Q3 2025 ADT Inc Earnings Call

Speaker #2: Hello . And thank you for standing by . My name is Mark , and I will be your conference operator today . At this time , I would like to welcome everyone to the ADT third quarter 2020 Earnings Conference call .

Speaker #2: All lines have been placed on mute to prevent any background noise . After the speakers remarks , there will be a question and answer session .

Speaker #2: If you would like to ask a question during this time , simply press star , followed by the number one on your telephone keypad .

Speaker #2: And to withdraw your question , press star one . Again , thank you . Now I would like to turn the call over to Elizabeth Landers Vice President , Investor Relations .

Speaker #2: Please go ahead .

Speaker #3: Good morning , and thank you for joining us to discuss third quarter 2025 results . Today's speakers are Jim DeVries , Adt's chairman , president and CEO .

Speaker #3: And Jeffrey Likosar , our CFO . After their prepared remarks , we'll open the call for analyst questions . This morning , we issued a press release and presentation summarizing our financial results .

Speaker #3: Both are available at investor . We'll reference our non-GAAP financial measures today . Reconciliations to the most comparable GAAP measures are included in the earnings presentation on our website .

Speaker #3: Unless noted otherwise , all financials and metrics discussed reflect continuing operations . non-GAAP Cash flow measures include amounts related to our former solar business through to Q2 2024 .

Speaker #3: Forward looking statements included in today's remarks are subject to risks and Actual results may differ materially . Please refer to our SEC filings for more details .

Speaker #3: uncertainties .

Speaker #3: And now I'm happy to turn it over to Jim .

Speaker #4: Thank you , Elizabeth , and good morning , everyone . I'm very pleased to report that ADT delivered another quarter of solid revenue growth , robust cash flow and very strong earnings per share .

Speaker #4: Collectively reflecting the resilience of our business model and our team's continued execution of our 2025 strategy . Let me start with a few key financial highlights .

Speaker #4: Total grew 4% to $1.3 billion . Adjusted EBITDA grew 3% to $676 million , with adjusted earnings per diluted share of $0.23 , up a strong 15% year over year .

Speaker #4: Cash flow continues to be a highlight , with adjusted free cash flow , including interest rate swaps reaching $709 million year to date .

Speaker #4: Additionally , year to date , we have returned

Speaker #4: $746 million to ADT shareholders through share repurchases and dividends . We ended the third quarter with a recurring monthly revenue revenue balance of $362 million , up 1% year over year .

Speaker #4: Turning to attrition, earlier this year, ADT achieved record levels in this quarter. We ticked up to 13%, which is above our budget.

Speaker #4: Our teams are focused on plans to continue improving customer retention and those actions are underway as we've executed in prior quarters during Q3 , we completed a small bulk account purchase of 15,000 accounts for $24 million .

Speaker #4: Overall sentiment remains cautious and relocations continue at low levels . We have remained disciplined in our SAC spending , which resulted in lower new subscriber and RMR ads .

Speaker #4: Jeff will provide more specific details about our results and full year outlook later in our call . I'd like to spend the next few minutes updating you on Adt's 2025 .

Speaker #4: Progress and strategic focus areas , which continue to build on the priorities we've shared throughout this year . ADT commitment remains unchanged , delivering safety and peace of mind to our residential and small business , consumer customers .

Speaker #4: Our strategy is anchored in three core pillars unrivaled safety , innovative offerings and a premium best in class customer experience , unrivaled safety is at the heart of everything we do at ADT , as it has been throughout our entire 150 year history .

Speaker #4: We are constantly strengthening the ways we protect ADT customers and provide them with confidence in their security . Delivering peace of mind as we execute on our near-term financial goals .

Speaker #4: We're also investing in our product and experience ecosystem , expanding and enhancing our differentiated offerings . These efforts give customers even more reasons to choose ADT and to remain loyal to our brand .

Speaker #4: Our ADT Plus platform continues to gain traction, enhancing the safety, convenience, and experience we deliver to our customers. Our product and engineering teams are firing on all cylinders and coordinating with our strategic partners to drive a continued pipeline of innovative releases.

Speaker #4: Our product roadmap is robust and we expect to continue expanding our suite of unrivaled offerings every quarter to continue to gain share within the smart home and increasing percentage of our new customers are now enjoying ADT plus and many of these customers are opting for larger , more comprehensive ADT systems , leading to increased installation revenue .

Speaker #4: And we anticipate contributing to even stronger retention over time . During 2025 , approximately 25% of our new customer additions have been installed with the ADT plus platform , and we are continuing to expand to more categories of customers and channels .

Speaker #4: This quarter , we launched the ADT plus alarm range Extender , further enhancing the capabilities , performance and dependability of the ADT plus platform .

Speaker #4: This device expands coverage between the ADT plus base and other connected devices in larger or more complex homes , with a 24 hour battery backup and tamper alerts .

Speaker #4: We also introduced new automation and driven testing capabilities to streamline app development , reduce the need for manual testing , and deliver faster , high quality releases .

Speaker #4: These innovations help ensure a smoother , more reliable experience for our ADT plus customers . We are actively evaluating new features , use cases and economic AI models and will continue to share additional information as these come to market .

Speaker #4: I also have a few updates regarding our efforts to optimize our hardware portfolio . While we don't expect hardware savings to be material in 2025 , we view this as a meaningful source of savings going into 2026 .

Speaker #4: Beginning October 15th , ADT refreshed our smart home security portfolio and we now offer five new Google Nest Camera models , reflecting the continued expansion of our partnership with Google .

Speaker #4: And we are working closely with our suppliers to mitigate our tariff exposure , which we do not expect to be material during 2025 .

Speaker #4: On the customer service front , we remain pleased with our progress with Adt's remote assistance Program , which has eliminated approximately half of our in-home service calls , reducing truck rolls and field service costs .

Speaker #4: Our current AI efforts remain focused on our customer care operations , with an emphasis on improving the customer service experience for both our customers and our employee agents .

Speaker #4: While also improving overall efficiency . These AI initiatives continue to deliver positive results with an increasing number of customer service chats processed by AI agents .

Speaker #4: With nearly half of those successfully resolved without live agent intervention . We're also continuing to expand the rollout of AI agents for voice calls and early results are promising for both customer satisfaction and cost efficiency .

Speaker #4: AI driven cost savings are beginning to materialize , particularly in our call center operations , and we expect to provide more quantitative detail as these benefits scale .

Speaker #4: Turning for a moment to statefarm . As mentioned during our last call , we have pivoted away from the past , selling program , and we're exploring new opportunities for a digital relocation focused approach to jointly pursue new customers .

Speaker #4: Despite some ongoing macroeconomic uncertainty , including tariff pressures and elevated interest rates . Adt's business model remains resilient and very well positioned for the future .

Speaker #4: In closing , we remain focused on execution , operational excellence and positioning . ADT for long term value creation . I remain confident in Adt's outlook and our ability to deliver on our commitments for 2025 .

Speaker #4: I want to thank our employees , partners and customers for their dedication and trust in ADT . I'm proud of our team's performance and excited for the opportunities ahead .

Speaker #4: With that , I'll turn the call over to Jeff .

Speaker #5: Thanks , Jim , and good morning , everyone . I will take the next few minutes to share some additional details on our third quarter and year to date results , and our outlook for the rest of the year .

Speaker #5: As Jim mentioned , cash flow remains a significant highlight in the third quarter , we generated $208 million of adjusted free cash flow , including swaps , up 32% , and we have generated $709 million year to date , up 36% .

Speaker #5: Adjusted net income for the quarter was also very strong , at $187 million , or $0.23 per share . Year to date , we have generated adjusted earnings per share of $0.67 , up 20% .

Speaker #5: Adjusted EBITDA for the quarter was $676 million , up 3% in the quarter and up 4% on a year to date basis . This strong performance is driven by revenue growth .

Speaker #5: The associated margins and our overall efficiency , enabling continued investments for the future while delivering these results . Adjusted earnings per share also benefited from our repurchases , enabled by our strong cash generation and our efficient capital structure .

Speaker #5: On the top line , we delivered total revenue of $1.3 billion in the quarter , up 4% . Monitoring and services revenue was up 2% , with an ending RMR balance of $362 million .

Speaker #5: Installation revenue was $200 million , up 21% , reflecting our continued mix shift to outright sales at higher average prices . As more customers choose our ADT plus offerings , gross subscriber additions were 210,000 in the quarter , adding $12.5 million in RMR .

Speaker #5: Our ads were down year over year , driven mainly by fewer bulk account purchases . Approximately 49,000 accounts last year versus approximately 15,000 this year .

Speaker #5: I will note that our third quarter results still include the multifamily business , which we divested on October 1st . This business is comprised of customers who own or operate residential rental housing facilities , such as apartment complexes .

Speaker #5: It's characteristics are akin to the commercial business we divested in late 2023 , generating meaningfully lower EBITDA and cash flow margins than our core residential subscriber base .

Speaker #5: We are consequently pleased with the $56 million sale price for this relatively small portfolio of approximately 200,000 subscribers and $2.6 million in RMR .

Speaker #5: We have also continued to . Return significant capital to shareholders while strengthening our balance sheet . As Jim mentioned , we have returned $746 million so far this year from the repurchase of 78 million shares and our quarterly dividend distributions .

Speaker #5: We remain very comfortable with our leverage at 2.8 times adjusted EBITDA , with net debt of $7.5 billion at the end of the third quarter .

Speaker #5: In October , we closed on a new eight year , $1 billion bond and a $300 million add on to our 2032 term loan .

Speaker #5: B we used the proceeds to fully repay our $1.3 billion , 2028 second lien notes , which was our most expensive debt . We also closed on a new $325 million term loan , a last week , with those proceeds designated to repay some of our 2030 term loan .

Speaker #5: B and our April 2026 notes . In all cases , we were able to price the new facilities below the rates of the debt they replaced , together with transactions from earlier in the year .

Speaker #5: We have extended almost $2.5 billion of upcoming maturities and lowered our borrowing costs to 4.3% . We also enjoy a continued strong liquidity position with an undrawn $800 million revolving facility and $63 million of cash on hand at the end of the quarter .

Speaker #5: I'll close with a couple comments on our outlook . With two months to go , we remain on track to deliver results consistent with the guidance we shared earlier this year .

Speaker #5: Reflecting this confidence , we have tightened and adjusted our guidance ranges , largely maintaining prior midpoints . We now expect total revenue of between 5.075 and $5.175 billion , with the midpoint consistent with our original guidance .

Speaker #5: Our refreshed ranges include a slightly higher adjusted EPs midpoint with an offset to the adjusted EBITDA midpoint . This is in consideration of the mix between expense and capitalized sack and other factors , including a delayed planned legal recovery .

Speaker #5: We now expect adjusted EPs in a range of 85 to $0.89 , and we expect adjusted EBITDA to be in the range of 2.665 to $2.715 billion .

Speaker #5: Finally , we are maintaining our 800 to $900 million range for adjusted free cash flow , including swaps . As we evaluate a handful of fourth quarter opportunities , including bulk account purchases .

Speaker #5: In summary , we are very pleased with our progress during the first three quarters of 2025 , as we look towards the remainder of the year , we are confident in our ability to deliver on our commitments .

Speaker #5: We remain focused on driving operational efficiency , investing in innovation and generating long term value for our stakeholders . Thank you for your continued support .

Speaker #5: Operator . Please open the line for questions .

Speaker #2: We'll now begin the question and answer session . If you would like to ask a question at this time , simply press star , followed by the number one on your telephone keypad and your first question comes from the line of Peter Christiansen with Citigroup .

Speaker #2: Peter , please go ahead .

Speaker #6: Hi . Good morning . Thanks for the question . Great to see the free cash flow growth . Really materialized here this year .

Speaker #6: It looks pretty impressive . Jeff , I really one question for me , Jeff , I was just wondering , we obviously know next year full cash tax payer .

Speaker #6: But on the other hand you've been able to lower the borrowing costs for the company . So I mean those are those are pretty important .

Speaker #6: Key inputs as we think about 2026 free cash flow , are there are there any other areas that we should think about when when in our modeling , as we looked at 2026 , any any components to free cash flow growth that stand out in your view ?

Speaker #6: Thank you .

Speaker #5: Yeah . You hit on the on on the ones that that have some dynamics that could cause them to change . So so we've had some success managing our cash taxes will end up a little bit better on cash taxes .

Speaker #5: A couple of benefits from from the recent legislation . We've done a really good job with the series of debt transactions reducing our borrowing costs , which makes that less of a less of a challenge next year compared to what we we once , once thought it would be .

Speaker #5: So we feel really good about our progress in 2025 . On track to achieve our original guidance . Because of our improvements , we have a lot more flexibility in capital deployment .

Speaker #5: So while we're not sharing any specific guidance beyond 25 today , this is of course the time of year where we're working on strategic planning and budgeting for next year .

Speaker #5: Ongoing conversation with with our board , evaluating several really interesting initiatives and opportunities for long term growth . We continue to believe our stocks undervalued .

Speaker #5: So we've deployed capital there this year . We plan to to share more in the first part of next year . In terms of a broader strategy and longer range outlook , along with our 2026 guidance .

Speaker #5: But feel really , really , really good about where we are in 2025 .

Speaker #6: That's good color . Thank you . Thanks . Results .

Speaker #2: And your next question comes from the line of Ashish Subadra with RBC answers . Please go ahead .

Speaker #7: Hi . Thanks for taking my question . So you mentioned efforts under way to improve retention . I believe ADT plus and some of the AI initiatives are part of it .

Speaker #7: But I was just wondering if you could elaborate further on how should we think about some of these initiatives helping , retention going forward ?

Speaker #7: Thanks .

Speaker #4: Sure . Thanks for the question . It's Jim . I'll give a little bit of color on attrition overall and then talk about a couple of the improvement areas that we're focused on .

Speaker #4: As I said on the call , we ended the quarter rounding the 13% up about 13 basis points from from last quarter . As a reminder , we achieved record levels earlier this year and and expect to drive attrition lower over time , largely due to tailwinds on customer service and new offerings like like ADT plus , which should drive continue to drive more customer engagement and more usage on the quarter itself , the pressure on the quarter came from a couple of areas non-payment cancels were higher than last year .

Speaker #4: Voluntary losses were worse than last year , and relocation losses were modestly lower than last year . A couple of areas to more specifically to your question , where I think there's there's cause for optimism , the team stability continues to improve and more tenured employees perform at higher productivity rates .

Speaker #4: Our customer experience metrics virtually across the board , NPS customer said . Digital self-service , our all improving and going in the right direction .

Speaker #4: There's been some excellent improvement on life cycle management , which which the team is advancing and and then from a hardware perspective , ADT plus things like trusted neighbor , increased penetration with video , all drive improved usage of our services and to the extent that usage increases , we know historically that retention improves the more customer uses the system .

Speaker #4: The higher they value it . And the higher retention . So the quarter ended at 13 . We ticked up , but there's a number of initiatives underway that I think long term bode well for us .

Speaker #7: That's great color, and maybe just on the RMR front, we saw some softness there from a growth perspective. How should we think about the puts and takes going forward?

Speaker #7: Thanks .

Speaker #4: Sure . So at the at the intersection of attrition being 13 basis points higher and gross adds not being quite where we'd like them to be , RMR ended the quarter less than what we had anticipated .

Speaker #4: Our our direct organic residential ads were actually up 1% year over year . Dealer ads were down modestly . DIY it's a small number , but DIY for us was up 13% year over year .

Speaker #4: The the most significant impact on ending RMR for us this quarter from a comparison perspective , is that we did a bulk of 15,000 this quarter comparing to 49,000 last year .

Speaker #4: So RMR ending RMR ended a little lower than anticipated . We have some bulk in the pipeline . We'll be disciplined about pursuing that bulk , but that should continue to be a source of growth for us going forward .

Speaker #4: Thanks for the question .

Speaker #5: And one thing I'd add to or just emphasize is our continued focus on returns and discipline in capital deployment , stack deployment , especially , you know , it's of course , a very important measure .

Speaker #5: But we're also focused on profitability stack efficiency , cash generation . So so really pleased to be still affirming our guidance . That would would have our adjusted free cash flow up 14 or 15% at the midpoint after 40 .

Speaker #5: I think it was a little bit above 40% last , last year . So so as we're bouncing all of these objectives . I want to emphasize the progress we've made on cash generation .

Speaker #7: That's great color and congrats on good , solid topline . Thank you .

Speaker #2: And your next question comes from the line of Manav Patnaik with Barclays . Manav , please go ahead .

Speaker #8: Hi . Good morning . This is Ronan Kennedy on for thank you for taking my questions . Can you talk about the portfolio hardware optimization efforts ?

Speaker #8: I believe you indicated not material savings in 25 , but a potentially meaningful source of savings into 26 . So if you could please provide some color of that on that .

Speaker #8: And also the benefits of the remote assistance program and your early AI initiatives , please .

Speaker #4: Sure . Ronan , there's a lot packed into that , into that question . I'll , I'll go treetops on on each of the three and we can go deeper in the after call .

Speaker #4: If you like , on the product side , we're working with our Odms , essentially leveraging our scale and their expertise to drive lower cost manufacturing and and we've had some good progress with ADT plus that .

Speaker #4: Now represents something in the neighborhood of 25% of our new sales. We will continue to expand that to new order types and new channels.

Speaker #4: But but all of the work that our engineering teams are doing with the Odms are focused on driving , driving down prices . We'll have a little bit of tailwind .

Speaker #4: We've had a little bit of tailwind on that front this year . It's not material , but as we continue to expand ADT plus to more and more of our new installations , we'll see more progress on the savings front .

Speaker #4: AI continue to focus on customer service . We're now expanding into some sales applications , employee productivity there , too . We've had savings in in 2025 and expect that to begin to accelerate in 26 as well .

Speaker #4: Chat volumes now have 100% AI containment, with voice at around 50%. Voice is likely in the neighborhood of half of our calls, where virtual agents contribute to our voice call containments, which remain flat at just below 20%.

Speaker #4: But I feel good about about what we're doing on the on the AI front as well . And then on and then on remote servicing .

Speaker #4: That's maintained about at a level of about 50% of our service calls . And we've plateaued right about there for the last handful of quarters .

Speaker #4: I think there might be a little bit more improvement there , Ronan , but it's not shouldn't be meaningful . We're happy with where we are .

Speaker #4: The NPS and customer SAT scores are very good with with remote service , and I would expect that it will maintain right around half of our service calls .

Speaker #8: Thank you very much for that , Jim . Another , if I may kind of multifaceted question , but more so on the macro and the strength of the consumer as you see it .

Speaker #8: I think you said not our voluntary disconnects were up . I don't think you you commented on non-pay . You also alluded to potential impacts of tariffs and a still higher interest rate environment .

Speaker #8: So could we just have your characterization of the macro , the strength of the consumer and if and how those could potentially impact you achieving your guidance for for Q or going into 26 , please .

Speaker #4: Yeah , we so absolutely we so we reiterated on the guide . So I'd say overall macro factors . Included . We are confident with a couple of months to go that will be in the guide .

Speaker #4: And therefore, I reiterate, I'll share a couple of comments on attrition and macro overall, and then ask Jeff to touch on your question with regard to tariffs.

Speaker #4: I think generally , Ronan , we're seeing a cautious consumer delinquency is up a bit . Our non-pay cancels , as I mentioned , were higher than last year .

Speaker #4: It's not meaningfully higher , but it's a number . We're paying a lot of attention to . I think that some of the process changes in collections that our team is making while early , bode well for us , and we're definitely not seeing a continued erosion , those elevated non-pay cancels and delinquencies have have stayed steady , elevated , but steady .

Speaker #4: Another thing worth mentioning you're pretty familiar with our business when when we have relocations down the downside is we get fewer bites at the apple from a gross ads perspective .

Speaker #4: But it is a tailwind for us on attrition and relocation losses were a bit less Q3 this year than Q3 last year , so overall , taking macro all the macro variables in the in the into consideration , I continue to feel good .

Speaker #4: Jeff continues to feel good about Q4 .

Speaker #5: Yeah , and I'd add on tariffs . The the environment has come into a little bit sharper focus , but still still not perfect focus .

Speaker #5: So we we continue to work with with our vendors to mitigate costs . In some cases , it's negotiations . It's it's consideration of country of origin shifts .

Speaker #5: In some cases nearer term , some cases longer term . You know , places , places where we make may make pricing adjustments to our customers .

Speaker #5: And then I want to reiterate at the at the risk of repeating the point that we just feel really good about about our ability to deliver our guidance from the beginning of the year , I recall in , I think it was our first quarter call , noting that we expected tariffs would put pressure on the midpoint of some of our guidance ranges , but we still would deliver the ranges .

Speaker #5: And you're sitting here today in November , the tariffs have a bit of an effect on on EBITDA . There's a couple EBITDA things between hitting the PNL and hitting the balance sheet , but we're able to overcome those in a couple of offset in EPs .

Speaker #5: So you took our EPs up a couple of points and or a couple cents . I mean , and then I already already made the point of we feel really good about our cash generation .

Speaker #5: So , so despite some of these uncertainties , our teams have done a really good job managing the puts and takes this year .

Speaker #8: Thank you both for all the color . Greatly appreciate it .

Speaker #4: Thanks , Ronan .

Speaker #2: And your next question comes from the line of Toni Kaplan with Morgan Stanley. Toni, please go ahead.

Speaker #9: Thank you so much . I first wanted to ask about the lower sac spend . Was that a deliberate strategy ? It makes sense that you wanted to be more disciplined , but I guess is there anything that sort of drove you to spend less this quarter or it just was that the customers that , you know , you saw , you know , weren't as high quality or or was it sort of a deliberate you wanted to spend less .

Speaker #9: Thanks .

Speaker #5: Yeah , I would , I would say it's it's the combination of those things , you know , navigation of the , of the point I was alluding to earlier of a variety of factors and offsetting directions in our commitment to deliver the guidance we put forth at the beginning of the year and the point I mentioned about disciplined and returns oriented in our approach , and then maybe we're worth also mentioning that that we do still have a range around our adjusted free cash flow outlook for the full year , even with a couple months left .

Speaker #5: And part of that is the continued evaluation of of SAC and the largest chunks of SAC tend to be bulk account purchases that that that we will evaluate in the in the in the last handful of weeks here .

Speaker #9: Great . And then on State Farm , I know you had talked about sort of changing course on the program that was originally rolled out because of the slow pace .

Speaker #9: This one seems more targeted , but also sort of . More limited . So I guess , maybe just talk about how how did you sort of pick this new target customer base where they seeing higher adoption of like higher take rate of the ADT product during the initial phase or was there something else ?

Speaker #9: And I guess in terms of like your cost of this program , I imagine is probably not that big , but I guess , like , how do you think about , like what you're hoping to get for returns or things like that ?

Speaker #9: And when do you sort of reevaluate on the new pilot ? Thanks .

Speaker #4: Thanks for the question , Tony . It's Jim . I'll give a little bit of context on State Farm and then speak to speak more directly to your to your question about the digital program that we're contemplating our original agreement with State Farm was was for a three year term that concluded just this past October .

Speaker #4: As you know , and as I've mentioned on a few calls , volumes been below what we expected from the partnership . We didn't build meaningful ads into our 2025 budget program .

Speaker #4: To date . We're at around 33,000 subscribers , 32 33,000 subscribers . And so we have pivoted to explore a digital solution . This is effectively directed at relocating consumers .

Speaker #4: We're in the very early days of design . It's not necessarily the last effort trying to traditional distribution with State Farm , but it's it's a fresh tactic and we're going to lean in here and see if we can get some traction and advantage .

Speaker #4: Is that it's it's in the potential by flow . And so there's not a reliance on agent execution as there is in the traditional path .

Speaker #4: This is a digital process directed at relocating customers . I should also mention we're continuing our data sharing program with State Farm , where with customer consent , we we share alarm activity at the customer's home with State Farm .

Speaker #4: And so we continue to kick tires on that front to see if there's a source of value . But but back again on your original question about the the the advantage of the digital program , I would say is that it's included in the buy flow .

Speaker #4: A more natural process and , and one we hope we get better traction with .

Speaker #9: Super . Thanks .

Speaker #2: And your next question comes from the line of George Tong with Goldman Sachs . George , please go ahead .

Speaker #10: Hi . Thanks . Good morning . You outlined various drivers to improve your attrition rates . Can you talk about how long you think it might take for those improvements to materialize and drive year over year improvements in attrition ?

Speaker #4: Thanks for the question , George . I , I , I think that it's probably Q1 Q2 of of next year . The it takes a little bit of time to bake on on the NPS improvements .

Speaker #4: The digital self-service continues to get really good traction . We're better than ever at meeting customers where they choose to interact with us .

Speaker #4: So we're expanding the digital platforms . There are some really interesting work that we're doing leveraging AI to drive satisfaction , but I think it's a quarter or two before we start to see some improvement .

Speaker #4: I think the voluntary losses I anticipate will be the first to improve. I mentioned earlier on our non-payment cancels that there has been some process improvement on collections, where we essentially are dialing up our contact rates with delinquent customers and having some success.

Speaker #4: There . And I'd expect some non-pay improvement as well , that that , of course , is pretty significantly influenced by the macro environment .

Speaker #4: So a little more difficult to predict . But I think our internal process is and the improvement we're making bode well for us , say Q1 , Q2 .

Speaker #5: And one other thing I'd add too is we made we made some adjustments , some fine tuning to our underwriting processes , to whom we extend how much credit earlier in the year that we expect will have some benefit .

Speaker #5: But also take takes a few months to work its way through the system .

Speaker #10: Got it . That's helpful . And you mentioned earlier continuing to opportunistically pursue bulk account purchases . Can you remind us what's embedded in the guide in the full year guide with respect to future bulk account purchases , and what current economics look like with purchases ?

Speaker #4: Let's tag team on this one . Jeff , I saw give you a little bit of color and Jeff , Jeff , Jeff will as well .

Speaker #4: George the so we've got some bulk in the pipeline now . We as you know will stay disciplined . We won't chase these bulks .

Speaker #4: We don't want ads just for the sake of ads . So if we can't get to the economics that that we target , we won't pursue them .

Speaker #4: But there's , you know , there's 2 or 3 sizable sizable bulk opportunities available to us . We're evaluating those . We we may end up executing one in the fourth quarter .

Speaker #4: And and that I think Jeff mentioned earlier is largely the reason why we left the free cash flow guide guide . We tightened revenue , EBITDA and EPs , but left a just free cash flow at the 800 to 900 to in to principally to have the flexibility to pursue one of these bulks in Q4 .

Speaker #4: If the economics work out .

Speaker #5: Yeah , I don't have a whole lot to add . Similar to to Tony's question , and even in even in the third quarter , you , Jim , had noted one of one of the drivers or I noted also in the prepared remarks that that one one of the drivers , year on year was less bulk in the third quarter .

Speaker #5: So of course , that led to less spending on those bulks . You guys , we're evaluating these in the fourth quarter . I would just be echoing Jim's point about about that .

Speaker #5: That's why that's why the range is a bit wider than some of the other ranges .

Speaker #10: Got it . Thank you .

Speaker #11: Thank you .

Speaker #4: Thanks , George .

Speaker #2: And your next question comes from the line of Ashish Subadra . Please go ahead .

Speaker #7: My question again , just one quick question on capital allocation . You've been very opportunistic with the share repurchases . Can you just remind us how much more authorization do you have in place .

Speaker #7: And also, from a liquidity perspective, can you talk about your opportunity to continue to do more opportunistic share repurchases going forward? Thanks.

Speaker #5: Yeah , sure . So the the authorization from the beginning of this year , we have fully consumed . So that was a $500 million authorization .

Speaker #5: We also had another a little bit more than $100 million of repurchases in January under the prior year's authorization . In terms of of capacity , we we have access to our revolving facility .

Speaker #5: As I noted , we we feel really good about the debt transactions we've been able to undertake , including including refinancing our most expensive debt just in the last couple of weeks .

Speaker #5: We also recently issued a term loan , a we use $200 million of those proceeds to to repay our older , more expensive term loan .

Speaker #5: B the 2030 term loan B but we do have some of that cash still available . It's earmarked for for debt repay . But from a liquidity perspective , as we sit here today , we have liquidity available .

Speaker #5: And as already alluded to , significant flexibility . Our next upcoming maturity is our is $300 million . On our April 2026 notes .

Speaker #5: And we feel very confident we can manage that maturity and have some capital available for for share repurchases . If there's a good opportunity or M&A or SAC or any of the other capital allocation priorities .

Speaker #5: We've talked about .

Speaker #7: Very helpful . Thank you .

Speaker #2: There's no further questions at this time . I will now turn the call back over to for closing remarks . Jim .

Speaker #4: Thank you . Mark , and thanks , everyone , for taking the time to join us today . We look forward to finishing the year strong .

Speaker #4: We remain confident in achieving our financial commitments for 2025 . I'd like to extend my appreciation to our employees and our dealer partners .

Speaker #4: Thanks again everyone and have a great day .