2023 Q4 earnings call sees a slimmed-down ADT eyeing growth in 2024

BOCA RATON, Fla. – Following a year fraught with challenges for most companies, ADT enters 2024 leaner and hungry as it refocuses on its core business.

On Feb. 28, 2024, ADT held its fourth quarter (Q4) 2023 earnings conference call to discuss both its financial results and its direction as it enters 2024 lighter after divesting itself of its commercial business and discontinuing its ADT Solar division.

ADT provided a number of highlights for both the quarter and the year, noting that in Q4 the company saw total revenue of $1.2 billion with end-of-period recurring monthly revenue (RMR) up 4% to $353 million ($4.2 billion on an annualized basis). They also boasted a consumer and small business (CSB) revenue of $1.2 billion, up 5% and segment Adjusted EBITDA of $627 million, up 8% among others. For the year of 2023 they showed a GAAP loss from continuing operations of $65 million, or $(0.07) per diluted share, which includes $511 million in Solar segment goodwill impairment charges.

“2023 was a pivotal year for ADT, and we delivered solid performance, invested for the future, reshaped our portfolio and meaningfully improved our capital structure,” ADT President and CEO Jim DeVries told participants of the earnings call. “With the divestiture of our commercial business and the decision to exit residential solar we have simplified our business model and focused on our consumer-oriented core security and smart home business. Our remaining business serves a large and growing market and we are the proven industry leader with durable customer relationships that generate substantial and significant cash flows.”

DeVries highlighted ADT’s $2.1 billion debt reduction during 2023 and the recent announcement of a 57% increase in their dividend and a $350 million share repurchase program authorization. The fourth quarter also saw a strategic customer portfolio acquisition for under $90 million. DeVries said that this bulk account acquisition was complementary to ADT’s existing customer footprint and was comprised of 57,000 subscribers.

The CEO also went on to highlight the continuing development of its ADT+ consumer app that he said forms a primary set of initiatives during 2024 centered on methodically rolling out a new ecosystem of customer offerings. The platform is slated to further leverage the partnership between ADT and Google Nest in the growing markets of camera and video analytics.

“The improved camera take rates contributed to approximately $1400.00 of install revenue per new customer during this past year,” DeVries said. “It has also improved customer satisfaction with higher Net Promoter scores for customers with Google devices exceeding the rest of our customer base. In addition to our new offerings, we continue to make substantial progress in improving our operating efficiencies and customer experience.”

As an example, the CEO highlighted their virtual assistance program launched in 2022. DeVries said that the service has crossed a threshold where ADT is closing 50% of service tickets virtually versus the alternative of rolling a truck. Moreover, he said ADT had broadened its relationship with Google beyond the nest hardware with a focus on efficiency and customer experience utilizing Google's AI technology platform to explore several opportunities across the business. With early efforts focused on call center operations.

“ADT delivered solid results at our core, invested for the future, reshaped our portfolio, and meaningfully improved our capital structure,” DeVries said in concluding remarks. “We’ve got good momentum in the business, great catalysts for growth, and we’re looking forward to a strong 2024.”

He went on to extend his appreciation to ADT employees for their work during 2023. The full financial results as well as the earnings call in its entirety can be found online at investor.adt.com.