ADT Reports $300M Q1 Net Loss on Improved Total Revenues
BOCA RATON, Fla. — ADT (NYSE: ADT ) on Thursday reported a net loss of $300 million in its first quarter, compared to $66 million during the same period the prior year. The company had total revenues of $1.37 billion, a 10% increase from the $1.24 billion posted during the prior-year period.
ADT said it had a per-share quarterly loss of 40 cents. Losses, adjusted for non-recurring costs, amounted to 9 cents per share. The company expects full-year revenue in the range of $5 billion to $5.3 billion.
Adjusted EBITDA of $539 million was down from $621 compared to the prior-year period. The decline was primarily attributed to expenses related to the Defenders acquisition , along with the sale of the company’s Canadian operations in Q4 2019 , which previously amounted to approximately 4% of total revenue and adjusted EBITDA.
During an earnings call with investors on Thursday, CFO Jeffrey Likosar said another factor creating downward pressure on adjusted EBITDA was the launch of the company’ consumer financing program and the transitioning of many residential transactions to outright sales.
“Defenders transactions are also of an outright sales nature. This differs from ADT’s historical ADT-owned model and therefore, leads to the recognition of higher installation revenue and the associated costs,” he explained.
Likosar cited free cash flow before special items remained robust at $173 million, which was stronger than Q1 of 2019 despite more than $65 million in higher cash interest due to the timing of the company’s debt coupons. He said an important component of ADT’s free cash flow growth was efficiency in net subscriber acquisition costs, which were down year-over-year.
Related: ADT President and CEO Jim DeVries Diagnosed With COVID-19
The company reported its trailing 12-month revenue payback improved to 2.3 years from 2.4 years. Trailing 12-month gross customer revenue attrition was 13.5%, an increase of 20 base points. The increase is primarily due to a higher level of dealer disconnects, partially offset by a lower level of direct residential disconnects.
During the earnings call, President and CEO Jim DeVries said the company had a strong first quarter adding new customers, resulting in more subscribers at the end of Q1 than the company had at the beginning of the year.
“This is the first net adds in any quarter for ADT since 2015. Along with unit adds, our recurring revenue, or RMR additions, were also strong and brought our quarter-end RMR balance to $339 million, up over $6 million sequentially from the fourth quarter,” he said.
Resilient Business Model
DeVries said relocations drive about one-third of the company’s attrition. Because the rate of relocations has decreased during the coronavirus pandemic, ADT’s April retention was better than its internal budget, he said.
In the time since the pandemic resulted in...