ADT sees slight increase in total revenues for 2014

Nov. 12, 2014
Company announces financial results for Q4, full year 2014

ADT on Wednesday announced its financial results for the fourth quarter and full year of 2014, both of which were slight improvements over 2013. 

According to a statement, the company’s total revenue for 2014 was $3.4 billion, a year-over-year increase of 3 percent. Recurring revenue was $3.2 billion, up 3.7 percent compared to the same time period last year. ADT also turned in a strong fourth quarter with total revenues of $883 million, which was an increase of 4.4 percent compared to the same time period last year. Recurring revenue, which made up 93 percent of total revenues for the quarter, was $819 million, up 5.4 percent compared to the same time period last year. However, the company's net income dropped by more than 14 percent for the quarter to $82 million from $96 million for the same quarter in 2013. For the year, the company's net income fell by over 27 percent to $304 million in 2014 from $421 million in 2013.     

ADT attributed the recurring revenue growth it saw in Q4 primarily to an increase in the company’s organic average revenue per customer, which increased 3.7 percent over last year to $43.32, and the consolidation of its previously announced acquisition of Reliance Protectron for 11 weeks in the quarter.

Additionally, ADT’s said that it’s EBITDA (earnings before interest, taxes, depreciation, and amortization) before special items increased by $77 million to $1.8 billion. Excluding special items, ADT’s diluted earnings per share for the year was $2.02 compared to $1.84 in 2013.

"We ended the year with a solid quarter, consistent with our most recent guidance, positioning us to drive profitable growth in the year ahead," Naren Gursahaney, CEO of ADT, said in the statement. "I am proud of how our team has responded to the competitive landscape, while continuing to leverage ADT's competitive advantages to deliver a great customer experience and create long term value for our shareholders.”

Some of the other highlights from the company’s Q4 and 2014 financial results included:

ADT Pulse customer base grows to over one million subscribers - The company continued to extend its position as a leading provider of monitored interactive home automation solutions, achieving strong growth in its ADT Pulse platform. In the company’s residential direct channel, approximately 70 percent of new customers purchased a Pulse security system, and upgrade units more than doubled from a year ago. Total ADT Pulse surpassed the one millionth customer milestone and now make up 16 percent of ADT's total customer base.

Attrition reduction initiatives leading to improved customer retention - The majority of customer attrition is driven by relocations associated with the housing recovery as well as non-pay customers. ADT continued to take action to reduce customer attrition by completing its roll out of tighter credit screening policies and implementing other non-pay initiatives, strengthening resale efforts, customer loyalty programs, and driving increased penetration of ADT Pulse automation services, which currently exhibits better retention characteristics. These actions, along with a more stable housing market, drove improvements resulting in revenue attrition in the quarter of 13.5 percent -- a 40 basis point improvement sequentially and year-over-year, and unit attrition the company's residential and small business channels of 13.2 percent -- a 30 basis point improvement sequentially and 10 basis points below 2013.

Increases in dealer channel production surpasses prior year level - Aligned with a key priority to improve productivity in the dealer channel, the company took steps to strengthen the quality and output of this channel.

     - Customer adds from the dealer channel grew by 20 percent sequentially and 17 percent from the fourth quarter last year. ADT dealer production, excluding Protectron, rose 7 percent sequentially and 5 percent from the      fourth quarter last year. 

     - The Company expanded its dealer network and drove a 47 percent take rate in ADT Pulse units in the quarter, up from 23 percent in the comparable period last year.

Expanding presence in business interactive security and automation - The company is executing on growth initiatives in the small business and mid-size commercial space.

     - Following the expiration of the non-compete provisions with Tyco, the company re-branded its Small Business channel as ADT Business, with an expanded focus into the mid-size commercial space.

     - ADT Pulse take rate in the small business channel continued to improve as 46 percent of new small business customers added during the quarter adopted Pulse.

     - ADT expanded its video surveillance and analytics offering to include both cloud-based and on-site secure storage solutions, providing small business owners with enhanced visibility into the security of their business            premises.

Forging new partnerships to achieve future vision - ADT continued to build out its strategic partnerships as it looks to expand beyond its strength in managing and protecting physical assets to protecting digital assets and protecting its customers outside of the home.

     - The company announced that it will begin marketing its products and services at Best Buy, creating a strong retail presence for ADT in the U.S.

     - ADT also announced a new relationship with IFTTT, a service that enables consumers to create powerful connections with one simple statement - if this then that. The partnership will enhance the ADT Pulse home                  automation experience as ADT and IFTTT are planning to test a beta version of an ADT Pulse Channel on IFTTT, connecting a customer's ADT Pulse-enabled home with more than 100 existing channel partners. Whether it's      adjusting the thermostat in reaction to local weather conditions, or arming the security system based on users' GPS data, an ADT Pulse Channel on IFTTT could enable users to put many aspects of their home on auto-            pilot.

Completed Reliance Protectron acquisition positioning Canadian operations for growth - The company completed its acquisition of Reliance Protectron, expanding and strengthening its position in Canada. ADT has begun integrating Protectron's operations and customer base, which includes approximately 370,000 high-quality residential and commercial customers (excluding approximately 30,000 wholesale contract monitoring accounts).