Q3 2024 ADT Inc Earnings Call

Okay.

Operator: Thank you for standing by.

Thank you for standing by.

Operator: I would like to welcome everyone to the ABT State Quarter 2024 earnings conference call.

Speaker Change: I would like to welcome everyone to the AVP third quarter 2024 earnings Conference call.

Elizabeth Landers: I would now like to turn the call over to Elizabeth Landers, the head of Investor Relations. Please, go ahead.

Speaker Change: Now I'd like to turn the call over to the Sandoz the head of Investor Relations. Please go ahead.

Elizabeth Landers: Thank you, operator, and good morning, everyone. We appreciate you joining today's call to discuss ADT's third quarter 2024 results. Speaking on today's call, we'll be ADT's Chairman, President and CEO.

Speaker Change: Thank you operator, and good morning, everyone. We appreciate you joining today's call to discuss Adt's third quarter 2024 results speaking on today's call will be Att's, Chairman, President and CEO, Jim Devries, and our Chief Financial Officer, Jeff like Us are weighing Dorothy Chief business Officer and Don.

Elizabeth Landers: Jim DeVries, and our Chief Financial Officer, Jeff Likosar, Wayne Thorsen, Chief Business Officer, and Don Young, Chief Operating Officer, will also join us following the prepared remarks as we take analyst questions. Earlier this morning, we issued a press release in flood presentation, summarizing our financial results. These materials are available on our website at Investor.adt.com.

Speaker Change: <unk> Chief operating officer will also join US following the prepared remarks as we take analyst questions earlier. This morning, we issued a press release and slide presentation summarizing our financial results.

Speaker Change: These materials are available on our website at Investor Dot ADT Dot com before we begin I'd like to remind everyone that the former commercial and solar segment are reported as discontinued operations financials and metrics for current and historical periods discussed on this call will be for continuing operations, except for non-GAAP cash flow.

Elizabeth Landers: Before we begin, I'd like to remind everyone that those former commercial and solar segments are reported as discontinued operations. Financials and metrics for current and historical periods discussed on this call will be for continuing operations, except for non-GAAP cash flow measures, which include amounts related to the commercial business through the date of sale and solar through the second quarter of 2024. Today's remarks also include forward-looking statements that represent our beliefs or expectations about future events. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially. Some of the factors that may cause differences are described in our SEC filings, who will also discuss non-GAAP financial measures on the call.

Speaker Change: <unk>, which include amounts related to the commercial business through the date of sale and solar through the second quarter of 2020 for todays remarks also include forward looking statements that represent our beliefs or expectations about future events.

Speaker Change: These forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially.

Speaker Change: Other factors that May cause differences are described in our SEC filings. We will also discuss non-GAAP financial measures on the call. The most directly comparable GAAP measures along with a reconciliation to those measures can be found on our earnings presentation at the Investor Relations website, and with that I'll turn the call over to Jim Good morning, and thank you to everyone.

Elizabeth Landers: The most directly comparable gap measures, along with the reconciliation to those measures, can be found on our earnings presentation at the Investor Relations website.

James DeVries: And with that, I'll turn the call over to Jim. Good morning, and thank you to everyone for joining us today to discuss ADT's third quarter results. I'm pleased to report that ADT is continuing to deliver on our 2024 objectives, and as we close out the year, we're well positioned to deliver the full-year financial guidance we outlined in February. We ended the quarter with a record recurring monthly revenue balance of $359 million of 2%, which benefited from strong accretion results at 12.8%. We continue to grow total revenue up 5% versus the prior year, while remaining focused on balancing profitability and investments for the future. Adjusted EBITDA was up 6%.

Jim: For joining us today to discuss Adt's third quarter results I'm pleased to report that ADT is continuing to deliver on our 2024 objectives and as we close out the year, we're well positioned to deliver the full year financial guidance. We outlined in February we ended the quarter with a record.

Jim: Recurring monthly revenue balance of $359 million up 2%, which benefited from stronger Christian results at 12, 8%. We continue to grow total revenue up 5% versus the prior year, while remaining focused on balancing profitability.

Jim: City and investments for the future adjusted EBITDA was up 6% and we continued to deliver strong free cash flows a highlight for the quarter is that our leverage ratio net debt to adjusted EBITDA is now at 2.9 times in addition to year over year.

James DeVries: And we continue to deliver strong free cash flows. A highlight for the quarter is that our leverage ratio net debt to adjusted EBITDA is now at 2.9 times. In addition to year-over-year gross ad growth and our pro-install residential business, I'll note that our results included a strategic customer portfolio acquisition for $81 million. This bulk account purchase is complimentary to our existing customer footprint and was comprised of 49,000 subscribers. We believe that bulk deals such as this one are an ongoing and attractive option for capital allocation.

Jim: <unk> AD growth and our pro install residential business I will note that our results included a strategic customer portfolio acquisition for $81 million. This bulk account purchases is complementary to our existing customer footprint and was comprised of 40.

Jim: 9000 subscribers, we believe that bulk deals such as this one are an ongoing and attractive option for capital allocation, Jeff will provide more details about our financials and full year outlook in a few moments, but I'd first like to share several comments about.

James DeVries: Jeff will provide more details about our financials in full-year outlook in a few moments, but I'd first like to share several comments about our business and strategic progress. As many of you know, we've been focused on investing in the product and experience ecosystem to create even more differentiated offerings and more reasons for customers to choose ADT and stay with ADT. As we've shared before, a key component of our future is the new and proprietary ADT Plus platform, which is now available across the country for a growing portion of our residential customers. The ADT Plus platform includes a new app, refreshed hardware, and several advantages, including enhanced installation flexibility and configurability.

Jim: Our business and strategic progress as many of you know we've been focused on investing in the product and experience ecosystem to create even more differentiated offerings and more reasons for customers to choose ADT and stay with ADT.

Jim: As we've shared before a key component of our future is the new and proprietary ADT plus platform, which is now available across the country for a growing portion of our residential customers.

Jim: ADT plus platform includes a new app refreshed hardware and several advantages, including enhanced installation flexibility and configure ability.

James DeVries: Importantly, it also offers additional and stronger integrations with smart home devices such as Google's Nest ecosystem. We've built this platform as the foundation on which we will innovate and build unique experiences tailored to our customers' individual needs. The first of these experiences is Trusted Neighbor, which we officially launched in mid-August. Trusted Neighbor essentially allows customers to grant trusted individuals access to their homes for everyday events like package delivery or more urgent issues like water leaks. We're excited about the innovative and secure ways we're able to grant access, such as with ADT Plus app on a neighbor's phone, codes, or in combination with Nest familiar face feature.

Jim: Importantly, it also offers additional and stronger integrations with smart home devices, such as Google nest ecosystem. We've built this platform is the foundation on which we will innovate and build unique experiences tailored to our customers' individual needs.

Jim: First of these experiences as trusted neighbor, which we officially launched in mid August trusted neighbor essentially allows customers to grant trusted individuals' access to their homes for everyday events like package delivery or more urgent issues like water leaks were excited about the.

Jim: <unk> and secure ways, we're able to grant access such as with ADT plus app on our neighbors phone codes or in combination with NES familiar face feature we're working with our partners at Yale to introduce a lock that grants access through biometrics, which will.

James DeVries: We're working with our partners at Yale to introduce a lock that grants access through biometrics, which will be available in the coming months. It's very early in the process, but we're pleased with virtually all aspects of the Trusted Neighbor launch, everything from unit economics to our field response to customer satisfaction. There's reason for optimism. Importantly, this product introduction is just the first of many innovations we plan to develop and roll out over time. Additionally, as I've shared previously, we have expanded our Google relationship to include their CCAI platform and are currently exploring several opportunities across our business, with early efforts focused on call center operations.

Available in the coming months, it's very early in the process, but we're pleased with virtually all aspects of the trusted neighbor launch everything from unit economics to our field response to customer satisfaction. There's reason for optimism importantly, this product introduction is just.

Jim: The first of many innovations we plan to develop and rollout over time.

Jim: Additionally, as I've shared previously we have expanded our Google relationship to include their <unk> platform and are currently exploring several opportunities across our business with early efforts focused on call Center operations. We also remained focused on advancing our state farm partnership.

James DeVries: We also remain focused on advancing our State Farm partnership. Working closely with State Farm, we're currently focused on the self setup alternative or DIY in Georgia, and we expect to expand this offering in Washington later this quarter. We're also launching an offering focused on leak detection in Maryland and Michigan in the coming weeks. We're pleased with the overall progress we've made developing new and innovative products and services for our customers and the foundation this provides for the future. Importantly, we'll use these learnings as we expand solutions for a national audience with a focus on protecting our customers and providing proactive risk detection and prevention.

Jim: Working closely with state farm. We're currently focused on the self setup alternative or DIY in Georgia, and we expect to expand this offering and Washington later this quarter. We're also launching an offering focused on leak detection in Maryland, and Michigan in the coming weeks.

Jim: We're pleased with the overall progress we've made developing new and innovative products and services for our customers and the foundation. This provides for the future.

Jim: Importantly, we'll use these learnings as we expand solutions for a national audience with a focus on protecting our customers and providing proactive risk detection and prevention.

James DeVries: Additionally, we remain focused on our service delivery, with a focus on both enhancing the customer experience and improving our operating efficiency. We continue to advance initiatives toward this end, including our ability to resolve more than half of service calls remotely. The expansion of our capabilities to diagnose and remediate customers' home network issues beyond their core security systems. And the streamlining of our customer interface processes.

Jim: Additionally, we remain focused on our service delivery with a focus on both enhancing the customer experience and improving our operating efficiency. We continue to advance initiatives toward this end, including our ability to resolve more than half of service calls remotely they are.

Jim: Expansion of our capabilities to diagnose and remediate customers home network issues beyond their core security systems, and the streamlining of our customer interface processes before turning to Jeff I also want to acknowledge and thank our team members and partners for their extraordinary.

James DeVries: Before turning to Jeff, I also want to acknowledge and thank our team members and partners for their extraordinary efforts to maintain continuity of service and assist our customers during the recent storms that affected the southeast part of the country. It is during events such as these that our core belief everyone deserves to feel safe, especially resonate, and I am especially proud of the dedication and hard work of our more than 13,000 employees to deliver on our commitments to customers.

Jim: Efforts to maintain continuity of service and assist our customers during the recent storms that affected the southeast part of the country. It is during events such as these that our core belief everyone deserves to feel safe, especially resonates and I am especially proud of the.

Jim: <unk> and hard work of our more than 13000 employees to deliver on our commitments to customers as we marked our 150 F. Yearend business. This past August I reflected on Adt's journey and accomplishments.

James DeVries: As we marked our 150th year in business this past August, I have reflected on ADT's journey and accomplishments. I am humbled to lead this historic company and very thankful for our employees, partners, communities, and investors who collectively help us achieve our mission of empowering people to connect and protect what matters most.

Speaker Change: Humbled to lead this historic company and very thankful for our employees partners communities and investors, who collectively help us achieve our mission of empowering people to connect and protect what matters, most and with that I'll turn the call over to Jeff.

Jeffrey Likosar: And with that, I'll turn the call over to Jeff. Thanks, Jim, and thanks everyone for joining our call today. We are continuing our 2024 progress with very strong results through the first three quarters. Our overall performance is consistent with our plans, and we are on track to achieve our full year guidance. Our exceptionally strong cash flow remains a highlight, with $158 million in adjusted free cash flow, including interest rate swaps, in the quarter. This includes the $81 million outflow from our strategic bulk account purchase. On a year-to-date basis, we have generated $520 million of adjusted free cash flow, up 28%, and already near last year's full year, $525 million.

Jeff Like: Thanks, Jim and thanks, everyone for joining our call today.

Jeff Like: We are continuing our 2020 for progress with very strong results through the first three quarters. Our overall performance is consistent with our plans and we are on track to achieve our full year guidance are exceptionally strong cash flow remains a highlight with $158 million in adjusted free cash flow, including interest rate swaps in the corner.

Jeff Like: This includes $81 million outflow from our strategic bulk account purchases on a year to date basis, we have generated $520 million of adjusted free cash flow up 28% and already near last year's full year $525 million. The improvement drivers include our overall profitability.

Jeffrey Likosar: The improvement drivers include our overall profitability, lower cash interest from debt reduction, and the wind down of our solar business. These factors more than offset this year's bulk account purchase outflow and the cash generation from our former commercial business, which we sold late last year. Adjusted net income for the quarter was $183 million, or 20 cents per share. Year-to-date, we have generated earnings per share of 56 cents, up 33%. Total revenue for the quarter was $1.2 billion, up 5%, with monitoring and services revenue up 2%. Our record RMR balance of $359 million, also up 2%, resulted from higher average pricing, the strategic bulk purchase, and strong customer retention.

Jeff Like: Lower cash interest from debt reduction and the wind down of our solar business. These factors more than offset this year's bulk account purchases outflow and the cash generation from our former commercial business, which we sold late last year adjusted net income for the quarter was $183 million or <unk> 20 per share year to date.

Jeff Like: We have generated earnings per share of <unk> 56 up 33%.

Jeff Like: Total revenue for the quarter was $1 2 billion up 5% with monitoring and services revenue up 2% a record RMR balance of $359 million also up 2% resulted from higher average pricing this strategic bulk purchase and strong customer retention, we grew our subscriber base in the <unk>.

Jeffrey Likosar: We grew our subscriber base in the quarter and added 250,000 gross new customers with $14.7 million of new RMR compared to $13.1 million last year. This includes the benefits of the bulk account purchase, which is part of our discipline growth and capital allocations. Our improved gross revenue attrition at 12.8% reflects our continued commitment to superior customer service and related retention improvements. This more than offset some headwinds from higher payment delinquencies and resulting cancellation. Installation revenue in the quarter was up $40 million, or 32% in total. As a larger percentage of our new customer installations continued to transition to a customer-owned model, outright sales revenue was up 60%.

Jeff Like: Order and added 250000, gross new customers with $14 $7 million of new RMR compared to $13 $1 million last year. This includes the benefits of the bulk account purchases, which is part of our disciplined growth and capital allocation strategy.

Our improved gross revenue attrition at 12, 8% reflects our continued commitment to superior customer service and related retention improvements this more than offset some headwinds from higher payment delinquencies and resulting cancellations installation revenue in the quarter was up $40 million or 32% in total as a larger.

Jeff Like: Vantage of our new customer installations continued to transition to a customer owned model outright sales revenue was up 60% amortization of deferred subscriber acquisition revenue from installations under the company owned model was also up by 14% as we've described previously we expect this shift to continue as our new offerings of.

Jeffrey Likosar: In addition to deferred subscriber acquisition revenue from installations under the company-owned model, was also up by 14%. As we've described previously, we expect this shift to continue as our new offerings evolve away from our legacy company-owned equipment model. We will share more detail as this becomes more material in 2025. Adjusted EBITDA for the quarter was $659 million, up a strong 6%. The key driver was our higher monitoring and services revenue and resulting margins, which reflect our strong operating and cost discipline. A highlight remains our service cost, benefiting especially from the large percentage of calls we now resolve virtually rather than rolling a truck.

Jeff Like: <unk> away from our legacy company owned equipment model, we will share more detail as it becomes more material in 2025 adjusted EBITDA for the quarter was $659 million up a strong 6%. The key driver was our higher monitoring and services revenue and resulting margins, which reflect our strong operating and cost does.

Jeff Like: <unk> a highlight remains our service cost benefiting, especially from the large percentage of calls we now resolved virtually rather than rolling a truck importantly, and further to the disciplined point, we continue to invest in key technologies and capabilities to drive longer term product differentiation and growth EBITDA as a percentage of revenue.

Jeffrey Likosar: Importantly, and further to the discipline point, we continue to invest in key technologies and capabilities to drive longer-term product differentiation and growth. EBITDA as a percentage of revenue was approximately flat as our profitability initiatives offset these investments and the higher mix of lower margin installation revenue. We also remain very disciplined with capital allocation, and we continue to benefit from the enhanced flexibility of our improved capital structure. A highlight here is that our net debt to adjusted EBITDA ratio at 2.9 times is now below the three-time threshold we had been targeting. Another highlight is that in October, we extended an upsized our revolver with a new five-year $800 million facility with lower commitment fees and borrowing costs.

Jeff Like: <unk> was approximately flat as our profitability initiatives offset these investments and the higher mix of lower margin installation revenue. We also remain very disciplined with capital allocation and we continue to benefit from the enhanced flexibility of our improved capital structure. A highlight here is that our net debt to adjusted EBITDA ratio.

Jeff Like: <unk> at two nine times is now below the three times threshold, we had been targeting another highlight is that in October we extended and Upsized, our revolver with a new five year $800 million facility with lower commitment fees and borrowing costs. Our overall net debt of $7 4 billion.

Jeffrey Likosar: Our overall net debt of $7.4 billion is down $1.9 billion from a year ago, with a weighted average cost of 4.5% and no significant maturity until 2026. We finished a quarter with just under $100 million of unrestricted cash on hand and no outstanding revolver bounce. Our strong capital structure, cash generation capability, and liquidity afford a significant flexibility in capital allocation. We repurchased five million shares of stock earlier this month and continue to believe our stock is very attractive at recent prices. Approximately $225 million remain available under our share repurchase authorization. As we look to close out 2024, we are on track to deliver results consistent with the guidance we shared at the beginning of the year.

Jeff Like: Is down $1 9 billion from a year ago with a weighted average cost of four 5% and no significant maturities until 2026, we finished the quarter with just under $100 million of unrestricted cash on hand, and no outstanding revolver balance our strong capital structure cash generation capability.

Jeff Like: And liquidity afford us significant flexibility in capital allocation, we repurchased 5 million shares of stock earlier. This month and continue to believe our stock is very attractive at recent prices approximately $225 million remained available under our share repurchase authorization as we look to close out 2024, we are on.

Jeff Like: Track to deliver results consistent with the guidance, we shared at the beginning of the year.

Jeffrey Likosar: We have consequently tightened our guidance ranges around the same midpoints for revenue, adjusted EBITDA, and adjusted free cash flow, while we've increased the midpoint for EPS, which is trending towards the higher end of the original range. Our fourth quarter results will reflect normal seasonal and timing dynamics. Cash interest, for example, is lower in the second and fourth quarters than the first and third due to coupon timing. New customer ads, and therefore our tax spending, tend to be higher in the middle of the year than around the holidays. And while we had a bulk account purchase in the third quarter this year, we had a similar transaction last year in the fourth quarter.

Jeff Like: We are consequently tightened our guidance ranges around the same mid points for revenue adjusted EBITDA and adjusted free cash flow, while we've increased the midpoint for EPS, which is trending towards the higher end of the original range. Our fourth quarter results will reflect normal seasonal and timing dynamics cash interests. For example is lower in the second.

Jeff Like: Quarters than the first and third due to coupon timing, new customer ads and therefore, our sac spending tend to be higher in the middle of the year around the holidays and while we had a bulk account purchases in the third quarter. This year, we had a similar transaction last year in the fourth quarter. I'll also note that we are still assessing the effect of recent hurricanes and <unk>.

Jeffrey Likosar: I will also note that we are still assessing the effect of recent hurricanes and of the mix of new subscriber additions in the fourth quarter. We have considered all these factors in our outlook. As we approach your end, we are very excited by our 2024 progress. This includes our year-to-date results, our confidence in delivering our full-year objectives, and the encouraging early trends from our new offerings and capabilities. This progress is the result of our having bounce near-term objectives and results with a longer-term focus and with a disciplined approach to allocating capital. And again, our progress and flexibility are increasingly enabled by our strong and improved capital structure, with a focus on generating shareholder returns.

Jeff Like: <unk>, a new subscriber additions in the fourth quarter, we have considered all of these factors and our outlook ranges as we approach year end. We are very excited by our 2020 for progress. This includes our year to date results our confidence in delivering our full year objectives and the encouraging early trends from our new offerings and capabilities. This progress is the result of <unk>.

Jeff Like: Having bounced near term objectives and results with a longer term focus and with a disciplined approach to allocating capital and again, our progress and flexibility are increasingly enabled by our strong and improved capital structure with a focus on generating shareholder returns I'm very enthusiastic about our business and look forward to closing the year strong.

Jeffrey Likosar: I'm very enthusiastic about our business and look forward to closing the year strong and to sharing our full-year results in 2025 outlook on our next call.

Jeff Like: And to sharing our full year results and 2025 outlook on our next call. Thank you again, everyone for joining today operator, please open the line to questions.

Jeffrey Likosar: Thank you again, everyone, for joining today.

Operator: Operator, please open the line to questions. Thank you. Elder reminder: if you'd like to ask a question, please first start at the number one on your telephone keypad.

Speaker Change: Thank you Andrew.

Speaker Change: As a reminder, if you'd like to ask a question. Please press star and the number one on your telephone keypad.

Operator: We'll pause for just a moment to compile a roster. We will begin the question in our session.

Speaker Change: Well pause for just a moment to compile the roaster.

Speaker Change: We will begin the question and answer session.

George Tong: Our first question comes from the line of George Tong from Goldman Sachs. The line is open. Hi, thanks.

Speaker Change: Our first question comes from the line of George Tong from Goldman Sachs.

Speaker Change: Your line is open.

George Tong: Good morning. I wanted to ask about the bulk deal that you did in the quarter.

Speaker Change: Alright, thanks, good morning.

I wanted to ask you about.

Speaker Change: The deal that you did in the quarter can you elaborate a little bit more on your expected financial impact for the bulk deal as well as economics that come along with it.

James DeVries: Can you elaborate a little bit more on your expected financial impact for the bulk deal as well as the economics that come along with it? George, George, we executed a bulk as you're pointing out in Q3. It was for 49,000 accounts at a cost of roughly $80 million. The bulk was purchased from the same seller that we acquired a bulk from last December. In terms of returns, generally, bulk returns are consistent with our dealer business. So high teams in terms of IRRs, we expect to continue to have opportunity to buy bulk. We've done so. I think five of the last six years.

Speaker Change: Sure George.

Speaker Change: So we executed a bulk as you pointed out in Q3. It was for 49000 accounts at a cost of roughly $80 million.

Speaker Change: The bulk was purchased from the same seller that we acquired a bulk from last December.

Speaker Change: In terms of returns generally bulk returns are consistent with our with our dealer business. So high teens in terms of Irr's are we expect to continue to have opportunity to buy bulk we've done. So I think five of the last six years and when.

James DeVries: And when we're making capital allocation decisions, we're always comparing bulk to dealer to incremental direct ads. This one in particular has a lot of density for us. We expect it will perform well. That's helpful.

Speaker Change: We're making capital allocation decisions, we're always comparing bulk to dealer.

Speaker Change: Two incremental direct ads.

Speaker Change: This one in particular has a lot of density for us, we expect that will perform well.

Speaker Change: Got it that's helpful. And then can you talk a little bit more of a prevailing conditions and trends youre seeing in the residential market and how those conditions are informing your spending intentions for subscriber acquisition costs.

Jeffrey Likosar: And then can you talk a little bit more about prevailing conditions and trends you're seeing in the residential market and how those conditions are informing your spending intentions for subscriber acquisition costs?

Jeffrey Likosar: Hey, George, it's Chef. I'll answer that one. Somewhat related to what Jim's describing as to the attractiveness of books is really on a relative basis. We've seen some challenges in the macro environment: interest rates higher, fewer, fewer moves. In some cases, customer credit quality, as we look at what customers to underwrite, not quite as great as it once was. I'd also highlight that we're in the process of rolling out our new platform and ecosystem, which we're really excited about. Some of the early things we're seeing there. And then, as part of that, there's a couple of parts of our business.

Jeff Like: Hey, George it's Jeff I'll answer that one.

Jeff Like: Somewhat related to what Jim's describing as to the attractiveness of bulk is really on a relative basis. We've seen some challenges in the macro environment interest rates higher fewer fewer moves in some cases custom.

Jeff Like: Customer credit quality as we look at what customers to underwrite not not quite as great. As it once was I'd also highlight that we are in the process of rolling out our new platform and ecosystem, which we're really excited about some of the early things. We're seeing there and then as part of that there is a couple of parts of our business. We don't talk about quite as much that we've.

Jeffrey Likosar: We don't talk about quite as much that we've deemphasized the health; for example, ultimately we will transition health to the new platform. But while we're making that transition, we're not deploying capital to take on as many health customers with the older hardware. So they're all related to the reasons that we found the bulk relatively more attractive, and it's a little bit deeper detail maybe than we normally share. But I'd also point out that excluding bulk, if we just look at our core professionally installed residential customers, those ads were up in the period year on year also, which you have nothing to do with bulk.

Jeff Like: De emphasize the health for example, ultimately we will transition health to the new platform, but while we're making that transition we're not deploying capital to take on as many health customers with the older hardware. So theyre all related to the reasons that we are we found the bulk relatively more attractive and it's a little bit deeper detail maybe.

Jeff Like: And then we normally share, but I'd also point out that excluding bulk if we just look at our core professionally installed residential customers.

Jeff Like: <unk> adds were up in the period year on year also which has nothing to do with bulk and then Lat last point is that your total RMR adds for the quarter, including the bulk were up are really strong.

Jeffrey Likosar: And then last point is our total RMR ads. For the quarter, including the bulk, we're up a really strong 13%, also up on either a date basis, and we're ending with record RMR. So we feel really good about our overall management of the portfolio in the ads.

Jeff Like: 13% also up on a year to date basis, and ending with record RMR. So we feel really good about our overall management of the portfolio and the ads.

George Tong: Very helpful.

George Tong: Thank you.

Speaker Change: Very helpful. Thank you.

Speaker Change: Thank you.

David Page: Our next question comes from the line of Ashish Sabadra from ABC. Line's open. Hi, good morning.

Speaker Change: Our next question comes from the line of Ashish I buy data from RBC.

Speaker Change: Your line is open.

Speaker Change: Hi, Good morning. This is David page on for Ashish Congrats on the nice quarter and thanks for taking my question I was wondering if you could provide an update on it looks like you made some good progress with partnerships and Google.

David Page: This is David Page on first, Ash, congrats on the look like you need some good progress with partnerships and Google any puts and takes there that we should be causing love and then also maybe what's like the longer term potential from the partnership with Google and the new product rollouts. Thank you. Thanks, David.

Speaker Change: Puts and takes there that we should be cognizant of and then also maybe what's like the longer term potential from the partnership with Google and the new product rollout. Thank you.

Speaker Change: Thanks, David Oh this.

James DeVries: This is Jim. I'll provide a comment or two, and then ask my colleague Wayne Thorsen to weigh in on the Google partnership. Overall, things continue to go well. We had an infusion of Google Success Funds this quarter for another seven and a half million dollars. I think that's 22 and a half million year-to-date. Our engineering teams and marketing teams continue to work together, and I give the partnership great grades. They've done a lot of work, in particular, to integrate and rollout Trusted Neighbor, our new product, and I'm excited to see what we're going to do in AI.

Speaker Change: This is Jim ill provide a comment or two and then ask my colleague Wayne tourists in.

Speaker Change: To weigh in on the Google partnership.

Jim: Overall things continue to go well.

Jim: We had an infusion of Google's success funds this quarter for another $75 million I think that's $22 5 million year to date.

Jim: Our engineering teams and marketing teams continue to work together and.

Jim: I give the partnership great grades.

Jim: They've done a lot of work in particular to integrate and rollout trusted neighbor or our new product.

Jim: And I'm excited to see what we're going to do in AI, we're working with Google.

Wayne Thorsen: We're working with Google and leveraging their CCAI product, and Wayne and some of his colleagues are leading the way on that work, and I'll ask him to weigh in. Thanks, Jim. And thank you for the question. We are really excited about the partnership with Google Cloud, and we're making great progress on a number of the initiatives, some of which we mentioned last quarter. So we should be rolling out the first virtual agent that'll help significantly with our deflection and care. Those pilots should be coming in the beginning of the year, and then we'll plan to expand from there through 2025.

Jim: And leveraging their CCA I product and Wayne and some of his colleagues are leading the way on that work and I'll ask him to weigh in.

Wayne: Thanks, Jim and thank you for the question. We are really excited about the partnership with Google Cloud and we're making great progress on a number of the initiatives.

Speaker Change: Some of which we mentioned last quarter. So we should be rolling out the first virtual agents that'll that'll help significantly with our deflection and care those pilots and should be coming in the beginning of the year and then we will plan to expand from there through 2025.

Wayne Thorsen: It's too early to give a ton of direct items on that, but as I mentioned last quarter, these are pretty hardened products with a clear track record at many large companies with similar call centers, and we have a high level of confidence in achieving some cost savings there.

Speaker Change: It's too early to give a ton of direct guidance on that but as I mentioned last quarter. These are pretty hardened products with a clear track record it at many large companies.

Speaker Change: With similar call centers, and we have a high level of confidence in achieving some cost savings there, but we're also really excited as we continue down AI. We're also really excited about some other partnerships such as with Sierra Dot AI conversational AI platform started by clay bore and Bret Taylor. So we just <unk>.

Wayne Thorsen: But we're also really excited, as we continue down AI, we're also really excited about some other partnerships, such as with Sierra.ai, the conversational AI platform started by Clay Bavore and Brett Taylor. So we just launched our first pilot with them last week, and they're already starting to take a small percentage of our chat traffic, and that'll be increasing dramatically over the coming weeks as we improve metrics. So we're already seeing really positive results, and we're excited to watch this rapidly improve and grow. They've been terrific to work with, and we've been extremely impressed with both the technology and the people.

Speaker Change: Launched our first pilot with them last week, and they're already starting to take a small percentage of our chat traffic and that'll be increasing dramatically over the coming weeks as we improve metrics. So we're already seeing really positive results and we're excited to watch this rapidly improve and grow they've been terrific to work with and we've been extremely impressed with both the technology and the <unk>.

David Page: So another great partnership there on the AI front. Very helpful. Thank you.

Speaker Change: So another great partnership there on the AI front.

Speaker Change: Okay very helpful. Thank you.

David Page: I apologize; I was on mute. Thank you.

Speaker Change: I apologize I was on mute.

Tony Kaplan: Our next question comes from the line of Tony Kaplan, the Morgan Stanley. The line is open. Thank you.

Speaker Change: Our next question comes from the line of Toni Kaplan from Morgan Stanley.

Speaker Change: One is open.

Speaker Change: Thanks, so much.

Toni Kaplan: Jeff at the end of your remarks, you had talked about that you are evaluating the impacts of the hurricanes and.

Toni Kaplan: Maybe there are some other one timer type items, maybe you could talk about a lot.

Toni Kaplan: One like what the impact is of those would be and if it's on third quarter fourth quarter I think that there were some hurricanes at the very end of the quarter and then some early in <unk> and would you have raised the diet, if not for that or.

Toni Kaplan: Not big enough to have moved the needle there. Thanks.

Speaker Change: Yes not.

Speaker Change: Not really any affect in the third quarter.

A lot of effect for a lot of employees a lot a lot of our customers and you're having to manage through.

Speaker Change: Personal challenges of course, and we're very grateful to our teams as Jim described for helping manage that what was.

Speaker Change: Typically has happened in events like this in the past is it takes a little bit of time to assess.

Speaker Change: Exactly what customers might have had service disruptions and then we of course make those accommodations, we consider that in our guidance range, we don't expect it to be.

Speaker Change: <unk> material, but it's among the factors that that we still have a range.

Speaker Change: Around around revenue, probably even more than EBITDA and some of the other majors and and and and while I'm speaking of guidance do I just would what would highlight we feel really great about where we are overall with respect to delivering what we said we would do at the beginning of the year. So we tightened all the ranges around the mid points the hurricane.

Speaker Change: Exact effect there was among the reasons that that we didn't make them even tighter.

Terrific.

Speaker Change: I wanted to get the latest update on really both your views on what an ideal like M&A kind of target would look like primarily domestic or.

Speaker Change: <unk> international as well and traditional security or more technology, just wanted to get the latest on your strategic thinking around M&A targets. Thanks.

Speaker Change: Thanks.

Speaker Change: I would say.

Speaker Change: Generally speaking like we're obviously going to keep our options options open.

Speaker Change: Tony but the I'd.

Speaker Change: I'd say in the main the focus is on in industry.

Speaker Change: And the focus would be domestic.

Speaker Change: We're and I would say generally speaking more tuck in in size.

Speaker Change: And then anything substantial one of the benefits of being out of the solar business and out of the commercial business is it really has renewed our focus on our core and we see a lot of opportunity there and if we were to wade into the waters of M&A again.

Speaker Change: I suspect that it would be in our core.

Speaker Change: And I'd add to that too we've talked about this.

Speaker Change: Just to emphasize is that we're in a spot where we have a lot more flexibility to be opportunistic from all of the progress that we've made in our capital structure youre, having reduced our debt.

Speaker Change: By more than $2 billion, you feel compelled to repeat that we got our leverage down below the 3.0 line. So so at two nine times and we're always evaluating the deployment of capital between capital that generates near term returns you know normal subscriber acquisition spending as an example versus capital deployed to <unk>.

Speaker Change: Best in technologies capabilities and might have longer term and then then M&A and then of course also returning more to shareholders with our dividend increase and our share repurchases. So far this year.

Speaker Change: Thanks, so much.

Speaker Change: Thank you.

Operator: Again, if you'd love to ask a question, please press stop on the number one on your telephone keypad. Our next question, oh, just dropped. The number of questions in the queue.

Speaker Change: Again, if you'd love to ask a question. Please press star.

Speaker Change: And the number one on your telephone keypad.

Speaker Change: Our next question.

Speaker Change: Just dropped.

Speaker Change: And then Nemo questions in the queue I would like.

James DeVries: I would like to send a call back over to the ADT team for closing remarks. Okay, thank you, operator. Thanks, everyone, for taking time to join us today. We feel very good about the momentum in the business, closing the year strong. I'd like to express my appreciation again to our ADT employees and dealer partners. Congratulations on an excellent quarter.

Speaker Change: So, let's turn the call back over to the ADT team for closing remarks.

Speaker Change: Okay. Thank you operator, thanks, everyone for taking time to join US today, we feel very good about the momentum in the business closing the year strong.

Speaker Change: I'd like to express my appreciation again to our ADT employees and dealer partners.

Speaker Change: Gratulation on an excellent quarter, thanks, again, everyone and have a great day.

James DeVries: Thanks again, everyone, and have a great day.

Speaker Change: Yeah.

Operator: Ladies and gentlemen, that includes our presentation for today. Thank you for joining, and have a wonderful day.

Ladies and gentlemen that concludes our presentation for today. Thank.

Speaker Change: Thank you for joining and have a wonderful.

Speaker Change: A wonderful day.

Speaker Change: Yeah.

Speaker Change: And we are clear.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Andrea.