ADT (ADT -2.65%), a leading provider of security, automation, and smart home solutions for residential and small business customers, posted better-than-expected results in its Q2 2025 earnings release on July 24, 2025, covering the period ending June 2025. The headline numbers saw adjusted EPS at $0.23 versus estimates of $0.20, and GAAP revenue clocking in at $1,287 million, ahead of the $1,276.39 million consensus. These results reflect a non-GAAP EPS beat of 15.0% and a modest revenue beat of under 1% (GAAP). Quarterly performance was marked by resilient recurring revenue, efficiency improvements in cash generation, dividend and buyback activity, and incremental progress in key customer metrics, though some underlying pressure points remain.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $0.23 | $0.20 | $0.17 | 35% |
| Revenue | $1,287 million | $1,276.39 million | $1,205 million | 7% |
| Adjusted EBITDA | $674 million | $629 million | 7% | |
| Net Cash Provided by Operating Activities | $564 million | $563 million | 0.2% | |
| Adjusted Free Cash Flow (including interest rate swaps) | $274 million | $251 million | 9% |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Business Overview and Strategic Focus
ADT operates in the security and smart home industry, offering monitoring, automation, and professional installation to over 6 million residential and small business customers. Its core business centers around recurring monitoring revenues, technology-rich security products, and comprehensive service bundles.
In recent years, the company strategically exited its commercial and solar segments to focus on its residential and small business markets. These moves enable ADT to streamline operations, deploy capital more efficiently, and sharpen its competitive positioning. Partnerships with firms such as Google have been critical, integrating advanced smart home devices into ADT's platform, while remaining attentive to debt management and customer retention as key drivers of future success.
Quarter Highlights: Metrics, Innovation, and Strategy
The second quarter saw several standout metrics and operational milestones. Revenue (GAAP) increased 7% from the prior year period, driven by monitoring and related services revenue growth and strong installation and product sales (up 44% GAAP). Installation and product revenue (GAAP) surged 44%, reflecting growth in professionally installed smart home systems and higher average prices as more customers adopted the ADT+ platform, a unified smart home app and ecosystem.
Recurring monthly revenue (RMR), a key metric for subscription-based businesses, reached $363 million at quarter-end, up 2%. Management pointed to a “record-high recurring monthly revenue” of $363 million. although growth in this area remains slow. Customer attrition, or the rate at which customers leave, improved marginally to 12.8%, down from 12.9% for the trailing twelve months ended Q2 2025, with management targeting long-term improvement toward the low 12 % or even high 11 % range. Revenue payback, which measures how quickly ADT recoups its customer acquisition investment, ticked up to 2.3 years from 2.2 years.
On the technology front, ADT expanded the ADT+ smart home platform and launched products like the Yale Assure Touch smart lock, featuring fingerprint recognition, which integrates directly into the platform. The company’s partnership with Google continued to grow, with over 1 million Nest Aware smart home monitoring subscriptions now active. Over half of all customer service requests are now handled virtually using remote assistance, and AI-powered agents have been rolled out to automate routine customer queries, which is expected to yield operational savings beginning in 2026.
Capital allocation remained a theme, with $143 million returned to shareholders through share repurchases ($96 million) and dividends ($47 million). During the first half of 2025, total capital returns reached $589 million. Debt levels improved modestly as ADT reduced its net leverage ratio (non-GAAP) to 2.8x as of June 30, 2025 from 2.9x at December 31, 2024, and the redemption of near-term notes. A significant account acquisition occurred, with approximately 50,000 customer accounts added for $89 million.
Looking Forward: Guidance and Key Priorities
Management reiterated its 2025 full-year financial outlook. Guidance remains unchanged for FY2025 on revenue ($5,025–$5,225 million), adjusted EBITDA ($2,650–$2,750 million), and adjusted free cash flow ($800–$900 million), while adjusted EPS guidance was slightly raised to $0.81–$0.89 to reflect share buybacks. No new or revised guidance was provided on potential impacts from macroeconomic changes.
For the next few quarters, investors will want to watch customer attrition rates, recurring monthly revenue (RMR) growth, and progress on revenue payback. ADT’s margin management, customer retention strategies, technological innovation through its ADT+ platform, and continued debt reduction will be central to sustaining its financial health. The quarterly dividend was maintained at $0.055 per share, with no change from previous quarters.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
