ADT adds 100,000 customers in fiscal 2013 and its Devcon buy boosts its RMR, but attrition climbs to 13.9 percent

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11/20/2013

Just about one year after The ADT Corp. split from Tyco International and became a stand-alone, publicly traded company, the company reported today that its RMR climbed 4.7 percent in Q4 and that the rise was helped by its acquisition of Devcon Security this summer.

Boca Raton, Fla.-based ADT, which officially became independent Sept. 28, 2012, reported its Q4 and fiscal year 2013 results today. It added 100,000 subscribers in 2013, bringing its total customer based to 6.5 million, the company said.

ADT also reported average revenue per user (ARPU) had climbed to $40.31, an increase of 3.7 percent, and said that helped increase RMR. The company also said its ADT Pulse overall take rate was at 32 percent in Q4, up from 13 percent last year due to new customers and price escalations to existing ones.

In the earnings call, ADT CEO Naren Gursahaney said, "We recently passed the 500,000 mark with Pulse customers. Just to put that into perspective for you, if Pulse was a stand-alone business, it would be the sixth largest security provider in North America. While this a major milestone for us, it still only represents about 8% of our total customer base, so we still have a tremendous opportunity to further grow our Pulse customer base."

Gursahaney also said that in Q4, "Net attrition increased by 10 basis points sequentially and 40 basis points year-over-year to 13.9 percent, with more than 100 percent of the increase attributable to higher relocation disconnects as a result of the continued recovering in the housing markets." The company is launching new programs to address attrition, which it plans to announce soon, he said.

The company’s revenue increased in Q4 by 4 percent to $846 million from $812 million, higher than the $843.8 million analysts expected. EBITDA was $431 million in Q4,  up 7.5 percent compared to the previous year.

Much of ADT’s total revenue is recurring revenue, the report said. RMR was $777 million in Q4. The company also said small business RMR growth for fiscal 2013 was 7 percent, up from 3 percent in 2012.

Just before its Nov. 20 earnings report, ADT announced this week it was defending its turf by suing Utah-based Vision Security for the second time over Vision’s alleged deceptive sales practices. The new lawsuit comes shortly after Vision and Security Networks, of which Vision is an affiliate, “settled with ADT for $2.2 million and agreed to a permanent injunction [from] engaging in similar practices,” according to an ADT news release.

Vision told me it denies ADT's allegations and intends to fight them.

The AP reported ADT’s shares closed at $42.81 yesterday, Nov. 19. Shares are down 8 percent for the year to date, the AP said.

Gursahaney predicted positive results for fiscal 2014, with revenues and RMR climbing 4 percent to 5 percent. "I'm confident the momentum we have built, coupled with the improvement programs we have implemented to address our challenges, will position us for continued revenue growth and operational improvements in 2014," he said.

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