ADT Q3 Revenue Rises 4% as EBITDA Margin Narrows

ADT Inc. (NYSE: ADT) reported higher third-quarter 2026 revenue and adjusted earnings per share as stronger installation and product sales offset a decline in monitoring revenue. Profitability came under pressure, however, as technology investments and a shift in revenue mix contributed to lower adjusted EBITDA and a narrower margin.

Revenue for the quarter ended September 30 rose 4% year over year to $1.349 billion. Security installation, product and other revenue increased 32% to $265 million, driven primarily by a greater mix of outright professional-installation sales and higher average prices. Those gains were partially offset by lower volume and the effect of the prior-year Multifamily Divestiture.

Monitoring and related services revenue, the company’s largest revenue stream, declined 1% to $1.084 billion. ADT nevertheless reported an annualized recurring monthly revenue base of about $4.3 billion.

GAAP income from continuing operations increased 7% to $153 million, while diluted GAAP earnings from continuing operations rose to $0.20 per share from $0.17. Net income was $151 million, up 4%.

Adjusted EBITDA declined 2% to $665 million, and adjusted EBITDA margin narrowed to 49.3% from 52.1%. ADT attributed the EBITDA performance in part to higher general and administrative costs, including technology investments, partly offset by higher installation revenue.

Adjusted income from continuing operations fell to $176 million from $187 million, but adjusted EPS increased 4% to $0.24. The company said share repurchases benefited per-share results.

Cash Flow and Capital Position

Adjusted free cash flow including interest-rate swaps increased 4% to $217 million in the quarter. GAAP operating cash flow was $440 million, compared with $480 million a year earlier.

For the first nine months of 2026, adjusted free cash flow including swaps rose 46% to $1.037 billion. ADT cited lower cash taxes and working-capital management as contributors to cash generation. Year-to-date revenue increased 2% to $3.940 billion, adjusted EBITDA was nearly unchanged at $2.009 billion, and adjusted EPS rose 6% to $0.71.

ADT returned $748 million to shareholders through dividends and share repurchases during the first nine months. Net leverage stood at 2.7 times adjusted EBITDA at September 30, compared with 2.8 times a year earlier. Net debt declined to $7.288 billion from $7.455 billion, while cash and cash equivalents increased to $228 million from $63 million.

Subscriber Metrics Reflect Divestiture and Acquisition Mix

ADT ended the quarter with 6.0 million subscribers, down 5% year over year, while end-of-period recurring monthly revenue including wholesale customers declined 1% to $360 million. The company said both decreases primarily reflected the Multifamily Divestiture completed on October 1, 2025.

Gross recurring monthly revenue additions declined 3% to $12.1 million, and gross unit additions fell 7% to 195,000. Direct unit and recurring revenue additions improved from the prior year, according to the presentation, but were offset by fewer dealer-generated additions and bulk account purchases.

Gross customer revenue attrition was 13.1%, up 10 basis points. ADT said non-payment cancellations kept attrition elevated, partly offset by fewer voluntary disconnections. Last-12-month revenue payback remained at 2.3 years, and net cash subscriber acquisition costs were unchanged at $355 million.

Strategic Priorities and Risks

ADT’s presentation emphasized continued investment in technology and home-intelligence capabilities. Its forward-looking priorities include expanding ADT+ and ADT Blu, integrating Origin AI’s presence-sensing technology, scaling do-it-yourself offerings through retail and e-commerce channels, and deploying artificial intelligence across customer interactions and operations.

The company also identified substantial uncertainty surrounding its proposed merger with Thrive Holdings, announced October 29, 2026. Risks include delays or failure to obtain stockholder and regulatory approvals, unmet closing conditions, competing proposals, litigation, potential termination fees and disruption to employees, counterparties or operating performance.

Other disclosed risks include integrating Origin AI, executing technology initiatives, retaining and expanding the customer base, converting customers using older technology, cybersecurity incidents, changes in consumer spending and regulation, dependence on suppliers and partners, and the revenue and cost effects of a greater mix of outright equipment sales. ADT also continues to face risks associated with its former commercial and residential solar operations, which are classified as discontinued operations under GAAP.