ADT Raises Outlook as Cash Flow Growth Outpaces Revenue
Adjusted free cash flow rose 48% to $406 million as subscriber-acquisition spending declined.
ADT Inc. (ADT), the security and smart-home services provider, raised its 2026 outlook after second-quarter revenue growth accelerated even as profitability weakened.
Revenue rose 2% from a year earlier to $1.312 billion, accelerating from 1% growth in the first quarter. Adjusted earnings were $0.23 a share, unchanged sequentially as share repurchases reduced the diluted share count.
Installation, product and other revenue supplied the growth, increasing 17% to $230 million as ADT sold a greater mix of professionally installed systems outright. Monitoring and related-services revenue declined 1% to $1.082 billion, partly reflecting the October 2025 divestiture of the multifamily business.
Higher costs weighed on the top-line improvement. GAAP income from continuing operations fell 8% to $155 million, and adjusted income declined 6% to $180 million, reversing increases in both measures during the first quarter. Operating income dropped 8% to $316 million as selling, general and administrative expenses rose 8% and total cost of revenue increased 5%.
Adjusted earnings before interest, taxes, depreciation and amortization were nearly flat at $671 million, compared with $674 million a year earlier. The adjusted EBITDA margin narrowed to 51% from 52%, and the operating-income margin fell to 12% from 13%.
Operating cash flow increased 18% to $666 million, extending a sequential climb from $374 million in the fourth quarter and $638 million in the first. Cash generation was driven by lower cash taxes, working-capital discipline and reduced subscriber-acquisition spending. Purchases of dealer-generated and bulk accounts fell to $137 million from $224 million, while subscriber-system spending declined to $79 million from $104 million.
Customer attrition held at 13.1% from the first quarter and increased from 12.8% a year earlier. Revenue payback remained 2.3 years, while recurring monthly revenue edged up sequentially to $360 million and stayed 1% below the year-earlier level. ADT also introduced the self-installed ADT Blu system with optional professional monitoring and expanded distribution through channels including Amazon.
ADT now projects approximately 30% growth in adjusted free cash flow including swaps, alongside roughly 2% growth in both revenue and adjusted earnings a share. The company returned $523 million to shareholders during the quarter, including $478 million of repurchases, as Apollo fully exited its stake through a secondary offering.