ADT Inc. Q1 FY2026 earnings call

Jim DeVries mentioned ADT's strong start with key financial highlights like adjusted free cash flow and earnings per share. He also discussed strategic initiatives: on product technology, ADT Plus platform gains traction, with ~30% of new customer additions including ADT+; acquired Origin AI for ambient intelligence; on service excellence, deploying AI powered virtual agents to improve service and lower costs, net promoter score lifted; on customer acquisition, launched ADT Blue for DIY-oriented customers, expanding e-commerce, and rationalizing marketing spend.

ADT delivered a strong start to the year. Adjusted free cash flow, including swaps, was at $414 million, and adjusted earnings per diluted share was 23 cents up 10 percent year-over-year. Our durable recurring monthly revenue was $359 million flat versus prior year. Gross revenue attrition remained at 13.1 percent, and our revenue payback period was 2.3 years.

Full-year 2026 outlook: expected very strong adjusted free cash flow growth of approximately 20% and revenue and adjusted EPS to be approximately flat to last year. Second quarter expected revenue and EPS to be slightly lower than the first quarter, due primarily to higher advertising spending with the ADT Blue Launch, along with other initiative investments.

Discussed risks include potential impact of changes in customer acquisition cost, credit standards adjustments affecting non-pay activity, and market changes influencing subscriber economics.

Q: Thanks for taking my question. As you have improved the efficiency in the overall go-to-market approach, you talked about several things that you've worked on and also increased your upfront revenues that you're getting on these installation. How do we think about the customer acquisition cost trending over the next three to five years and the benefit to the free cash flow from that?

A: Yeah, thanks, Ashish. Jeff, we think there's meaningful opportunity We for some time have been focused on reducing our cost of subscriber acquisition, including especially for more installation revenue as customers buy more comprehensive systems. What we're focused on, especially this year, is go-to-market efficiency. And there's several things we could highlight, but one I will highlight specifically is the transition as we launch our ADT Blue platform to ADT e-tail type channels, which we believe will be more efficient methods of adding subscribers. And then the other that Jim alluded to in his prepared remarks is transitioning away from some of our highest cost lead sources and higher cost channels. And we think there's meaningful opportunity there over the coming years, which is reflected in the long range guidance we put out where we said we were targeting getting to revenue payback more like two times or lower.