ADT Inc. (ADT) provides security, interactive, and smart home solutions serving residential and small business customers in the United States (U.S.). The company primarily conducts business under the ADT brand. As of December 31, 2024, the company had approximately 6.4 million security monitoring service subscribers. The company serves its customers through its nationwide sales and service offices, monitoring and support centers; and large network of installation and service professionals.
The...
ADT Inc. (ADT) provides security, interactive, and smart home solutions serving residential and small business customers in the United States (U.S.). The company primarily conducts business under the ADT brand. As of December 31, 2024, the company had approximately 6.4 million security monitoring service subscribers. The company serves its customers through its nationwide sales and service offices, monitoring and support centers; and large network of installation and service professionals.
The company is majority-owned by Prime Security Services TopCo (ML), L.P., which is majority-owned by Prime Security Services TopCo Parent, L.P.
Google Partnership
In July 2020, the company entered into a Master Supply, Distribution, and Marketing Agreement with Google (as amended, the Google Commercial Agreement) pursuant to which Google has agreed to supply it with certain Google devices, as well as certain Google video and analytics services (the Google Devices and Services) for sale to the company’s customers. Subject to customary termination rights related to breach and change of control, the Google Commercial Agreement has an initial term of seven years from the date that the Google Devices and Services are successfully integrated into the company's end-user security and automation platform. Further, subject to certain carve-outs, the company has agreed to exclusively sell Google Devices and Services to its customers. In January 2024, the company amended the Google Commercial Agreement to, among other things, remove exclusivity for do-it-yourself (DIY) products and services, limit exclusivity for do-it-for-me (DIFM) products and services, and restructure the commitment from the Google Success Fund to pay a portion of the remaining amount due to ADT as a quarterly marketing reimbursement (with the balance to be used towards unlocking certain opportunities).
The company's partnership with Google represents the combination of the leading security and smart home brand and the leading technology brand joining forces to introduce the next-generation smart and helpful home.
In December 2023, the company and Google entered into an addendum to the company's existing agreement for using Google cloud services (the 'Google Cloud Agreement Addendum'), pursuant to which Google has agreed to provide certain credits, discounts, and other incentives for use of the Google Cloud Platform to the company.
State Farm Partnership
The company has a development agreement with State Farm (the State Farm Development Agreement), pursuant to which State Farm committed to fund product and technology innovation, customer growth, and marketing initiatives.
Products and Services
Security and Automation Offerings
The company's core security offerings include burglar and life safety alarms, smart security cameras, smart home automation systems, and video surveillance systems (referred to collectively as security systems, solutions, or offerings). The company's security offerings are designed to detect intrusion; control access; sense movement, smoke, fire, carbon monoxide, leaks, temperature, and other environmental conditions and hazards; and address personal medical emergencies such as injuries or unanticipated falls. The company offers its customers routine maintenance and the installation of upgraded or additional equipment, which provide additional value to the customer and generate incremental recurring monthly revenue. Additionally, the company's personal emergency response system products and services utilize the company's security monitoring infrastructure to provide customers with solutions that help to sustain independent living, detect when a fall occurs, and provide protection while on the go with geolocation capability.
During 2022, as part of the company's partnership with Google, the company launched the Google Nest doorbell, rolled out mesh Wi-Fi, and launched Google indoor and outdoor cameras as part of the company's product offerings. In the first quarter of 2023, the company launched its proprietary ADT+ app for its self setup line of DIY smart home security products, including Google Nest offerings, which allows customers to easily access and control their ADT devices through an intuitive app experience. The company's comprehensive interactive technology platform is intended to provide customers with a seamless experience through a common application across security, life safety, automation, and analytics, and integrate the user experience, customer service experience, and back-end support. During the fourth quarter of 2023, the company began its phased rollout of its ADT+ app for professional installation along with a new interactive and hardware lineup. During 2024, the company continued its phased rollout of the ADT+ platform across the country. Customers can now take advantage of next generation hardware and technology through its proprietary app.
In addition, the company launched Trusted Neighbor across the U.S. This new offering allows customers to grant secure, temporary access to their homes through the ADT+ app, enhancing security and convenience. Enabled by deep integration of the ADT+ app, Google Nest Doorbell’s Familiar Faces technology, and Yale locks, select customers can use the Auto-Unlock feature to automatically verify a trusted individual.
The vast majority of new residential customers choose the company's automation and smart home solutions, which provide customers the ability to remotely monitor and manage their environments through the company's customized web portal via web-enabled devices (such as smart phones), smart phone applications, or through touchscreen panels in their homes.
The company's automation and smart home solutions allow customers to remotely arm and disarm their security systems; record and view real-time video; program their systems to react to defined events; integrate their systems with various third-party connected devices, such as cameras, lights, thermostats, appliances, and garage doors; and automate custom schedules for these connected devices.
Generally, a significant upfront investment is required to acquire new subscribers related to installation costs (such as labor, commissions, equipment, and overhead), which it recovers through upfront fees charged at the time of installation and recurring monthly revenue generated in future years.
At the time of initial equipment installation, the company's customers typically contract for both monitoring and maintenance services, which are generally governed by multi-year contracts.
Monitoring Centers
As of December 31, 2024, the company operated six monitoring centers located throughout the U.S. and listed by Underwriters Laboratories ('UL') in order to provide 24/7 year-round professional monitoring services to the company's customers, including the company's monitoring centers that also provide outsourced monitoring services for other security companies. The company's monitoring centers are fully redundant, which means all monitoring operations can be automatically transferred to another monitoring center in case of an emergency, such as fire, tornado, major interruption in telephone or computer service, or any other event affecting the functionality of one of the company's centers. To obtain and maintain a UL listing, a security systems monitoring center must be located in a building meeting UL's structural requirements, have back-up computer and power systems, and meet UL specifications for staffing and standard operating procedures. Many jurisdictions have laws requiring that security systems for certain buildings be monitored by UL-listed centers, and in some instances, a UL listing is required by insurers of certain customers as a condition of insurance coverage. In addition, the company implemented certain work from home actions, including for a majority of the company's monitoring center professionals, in compliance with UL work-from-home standards.
Upon the occurrence of certain initiating events, the company's monitored security systems send event-specific signals to the company's monitoring personnel who then relay appropriate information, based on the customer's contract and preferences, to first responders, such as local police, fire departments, or medical emergency response centers and the customer or others on the customer's emergency contact list. The company continues to focus on the company's alarm verification technologies and partner with industry associations and various first responder agencies to help prioritize response events, enhance response policies, and develop processes that allow the company to send data to emergency response centers directly. Additionally, the company's System Monitoring and Response Technology ('SMART') monitoring solution aims to result in faster and higher-quality responses, and is expected to reduce annual false alarms and customer care calls. The company's SMART monitoring differentiates its offerings by delivering alarms to connected and participating 911 centers faster than traditional voice handling speeds. Additionally, the company's alarm scoring program, which offers a uniform and reliable approach for categorizing alarm severity levels, enhances the accuracy of assessing potential life or property threats and gives first responders precise and crucial alarm data for improved emergency responses.
Field and Call Center Operations
The company's field and call center operations comprise a nationwide network of sales and service offices, call centers, and support facilities. It staffs its sales and service offices with qualified field solution advisors and installation and service technicians, and it utilizes third-party subcontract labor when appropriate. The company provides ongoing training to its field and call center employees, as well as its authorized dealers, and it continually measures and monitors customer satisfaction-oriented metrics across each customer touch point. The company's objective is to provide a differentiated service experience by resolving customer issues remotely whenever possible, and scheduling installation and service visits at times convenient for the customer.
The company's innovative remote assistance program (the Remote Assistance Program) delivers a scalable, cost-efficient means of servicing its customers through live video streaming with skilled technicians to troubleshoot and resolve service issues, as well as remote programming and installation support for new DIY systems, add-ons, and resale reactivations. The company is also exploring and implementing AI tools that are aimed at improving and automating certain processes for its call center agents and customers. Additionally, the company’s ADT WiFi Fix app allows remote customer service agents to diagnose and address any WiFi issues impacting customers’ ADT equipment or other devices. These offerings provide customers with more options for receiving services that best fit their lifestyles, while reducing the cost for the company to provide these services and lowering its carbon footprint through the reduction of truck rolls.
The company’s customer care agents provide support 24 hours a day on a year-round basis to ensure service requests are handled promptly and professionally. Approximately 80% of these requests are resolved during the initial interaction. However, in the event these requests cannot be resolved, they are routed to a remote assist agent or a field technician for further support. In many cases, customer care agents can remotely resolve emergency and non-emergency inquiries regarding ongoing alarms, service, billing, and system and product troubleshooting. The company continues to offer customers additional choices in managing their services through customer-facing self-service tools via interactive voice response systems and the Internet. In addition, the company uses a network of external vendors, both domestic and outside of the U.S., to supplement its internal call center resources as needed.
The company's support facilities also provide administrative assistance to its local service offices and customer care centers, which includes scheduling and ordering, drop-shipping, and physically distributing system components for installations.
Sales and Distribution Channels
The company utilizes a complementary mix of direct and indirect sales and distribution channels:
Direct Channel
The company's direct channel customers are generated by direct response and other marketing efforts, general brand awareness, customer referrals, door-to-door activities, along with lead generation partners, and are supported by the company's internal sales force located in the company's national sales call centers, as well as the company's nationwide network of field sales and service offices. In many scenarios, the company closes the sale of a basic system over the phone and allow the company's field force to augment the system at the time of installation. In other cases, field solution advisors work directly with the customer to select an ideal system. Driven by consumer preferences, the company also markets to customers through retail and e-commerce channels, and the company has been supplementing existing channels to meet consumers where they prefer to shop.
The company's field solution advisors typically undergo an in-depth screening process prior to hire, complete comprehensive centralized training before conducting customer sales presentations, and participate in ongoing training in support of new offerings. The company generally utilizes a highly structured sales approach, which includes a structured model sales call, daily monitoring of sales activity and effectiveness metrics, and regular coaching by its sales management teams.
Indirect Channel
The company's indirect channel customers are generated mainly through its network of agreements with third-party independent dealers who sell and install equipment and ADT Authorized Dealer-branded monitoring, interactive, and other services to residential end users (the ADT Authorized Dealer Program). As opportunities arise, the company may engage in selective third-party account purchases, which typically involve the bulk purchase of customer accounts from other security service providers.
As of December 31, 2024, the company's network of authorized dealers consisted of approximately 140 authorized dealers operating across the U.S. The company's authorized dealers are contractually obligated to offer exclusively to it all qualified monitored accounts they generate, but the company is not obligated to accept these accounts. The company pays its authorized dealers for the acquisition of any qualified monitored accounts (referred to as dealer generated customer accounts) it purchases from them. Dealer generated customer account contracts typically have an initial term of three years with automatic renewals for successive 30-day periods, unless canceled by either party. If a purchased account is canceled during the charge-back period, which is generally thirteen months, the dealer is required to refund the company's payment of the purchase price for the canceled account. In certain instances in which the company rejects an account, it generally still indirectly provides monitoring services for that account through a monitoring services agreement with the authorized dealer.
Authorized dealers are required to adhere to the same high-quality standards for sales and installation as the company's own sales and service offices. The company monitors each authorized dealer's financial stability, use of sound and ethical business practices, and delivery of reliable and consistent high-quality sales and installation methods.
Marketing Strategy
The company focuses on driving revenue by increasing consumer awareness and preference, improving consumer purchasing flexibility, and optimizing its go-to-market approach. To support the growth of its customer base, improve brand awareness, and drive greater market penetration, the company considers new customer channels and lead generation methods, explores opportunities to provide branded solutions, and forms strategic partnerships and alliances with various third parties.
The company strives to optimize its marketing spend through a lead modeling process, whereby it dynamically allocates spend based on lead flow and measured marketing channel effectiveness. The company markets its offerings through national television, radio, and direct mail advertisements, as well as through Internet advertising, which includes national search engine marketing, email, online video, local search, and social media. The company also has several affinity partnerships with organizations that promote its services to their customer bases, and it markets through social media influencers and celebrity spokespersons representing the ADT brand. In addition to Google and State Farm, the company's strategic partnerships and alliances include dealers, home builders, property management firms, homeowners’ associations, financial institutions, retailers, first responders, and software service providers.
Market
Many of the company's residential and small business customers are driven to purchase monitored security and automation services as a result of moving to a new location; a perceived or actual increase in crime or life safety concerns in their neighborhood; significant events, such as the birth of a child or the opening of a new business; or incentives provided by insurance carriers.
Competition
The company faces competition in the DIY (do-it-yourself) space from companies, such as SimpliSafe, Wyze Home Monitoring, and Amazon Ring.
Intellectual Property
The company also owns a portfolio of trademarks, including ADT, ADT Pulse, and ADT+.
Certain trademarks associated with the ADT brand that the company owns within the U.S. and Canada are owned outside of the U.S. and Canada by Johnson Controls International PLC (as successor to Tyco International Ltd., 'Tyco').
Seasonality
The company's residential security and home automation business has historically experienced a certain level of seasonality primarily as a result of fluctuations in the housing market. Since more household moves typically take place during the second and third calendar quarters of each year, the company's disconnect rate, new customer additions and installation volume, and related cash subscriber acquisition costs are historically higher in these quarters than in the first and fourth calendar quarters (year ended December 2024).
Government Regulation and Other Regulatory Matters
The company relies extensively on telecommunications service providers, which are regulated in the U.S. by the Federal Communications Commission ('FCC') to communicate signals as part of the functionality and monitoring of security and solar systems.
The company's advertising and sales practices are regulated by the U.S. Federal Trade Commission (FTC) and state and consumer protection laws.
The use of credit reporting and scoring, as well as offering financing options to the company’s residential customers, is subject to federal and state laws, including the federal Fair Credit Reporting Act, which limits the use of consumer credit reports, prohibits discrimination against protected classes when offering or granting credit, and requires certain disclosures to customers in the event that the company takes an adverse action based on a consumer credit report.
The company’s operations are subject to regulation under the U.S. Occupational Safety and Health Act (OSHA) and equivalent state laws.
History
The company was founded in 1874. The company was formerly known as Prime Security Services Parent, Inc. and changed its name to ADT Inc. in 2017.
