ADT executives used the company’s second-quarter earnings call on Thursday to outline progress on three strategic priorities for 2026: product technology, service excellence and customer acquisition efficiency improvement, while reporting continued cash generation and modest revenue growth.

The company reported second-quarter revenue of $1.3 billion, up 2% year over year, with end-of-period recurring monthly revenue (RMR) of $360 million. Adjusted free cash flow totaled $406 million, an increase of 48% from the same quarter last year, leading the company to modestly raise its full-year outlook.

“We delivered a solid second quarter with continued strength in cash flow and disciplined execution across the business,” said Chairman, President and CEO Jim DeVries. “Our priority remains on generating strong economic returns while improving core metrics.”

Core business performance

While ADT reported total revenue growth during the quarter, its recurring revenue business changed little year over year.

Monitoring and related services revenue declined 1% to $1.082 billion, while end-of-period recurring monthly revenue slipped to $360 million from $363 million a year earlier. Executives attributed the decline to the October 2025 divestiture of ADT’s multifamily business.

Installation, product and other revenue increased 17% to $230 million, driven primarily by a higher mix of professionally installed systems sold under the outright sales model, according to the company.

Other key operating metrics changed little during the quarter. Gross customer revenue attrition was 13.1%, compared with 12.8% a year ago, while revenue payback remained 2.3 years. The company added 190,000 gross new subscribers during the quarter, generating $11.9 million in gross recurring monthly revenue additions. Executives said softer performance in the dealer channel was partially offset by growth in direct subscriber and RMR additions.

Likosar said the company’s strong cash generation continued to distinguish the quarter, with adjusted free cash flow increasing 48% to $406 million, driven primarily by working capital timing, lower cash taxes, lower interest payments and reduced subscriber acquisition spending. The company now expects approximately 2% revenue growth, 2% adjusted EPS growth and 30% adjusted free cash flow growth for 2026.

“Our full year outlook and our performance through the first half reflect the resilience of our model and our disciplined execution, while we also continue to invest in our business for the long term,” Likosar said.

ADT advances AI initiatives

Artificial intelligence was a recurring theme throughout management’s prepared remarks as executives described new applications intended to improve customer service and operating efficiency.

During the second quarter, ADT combined AI-driven call routing with virtual AI agents.

“As a result, we handle nearly 20% fewer customer contacts through human agents and reduce service tickets by a similar amount, all while achieving improved customer satisfaction,” DeVries said.

According to DeVries, the company plans to expand its use of AI during the third quarter by transcribing and analyzing sales and service calls, enabling customer interactions with virtual agents through SMS and deploying AI-enabled fleet safety technology for service technicians.

“We believe we’re still in the early stages of this opportunity and that these initiatives will be a meaningful contributor to both growth and margin expansion,” he said.

DeVries also emphasized that AI will complement, rather than replace, employees in certain situations.

“ADT employees continue to handle situations where human expertise matters most, such as during emergencies or when an on-site, highly trained service technician is the best way to resolve a customer issue,” he said.

ADT+ platform continues to grow

DeVries said ADT continues expanding the capabilities of its ADT+ ecosystem.

During the quarter, the company launched ADT Blu, a lower-cost, self-installed security offering that can be paired with professional monitoring.

“While it is very early, we are pleased with the customer receptiveness and reviews,” DeVries said.

ADT also said its third-party dealer network has begun transitioning to the ADT+ platform.

“Our third-party dealer network, which has historically represented more than one-third of our gross additions, is beginning to transition to the ADT+ platform,” DeVries said, adding that the migration will occur in phases over the next year.

According to DeVries, approximately 30% of new customer additions during the first half of 2026 were deployed on ADT+.

The company is also preparing to commercialize a new presence sensing offering based on technology it acquired earlier this year.

“We advanced manufacturing and integration of a Wi-Fi-based smart plug that will bring privacy-preserving presence sensing into the ADT+ platform for security and aging-in-place use cases,” DeVries said. “We expect customer pilots to begin this fall ahead of a planned launch in early 2027.”

Focus remains on customer acquisition

Management said customer acquisition efficiency remains another strategic priority for 2026.

“A key objective this year is migration to lower cost sales tactics and channels,” DeVries said.

He said ADT Blu broadens the company’s reach to value-conscious and DIY-oriented customers and that the company plans to expand its presence on Amazon and increase advertising during the second half of the year.

DeVries also said the company continues to optimize its sales channels.

“As we’ve said, some of these changes may temporarily affect subscriber additions but are designed to improve our long-term returns,” he said.

Looking ahead, management said its focus during the second half of 2026 will be executing its growth initiatives while improving subscriber additions and customer retention.

(Editor’s note: This article was produced with the assistance of generative AI using ADT’s publicly available earnings call transcript as source material. The content was reviewed, edited and verified by the SecurityInfoWatch editorial team to ensure accuracy, context and adherence to our editorial standards.)