.02 | 0.02 | — | ||||||||||||||||||||||||||||
Merger, restructuring, integration, and other | 0.01 | — | 0.01 | ||||||||||||||||||||||||||||
Interest rate swaps, net (1) | 0.01 | 0.03 | (0.02) | ||||||||||||||||||||||||||||
| Loss on extinguishment of debt | — | 0.01 | (0.01) | ||||||||||||||||||||||||||||
Other, net | — | — | — | ||||||||||||||||||||||||||||
Tax impact on adjustments (2) | (0.01) | (0.01) | — | ||||||||||||||||||||||||||||
Adjusted EPS (3) | $ | 0.23 | $ | 0.21 | $ | 0.02 | |||||||||||||||||||||||||
(1) Represents unrealized gains or losses on interest rate swaps presented in interest expense, net and other income (expense).
(2) Represents the tax impact on adjustments using the federal and state blended statutory rate.
(3) Amounts may not sum in this table due to rounding.
The increase in Adjusted EPS for the three months ended March 31, 2026, as compared to the prior year period, was primarily due to:
•$0.03 per share due to lower general and administrative costs and
•$0.01 per share due to a decrease in our diluted weighted average shares outstanding as a result of share repurchases, partially offset by
•$0.02 per share due to an increase in the allowance for credit losses.
The factors listed above exclude amounts that are outside of our definition of Adjusted EPS. Refer to the discussions above under “—Results of Operations” for further details.
Adjusted EBITDA
We define Adjusted EBITDA as income (loss) from continuing operations adjusted for (i) interest; (ii) taxes; (iii) depreciation and amortization, including depreciation of subscriber system assets and other fixed assets and amortization of dealer and other intangible assets; (iv) amortization of deferred costs and deferred revenue associated with subscriber acquisitions; (v) share-based compensation expense; (vi) merger, restructuring, integration, and other items; (vii) impairment charges; and (viii) other non-cash or non-routine adjustments not necessary to operate our business.
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We believe Adjusted EBITDA is useful to investors to measure the operational strength and performance of our business. We believe the presentation of Adjusted EBITDA is useful as it provides investors additional information about our operating profitability adjusted for certain non-cash items, non-routine items we do not expect to continue at the same level in the future, as well as other items not core to our operations. Further, we believe Adjusted EBITDA provides a meaningful measure of operating profitability because we use it for evaluating our business performance, making budgeting decisions, and comparing our performance against other peer companies using similar measures, although this measure may not be directly comparable to similar measures reported by other companies.
There are material limitations to using Adjusted EBITDA as it does not include certain significant items, including interest, taxes, depreciation and amortization, and other adjustments which directly affect our income (loss) from continuing operations (the most comparable GAAP measure). These limitations are best addressed by considering the economic effects of the excluded items independently and by considering Adjusted EBITDA in conjunction with income (loss) from continuing operations as calculated in accordance with GAAP.
The table below reconciles Adjusted EBITDA to income (loss) from continuing operations:
| Three Months Ended March 31, | |||||||||||||||||||||||||||||||
| (in thousands) | 2026 | 2025 | $ Change | ||||||||||||||||||||||||||||
Income (loss) from continuing operations | $ | 169,351 | $ | 142,477 | $ | 26,874 | |||||||||||||||||||||||||
| Interest expense, net | 98,381 | 120,879 | (22,498) | ||||||||||||||||||||||||||||
| Income tax expense (benefit) | 58,113 | 51,032 | 7,081 | ||||||||||||||||||||||||||||
| Depreciation and intangible asset amortization | 345,486 | 339,517 | 5,969 | ||||||||||||||||||||||||||||
| Amortization of deferred subscriber acquisition costs | 67,445 | 60,358 | 7,087 | ||||||||||||||||||||||||||||
| Amortization of deferred subscriber acquisition revenue | (89,595) | (88,871) | (724) | ||||||||||||||||||||||||||||
| Share-based compensation expense | 13,626 | 20,521 | (6,895) | ||||||||||||||||||||||||||||
Merger, restructuring, integration, and other (1) | 6,559 | 3,905 | 2,654 | ||||||||||||||||||||||||||||
Unrealized (gain) loss on interest rate swaps (2) | 3,709 | 4,032 | (323) | ||||||||||||||||||||||||||||
| Loss on extinguishment of debt | — | 6,443 | (6,443) | ||||||||||||||||||||||||||||
Other, net | 675 | 508 | 167 | ||||||||||||||||||||||||||||
Adjusted EBITDA | $ | 673,750 | $ | 660,801 | $ | 12,949 | |||||||||||||||||||||||||
(1) During 2026, primarily includes costs related to the Origin AI Acquisition.
(2) Represents unrealized gains or losses on interest rate swaps presented in other income (expense).
The increase in Adjusted EBITDA for the three months ended March 31, 2026, as compared to the prior year period, was primarily due to:
•a decrease in general and administrative costs of $27 million and
•higher installation revenue, net of the associated costs and commissions, of $5 million, partially offset by
•an increase in the allowance for credit losses of $19 million.
The factors listed above exclude amounts that are outside of our definition of Adjusted EBITDA. Refer to the discussions above under “—Results of Operations” for further details.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity and capital resources primarily consisted of the following:
| (in thousands) | March 31, 2026 | ||||
| Cash and cash equivalents | $ | 119,328 | |||
| Restricted cash and restricted cash equivalents | $ | 32,470 | |||
| Availability under First Lien Revolving Credit Facility | $ | 800,000 | |||
Uncommitted available borrowing capacity under 2020 Receivables Facility | $ | 117,392 | |||
Carrying amount of total debt outstanding, including finance leases | $ | 7,668,864 | |||
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Liquidity
We expect our ongoing sources of liquidity to include cash generated from operations, borrowings under our credit facilities, and the issuance of equity and/or debt securities as appropriate given market conditions. Our future cash needs are expected to include cash for operating activities including working capital, principal and interest payments on our debt, income tax payments, capital expenditures, expected dividend payments to our stockholders, potential share repurchases, and other business initiatives as they arise.
We are a highly leveraged company with significant debt service requirements and have both fixed-rate and variable-rate debt. We may periodically seek to repay, redeem, repurchase, or refinance our indebtedness, or seek to repurchase and retire our outstanding securities through cash purchases in the open market, privately negotiated transactions, a 10b5-1 repurchase plan, or otherwise, and any such transactions may involve material amounts. Cash outflows for interest payments are not consistent between quarters, with larger outflows occurring in the first and third quarters, and may vary as a result of our variable rate debt.
We believe our cash position, available borrowing capacity under our credit agreements, and cash provided by operating activities are, and will continue to be, adequate to meet our operational and business needs in the next twelve months, as well as our long-term liquidity needs.
Material Cash Requirements
There have been no significant changes to our material cash requirements, commitments and contingencies, or off-balance sheet arrangements from those disclosed in our 2025 Annual Report, except as discussed below.
Debt Principal
In April 2026, we redeemed the remaining outstanding balance of our First Lien Notes due 2026. Our next debt maturity will occur in August 2027 with respect to the remaining outstanding balance of our First Lien Notes due 2027. We intend, and believe that we will have the ability, to refinance or redeem these notes before or at maturity.
Share Repurchase Plans
In February 2026, our Board of Directors approved the 2026 Share Repurchase Plan, pursuant to which we were authorized to repurchase, through April 30, 2029, up to a maximum aggregate amount of $1.5 billion of shares of our Common Stock.
The 2026 Share Repurchase Plan allows us to purchase Common Stock, from time to time, in one or more open market or privately negotiated transactions, including pursuant to Rule 10b5-1 or Rule 10b-18 of the Exchange Act, or pursuant to one or more accelerated share repurchase agreements, subject to certain requirements and other factors. We are not obligated to repurchase any of our shares of Common Stock, and the timing and amount of any repurchases depends on legal requirements, market conditions, stock price, the availability of the safe harbor provided by Rule 10b-18 under the Exchange Act, alternative uses of capital, and other factors.
During the first quarter of 2026, we repurchased, and subsequently retired, 18 million shares of our Common Stock in the open market pursuant to Rule 10b5-1 and Rule 10b-18 of the Exchange Act under the 2026 Share Repurchase Plan in multiple transactions for a total of $116 million (or $6.57 per share).
As of March 31, 2026, there was $1.4 billion remaining under the 2026 Share Repurchase Plan.
In April 2026, we repurchased, and subsequently retired, 17 million shares of our Common Stock in the open market pursuant to Rule 10b5-1 and Rule 10b-18 of the Exchange Act under the 2026 Share Repurchase Plan in multiple transactions for a total of $114 million (or $6.92 per share). After these repurchases, we had $1.3 billion remaining under the 2026 Share Repurchase Plan.
Other Contractual Obligations
As of March 31, 2026, we continue to work to meet our commitment of $200 million of aggregate purchases under the Google Cloud Agreement Addendum. Refer to Note 12 “Commitments and Contingencies.”
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Cash Taxes
While we did not make any material cash payments during the three months ended March 31, 2026, we expect to make initial estimated federal and state tax payments in the second quarter of 2026, with subsequent payments scheduled for the periods they correspond to. The specific payment amounts may fluctuate each quarter based on our financial results and tax positions taken.
Dividends
On April 30, 2026, we announced a dividend of $0.055 per share to holders of Common Stock and Class B Common Stock of record on June 11, 2026, which will be paid on July 7, 2026.
Long-Term Debt
Significant changes and activity related to our long-term debt since our 2025 Annual Report are discussed below. Refer to Note 6 “Debt” for additional information.
First Lien Notes due 2026 Redemption
In April 2026, we redeemed the remaining outstanding balance of the First Lien Notes due 2026 at maturity for a redemption price of $75 million using cash on hand.
2020 Receivables Facility
In March 2026, we amended the agreement governing the 2020 Receivables Facility to extend the uncommitted revolving period to April 2026.
In April 2026, we amended the agreement governing the 2020 Receivables Facility to extend the uncommitted revolving period to April 2027, among other things.
Debt Covenants
As of March 31, 2026, we were in compliance with all financial covenant and other maintenance tests for all our debt obligations. We do not believe there is a material risk of future noncompliance with our financial covenant and other maintenance tests.
Cash Flow Analysis
The amounts and discussion below include cash flows from both continuing operations and discontinued operations, as appropriate, consistent with the presentation on the Statements of Cash Flows.
| Three Months Ended March 31, | |||||||||||||||||
| (in thousands) | 2026 | 2025 | $ Change | ||||||||||||||
| Net cash provided by (used in): | |||||||||||||||||
| Operating activities | $ | 638,093 | $ | 466,626 | $ | 171,467 | |||||||||||
| Investing activities | $ | (405,608) | $ | (258,259) | $ | (147,349) | |||||||||||
| Financing activities | $ | (189,227) | $ | (321,246) | $ | 132,019 | |||||||||||
Cash Flows from Operating Activities
The increase in net cash provided by operating activities, as compared to the prior year period, was primarily due to lower interest payments and the timing of certain payroll-related payments, as well as changes in assets and liabilities due to the volume and timing of other operating cash receipts and payments with respect to when the transactions are reflected in earnings. Refer to the discussions above under “—Results of Operations” for further details.
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Cash Flows from Investing Activities
The increase in net cash used in investing activities, as compared to the prior year period, was primarily due to:
•outflows of $164 million related to the Origin AI Acquisition, partially offset by
•a decrease in subscriber system assets expenditures of $15 million primarily due to our continued transition to an outright sales model.
Cash Flows from Financing Activities
The decrease in net cash used in financing activities, as compared to the prior period, was primarily due to:
•lower share repurchases of $281 million, partially offset by
•a reduction in net borrowings on long-term debt of $137 million primarily related to the issuance of the First Lien Term Loan B-2 due 2032 partially offset by the partial redemption of the First Lien Notes due 2026 in the prior year.
CRITICAL ACCOUNTING ESTIMATES
We disclosed our critical accounting estimates in our 2025 Annual Report, which include estimates prepared in accordance with GAAP that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the financial condition or results of operations.
Critical accounting estimates are based on, among other things, estimates, assumptions, and judgments made by management that include inherent risks and uncertainties. Our estimates are based on relevant information available at the end of each period. Actual results could differ materially from these estimates under different assumptions or market conditions.
There have been no material changes to our critical accounting estimates as disclosed in our 2025 Annual Report.
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains certain information that may constitute “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. While we have specifically identified certain information as being forward-looking in the context of its presentation, we caution you that all statements contained in this Form 10-Q that are not clearly historical in nature, including statements regarding the ADT Solar Exit; the Commercial Divestiture; the expected benefits of the Commercial Divestiture and ADT Solar Exit including that the costs of the ADT Solar Exit may exceed our best estimates; the expected effects of the One Big Beautiful Bill Act on cash taxes; the anticipated changes to our internal control over financial reporting in 2026 resulting from ongoing information technology system implementations; the integration of strategic bulk purchases of customer accounts and other acquired businesses; any repurchases of our common stock under an authorized share repurchase plan; our ability to refinance or reduce debt or improve leverage ratios, or to achieve or maintain our leverage goals; anticipated financial performance; management’s plans and objectives for future operations; the expected benefits of the Origin AI Acquisition, including the expected integration of Origin AI’s technology into the Company’s products and services; the successful development, commercialization, and timing of new or joint products; the successful development, commercialization and integration of artificial intelligence (“AI”) technologies into the Company’s products, services, and operations; business prospects; outcomes of regulatory proceedings; market conditions; our ability to deploy our business continuity and disaster plans and procedures to successfully respond to catastrophic events; 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 innovative offerings; the successful conversion of customers who continue to utilize outdated technology; the current and future market size for existing, new, or joint products; any stated or implied outcomes with regards to the foregoing; and other matters. Forward-looking statements are contained principally in the sections of this report entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Without limiting the generality of the preceding sentences, any time we use the words “ongoing,” “expects,” “intends,” “will,” “anticipates,” “believes,” “confident,” “continue,” “propose,” “seeks,” “could,” “may,” “should,” “estimates,” “forecasts,” “might,” “goals,” “objectives,” “targets,” “planned,” “projects,” and, in each case, their negative or other various or comparable terminology, and similar expressions, we intend to clearly express that the information deals with possible future events and is forward-looking in nature. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking.
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Particular uncertainties that could cause our actual results to be materially different than those expressed in our forward- looking statements include, without limitation:
•our ability to retain and hire key personnel and to maintain relationships with customers, suppliers, and other business partners;
•risks related to the Commercial Divestiture and ADT Solar Exit, including our business becoming less diversified and the possible diversion of management’s attention from our core business operations;
•our ability to keep pace with rapid technological changes and other industry changes;
•risks related to the expansion and further development of our next-generation platform and our efforts to migrate our information technology infrastructure, including our customer relationship management and enterprise resource planning systems, to the cloud;
•our ability to effectively implement our strategic partnership with or utilize any of the amounts invested in us by Google;
•the impact of supply chain disruptions;
•
Recent insider activity
| Date | Insider | Role | Action | Shares | Price | Value |
|---|---|---|---|---|---|---|
| 2026-05-29 | Likosar Jeffrey | Pres Corp Dev & Trans. & CFO | Buy | +15,000 | $6.75 | $101,250 |
| 2026-05-14 | Miller Kimberly | EVP, CMO & Comm. Officer | Buy | +3,625 | $6.91 | $25,049 |
| 2026-05-12 | Ahmad Fawad | EVP, Chief Oper and Cust. Off. | Buy | +7,500 | $6.75 | $50,625 |
| 2026-05-11 | Khan Omar | EVP, Chief Business Officer | Buy | +7,280 | $6.88 | $50,080 |
| 2026-05-08 | Houston Daniel Joseph | Director | Buy | +36,450 | $6.87 | $250,412 |
Source: SEC Form 4 filings.
Next expected filings
- ~2026-11-03 10-Q expected by 2026-11-11 (in 100 days)
- ~2027-03-02 10-K expected by 2027-03-02 (in 219 days)
- ~2027-04-29 10-Q expected by 2027-05-07 (in 277 days)
- ~2027-07-23 10-Q expected by 2027-07-31 (in 362 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-07-02 424B7 424B7
- 2026-05-28 8-K Material Agreement Entered; Material Financial Obligation; Shareholder Vote Results; Financial Statements and Exhibits
- 2026-05-08 8-K Officer/Director Change; Bylaws/Articles Amended; Other Events; Financial Statements and Exhibits
- 2026-05-05 424B7 424B7
- 2026-04-30 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
- 2026-04-30 10-Q Quarterly Report
- 2026-04-24 8-K Other Events
- 2026-04-14 DEF 14A Proxy Statement
- 2026-03-02 10-K Annual Report
- 2026-03-02 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
- 2025-11-04 10-Q Quarterly Report
- 2025-11-04 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
- 2025-10-28 8-K Material Agreement Entered; Material Financial Obligation; Other Events; Financial Statements and Exhibits
- 2025-10-15 8-K Material Agreement Entered; Material Financial Obligation; Financial Statements and Exhibits
- 2025-09-30 8-K Other Events; Financial Statements and Exhibits