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Our ability to develop, alone or with third parties, or to acquire new products and services that are technologically innovative requires the investment of significant resources and can affect our competitive position.
−Removed: In addition, the dynamic nature of these changes requires that we simultaneously engage in significant technology developmental efforts across our operations, including platform development, sales, marketing, customer care, customer self-service, virtual service, billing, and other substantive and administrative functions.
−Removed: Upgrading and implementing changes to any one of our systems could present challenges, including potential interruptions to system operations as changes are made, which could disrupt or reduce their efficiency in the short term and temporarily affect the quality of the products and services offered to customers.
+Added: In addition, the dynamic nature of these changes requires that we simultaneously engage in significant technology developmental efforts across our operations, including platform development, sales, marketing, customer care, customer self-service, remote assistance, billing, and other substantive and administrative functions.
+Added: Upgrading and implementing changes to any one of our systems presents challenges, including potential interruptions to system operations as changes are made, which could disrupt or reduce their efficiency in the short term and temporarily affect the quality of the products and services offered to customers.
Moreover, the age of our systems and architecture may present unique challenges that we have not previously encountered as we undertake these developmental efforts simultaneously across our operations.
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Product introductions and the timing of such integration are focused on customer experience and are mutually agreed upon.
−Removed: Until such integration occurs, Google has the contractual right to require us, with certain exceptions, to exclusively offer those Google Devices and Services without integration for all new professional installations and for existing customers who do not have ADT Pulse or ADT Control interactive services.
−Removed: In November 2020, we announced the ongoing development of our proprietary ADT-owned next-generation professional security and automation technology platform.
−Removed: Our comprehensive interactive platform is intended to provide customers with a seamless experience across security, life safety, automation, and analytics through a common application that integrates the user experience, the customer service experience, and back-end support.
−Removed: We may not achieve a successful platform rollout in a
−Removed: timely manner, within budget, or in a manner that enables the commercialization of products and services that meet the continually evolving demands of our customers, any of which could have a material adverse impact on our business, financial condition, results of operations, and cash flows.
−Removed: As we begin to commercialize products based upon our interactive platform, we have adjusted our processes for reviewing and securing intellectual property rights.
−Removed: Nevertheless, we may become the target of additional lawsuits alleging that we have infringed the patents or technology of third parties.
−Removed: Regardless of the merits of these lawsuits and any steps we take to mitigate infringement risk, any allegations could cause us to incur significant costs to defend and resolve, and could harm our business and reputation, any of which could have a material adverse impact on our business, financial condition, results of operations, and cash flows.
+Added: Until the launch of such integration, Google has the contractual right to require us, with certain exceptions, to exclusively offer those Google Devices and Services without such integration for all new professional installations and for existing customers who do not otherwise have ADT Pulse or ADT Control interactive services.
+Added: In November 2020, we announced the ongoing development of our proprietary ADT-owned next-generation professional security and automation technology platform that we launched in 2023 as ADT+.
+Added: Our ADT+ platform is intended to provide customers with a seamless experience across security, life safety, automation, and analytics through a common application that integrates the user experience, the customer service experience, and back-end support.
+Added: We may not achieve a successful
+Added: ongoing rollout of the platform, and new platform features, in a timely manner, within budget, or in a manner that enables the commercialization of products and services that meet the continually evolving demands of our customers, any of which could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
+Added: As we continue to commercialize products based upon our interactive platform, we have adjusted processes for reviewing and securing intellectual property rights.
+Added: Nevertheless, we have been, and in the future may become, the target of additional lawsuits alleging that we have infringed the patents or technology of third parties.
+Added: Regardless of the merits of these lawsuits and any steps we take to mitigate infringement risk, any allegations could cause us to incur significant costs to defend and resolve, and could harm our business and reputation, any of which could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
In September 2022, we entered into a strategic relationship with State Farm with the goal of expanding our customer base by developing integrated solutions for State Farm’s customers.
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Subject to the terms of the State Farm Development Agreement, we have agreed not to enter into any development, marketing, distribution, or other arrangement with certain competitors of State Farm and to refrain from developing, marketing, distributing, or making available to certain competitors of State Farm any products or services developed in connection with the State Farm Development Agreement.
−Removed: If we fail to successfully develop products and services that are utilized by State Farm’s customer base pursuant to the State Farm Development Agreement, we may not achieve or realize the anticipated financial, strategic and other benefits of the strategic relationship with State Farm, and our growth prospects and our business, financial condition, results of operations, and cash flows could be materially adversely affected.
−Removed: Subject to termination rights related to breach and change of control, the State Farm Development Agreement has an initial term of three years from October 13, 2022.
+Added: If we fail to successfully develop products and services that are utilized by State Farm’s customer base pursuant to the State Farm Development Agreement, or if such agreement is not extended past its initial term expiring on October 13, 2025, we may not achieve or realize the anticipated financial, strategic and other benefits of the strategic relationship with State Farm, and our growth prospects and our business, financial condition, results of operations, and cash flows could be materially adversely affected.
Any new or enhanced products and services that we develop alone or pursuant to existing or new agreements with third parties may not satisfy customer preferences, and potential product failures may cause customers to reject our products and services.
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The home security and automation markets in which we sell our products and services are highly competitive, which may result in pressure on our profit margins and limit our ability to maintain or increase the market share of our products and services.
−Removed: We experience significant competitive pressure in both the do-it-for-me (“DIFM”) and DIY spaces.
+Added: We experience significant competitive pressure in both the DIFM and DIY spaces.
The monitored security industry is highly fragmented and subject to significant competition and pricing pressures.
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Several competitors offer comparable or lower installation and monitoring fees, and others may charge significantly more for installation, but in many cases, less for monitoring.
−Removed: We also face competition in the DIY space from companies such as SimpliSafe, Apple HomeKit, and Amazon Ring, which enable customers to self-monitor and control their environments without third-party involvement through the Internet, text messages, emails, or similar communications.
−Removed: Some DIY providers may also offer professional monitoring with the purchase of their systems and equipment without a contractual commitment, or offer new IoT devices and services with automated features and capabilities, which may be appealing to customers and put us at a competitive disadvantage.
+Added: We also face competition in the DIY space from companies such as SimpliSafe, Wyze Home Monitoring, and Amazon Ring, which enable customers to self-monitor and control their environments without third-party involvement through the Internet, text messages, emails, or similar communications.
+Added: Some DIY providers may also offer professional monitoring with the purchase of their systems and equipment without a contractual commitment, or offer new Internet of Things (“IoT”) devices and services with automated features and capabilities, which may be appealing to customers and put us at a competitive disadvantage.
In addition, certain DIY providers have a significantly broader customer base and product offering than us, allowing them to cross-subsidize their offerings through their other product offerings and cross-sell interactive and security solutions that are competitive with our offerings to customers who are loyal to the competitor’s brand.
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(ii) may have access to greater capital and resources than us;
−Removed: and (iii) may spend significantly more on advertising, marketing, and promotional resources, as well as the acquisition of other companies with home automation solution offerings, any of which
−Removed: could have a material adverse effect on our ability to drive awareness and demand for our products and services.
+Added: and (iii) may spend significantly more on advertising, marketing, and
+Added: promotional resources, as well as the acquisition of other companies with home automation solution offerings, any of which could have a material adverse effect on our ability to drive awareness and demand for our products and services.
We may also face competition for direct sales from our independent, third-party authorized dealers, who may offer installation in particular markets for considerably less than we do.
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Many of our customers’ security systems rely on technology that is not operable with newer cellular or IP-based networks, and as such, will not transmit alarm signals on these networks.
−Removed: The discontinuation of copper landline services, older cellular technologies, and other services by telecommunications providers, as well as the switch by customers to the exclusive use of cellular or IP-based technology, may require system upgrades to alternative, and potentially more expensive, alarm systems to function and transmit alarm signals properly.
−Removed: This could increase our customer revenue attrition, as was the case when we sought to migrate certain customers from the earlier 2G networks, and slow new customer generation.
+Added: The discontinuation of copper landline services, older cellular technologies, and other services by telecommunications providers, as well as the switch by customers to the exclusive use of cellular or IP-based technology, may require system upgrades to alternative, and potentially more expensive, alarm systems to function and transmit alarm signals properly, which could increase our customer revenue attrition.
+Added: Additionally, any telecommunications technology upgrades or implementations could also result in significant additional costs and divert management and other resource attention away from customer service and sales efforts for new customers.
+Added: In the future, we may not be able to successfully implement new telecommunications technologies or adapt existing telecommunications technologies to changing market demands.
+Added: If we are unable to adapt in a timely manner to changing telecommunications technologies, market conditions or customer preferences, our business, financial condition, results of operations, and cash flows could be materially adversely affected.
In February 2022, a major provider of 3G cellular networks began to retire its network and a major provider of Code-Division Multiple Access (“CDMA”) began to do so in December 2022.
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None of these remaining customers have responded to our multiple requests to upgrade their systems and therefore we could not transition them prior to the relevant transition dates.
−Removed: A failure to effectively transition these customers away from retired networks will result in a loss of signal to the systems and certain services we provide, which may impact our ability to bill and
−Removed: collect for services provided.
+Added: A failure to effectively transition these remaining customers away from retired networks will result in a loss of signal to the systems and certain services we provide, which may impact our ability to bill and collect for services provided.
Implementation of additional service charges in connection with these transitions may cause customers to view such charges unfavorably, which could increase our customer attrition.
−Removed: We cannot know the full impact of network retirement on our customers and therefore on our business until sometime after all such retirements have occurred.
−Removed: If we are unable to upgrade cellular equipment at customer sites to meet new network standards or to respond to other changes carriers are making or may make to their networks in a timely and cost-effective manner, whether due to an insufficient supply of electronic components or parts, an insufficient skilled labor force, or due to any other reason, or if we are sued by one or more customers due to our inability to provide certain services, or due to any loss incurred while we are not able to provide certain services, or due to any continuous billing for services after a prior or future transition date, our business, financial condition, results of operations, and cash flows, could be materially adversely affected.
−Removed: We have also recently become aware that one or more telecom carriers are beginning the process to retire their time-division multiplexing (“TDM”) nodes that service toll-free numbers, which could require us to further upgrade certain of our customer equipment.
−Removed: In November 2017, as part of the FCC’s efforts to facilitate the transition from traditional copper-based wireline networks to IP-based fiber broadband networks, the FCC repealed its rules requiring telecommunications carriers to provide direct advanced public notice to consumers of the retirement of copper-based wireline networks.
−Removed: Many of our customers rely solely on copper-based telephone networks to transmit alarm signals from their premises to our monitoring stations.
−Removed: Since some customer alarm systems are not compatible with IP-based communication paths, we will be required to upgrade or install new technologies, which may include the need to subsidize the replacement of the customers’ outdated systems at our expense.
−Removed: The carrier’s ability to retire copper-based wireline networks without advanced notice could lead to customer confusion and impede our ability to timely transfer customers to new network technologies.
−Removed: Any technology upgrades or implementations could require significant capital expenditures, may increase our attrition rates, and may also divert management and other resource attention away from customer service and sales efforts for new customers.
−Removed: In the future, we may not be able to successfully implement new technologies or adapt existing technologies to changing market demands.
−Removed: If we are unable to adapt in a timely manner to changing technologies, market conditions or customer preferences, our business, financial condition, results of operations, and cash flows could be materially adversely affected.
+Added: If we are unable to upgrade cellular equipment at customer sites to meet future carrier network standards or to respond to other changes carriers are making or may make to their networks in a timely and cost-effective manner, whether due to an insufficient supply of electronic components or parts, an insufficient skilled labor force, or due to any other reason, or if we are sued by one or more customers due to our inability to provide certain services, or due to any loss incurred while we are not able to provide certain services, or due to any continuous billing for services after a prior or future transition date, our business, financial condition, results of operations, and cash flows, could be materially adversely affected.
+Added: We have also become aware that one or more telecom carriers are beginning the process to retire their time-division multiplexing (“TDM”) nodes that service toll-free numbers, which could require us to further upgrade certain of our customer equipment.
In addition, we use broadband Internet access service to support our product offerings, such as video monitoring and surveillance, and as a communications option for alarm monitoring and other services.
Video monitoring and surveillance services use significantly more bandwidth than non-video Internet activity.
−Removed: As utilization rates and penetration of these services increase, the need for increased network capacity might necessitate incurring additional capital or operational expenditures to avoid service disruptions as well as ensure a seamless video experience for our customers, which could materially adversely impact our business, financial condition, results of operations, and cash flows.
−Removed: Police and fire departments could refuse to respond to calls from monitored security service companies.
+Added: As utilization rates and penetration of these services increase, the need for increased network capacity may necessitate incurring additional capital or operational expenditures to avoid service disruptions and enable a seamless video experience for our customers.
+Added: Further, if our customers decide to transition from traditional broadband Internet access services to fixed mobile Internet access services, they may encounter data limits which could negatively impact their use of video monitoring and surveillance, any of which could materially adversely impact our business, financial condition, results of operations, and cash flows.
+Added: Police and fire departments could refuse to respond to calls from monitored security service companies, which could damage consumer trust and confidence in our solutions and may damage our ability to attract and retain customers.
Police departments in certain jurisdictions do not respond to calls from monitored security service companies unless certain conditions are met, such as video or other verification or eyewitness accounts of suspicious activities, either as a matter of policy or by local ordinance.
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We rely on trademark law, company brand name protection policies, and agreements with our employees, customers, business partners, and others to protect the value of our brand names.
−Removed: Despite our precautions, we cannot provide assurance that those procedures are sufficiently effective to protect against unauthorized third-party use of our brand names.
+Added: Despite our precautions, we cannot provide assurance that those procedures are sufficient to protect against unauthorized third-party use of our brand names.
In recent years, various third parties have used our brand names to engage in fraudulent activities, including unauthorized telemarketing conducted in our names to induce our existing customers to switch to competing monitoring service providers, lead generation activities for competitors, and obtaining personally identifiable or personal financial information.
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Future litigation with respect to such unauthorized use could also result in substantial costs and diversion of our resources.
−Removed: Additionally, pursuant to the Brand License we entered into in connection with the Commercial Divestiture, GTCR is allowed to use the ADT brand and other trademarks for a period of 12 months.
−Removed: During this period, we have limited control over the use of the ADT Commercial brand by GTCR, which may increase the risk of damage to the brand for our remaining businesses.
These factors could materially adversely affect our reputation, business, financial condition, results of operations, and cash flows.
−Removed: Third parties hold rights to certain of our key brand names outside of the U.S.
−Removed: Our success depends in part on our continued ability to use trademarks to capitalize on our brands’ name-recognition and to further develop our brands in the U.S, as well as in other international markets should we choose to expand and continue to grow our business outside of the U.S.
+Added: Third parties hold rights to certain of our key brand names outside of the U.S., which could prevent us from being able to adequately protect our brands or expand into other markets.
+Added: Our success depends in part on our continued ability to use trademarks to capitalize on our brands’ name-recognition and to further develop our brands in the U.S, as well as in other international markets should we choose to expand and grow our business outside of the U.S.
in the future.
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Pursuant to a trademark agreement entered into between The ADT Corporation and Tyco (the “Tyco Trademark Agreement”) in connection with the separation of The ADT Corporation from Tyco in 2012, which endures in perpetuity, we are prohibited from ever registering, attempting to register or using such trademarks outside the U.S.
−Removed: (including Puerto Rico and the US Virgin Islands) and Canada, and we may not challenge Tyco’s rights in such trademarks outside the U.S.
+Added: (including Puerto Rico and the U.S.
+Added: Virgin Islands) and Canada, and we may not challenge Tyco’s rights in such trademarks outside the U.S.
Additionally, under the Tyco Trademark Agreement, we and Tyco each has the right to propose new secondary source indicators (e.g., “Pulse”) to become designated source indicators of such party.
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and Canada, whether alone or in connection with an ADT brand.
−Removed: Any dilution, infringement, or customer confusion with respect to our brand or use of trade
−Removed: names, or the inability to use such names as we expand our existing and create new strategic relationships, could materially adversely affect our reputation, business, financial condition, results of operations, and cash flows.
+Added: Any dilution, infringement, or customer confusion with respect to our brand or use of trade names, or the inability to use such names as we expand our existing and create new strategic relationships, could materially adversely affect our reputation, business, financial condition, results of operations, and cash flows.
In addition, in November 2019, we sold all our shares of ADT Canada to TELUS and, among other things, entered into a non-competition and non-solicitation agreement with TELUS pursuant to which we agreed not to directly or indirectly engage in a business competitive with ADT Canada, subject to limited exceptions, for a period of seven years.
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Risks Related to Our Operations
−Removed: We rely on a significant number of our customers remaining with us as customers for long periods of time.
+Added: We rely on a significant number of our customers remaining with us as customers for long periods of time, and if our attrition rates rise significantly, our profitability, business financial condition, results of operations, and cash flows could be materially adversely affected.
New customers require an upfront investment, and we generally achieve revenue break-even in less than two and a half years.
Accordingly, our long-term profitability is dependent on long customer tenure.
−Removed: This requires that we minimize our rate of customer disconnects, or attrition, which can increase as a result of factors such as customer relocations, problems experienced with our product or service quality, customer service, increased interoperability of smart home devices now or in the future, customer non-pay, unfavorable general economic conditions, and the preference for lower pricing of competitors’ products and services over ours.
+Added: This requires that we minimize our rate of customer disconnects, or attrition, which can increase as a result of factors such as customer relocations, problems with our product or service quality, customer service challenges, increased interoperability of smart home devices now or in the future, customer non-pay, unfavorable general economic conditions, and the preference for lower pricing of competitors’ products and services over ours.
If attrition rates were to rise significantly, we may be required to accelerate the depreciation and amortization expense for, or to impair, certain of our assets, including with respect to subscriber and customer relationships, which would cause a material adverse effect on our financial condition and results of operations.
−Removed: In addition, if we fail to keep our customers for a sufficiently long period of time, or our attrition rates increase, our profitability, business, financial condition, results of operations, and cash flows could be materially adversely affected.
+Added: In addition, if we fail to keep our customers for a sufficient period of time, or our attrition rates increase, our profitability, business, financial condition, results of operations, and cash flows could be materially adversely affected.
Delays, costs, and disruptions that result from upgrading, integrating, and maintaining the security of our information and technology networks and systems could materially adversely affect us.
−Removed: We are dependent on the capacity, reliability, and security of information technology networks and systems, including Internet and Internet-based or “cloud” computing services, to collect, process, transmit, and store electronic information.
+Added: We are dependent on the capacity, reliability, and security of information technology networks and systems, including Internet and Internet-based or “cloud” computing services and the relevant personnel who operate those systems, to collect, process, transmit, and store electronic information.
We have completed a significant number of acquisitions of companies that operate different technology platforms and systems.
−Removed: We are continuously implementing modifications and upgrades to our existing information technology systems to keep up with changing technology and business demands.
+Added: We routinely implement modifications and upgrades to our existing information technology systems to keep up with changing technology and business demands.
Aiming to provide a seamless customer experience, we are also integrating systems from our various acquisitions, making changes to legacy systems, replacing legacy systems with successor systems with new functionality, and implementing new systems.
−Removed: We are also implementing modifications to various technology platforms and systems as part of the transition services related to the Commercial Divestiture.
−Removed: The dynamic nature of these and other changes we are undertaking require that we simultaneously engage in significant technology developmental efforts across our operations, including platform development, sales, marketing, customer care, customer self-service, virtual service, billing, and other substantive and administrative functions.
−Removed: Upgrading and implementing changes to any one of our systems could present challenges, and any delay in making such changes or replacements or in purchasing new systems could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
+Added: We are also implementing modifications to various technology platforms and systems related to the Commercial Divestiture, including as part of the transition services related to the Commercial Divestiture.
+Added: The dynamic nature of these and other changes we are undertaking require that we simultaneously engage in significant technology development efforts across our operations, including platform development, sales, marketing, customer care, customer self-service, remote assistance, billing, and other substantive and administrative functions.
+Added: Upgrading and implementing changes to our systems have presented, and could continue to present, challenges.
+Added: Any delay in making such changes or replacements or in purchasing new systems could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
There are inherent costs and risks associated with integrating, replacing, and changing these systems and implementing new systems, including potential disruptions in our sales, operations, and customer service functions which may reduce their efficiency in the short term;
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retention of sufficiently skilled personnel to integrate, implement, and operate the new systems and an increase in human capital costs;
+Added: the use of third-party personnel resources, including offshore vendors, to supplement our internal personnel demands;
demands on management time;
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If we do not effectively implement our plans to migrate our technology infrastructure to the cloud, we could experience significant disruptions in our operations, which could have a material adverse effect on our results of operations and financial condition.
−Removed: We plan to migrate our technology infrastructure to the cloud.
−Removed: This initiative is a major undertaking as we migrate and reconfigure our current system processes, transactions, data and controls to a new cloud-based platform.
+Added: We are in the process of migrating our technology infrastructure to the cloud.
+Added: This initiative is a major undertaking as we migrate and reconfigure our current system processes, transactions, data and controls to new cloud-based platforms.
This transition could have a significant impact on our business processes, financial reporting, information systems, and internal controls.
−Removed: As we implement the transition of our technology infrastructure to the cloud, we may need to divert resources away from other important business operations, including management attention.
−Removed: Additionally, we may experience difficulties as we manage these changes and transition our technology infrastructure to the public cloud, including loss or corruption of data, interruptions in service and downtime, increased cyber threats and activity, delayed financial reporting, unanticipated expenses including increased costs of implementation and of conducting business, and lost revenue.
−Removed: Although we plan to conduct design validations and user testing, these may cause delays in transacting our business due to system challenges, limitations in functionality, inadequate management or process deficiencies in the development and use of our systems.
+Added: As we transition our technology infrastructure to the cloud, we may need to divert resources, including management attention, away from other important business operations.
+Added: Additionally, we may experience difficulties as we manage these changes and transition our technology infrastructure to the cloud, including loss or corruption of data, interruptions in service and downtime, increased cyber threats and activity, delayed financial reporting, unanticipated expenses including increased costs of implementation and of conducting business, and lost revenue.
+Added: Although we conduct design validations and user testing, these may cause delays in transacting our business due to system challenges, limitations in functionality, inadequate management or process deficiencies in the development and use of our systems.
Difficulties in implementing or an inability to effectively implement our migration plans could disrupt our operations and harm our business.
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We have limited control over third-party cloud operations and facilities on which we plan to host our technology infrastructure.
−Removed: Any changes in third-party service levels or any disruptions or delays from errors, defects, hacking incidents, security breaches, computer viruses, DDoS attacks, bad acts or performance problems could harm our reputation, damage our customers’ businesses, and harm our business.
−Removed: Our third-party cloud providers are also vulnerable to damage or interruption from earthquakes, hurricanes, floods, fires, war, public health crises, such as COVID-19, terrorist attacks, power losses, hardware failures, systems failures, telecommunications failures and similar events.
−Removed: Although our transition and migration to the public cloud may increase our risk of liability and cause us to incur significant technical, legal or other costs, we may have limited remedies against third-party providers in connection with such liabilities.
−Removed: Additionally, our third-party cloud providers may not be able to effectively manage existing traffic levels or increased demand in capacity requirements, especially to cover peak levels or spikes in traffic, and as a result, our customers may experience delays in accessing our solutions or encounter slower performance in our solutions, which could significantly harm the operations of our customers.
+Added: Any changes in third-party service levels or any disruptions or delays from errors, defects, cyber attacks, security breaches, computer viruses, DDoS attacks, bad acts, or performance problems resulting from our increased reliance on cloud infrastructure could harm our reputation, damage our small business customers’ businesses, and harm our business.
+Added: Our third-party cloud providers are also vulnerable to damage or interruption from earthquakes, hurricanes, floods, fires, war, public health crises, terrorist attacks, power losses, hardware failures, systems failures, telecommunications failures and similar events.
+Added: Our transition and migration to the cloud may increase our risk of liability and cause us to incur significant technical, legal or other costs, and we may have limited remedies against third-party providers in connection with such liabilities.
+Added: Additionally, our third-party cloud providers may not be able to effectively manage existing traffic levels or increased demand in capacity requirements, especially to cover peak levels or spikes in traffic, and as a result, our customers may experience delays in accessing our solutions or encounter slower performance in our solutions, which could increase our attrition rates, negatively impact our sales, and significantly harm the operations of our small business customers.
Interruptions in our services might reduce our revenue, cause us to issue credits to customers, subject us to potential liability, and cause customers to terminate their subscriptions or harm our renewal rates.
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If any of our third-party cloud providers increase pricing terms, terminate or seek to terminate our contractual relationship or change or interpret their terms of service or policies in a manner that is unfavorable, we may be required to transfer to another provider and may incur significant costs and experience service interruptions.
−Removed: Cybersecurity breaches or threats or other unauthorized access or attempts to access to our systems could compromise the security of our systems and otherwise disrupt our normal operations which could have a material adverse effect on our business, results of operations and financial condition.
+Added: Cybersecurity attacks or threats or other unauthorized access or attempts to access to our systems, or those of third parties, have in the past, and may in the future, compromise the security of our systems and otherwise disrupt our normal operations, which could have a material adverse effect on our reputation, business, financial condition, results of operations, and cash flows.
We collect, process, transmit, and store sensitive and confidential information related to our customers, employees and business partners, as well as proprietary information related to our business, such as business plans and license agreements.
−Removed: This makes us vulnerable to cyber attacks and other attempts to gain unauthorized access to our information and technology networks and systems, including work from home environments.
−Removed: Cyber attacks may come from phishing, malware, ransomware, or other methods.
−Removed: While we implement security measures within our products, services, operations, and, to a limited extent, within other actors’ systems, cyber attacks continue to evolve in sophistication and volume and we may not be able to detect or prevent cybersecurity breaches;
−Removed: the unauthorized access, capture, or alteration of information;
+Added: This makes us vulnerable to cyber attacks and other attempts to gain unauthorized access to our information and technology networks and systems, including work from home environments and third-party systems that are interconnected with ours.
+Added: Cyber attacks have previously originated, and may in the future originate, from various methods, including phishing, malware, and ransomware.
+Added: While we implement and require security measures within our products, services, operations, and, to a limited extent, within third parties’ systems, cyber attacks continue to evolve in sophistication and increase in volume and frequency and we have not in the past and may not in the future be able to timely detect or prevent cybersecurity breaches on our systems or within third-party systems that are interconnected with ours, including the unauthorized access, capture, or alteration of information;
the exposure or exploitation of potential security vulnerabilities;
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or misplaced data or data loss that could materially adversely impact our reputation, business, financial condition, results of operations, and cash flows.
−Removed: Despite our security measures, we have been the target of a number of these forms of cyber attacks, and we will likely continue to be subject to such attacks in the future.
−Removed: If one of these cyber attacks is successful, it may result in disrupted operations, misstated or misappropriated financial data, theft of our confidential or proprietary or other information, increased cybersecurity protection costs, and reputational damage.
−Removed: In addition, we may be the subject to regulatory scrutiny or exposed to litigation or other claims by affected persons including our customers and business partners.
−Removed: While we maintain insurance coverage that is intended to address certain aspects of data security risks, such insurance coverage may not be sufficient to cover all losses or all types of claims that may arise.
−Removed: In addition, following the Commercial Divestiture, certain employees of the divested business will have access to our financial and other internal systems for a period of time which exposes us to increased risks related to information theft and unauthorized
−Removed: system access.
−Removed: Any measures we have taken or may take in the future to protect against theft and unauthorized system access cannot provide absolute protection against employees who may wrongfully use such technology, intellectual property, or information, or wrongfully disclose such technology and intellectual, confidential, proprietary, or any other information to third parties, including our competitors.
+Added: Despite our security measures, we and third parties whose systems are interconnected with ours have been the target of and/or subject to a number of these methods of cyber attacks, including the Cybersecurity Incidents, and we will likely continue to be the target of and/or subject to such attacks in the future.
+Added: These cyber attacks have previously resulted, and may in the future
+Added: result, in certain impacts to us or interconnected third-parties, including disrupted operations, system instability, theft of our confidential or proprietary or other information, increased cybersecurity protection, consulting and legal costs, litigation, and reputational damage.
+Added: These cyber attacks have previously exposed, and may in the future expose, us to an increased risk of future cyber attacks and threats, including through an increase in more sophisticated and targeted cyber attacks from various methods, including phishing, malware, and ransomware, among other methods.
+Added: In addition, cyber attacks could result in misstated or misappropriated financial data or impair our ability to effectively manage our financial reporting process.
+Added: We may be subject to regulatory scrutiny or exposed to litigation or other claims by affected persons including our customers, employees, and business partners.
+Added: While we maintain insurance coverage that is intended to address certain aspects of data security risks, such insurance coverage may not be sufficient to cover all losses or all types of claims that have arisen or may arise, and in the future may not be available at reasonable costs or at all.
+Added: In addition, following the Commercial Divestiture, certain of our information systems and our information security protocols remain interdependent on those of our divested Commercial Business, including dependence for a transitional period on its information systems for billing and alarm monitoring for a small portion of our clients’ accounts.
+Added: Moreover, certain employees of our former Commercial Business have had and will have access to our financial and other internal systems for a period of time which has exposed and will continue to expose us to increased risks related to information theft and unauthorized system access.
+Added: For more information on the continuing services relationship between ADT and our former Commercial Business, see “ We may not achieve some or all of the strategic and financial benefits that we expect to achieve from the Commercial Divestiture or the ADT Solar Exit which could have a material adverse effect on our financial condition and results of operations.”
+Added: This interconnection with our former Commercial Business was exploited by an unauthorized actor in the October Incident and exposes us to increased risks related to cyber attacks.
+Added: Cyber attacks and threats at our former Commercial Business have in the past led, and may in the future lead, to cyber attacks and threats to our systems and assets.
+Added: Any measures we have taken or may take in the future to protect against cyber attacks and threats, including those at our former Commercial Business, or against employees, including employees of our former Commercial Business, who may wrongfully or negligently use or access such technology, intellectual property, or information, or negligently or wrongfully disclose such technology and intellectual, confidential, proprietary, or any other information to third parties, including our competitors, may prove insufficient and cannot provide absolute protection against such attacks and threats.
Our business also requires us to share confidential information with suppliers and other third parties.
−Removed: Third parties, including our partners and vendors, could also be a source of security risk to us, or cause disruptions to our normal operations, in the event of a failure of their own products, components, networks, security systems, and infrastructure.
+Added: Third parties, including our partners and vendors, could also be a source of cybersecurity risk to us, or cause disruptions to our normal operations, in the event of a failure of their own products, components, networks, security systems, and infrastructure.
For example, in 2021, one of our vendors, the Ultimate Kronos Group (“Kronos”), which is a workforce management and human capital management cloud provider, experienced a ransomware attack that resulted in Kronos temporarily decommissioning the functionality of certain of its cloud software, requiring us to find alternative methods to properly pay our employees and to monitor the status of the work in progress of certain of our projects in a timely manner.
−Removed: In addition, some of the products we sell and provide services for are categorized as IoT and may become targets for cybercriminals and other actors attempting to gain unauthorized access.
+Added: In addition, some of the products we sell and provide services for are categorized as IoT and may become targets for cybercriminals and other actors, including for actors attempting to gain unauthorized access.
The significant increase in the number of our employees working from home further exposes us to security risks.
Although we take steps to secure confidential, proprietary, or other information that is provided to or accessible by third parties working on our behalf, we cannot be certain that advances in criminal capabilities, new discoveries in the field of cryptography, or other developments will not compromise or breach the technology protecting the networks that access our products and services.
−Removed: A significant actual or perceived (whether or not valid) theft, loss, fraudulent use or misuse of customer, employee, or other personally identifiable data, whether by us, our partners and vendors, or other third parties, or as a result of employee error or malfeasance or otherwise, non-compliance with applicable industry standards or our contractual or other legal obligations regarding such data, or a violation of our privacy and information security policies with respect to such data, could result in significant remediation costs, administrative fines, litigation or other claims by third parties, or regulatory actions against us.
+Added: A significant actual or perceived (whether or not valid) theft, loss, fraudulent use or misuse of customer, employee, or other personally identifiable or other sensitive data, whether by us, our partners and vendors, or other third parties, or as a result of employee error or malfeasance or otherwise, non-compliance with applicable industry standards or our contractual or other legal obligations regarding such data, or a violation of our privacy and information security policies with respect to such data, could result in significant remediation costs, administrative fines, litigation or other claims by third parties, or regulatory actions against us.
Such an event could additionally result in unfavorable publicity and therefore materially and adversely affect the market’s perception of the security and reliability of our products and services and our credibility and reputation with our customers, which may lead to customer dissatisfaction and could result in lost sales and increased customer revenue attrition.
−Removed: In addition, we depend on our information technology infrastructure for business-to-business and business-to-consumer electronic commerce.
−Removed: Security breaches of, or sustained attacks against, this infrastructure could create system disruptions and shutdowns that could negatively impact our operations.
−Removed: Increasingly, our products and services are accessed through the Internet, and security breaches in connection with the delivery of our services via the Internet may affect us and could be detrimental to our reputation, business, financial condition, results of operations, and cash flows.
−Removed: There can be no assurance that our continued investments in new and emerging technology and other solutions to protect our network and information systems will prevent any of the risks described herein.
+Added: In addition, we depend on our information technology infrastructure, and that of our third party partners or vendors, for business-to-business and business-to-consumer electronic commerce.
+Added: Cyber attacks to, or threats against, our infrastructure or that of third parties whose systems are interconnected with ours or whose systems contain ADT information could create prolonged system disruptions and shutdowns that could negatively impact our operations.
+Added: Increasingly, our products and services are accessed through the Internet, and a significant number of service calls happen virtually, and cyber attacks and/or threats in connection with the delivery of our services via the Internet may affect us and could be detrimental to our reputation, business, financial condition, results of operations, and cash flows.
+Added: There can be no assurance that our continued investments in new and emerging technology and other solutions to protect our network and information systems will prevent any of the risks
+Added: described herein.
In addition, any delay in making such investments due to conflicting budget priorities or otherwise could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
−Removed: There can be no assurance that our insurance will be sufficient to protect against all our losses from any future disruptions or breaches of our systems or other events as described herein.
+Added: There can be no assurance that our insurance will be sufficient to protect against all our losses from any future disruptions or cyber attacks on our systems or other events as described herein.
Uncertainty in the development, deployment, and use of AI in our products and services, as well as our business more broadly, could adversely affect our business and reputation.
−Removed: We may use systems and tools that incorporate AI-based technologies, including generative AI for customers, experts, and our workforce.
−Removed: As with many new and emerging technologies, AI presents numerous risks and challenges that could adversely affect our business.
−Removed: The development, adoption, and use for generative AI technology remains in early stages and ineffective or inadequate AI or generative AI development or deployment practices by us or third parties could result in unintended consequences.
−Removed: For example, AI algorithms that we use may be flawed or may be based on datasets that are biased or insufficient.
−Removed: In addition, any latency, disruption, or failure in our AI systems or infrastructure could result in delays or errors in our offerings.
−Removed: Developing, testing, and deploying resource-intensive AI systems may require additional investment and increase our costs.
−Removed: There also may be real or perceived social harm, unfairness, or other outcomes that undermine public confidence in the use and deployment of AI.
−Removed: In addition, third parties may deploy AI technologies in a manner that reduces customer demand for our products and services.
−Removed: Any of the foregoing may result in decreased demand for our products or harm to our business, results of operations or reputation.
−Removed: The legal and regulatory landscape surrounding AI technologies is rapidly evolving and uncertain including in the areas of intellectual property, cybersecurity, and privacy and data protection.
−Removed: For example, there is uncertainty around the validity and enforceability of intellectual property rights related to our use, development, and deployment of AI.
−Removed: Compliance with new or changing laws, regulations or industry standards relating to AI may impose significant operational costs and may limit our ability to develop, deploy or use AI technologies.
+Added: We use AI-enabled or AI-integrated systems and tools, including generative AI, to service our customers and drive efficiencies within our workforce.
+Added: As with many new and emerging technologies, AI presents numerous risks and challenges that could adversely affect its further development, adoption, or use, and therefore our business.
+Added: The development, deployment, and use of generative AI technology remains in early stages and ineffective or inadequate AI development or application practices by us or third parties could result in unintended consequences.
+Added: For example, models, including large language models, underlying AI solutions that we use may be flawed or may be based on biased, insufficient, or poor-quality datasets.
+Added: In addition, any latency, disruption, or failure in our AI systems or data infrastructure could result in delays or errors in our offerings or operational activities.
+Added: Developing, testing, and deploying resource-intensive AI solutions may require additional investment and increase our costs.
+Added: There also may be real or perceived social harm, unfairness, or other impacts to human rights, privacy, employment, or other social issues or outcomes that undermine public confidence in the use and deployment of AI.
+Added: In addition, third parties may deploy AI solutions in a manner that reduces customer demand for our products and services.
+Added: Any of the foregoing may result in decreased demand for our products or material harm to our business, results of operations, brand, or reputation.
+Added: The legal and regulatory landscape surrounding AI is rapidly evolving and uncertain including in the areas of intellectual property, cybersecurity, privacy, and data protection.
+Added: For example, there is uncertainty around the validity and enforceability of intellectual property rights related to our use or development of AI tools.
+Added: Compliance with new or changing laws, regulations or industry standards related to AI may impose significant operational costs and may limit our ability to apply AI technologies in certain use cases.
Failure to appropriately respond to this evolving landscape may result in legal liability, regulatory action, or brand and reputational harm.
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Any failure or interruption in products or services provided by these third parties could harm our ability to operate our business.
−Removed: The components for the security and automation systems that we install or consume are manufactured by third parties.
−Removed: We are therefore susceptible to interruptions in supply and to the receipt of components that do not meet our standards.
−Removed: Our suppliers may be susceptible to disruptions from fire, natural disasters, weather and the effects of climate change (such as sea level rise, drought, flooding, wildfires, and increased storm severity), health epidemics and pandemics, transmission interruptions, extended power outages, human or other error, malicious acts, terrorism, war, sabotage, government actions, or other concerns impacting their local workforce or operations, all of which are beyond our and their control.
−Removed: Any financial or other difficulties our providers face may have negative effects on our business.
−Removed: We exercise limited control over our suppliers, which increases our vulnerability to problems with the products and services they provide or to their choice of which companies they will allow to sell their products.
−Removed: For example, we are subject to the risk of unique or recurring shortages in materials which are part of our inventory.
−Removed: The 2021-2022 worldwide shortage of electronic components, which caused the lead times for such components’ manufacture and delivery to increase and extended existing commitments by certain manufacturers, and in certain cases, allocations, have improved.
−Removed: However, the lead times have not gone back to pre-2021 levels, and we still have to closely monitor and give earlier forecasts and purchase commitments to suppliers to procure components to accommodate the longer lead times.
−Removed: While a single cause of the shortages was not identified, it was believed that among other reasons, there was a surge in demand for such components and major growth in certain sectors which rely on such components, and these trends may continue and increase.
−Removed: Certain of our key suppliers have seen this impact their ability to obtain certain components which could present challenges to our ability to obtain the inventory necessary to meet the demands of our new and existing customers, and to complete crucial initiatives such as the upgrading of cellular equipment at customer sites to meet new network standards.
−Removed: We are also subject to supply chain disruption should we learn that any of our suppliers is in violation of legislation which bans the import of goods based on their method of production, such as using forced labor or otherwise.
−Removed: This may also result in negative publicity regarding our production methods, and alleged unethical or illegal practices of any of our suppliers and could adversely affect our reputation.
−Removed: Our efforts to minimize the risk of a disruption from a single supplier may not always be effective, and we have experienced some disruptions in our supply chain during recent years.
−Removed: Any continued or more significant interruption in supply could cause significant delays in installations and repairs and the loss of current and potential customers.
+Added: The components for the security and automation systems that we install or consume are manufactured by original equipment manufacturers (“OEM”), original design manufacturers (“ODM”), contract manufacturers (“CM”) and/or third-party suppliers.
+Added: While we have implemented robust supply chain management practices designed to mitigate the risk of supply chain interruptions, there is no assurance that these practices will be effective, and interruptions may occur from time to time.
+Added: Certain key suppliers may experience difficulties in obtaining necessary components, which may impact our ability to meet customer demands and complete critical initiatives.
+Added: In addition, our suppliers are susceptible to disruptions from fire, natural disasters, weather-related incidents, and the effects of climate change (such as sea level rise, drought, flooding, wildfires, and increased storm severity), as well as health epidemics and pandemics, transmission interruptions, extended power outages, human or other error, and malicious acts, including cyber attacks, terrorism, war, sabotage, and government actions, or other concerns impacting their local workforce or operations, all of which are beyond our and their control.
+Added: While we actively monitor supplier operations, require compliance with business continuity and disaster recovery plans, maintain alternative sourcing options where feasible, carry a surplus of finished goods in inventory, exercise limited control over our raw material suppliers through demand forecasting and supply planning processes, and have contract terms that require transparency in sourcing, quality assurance commitments, and escalation protocols, there is no assurance that these practices will be effective and supplier disruptions, including any financial or other difficulties our providers may face, may have a material adverse effect on our business.
+Added: We are also subject to supply chain disruptions if we learn that any of our suppliers are in violation of legislation which bans the import of goods based on their method of production, such as using forced labor or otherwise.
+Added: This may also result in negative publicity regarding our production methods, and the alleged unethical or illegal practices of any of our suppliers could adversely affect our reputation.
+Added: Our efforts to minimize the risk of a disruption from a single supplier may not always be effective, and we have experienced some disruptions in our supply chain during recent years, and could experience such disruptions in the future.
+Added: Any continued or significant interruption in supply could cause significant delays in installations and repairs and the loss of current and potential customers.
Although some specific shortages may be resolved, they may recur.
From time to time, we may also experience product recalls and other unplanned product repairs or replacements with customers.
−Removed: We have recently experienced such product service events, few of which are material, although there can be no assurance that any such future product service events will not be more extensive or more costly, material to us, and/or require the outlay of cash while we pursue cost recovery from manufacturers and suppliers, and there can be no assurance that we will be successful in pursuing recoveries from those third parties.
+Added: We have occasionally experienced such product service events.
+Added: There can be no assurance that any such future product service events will not be more extensive or more costly, material to us, and/or require the outlay of cash while we
+Added: pursue cost recovery from manufacturers and suppliers, and there can be no assurance that we will be successful in pursuing recoveries from those third parties.
If a previously installed component were found to be defective, we might not be able to recover the costs associated with its repair or replacement across our installed customer base, and these costs, or the diversion of technical personnel to address the defect could materially adversely affect our business, financial condition, results of operations, and cash flows.
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In the event of a product recall or litigation against our suppliers or us, we could experience a material adverse effect on our business, financial condition, results of operations, and cash flows.
−Removed: We rely on third-party software for key automation features in certain of our offerings and on the interoperation of that software with our own, such as our mobile applications and related platform.
+Added: We also rely on third-party software for key automation features in certain of our offerings and on the interoperation of that software with our own, such as our mobile applications and related platforms.
We could experience service disruptions if customer usage patterns for such integrated or combined offerings exceed, or are otherwise outside of, system design parameters and we or our third-party provider is unable to make corrections.
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Because a number of our products and services incorporate technology developed and maintained by third parties, we are, to a certain extent, dependent upon such third parties’ ability to update, maintain, or enhance their current products and services;
−Removed: to ensure that their products are free of defects or security vulnerabilities;
+Added: to ensure that their products are free of defects, security vulnerabilities, and compromise;
to develop new products and services on a timely and cost-effective basis;
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Further, these third-party technology licenses may not always be available to us on commercially reasonable terms, or at all.
−Removed: If third-party vendors decide not to renew our in-between agreements or to limit our access to their offerings, or the third-party technology becomes obsolete, is incompatible with future versions of our products or services, or otherwise fails to address our needs, we cannot provide assurance that we would be able to replace the functionality provided by the third-party software with technology from alternative providers.
−Removed: Furthermore, even if we obtain licenses to alternative software products or services that provide the functionality we need, we may be required to replace hardware installed at our monitoring centers, work from home environments, and at our customers’ sites, including security system control panels and
−Removed: peripherals, in order to execute our integration of or migration to alternative software products.
+Added: If third-party vendors decide not to renew our existing agreements or to limit our access to their offerings, or the third-party technology becomes obsolete, is incompatible with future versions of our products or services, is unusable due to defects, security vulnerabilities, or compromise or otherwise fails to address our needs, we cannot provide assurance that we would be able to replace the functionality provided by the third-party software with technology from alternative providers.
+Added: Furthermore, even if we obtain licenses to alternative software products or services that provide the functionality we need, we may be required to replace hardware installed at our monitoring centers, work from home environments, and at our customers’ sites, including security system control panels and peripherals, in order to execute our integration of or migration to alternative software products.
Any of these factors could materially adversely affect our business, financial condition, results of operations, and cash flows.
We also rely on various third-party telecommunications providers and signal processing centers to transmit and communicate signals to our monitoring facilities and work from home environments in a timely and consistent manner.
−Removed: These telecommunications providers and signal processing centers could deprioritize or fail to transmit or communicate these signals to the monitoring facilities and work from home environment for many reasons, including disruptions from fire, natural disasters, weather, and the effects of climate change (such as sea level rise, drought, flooding, wildfires, and increased storm severity), health epidemics or pandemics, transmission interruption, extended power outages, human or other error, malicious acts, including cyber attacks, provider preferences regarding the signals that get transmitted, government actions, war, terrorism, sabotage, or other conflicts, or as a result of disruptions to internal and external networks or third party transmission lines.
+Added: These telecommunications providers and signal processing centers could deprioritize or fail to transmit or communicate these signals to the monitoring facilities and work from home environment for many reasons, including disruptions from fire, natural disasters, weather-related incidents, and the effects of climate change (such as sea level rise, drought, flooding, wildfires, and increased storm severity), health epidemics or pandemics, transmission interruption, extended power outages, human or other error, malicious acts, including cyber attacks, provider preferences regarding the signals that get transmitted, government actions, war, terrorism, sabotage, or other conflicts, or as a result of disruptions to internal and external networks or third party transmission lines.
The failure of one or more of these telecommunications providers or signal processing centers to transmit and communicate signals to our monitoring facilities and work from home environments in a timely manner could affect our ability to provide alarm monitoring, home automation, and interactive services to our customers.
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As mentioned above, telecommunications providers have in the past, and may in the future, retire older telecommunications technology, limiting our customers’ options of telecommunications services and equipment, which could materially adversely affect our business, increase customer attrition and require significant capital expenditures.
−Removed: An event causing a disruption in the ability of our monitoring facilities or customer care resources, including work from home operations, to operate could materially adversely affect our business.
+Added: An event causing a disruption in the ability of our monitoring facilities or customer care resources to operate, including work from home operations, could materially adversely affect our business.
A disruption in our ability to provide security monitoring services or otherwise provide ongoing customer care to our customers could have a material adverse effect on our business.
−Removed: A disruption could occur for many reasons, including fire, natural disasters, weather, and the effects of climate change (such as sea level rise, drought, flooding, wildfires, and increased storm severity), health epidemics or pandemics, transmission interruption, extended power outages, human or other error, malicious acts, provider preferences regarding the signals that get transmitted, government actions, war, terrorism, sabotage, or other conflicts, or as a result of disruptions to internal and external networks or third party transmission lines.
−Removed: Monitoring and customer care could also be disrupted by information systems and network-related events or cybersecurity attacks, such as computer hacking, computer viruses, worms, or other malicious software, distributed denial of service attacks, malicious social engineering, or other destructive or disruptive activities that could also cause damage to our properties, equipment, and data.
+Added: A disruption could occur for many reasons, including fire, natural disasters, including hurricanes, weather-related incidents, and the effects of climate change (such as sea level rise, drought, flooding, wildfires, and increased storm severity), health epidemics or pandemics, transmission interruption, extended power
+Added: outages, human or other error, malicious acts, including cyber attacks, provider preferences regarding the signals that get transmitted, government actions, war, terrorism, sabotage, or other conflicts, or as a result of disruptions to internal and external networks or third party transmission lines.
+Added: Monitoring and customer care also have in the past been and could in the future be disrupted by information systems and network-related events or cyber attacks, such as computer hacking, computer viruses, phishing, malware, ransomware, worms, or other malicious software, distributed denial of service attacks, malicious social engineering, or other destructive or disruptive activities that could also cause damage to our properties, equipment, and data, as well as our efforts to respond to, contain, and remediate such events, attacks, and activities.
A failure of our redundant back-up procedures or a disruption affecting multiple monitoring facilities or work from home environments could disrupt our ability to provide security monitoring or customer care services to our customers.
−Removed: If we experience such disruptions, we may experience customer dissatisfaction and potential loss of confidence, and liabilities to customers or other third parties, each of which could harm our reputation and impact future revenues.
+Added: As a result of such disruptions, we may experience customer dissatisfaction and potential loss of confidence, and liabilities to customers or other third parties, each of which could harm our reputation and impact future revenues.
We could also be subject to claims or litigation with respect to losses caused by such disruptions.
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A variety of events have had and could have in the future a significant negative impact on our ability to carry on our normal operations and could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
−Removed: We have business continuity and disaster recovery plans and procedures designed to protect our business against a variety of events, including natural disasters, health epidemics or pandemics and armed conflicts or other hostilities.
−Removed: However, we cannot guarantee that these plans and procedures will prevent or efficiently mitigate the impact of all catastrophic events, especially those which are inherently unpredictable and beyond our anticipated thresholds or impact tolerances.
+Added: We have business continuity and disaster recovery plans and procedures and an incident response plan designed to protect our business against a variety of events, including natural disasters, health epidemics or pandemics, cyber attacks, and armed conflicts or other hostilities.
+Added: However, we cannot guarantee that these plans and procedures will prevent or efficiently mitigate the impact of such events, especially those which are inherently unpredictable and beyond our anticipated thresholds or impact tolerances.
Such events may impact macroeconomic conditions, consumer behavior, labor availability, or damage our facilities and our ability to provide our products and services to customers.
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For example, the outbreak of the coronavirus pandemic in 2020 contributed to consumer unease and decreased discretionary spending.
−Removed: In order to maintain our operations, we had to implement measures to protect the health of our
−Removed: employees and our customers.
+Added: In order to maintain our operations, we had to implement measures to protect the health of our employees and our customers.
Furthermore, while we maintain insurance, our coverage may not sufficiently cover all types of losses or claims that may arise and we may be unable to adequately offset any losses we may incur.
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Because the majority of employees who staff these operations currently conduct their jobs from home, our work from home environment could subject us to the failure of the communications networks serving our employees which we no longer control and who may not have sufficient back up capabilities.
−Removed: In addition, this work from home environment results in more home access points that are susceptible to cybersecurity attacks, such as computer hacking, computer viruses, worms or other malicious software or malicious activities.
+Added: In addition, this work from home environment results in more home access points that are susceptible to cyber attacks, such as computer hacking, computer viruses, phishing, malware, ransomware, worms or other malicious software or malicious activities.
In addition, our monitoring centers are listed by UL and must meet certain requirements to maintain that listing.
2 unchanged sentences
Any such impact with respect to our employees who are working from home could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
−Removed: Our independent, third-party authorized dealers may not be able to mitigate certain risks such as information technology breaches, data security breaches, product liability, errors and omissions, and marketing compliance.
+Added: Our independent, third-party authorized dealers may not be able to mitigate certain risks such as information technology and data security breaches, product liability, errors and omissions, and compliance with applicable laws and regulations.
We generate a portion of our new customers through our authorized dealer network.
−Removed: We rely on independent, third-party authorized dealers to implement mitigation plans for certain risks they may experience, including, but not limited to, information technology breaches, data security breaches, product liability, errors and omissions, and marketing compliance.
+Added: We rely on independent, third-party authorized dealers to implement mitigation plans for certain risks they may experience, including, information technology breaches, data security breaches, product liability, errors and omissions, and compliance with applicable laws and regulations.
In addition, our dealers rely on other third parties to submit orders and transmit data and may themselves be subject to many of these same risks.
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Any interruption or permanent disruption in the generation of customer accounts or services provided by our authorized dealers could materially adversely affect our business, financial condition, results of operations, and cash flows.
−Removed: We may pursue business opportunities that diverge from our current business model, or invest in new businesses, services, and technologies outside the traditional security and interactive services market, any of which may materially adversely affect our business results or financial condition.
+Added: We may pursue business opportunities that diverge from our current business model, or invest in new businesses, services, and technologies outside the traditional security, interactive and smart home services markets, any of which may materially adversely affect our business results or financial condition.
We have and will continue to pursue and invest in new business opportunities that may diverge from our current business model and practices, including expanding our products or service offerings, investing in new and unproven technologies, adding customer acquisition channels, and forming new alliances with companies to market our services.
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Acquisitions in recent years have also significantly expanded our risk profile.
−Removed: For example, in December 2021 we acquired ADT Solar although our core business was not then extended to the residential solar market.
+Added: For example, in December 2021 we acquired the Solar Business although our core business was not then extended to the residential solar market.
In September 2022, we announced a strategic relationship with State Farm and our intention to develop products and services to satisfy certain needs of State Farm’s property and casualty customers which represents a significant entry point into the insurance industry.
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In such cases, we may decide to revise our strategic plans and adjust our operating footprint to optimize our operations, or exit certain businesses or product lines entirely.
−Removed: For example, after recording a series of losses with respect to our acquisition of ADT Solar, we announced in November 2023 a series of steps to rationalize the ADT Solar business, and in January 2024, we made a determination to exit the Solar business entirely.
+Added: For example, after recording a series of losses with respect to our acquisition of the Solar Business, we announced in November 2023 a series of steps to rationalize the Solar Business , and in January 2024, we made a determination to exit the Solar Business entirely.
+Added: As of June 30, 2024, substantially all operations of the Solar Business had ceased.
Any of these factors could materially adversely affect our business, financial condition, results of operations, and cash flows.
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We may not achieve all of the anticipated benefits, synergies, or cost savings from our acquisitions or the Commercial Divestiture.
−Removed: Our historical acquisitions require the integration of separate companies that have previously operated independently.
−Removed: The continued integration of operations, information technology networks and systems, products, and personnel from our acquisitions, as well as the separation of certain shared services following the Commercial Divestiture, will continue to require the attention of our management and place demands on other internal resources.
−Removed: In addition, the overall continued integration of our acquired businesses may be disruptive to our business as a whole and result in material unanticipated problems, expenses, liabilities, competitive responses, and loss of customer relationships.
+Added: Our historical acquisitions, including bulk acquisitions of customer accounts, require the integration of separate companies or accounts that have previously operated independently or separately.
+Added: The continued integration of operations, including billing and service platforms for recently purchased customer accounts, information technology networks and systems, products, and personnel from our acquisitions, as well as the separation of certain shared services following the Commercial Divestiture, will continue to require the attention of our management and place demands on other internal resources.
+Added: In addition, the overall continued integration of our acquired businesses, including bulk acquisitions of customer accounts, may be disruptive to our business as a whole and result in material unanticipated problems, expenses, liabilities, competitive responses, and loss of customer relationships.
The diversion of management’s attention, and any difficulties encountered in the transition, integration, and divestiture processes, could materially adversely affect our business, financial condition, results of operations, and cash flows.
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Any delay in this implementation of, or disruption in, the transition to new or enhanced systems, procedures, or controls, including internal controls and disclosure controls and procedures, may cause us to present restatements or cause our operations to suffer, and we may be unable to conclude that our internal controls over financial reporting are effective and to obtain an unqualified report on internal controls from our independent registered public accounting firm.
−Removed: Any of these difficulties in combining operations or separating certain shared services following the Commercial Divestiture could result in increased costs, decreases in the amount of expected revenues, and further diversion of management’s time and energy, which could materially adversely affect our business, financial condition, results of operations, and cash flows.
−Removed: We have made a determination to fully exit the residential Solar business, following previously-announced plans to rationalize the ADT Solar business, and our exit of the Solar business is subject to uncertainties and risks that may materially adversely affect our financial condition and results of operations.
−Removed: On November 2, 2023, we announced a series of steps to rationalize the ADT Solar business, significantly reducing the number of ADT Solar branches in light of continued operational challenges and underperformance of operating results relative to expectations.
−Removed: Based on continued assessment of the market and evaluation of Solar operating results, on January 24, 2024, we announced that the Company had made a determination to fully exit the residential solar business, which may include the transition of components of the business to other parties.
−Removed: We expect to complete the ADT Solar Exit during 2024.
−Removed: There can be no assurance regarding the ultimate timing of the ADT Solar Exit or that the ADT Solar Exit will be completed as expected.
−Removed: Unanticipated developments could delay, prevent or otherwise adversely affect the Solar Exit and the anticipated financial impact thereof, including, but not limited to:
−Removed: • challenges in accurately predicting the costs associated with Solar Exit activities and in anticipating the time necessary to complete an orderly managed exit of the remaining Solar Business;
−Removed: • challenges in separating personnel, facilities, equipment, intellectual property, and financial or other systems with minimal impact on our remaining business;
−Removed: • our ability to offset the loss of revenue resulting from the Solar Exit and the loss of any synergies between ADT Solar and our remaining business.
−Removed: In connection with the ADT Solar Exit, we anticipate incurring severance and other costs.
−Removed: The ADT Solar Exit, whether or not completed, may result in significant business disruptions, including as a result of the need for management to spend significant time on activities related to the ADT Solar Exit.
−Removed: Moreover, the ADT Solar Exit may disrupt our relationships with customers, suppliers and other third parties, which could make our brand less attractive to consumers and business partners.
−Removed: The ADT Solar Exit, including related charges and the impact of the related workforce reduction, which may include potential legal claims by impacted employees, could have a material adverse effect on our business, operating results and financial condition.
−Removed: The ADT Solar Exit may also involve continued financial involvement in the discontinued operations, such as by causing us to continue to incur expenses to maintain services for completed installations and to complete those installations which have not yet been completed, or through continuing guarantees, indemnities or other financial obligations, such as a requirement by lenders that we repay outstanding loan amounts for jobs that have not achieved permission to operate in a timely manner or that we are otherwise required to repurchase pursuant to existing loan agreements.
+Added: Any of these difficulties in combining operations or accounts, or continuing to separate certain shared services following the Commercial Divestiture, could result in increased costs, decreases in the amount of expected revenues, and further diversion of management’s time and energy, which could materially adversely affect our business, financial condition, results of operations, and cash flows.
+Added: In 2024, we decided to fully exit the residential Solar Business and such exit is subject to uncertainties and risks that may materially adversely affect our financial condition and results of operations.
+Added: On January 24, 2024, we announced that the Company had made a determination to fully exit the residential s olar business , which included the transfer of certain assets to other parties as well as the retention of certain contractual obligations.
+Added: We substantially completed the ADT Solar Exit during the second quarter of 2024.
+Added: In connection with the ADT Solar Exit, we incurred severance and other exit costs.
+Added: The ADT Solar Exit may disrupt our relationships with customers, suppliers and other third parties, which could make our brand less attractive to consumers and business partners.
+Added: The ADT Solar Exit, including related exit charges, the impact of the related workforce reduction, and any potential legal claims by impacted employees, customers, suppliers, or lenders, could have a material adverse effect on our business, operating results and financial condition.
+Added: The ADT Solar Exit may also involve continued financial involvement while being reported in discontinued operations, such as by causing us to continue to incur expenses to maintain services for completed installations and to complete those installations which have not yet been completed, or through continuing guarantees, indemnities or other financial obligations, such as minimum solar panel performance guarantees, and a requirement by lenders that we repay outstanding loan amounts for jobs that have not achieved permission to operate in a timely manner or that we are otherwise required to repurchase pursuant to existing loan agreements.
The incurrence of any such cost or action could have a material adverse effect on our business, financial condition, results of operations and cash flows.
−Removed: We may not achieve some or all of the strategic and financial benefits that we expect to achieve from the Commercial Divestiture or the Solar Exit which could have a material adverse effect on our financial condition and results of operations.
−Removed: Although we believe the Commercial Divestiture and the ADT Solar Exit will place us in a better position to prioritize investments in our core business where we intend to drive profitable, capital-efficient revenue growth for the long-term, there can be no assurance that we will achieve such benefits, which could have a material adverse impact on our business, financial condition, results of operations, and cash flows.
+Added: We may not achieve some or all of the strategic and financial benefits that we expect to achieve from the Commercial Divestiture or the ADT Solar Exit which could have a material adverse effect on our financial condition and results of operations.
+Added: Although we believe the Commercial Divestiture and the ADT Solar Exit will place us in a better position to prioritize investments in our core business where we intend to drive profitable, capital-efficient revenue growth for the long-term, there can be no assurance that we will achieve such benefits, which could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
The anticipated benefits are based on several assumptions, some of which may prove incorrect, and could be affected by factors beyond our control, including, without limitation, general economic conditions, increased operating costs, regulatory developments, and other risks described in these risk factors.
−Removed: In connection with the Commercial Divestiture, we entered into a transition services agreement (the “Commercial TSA”), pursuant to which the Company and the Commercial Business will provide certain transitional services relating to ongoing support and other administrative functions to each other for a transitional period of up to 24 months after the closing of the Commercial Divestiture.
+Added: In connection with the Commercial Divestiture, we entered into the Commercial TSA, pursuant to which the Company and the Commercial Business will provide certain transitional services relating to ongoing support and other administrative functions to each other for a transitional period of up to 24 months after the closing of the Commercial Divestiture.
We rely on the Commercial Business to satisfy its obligations under the Commercial TSA.
−Removed: If the Commercial Business is unable to satisfy its obligations under the Commercial TSA, or if the transition of services covered by the Commercial TSA takes longer to complete than expected, it could have a material and adverse effect on our business, financial condition, and results of operations.
+Added: If the Commercial Business is unable to satisfy its obligations under the Commercial TSA, or if the transition of services covered by the Commercial TSA takes longer to complete than expected, it could have a material adverse effect on our business, financial condition, and results of operations.
In addition, we may not be able to eliminate certain costs after the completion of the transition period covered by the Commercial TSA.
−Removed: If we are unable to eliminate some of these costs or effectively work with our supplies to reduce the costs associated with fewer employees or customers, it could have a material and adverse effect on our business, financial condition, and results of operations.
−Removed: ADT will be a less diversified business following the Commercial Divestiture and the ADT Solar Exit, which may adversely affect ADT’s results of operations and financial condition.
+Added: If we are unable to eliminate some of these costs or effectively work with our supplies to reduce the costs associated with fewer employees or customers, it could have a material adverse effect on our business, financial condition, and results of operations.
+Added: ADT is a less diversified business following the Commercial Divestiture and the ADT Solar Exit, which may adversely affect ADT’s results of operations and financial condition.
Prior to the Commercial Divestiture, ADT had three business segments, CSB, Commercial, and Solar.
−Removed: The Commercial Divestiture resulted in ADT being a smaller, less diversified company more focused on consumers, potentially making ADT more vulnerable to changing market, regulatory, and economic conditions following the Commercial Divestiture, particularly those affecting consumers and small businesses.
−Removed: Additionally, we recently announced plans to exit our Solar business.
−Removed: Once the ADT Solar Exit is completed, we will be entirely dependent on CSB, and any trends or uncertainties affecting CSB will directly affect ADT’s results of operations and financial condition in the future.
−Removed: Macroeconomic headwinds or changes in consumer preferences could have a greater impact on our business following the Commercial Divestiture and the ADT Solar Exit which could have a material adverse effect on our business, results of operations, and financial condition.
+Added: The Commercial Divestiture resulted in ADT being a smaller, less diversified company more focused on consumers, potentially making ADT more vulnerable to changing market, regulatory, and economic conditions following the Commercial Divestiture and the ADT Solar Exit, particularly those affecting consumers and small businesses.
+Added: We are now entirely dependent on our consumer and small business markets, and any trends or uncertainties affecting such markets will directly affect ADT’s results of operations and financial condition in the future.
+Added: Macroeconomic headwinds or changes in consumer preferences could have a greater impact on our business following the Commercial Divestiture and the ADT Solar Exit which could have a material adverse effect on our business, financial condition, and results of operations.
Our customer generation strategies through third parties, including our authorized dealer and affinity marketing programs, and our use of celebrities and social media influencers, and the competitive market for customer accounts may expose us to risk and affect our future profitability.
−Removed: An element of our business strategy is the generation of new customer accounts through third parties, including our authorized dealers, and future operating results depend in large part on our ability to continue to manage this business generation strategy effectively.
+Added: An element of our business strategy is the generation of new customer accounts through third parties, including our authorized dealers, and future operating results depend in large part on our ability to continue to manage this business generation strategy
We currently generate accounts through hundreds of independent third parties, including authorized dealers, and a significant portion of our accounts originate from a smaller number of such third parties.
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In addition, we are subject to reputational risks that may arise from the actions of our dealers and their employees, independent contractors, and other agents that are wholly or partially beyond our control, such as violations of our marketing policies and procedures as well as any failure to comply with applicable laws and regulations.
−Removed: If our dealers engage in marketing practices that are not in compliance with local laws and regulations, we may be in breach of such laws and regulations, which may result in regulatory proceedings and potential penalties that could materially adversely impact our business, financial condition, results of operations, and cash flows.
+Added: If our dealers engage in practices that are not in compliance with all applicable laws and regulations, we may be deemed in breach of such laws and regulations, which may result in regulatory proceedings and potential penalties that could materially adversely impact our business, financial condition, results of operations, and cash flows.
In addition, unauthorized activities in connection with sales efforts by employees, independent contractors, and other agents of our dealers, including calling consumers in violation of the Telephone Consumer Protection Act, predatory door-to-door sales tactics, and fraudulent misrepresentations, could subject us to governmental investigations and class action lawsuits for, among others, false advertising and deceptive trade practice damage claims, against which we will be required to defend.
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We have actively pursued affinity marketing programs, which provide members of participating organizations with special offers on our products and services.
−Removed: organizations may require us to pay higher fees to them, decrease our pricing for their members, introduce additional competitive options, or otherwise alter the terms of our participation in their marketing programs in ways that are unfavorable to us.
−Removed: These organizations may also terminate their relationships with us if we fail to meet contract service levels and/ or member satisfaction standards, among other things.
+Added: These organizations may require us to pay higher fees to them, decrease our pricing for their members, introduce additional competitive options, or otherwise alter the terms of our participation in their marketing programs in ways that are unfavorable to us.
+Added: These organizations may also terminate their relationships with us if we fail to meet contract service levels or member satisfaction standards, among other things.
If any of our affinity or marketing relationships is terminated or altered in an unfavorable manner, we may lose a source of sales leads, and our business, financial condition, results of operations, and cash flows could be materially adversely affected.
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Any such activities or behaviors of the social media influencers or celebrities we engage, or our failure to adhere to the compliance processes as required by the FTC consent decree, could have a material adverse effect on our business, financial condition, results of operations, and cash flows, or on our reputation.
−Removed: We face risks in acquiring and integrating customer accounts.
−Removed: An element of our business strategy may involve the bulk acquisition of customer accounts.
−Removed: Acquisitions of customer accounts involve a number of risks, including the possibility of unexpectedly high rates of attrition and unanticipated deficiencies in the accounts and systems acquired despite our investigations and diligence prior to acquisition.
+Added: We face risks in acquiring and integrating customer accounts, and if any of these risks materialize, our business, financial condition, results of operations, and cash flows could be materially adversely affected.
+Added: An element of our business strategy involves the bulk acquisition of customer accounts.
+Added: Acquisitions of customer accounts involve a number of risks, including the possibility of unexpectedly high rates of attrition and unanticipated deficiencies in the accounts and systems acquired despite our investigations and diligence prior to acquisition, as well as costs and complexities in integrating newly purchased accounts into ADT billing and service platforms.
We face competition from other alarm monitoring companies, including companies that may offer higher prices and more favorable terms for customer accounts purchased, and/or lower minimum financial or operational qualification or requirements for purchased accounts.
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The purchase price we pay for customer accounts is affected by the recurring revenue historically generated by such accounts, as well as several other factors, including the level of competition, our prior experience with accounts purchased in bulk from specific sellers, the geographic location of the accounts, the number of accounts purchased, the customers’ credit scores, and the type of security or automation equipment or platform used by the customers.
−Removed: In purchasing accounts, we have relied on management’s knowledge of the industry, due diligence procedures, and representations and warranties of bulk account sellers.
+Added: In purchasing accounts, we have relied on
+Added: management’s knowledge of the industry, due diligence procedures, and representations and warranties of bulk account sellers.
We can provide no assurance that in all instances the representations and warranties made by bulk account sellers are true and complete or, if the representations and warranties are inaccurate, that we will be able to recover damages from bulk account sellers in an amount sufficient to fully compensate us for any resulting losses.
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If any of these risks materialize, our business, financial condition, results of operations, and cash flows could be materially adversely affected.
−Removed: If we are unable to recruit and retain sufficient personnel at all levels of our organization, our ability to manage our business could be materially and adversely affected.
−Removed: Our success depends in part upon the continued services of sufficient talent at all levels of our organization, including, our management team, sales representatives, installation and service technicians and call center talent.
+Added: If we are unable to recruit and retain sufficient personnel at all levels of our organization, our ability to manage our business could be materially adversely affected.
+Added: Our success depends in part upon the continued services of sufficient talent at all levels of our organization, including our management team, software developers, product engineers, sales representatives, installation and service technicians and call center talent.
Our ability to recruit and retain sufficient talent for these positions is based on our reputation as a successful business with a culture of fairly hiring, training, and promoting qualified employees.
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The loss of experienced personnel through wage competition, normal attrition (including retirement), or specific actions such as divestitures, cost structure rationalizations, or other business exit activity, may adversely affect our reputation among job seekers, demoralize our remaining employees, and result in loss of critical knowledge.
−Removed: The loss, incapacity, or unavailability for any reason of sufficient personnel at any level of our organization, higher than expected payroll and other
−Removed: costs associated with the hiring and retention of sufficient talent at all levels of our organization, or the inability or delay in hiring new employees, whether in management, sales, installation and service technicians, or call center personnel, could materially and adversely affect our business financial condition, results of operations, and cash flows.
+Added: The loss, incapacity, or unavailability for any reason of sufficient personnel at any level of our organization, higher than expected payroll and other costs associated with the hiring and retention of sufficient talent at all levels of our organization, or the inability or delay in hiring new employees, whether in management, sales, technology, product development, installation and service technicians, or call center personnel, could materially adversely affect our business financial condition, results of operations, and cash flows.
The loss of or changes to our senior management could disrupt our business.
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Factors that impact our ability to attract and retain senior management include compensation and benefits and our successful reputation as a top provider in these industries.
−Removed: Our success partly depends on the ability of our CEO, Mr.
−Removed: DeVries, along with the ability of other senior management and key employees, to effectively implement our business strategies and to continue to identify and grow talent through our annual strategic talent planning process.
+Added: Our success partly depends on the ability of our Chairman, President, and CEO, Mr.
+Added: DeVries, along with the ability of other senior management and key employees, to effectively implement our business strategies and to continue to identify and grow talent.
In addition, the success of our business depends on highly qualified leaders with relevant industry and operational experience, as well as the entire management team.
The unexpected loss of any member of our senior management team and the related loss of their knowledge of products, offerings, and industry experience, and the difficulty of quickly finding qualified senior management talent to replace any such loss, could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
−Removed: Adverse developments in our collective bargaining agreements or other agreements with some employees could materially and adversely affect our business, financial condition, results of operations, and cash flows.
−Removed: As of December 31, 2023, approximately 800 of our employees at various sites, or approximately 6% of our total workforce, were represented by unions and covered by collective bargaining agreements.
+Added: Adverse developments in our collective bargaining agreements or other agreements with some employees could materially adversely affect our business, financial condition, results of operations, and cash flows.
+Added: As of December 31, 2024, 835 of our employees at various sites, or approximately 7% of our total workforce, were represented by unions and covered by collective bargaining agreements.
We are currently a party to approximately 17 collective bargaining agreements.
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We identified a material weakness in our internal control over financial reporting as of December 31, 2022 and may identify additional material weaknesses in internal control over financial reporting in the future.
−Removed: A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis.
+Added: A material weakness is a deficiency, or
+Added: a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis.
While we believe we have now remediated the material weakness previously reported in our Amended 2022 Annual Report, we cannot assure you that additional material weaknesses in internal control over financial reporting will not occur in the future.
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The confidential data and information collected in the normal course of our business, as well as portions of the significant volume of third party data that we or our partners collect and retain, is subject to certain laws and regulations.
−Removed: Our ability to analyze this data to provide the customer with an improved user experience is a valuable component of our services, but we
−Removed: cannot provide assurance that the data we require will be available from these sources in the future or that the cost of such data will not increase.
+Added: Our ability to analyze this data to provide the customer with an improved user experience is a valuable component of our services, but we cannot provide assurance that the data we require will be available from these sources in the future or that the cost of such data will not increase.
If the data that we require is not available to us on commercially reasonable terms or at all, we may not be able to provide certain parts of our current or planned products and services, and our business, financial condition, results of operations, and cash flows could be materially adversely affected.
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or should we fail to prevent future rogue actors from undertaking actions similar to those described above, our reputation and our business, financial condition, results of operations, and cash flows could be materially adversely affected.
−Removed: Examples of certain requirements we face include those with respect to the Health Insurance Portability Act, the California Consumer Privacy Act, the California Privacy Rights Act, the Colorado Privacy Act, the Virginia Consumer Data Protection Act, and the General Data Protection Regulation.
+Added: Examples of certain requirements we face include those with respect to the Health Insurance Portability Act, the California Consumer Privacy Act, the California Privacy Rights Act, the Colorado Privacy Act, the Virginia Consumer Data Protection Act, and the European Union’s General Data Protection Regulation.
These laws and regulations are examples of our need to comply with costly and complex requirements at state, federal, and international levels.
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Adverse events affecting the use of our trademarks could also negatively impact our brands.
−Removed: In connection with the Commercial Divestiture, we have agreed to provide transitional services to GTCR for a period of up to 24 months and to license our ADT Commercial brand for 12 months.
−Removed: These arrangements allow for the use of our trademarks and certain intellectual property and limited use of the ADT Commercial brand, which may cause us to incur unanticipated costs and liabilities and which could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
−Removed: Additionally, during the period covered by the brand license, we have limited control over the use of the ADT brand by GTCR, which may increase the risk of damage to the brand for our remaining businesses, which could negatively impact our reputation, results of operations, and financial condition.
In addition, if we expand our business outside of the U.S.
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Furthermore, our confidentiality agreements with certain of our employees and third parties to protect our intellectual property could be breached or otherwise may not provide meaningful protection for our confidential information, trade secrets, and know-how related to the design, manufacture, or operation of our products and services.
−Removed: In 2021, we initiated certain litigation to protect our intellectual property rights, which has now been resolved.
These types of litigation actions may continue for long periods of time, may not be successful, or may result in impairment of certain of our intellectual property rights, and our need to continue to bring claims may be significant and may be indefinite.
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These companies typically have little or no business or operations, and there are few effective deterrents available to prevent such companies from filing patent infringement lawsuits against us.
−Removed: Our exposure to intellectual property infringement claims may increase as we continue to build our proprietary platform announced in November 2020 as part of our partnership with Google, as we modify and expand our offerings under our partnership with State Farm, or otherwise modify and expand our existing intellectual property in the future.
+Added: Our exposure to intellectual property infringement claims may increase as we continue to expand and develop our proprietary ADT+ platform, as we modify and expand our offerings under our partnership with State Farm, or otherwise modify and expand our existing intellectual property in the future.
In addition, we rely on licenses and other arrangements with third parties covering intellectual property related to many of the products and services that we market.
Notwithstanding these arrangements, we could be at risk for infringement claims from third parties.
+Added: For example, in 2022 ADT was sued by a party alleging that the cellular antennas in various products purchased and used by ADT infringed their patents.
+Added: The suit was settled in July of 2024, and ADT is currently in litigation with the supplier of the majority of those products regarding their obligation to indemnify ADT.
Additionally, our patent agreement with Tyco, which generally includes a covenant by Tyco not to bring an action against us alleging that the manufacture, use, or sale of any products or services in existence as of the date of our separation from Tyco infringes any patents owned or controlled by Tyco and used by us on or prior to such date, does not protect us from infringement claims for future product or service expansions.
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We may be subject to class actions and other lawsuits which may harm our business and results of operations.
−Removed: We have been and we may continue to be subject to class action litigation involving alleged violations of privacy, consumer protection laws, employment laws or other matters.
+Added: We have been and we may continue to be subject to class action litigation involving alleged violations of privacy, consumer protection laws, employment laws, common law claims or other matters.
In addition, we have previously been subject to securities class actions relating to our IPO, and we may in the future be subject to additional securities litigation that may be lengthy and may result in substantial costs and a diversion of management’s attention and resources.
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applicable to telemarketing and email marketing allow a private right of action for the recovery of damages or provide for enforcement by the FTC and FCC, state attorneys general, or state agencies permitting the recovery of significant civil or criminal penalties, costs and attorneys’ fees if regulations are violated.
−Removed: Although we have developed policies and procedures designed to assist in compliance with these statues, regulations, and consent decree, we can provide no assurance that we, our authorized dealers or other third parties that we rely on for telemarketing, email marketing, and other lead generation activities will be in compliance with all applicable regulations at all times.
−Removed: Although our contractual arrangements with our authorized dealers, affinity marketing partners, and other third parties generally require them to comply with all such regulations and to indemnify us for damages arising from their failure to do so, we can provide no
−Removed: assurance that the FTC and FCC, private litigants, or others will not attempt to hold us responsible for any unlawful acts conducted by our authorized dealers, affinity marketing partners and other third parties or that we could successfully enforce or collect upon any indemnities.
+Added: Although we have developed policies and procedures designed to assist in compliance with these statues, regulations, and consent decree, we can provide no assurance that we, our authorized dealers or other third parties that we rely on for telemarketing, email marketing, and other lead generation activities will be in compliance with all applicable laws and regulations at all times.
+Added: Although our contractual arrangements with our authorized dealers, affinity marketing partners, and other third parties generally require them to comply with all such laws and regulations and to indemnify us for damages arising from their failure to do so, we can provide no assurance that the FTC and FCC, private litigants, or others will not attempt to hold us responsible for any unlawful acts conducted by our authorized dealers, affinity marketing partners and other third parties or that we could successfully enforce or collect upon any indemnities.
Additionally, certain FCC rulings and FTC enforcement actions may support the legal position that we may be held vicariously liable for the actions of third parties, including any telemarketing violations by our independent, third-party authorized dealers that are performed without our authorization or that are otherwise prohibited by our policies.
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Changes in such regulations or the interpretation thereof that further restrict such activities could result in a material reduction in the number of leads for our business and could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
−Removed: Our business operates in a regulated environment and any new, or changes to existing, laws or regulations, or our failure to comply with any such rules or regulations could be costly to us, harm our business and operations, and impede our ability to grow our existing business, any new businesses that we acquire, or investment opportunities that we pursue.
+Added: Our business operates in a regulated environment and any new, changes to existing, or uncertainty regarding laws or regulations, or our failure to comply with any such rules or regulations, could be costly to us, harm our business and operations, and impede our ability to grow our existing business, any new businesses that we acquire, or investment opportunities that we pursue.
Our operations and employees are subject to various federal, state, and local laws and regulations in such areas as consumer protection, occupational licensing, environmental protection (including climate change regulations), labor and employment, tax, permitting, and other laws and regulations.
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federal Truth in Lending Act and analogous state legislation.
−Removed: Also, as we continue to expand our sales to government entities, we will be subject to additional contracting regulations, disclosure obligations, and various civil and criminal penalties, among other things, in a significant manner that we are not subject to today.
+Added: Also, if we continue to expand our sales to government entities, we may be subject to additional contracting regulations, disclosure obligations, and various civil and criminal penalties, among other things, in a significant manner that we are not subject to today.
The FTC and certain states have consumer protection laws and regulations governing the manner in which providers of consumer services must manage customer subscriptions, autorenewals, and negative option billing arrangements.
−Removed: In March of 2023, the FTC proposed to consolidate and significantly expand certain federal consumer protections through new rules concerning certain “negative option offers,” whereby a consumer’s silence or failure to take affirmative action to reject a good
−Removed: or service or to cancel a subscription is interpreted as acceptance or continuing acceptance of an offer.
+Added: In October of 2024, the FTC adopted a final “Click-to-Cancel rule intended to consolidate and significantly expand certain federal consumer protections through new rules concerning certain “negative option offers,” whereby a consumer’s silence or failure to take affirmative action to reject a good or service or to cancel a subscription is interpreted as acceptance or continuing acceptance of an offer.
Several states have followed suit and have enacted or have proposed to enact similar regulations concerning autorenewals, cancellation rights and negative option arrangements.
ADT sells its services to consumers on a subscription basis.
−Removed: The proposed FTC rule and certain proposed state regulations concerning subscription services may require ADT to provide additional notices to consumers regarding the end of fixed term contract commitments, limit ADT’s ability to market discounted or free trials to new customers and, in some cases, require ADT to seek additional customer consents to continue providing services past the end of minimum contract term commitments, each of which may have a material adverse effect on ADT’s ability to attract and retain customers.
+Added: The FTC’s “Click-to-Cancel rule, which becomes effective in May 2025 (other than the prohibition on misrepresentations, which took effect in January 2025), and certain proposed state regulations concerning subscription services may require ADT to provide additional notices to consumers regarding the end of fixed term contract commitments, limit ADT’s ability to market discounted or free trials to new customers and, in some cases, require ADT to seek additional customer consents to provide services past the end of minimum contract term commitments, each of which may have a material adverse effect on ADT’s ability to attract and retain customers.
Changes in these laws or regulations or their interpretation could dramatically affect how we do business, acquire customers, and manage and use information we collect from and about current and prospective customers and the costs associated therewith.
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Changes in laws or regulations could require us to change the way we operate or to utilize resources to maintain compliance, which could increase costs or otherwise disrupt operations.
+Added: For example, in June 2024, in Loper Bright Enterprises v.
+Added: Raimondo , the U.S.
+Added: Supreme Court held that lower courts need not defer to a governmental agency’s reasonable interpretation of an ambiguous statute that it administers, overruling the doctrine known as “Chevron Deference.” As a result, we cannot predict whether there will be increased challenges to existing regulatory requirements, such as those discussed above, thereby creating uncertainty in compliance with certain regulatory schemes.
In addition, failure to comply with any applicable laws or regulations could result in substantial fines or revocation of our operating permits and licenses.
If laws and regulations were to change or if we or our products failed to comply with them, our business, financial condition, results of operations, and cash flows could be materially adversely affected.
−Removed: We could be assessed penalties for false alarms.
+Added: We could be assessed penalties and fines for false alarms, and if these expenses become significant or we are unable to pass along the associated costs, our customers may terminate or fail to renew our services.
Some local governments impose assessments, fines, penalties, and limitations on either customers or the alarm companies for false alarms.
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In the absence of government regulation, these providers could take measures that affect their customers’ ability to use our products and services, such as degrading the quality of the data packets we transmit over their lines, giving our packets low priority, giving other packets higher priority than ours, blocking our packets entirely, or attempting to charge their customers more for using our products and services.
−Removed: To the extent that Internet service providers implement usage-based pricing, including meaningful bandwidth caps, or otherwise try to monetize access to their networks, we could incur greater operating expenses and customer acquisition and retention could be negatively impacted, which could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
−Removed: Furthermore, to the extent network operators were to create tiers of Internet access service and either charge us for or prohibit our services from being available to our
−Removed: customers through these tiers, our business could be negatively impacted.
+Added: To the extent that Internet Service Providers (“ISPs”) implement usage-based pricing, including meaningful bandwidth caps, or otherwise try to monetize access to their networks, we could incur greater operating expenses and customer acquisition and retention could be negatively impacted, which could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
+Added: Furthermore, to the extent network operators were to create tiers of Internet access service and either charge us for or prohibit our services from being available to our customers through these tiers, our business could be negatively impacted.
Some of these providers also offer products and services that directly compete with our own offerings, which could potentially give them a competitive advantage.
−Removed: In March 2015, the FCC released net neutrality rules prohibiting broadband Internet providers from blocking, throttling, or engaging in “paid prioritization” of content or services.
−Removed: These rules were repealed in 2017, and currently neither the U.S.
−Removed: on a federal level nor most other countries have adopted formal net neutrality open Internet rules.
−Removed: Although in response to the elimination of federal protections, a handful of U.S.
−Removed: states have adopted their own versions of net neutrality, this patchwork of state requirements cannot guarantee that all consumers are protected from conduct harmful to Internet openness.
−Removed: In October 2023, the FCC proposed new rules that if adopted as proposed, would reinstate the net neutrality rules and restore broadband internet access service’s classification as a telecommunications service and a commercial mobile service under Title II of the federal Communications Act of 1934, as amended.
−Removed: However, we cannot be certain that these rules will be adopted as proposed, if at all.
+Added: In March 2015, the FCC released net neutrality rules prohibiting broadband ISPs from blocking, throttling, or engaging in “paid prioritization” of content or services.
+Added: However, these rules were repealed in 2017.
+Added: As of April 2024, the FCC reinstated net neutrality regulations, effectively reversing the 2017 repeal, once again classifying broadband as a telecommunications service under Title II of the Federal Communications Act of 1934, as amended.
+Added: However, in June 2024, the U.S.
+Added: Supreme Court overruled the doctrine known as Chevron Deference, which previously required courts to defer to an agency’s reasonable interpretation of law when the law was ambiguous.
+Added: As a result, on January 2, 2025, the U.S.
+Added: Court of Appeals for the Sixth Circuit struck down the FCC’s previously adopted Safeguarding and Securing the Open Internet rule (“SSOI”), ruling that the FCC incorrectly classified ISPs as telecommunications service providers, rather than non-common carrier providers of information services, and therefore exceeded its authority in imposing the net neutrality regulations.
Absent net neutrality or open Internet rules, Internet providers, some with competing security businesses, could block or throttle ADT signals in a way that impacts our business and could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
−Removed: Given the nature of our business, we are exposed to greater risks of liability for employee acts or omissions or system failures than may be inherent in other businesses.
+Added: Given the nature of our business, we are exposed to greater risks of liability for employee acts or omissions or system failures than may be inherent in other businesses, which could materially adversely affect our business.
If a customer or third-party believes that it has suffered harm to person or property due to an actual or alleged act or omission of one of our authorized dealers, independent contractors, employees or others, or due to a security or automation system failure, they (or their insurers) may pursue legal action against us, and the cost of defending the legal action and of any judgment against us could be substantial.
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In the event of litigation with respect to such matters, it is possible that the risk-mitigation provisions in our standard customer contracts may be deemed not applicable or unenforceable and, regardless of the ultimate outcome, we may incur significant costs of defense that could materially adversely affect our business, financial condition, results of operations, and cash flows, and there can be no assurance that any such defense efforts will be successful.
−Removed: We may be subject to liability for obligations of The Brink’s Company under the Coal Act or other coal-related liabilities of The Brink’s Company.
+Added: We may be subject to liability for obligations of The Brink’s Company under the Coal Act or other coal-related liabilities of The Brink’s Company, which could materially adversely affect our business.
On May 14, 2010, The ADT Corporation acquired Broadview Security, a business formerly owned by The Brink’s Company.
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The new rule, effective in March 2024, implements a non-exhaustive multi-factor economic reality test where no one factor or subset of factors would be necessarily dispositive and the weight of each factor would depend on the facts and circumstances of the particular case.
−Removed: Also, in a decision issued on June 13, 2023, the
−Removed: National Labor Relations Board (“NLRB”) overruled its 2019 independent contractor standard which focused on whether workers have “entrepreneurial opportunity,” and returned to a non-exhaustive common law multi-factor analysis that could lead to more workers being found to have been improperly classified as independent contractors.
−Removed: Under the new legal framework, it may be more likely for our independent contractors or our subcontractors to be classified as our employees, resulting in such individuals becoming entitled to the reimbursement of certain expenses, to the benefit of wage-and-hour laws, and to the protections under the National Labor Relations Act including the right to organize for union representation.
+Added: Also, although the National Labor Relations Board (“NLRB”) has abandoned, due to legal challenges, its attempt to overrule its 2019 independent contractor standard focused on whether workers have “entrepreneurial opportunity,” a recent NLRB decision in September 2024 appears to signal an intent to reverse its current position that independent contractor misclassification is not itself a violation of the National Labor Relations Act (“NLRA”).
+Added: Under the new legal framework, it may be more likely for our independent contractors or our subcontractors to be classified as our employees, resulting in such individuals becoming entitled to the reimbursement of certain expenses, to the benefit of wage-and-hour laws, and to the protections under the NLRA including the right to organize for union representation.
If such classification was made, we could also be liable for employment and withholding tax and benefits for such individuals, and liable to such individuals for violations of other laws protecting employees.
Any such determination could result in a material reduction of the number of subcontractors we can use for our business or significantly increase our costs to serve our customers, which could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
−Removed: Existing or new tariffs and other trade restrictions imposed on imports from China or other countries where much of our end-user equipment is manufactured, or any counter-measures taken in response, may harm our business and results of operations.
−Removed: Tariffs imposed on imports from China, where certain components included in our end-user equipment are manufactured, and any counter-measures taken in response to such new tariffs, may harm our business and results of operations.
−Removed: In 2018 and 2019, the U.S.
−Removed: federal government imposed tariffs on certain alarm equipment components manufactured in China, and on other categories of electronic equipment manufactured in China that we install in our customers’ premises, such as batteries and thermostats, as well as imported solar energy equipment.
−Removed: Certain of these tariffs are as high as 25% and such tariffs have increased our costs for such equipment as a result of some or all of such new tariffs being passed on to us by our suppliers.
+Added: Existing or new tariffs and other trade restrictions imposed on imports from China, Mexico, or other countries where much of our end-user equipment is manufactured, or any counter-measures taken in response, may harm our business and results of operations.
+Added: Tariffs imposed on imports from China or Mexico, (including enhanced U.S.
+Added: tariffs recently imposed and/or threatened to be imposed on goods from China), where certain components included in our end-user equipment are manufactured, and any counter-measures taken in response to such new tariffs, may harm our business and results of operations.
+Added: For example, in 2018 and 2019, the U.S.
+Added: federal government imposed tariffs on certain alarm equipment components manufactured in China, and on other categories of electronic equipment manufactured in China that we install in our customers’ premises, such as batteries and thermostats.
+Added: Certain of these tariffs were as high as 25% and such tariffs increased our costs for such equipment as a result of some or all of such new tariffs being passed on to us by our suppliers.
If any or all such costs continue to be passed on to us by our suppliers, we may be required to raise our prices, which could result in the loss of customers and harm our business and results of operations.
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federal government’s 2018 National Defense Authorization Act imposed a ban on the use of certain surveillance, telecommunications, and other equipment manufactured by certain of our suppliers based in China, to help protect critical infrastructure and other sites deemed to be sensitive for national security purposes in the U.S.
−Removed: This federal government ban implemented in August 2019, and the ban on use of certain covered equipment by federal contractors implemented in August 2020, has required us to find new sources of end-user products, which has resulted in higher costs and disruption to our business.
−Removed: It is also possible additional tariffs will be imposed on imports of equipment that we install in end-user premises, or that our business will be impacted by retaliatory trade measures taken by China or other countries, causing us to raise our prices or make changes to our business, any of which could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
−Removed: In addition, in November 2021, President Biden signed the Secure Equipment Law into effect, and in November 2022, the FCC adopted rules stating that they will no longer review or give licenses to the equipment that makes use of radio frequencies manufactured by companies believed to pose a national security threat, including Huawei, ZTE, Dahua, and Hikvision.
+Added: federal government ban implemented in August 2019, and the ban on use of certain covered equipment by federal contractors implemented in August 2020, has required us to find new sources of end-user products, which has resulted in higher costs and disruption to our business.
+Added: It is also possible new or additional tariffs will be imposed on imports of equipment that we install in end-user premises, or that our business will be impacted by retaliatory trade measures taken by China, Mexico, or other countries, causing us to raise our prices or make changes to our business, any of which could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
+Added: During the 2024 presidential campaign, President Trump threatened to impose, and since taking office, has begun imposing, significant tariffs on goods imported from China, Canada, Mexico and other countries.
+Added: Given the uncertainty regarding the scope and duration of these trade actions by the U.S.
+Added: and any retaliatory trade actions taken by such other countries, we cannot predict whether, or to what extent, tariffs and other trade restrictions may be imposed on or otherwise become applicable to our product offerings or supply chain, and the impact of these trade actions on our business remains uncertain.
+Added: In addition, in November 2021, President Biden signed the Secure Equipment Act into effect, and in November 2022, the FCC adopted rules stating that they will no longer review or give licenses to the equipment that makes use of radio frequencies manufactured by companies believed to pose a national security threat, including Huawei, ZTE, Dahua, and Hikvision.
This could impact our ability to source products compatible with a customer’s existing system, or make repairs if new, compatible equipment cannot be sourced.
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The demand for our products and services is also dependent, in part, on national, regional, and local economic conditions, as well as our customers’ level of discretionary income.
−Removed: When our customers’ discretionary income is reduced (such as by higher housing, energy, interest, operating or other costs, or where the actual or perceived wealth of customers has decreased as a result of circumstances such as lower real estate values, increased foreclosure rates, inflation, increased tax rates, or other economic disruptions), we could experience increased attrition rates and reduced customer demand in home automation systems.
+Added: When our customers’ discretionary income is reduced (such as by higher housing, energy, interest, operating or other costs, or where the actual or perceived wealth of customers has decreased as a result of circumstances such as lower real estate values, increased foreclosure rates, inflation, increased tax rates, or other economic disruptions), we could experience increased attrition rates and reduced customer demand.
Where levels of business activity decline, the small business customers could experience increased attrition rates and reduced demand for our offerings.
No assurance can be given that we will be able to continue acquiring quality customers or that we will not experience higher attrition rates.
−Removed: Our long-term revenue growth rate primarily depends on installations and new contracts exceeding disconnects.
+Added: Our long-term revenue growth rate primarily depends on revenue from installations and new contracts exceeding disconnects.
If customer disconnects or defaults increase, our business, financial condition, results of operations, and cash flows could be materially adversely affected.
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In addition, where we have committed to provide financing internally, as interest rates rise, our cost of capital also gets more expensive and we may not be able to pass on such increased costs to our customers.
−Removed: Any increase in those fees or costs will have an adverse impact on our ability to offer attractive pricing to customers, which could negatively impact our sales and profitability, or increase the cost to us upon the sale of our aggregated customer loans.
+Added: Any increase in those fees or costs will have an adverse impact on our ability to offer attractive pricing to customers, which could negatively impact our sales and profitability, or increase the cost to us upon the sale of our aggregated customer
Any such outcome could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
−Removed: A substantial part of our CSB revenue is derived from the recurring monthly revenue due from customers under alarm monitoring contracts and we are subject to credit risk and other risks associated with our customers, dealers, and third-party lenders.
−Removed: A substantial part of our revenue is derived from the recurring monthly revenue due from customers under alarm monitoring contracts.
−Removed: Therefore, we are dependent on our customers’ ability and willingness to pay amounts due under alarm monitoring contracts in a timely manner.
−Removed: Although customers are contractually obligated to pay amounts due under an alarm monitoring contract and are generally contractually obligated to pay cancellation fees if they prematurely cancel the contract during its initial term (typically between two and five years), customers’ payment obligations are unsecured, which could impair our ability to collect any unpaid amounts from our customers.
−Removed: To the extent customer payment defaults under alarm monitoring contracts are greater than anticipated, our business, financial condition, results of operations, and cash flows could be materially adversely affected.
+Added: A substantial part of our revenue is derived from the recurring monthly revenue due from customers under alarm monitoring and other service contracts and we are subject to credit risk and other risks associated with our customers, dealers, and third-party lenders.
+Added: A substantial part of our revenue is derived from the recurring monthly revenue due from customers under alarm monitoring and other service contracts.
+Added: Therefore, we are dependent on our customers’ ability and willingness to pay amounts due under alarm monitoring or other service contracts in a timely manner.
+Added: Although customers are contractually obligated to pay amounts due under an alarm monitoring or other service contract and are generally contractually obligated to pay cancellation fees if they prematurely cancel the contract during its initial term (typically between two and five years), customers’ payment obligations are unsecured, which could impair our ability to collect any unpaid amounts from our customers.
+Added: To the extent customer payment defaults under alarm monitoring and other service contracts are greater than anticipated, our business, financial condition, results of operations, and cash flows could be materially adversely affected.
We have introduced and will continue to explore different commercial terms for our products and services, such as increasing or otherwise changing the amount of up-front payments, providing different financing options, such as retail installment contracts for the amount of up-front payments associated with our transactions, or offering longer or shorter contract term options.
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These limitations may adversely affect our relationships with customers, and may subject us to risk with respect to our ability to generate current levels of cash flow should, for example, such arrangements be terminated.
−Removed: In addition, rising interest rates, as we have experienced during 2022 and 2023 and which we may continue to experience, could increase the financing costs of our products and services substantially.
+Added: In addition, rising interest rates, as we experienced during 2022 and 2023 and which we may continue to experience, could increase the financing costs of our products and services substantially.
Any such result could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
We also placed a substantial reliance on third-party lenders in order to access loan products for our customers in our solar segment.
−Removed: The financial difficulty or insolvency of any such third party lender has and may in the future result in a delay in customer installations, a write-off in accounts receivables, or other negative impacts on the customer experience or our financial condition.
In addition, any disruption in our relationship with a third party lender could have an adverse impact on certain customer relationships or result in liability to us.
−Removed: For example, in 2022, a large third party lender notified us that it had entered insolvency proceedings which caused disruptions to our business and lost sales for certain customers who could not secure alternate financing options.
−Removed: Certain third party lenders also have the contractual right to require us to repurchase loans if we fail
−Removed: to achieve certain contractual milestones with respect to customer installations.
+Added: Certain third party lenders also have the contractual right to require us to repurchase loans if we fail to achieve certain contractual milestones with respect to customer installations.
If any of our third party lenders invokes such a right, the necessary repurchases could have a material, adverse effect on our cash flow for the quarter in which they occur.
Industry trends could also change, for example, by third party lenders more systematically requiring the repurchase of loans, or requiring a guarantee with respect to amounts that such lenders would otherwise require be repurchased, if we fail to achieve the relevant milestones.
−Removed: In February 2023, one of our largest third party lenders of loans advised us that they are implementing such policies effective during the first quarter of 2023, with additional policy changes forthcoming this year, and we are in discussions with them regarding the relevant loan portfolio.
We cannot predict the timing or extent to which the broader industry will implement such changes or the related impact on us.
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We are subject to the risk that dealers will breach these obligations.
−Removed: Although we generally withhold specified amounts from the acquisition cost paid to dealers for alarm monitoring contracts (“holdback”), which may be used to satisfy or offset these and other applicable dealer obligations under the alarm monitoring contract acquisition agreements, there can be no guarantee that these amounts will be sufficient to satisfy or offset the full extent of the default by a dealer of its obligations under its agreement.
+Added: Although we generally withhold specified amounts from the acquisition cost paid to dealers for alarm monitoring contracts (“holdback”), which may be used to satisfy or offset these and other applicable dealer obligations under the alarm monitoring contract acquisition agreements, there can be no guarantee that these amounts will be sufficient to satisfy
+Added: or offset the full extent of the default by a dealer of its obligations under its agreement.
If the holdback proves insufficient to cover dealer obligations, we are also subject to the credit risk that the dealers may not have sufficient funds to compensate us or that any such dealer will otherwise breach its obligation to compensate us for a terminating alarm monitoring contract.
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and a variety of other factors.
−Removed: For example, during 2023 and 2022, we recorded cumulative goodwill impairment charges of $712 million related to our Solar reporting unit due to continued deterioration of industry conditions, general macroeconomic decline, underperformance of the reporting unit’s operating results relative to expectations, and, during the third quarter of 2023, our decision to close a significant number of branches and reduce headcount.
−Removed: Following these goodwill impairment charges, the balance of goodwill in the Solar reporting unit is zero.
+Added: For example, during 2023 and 2022, we recorded cumulative goodwill impairment charges of $712 million related to our former Solar reporting unit due to continued deterioration of industry conditions, general macroeconomic decline, underperformance of the former reporting unit’s operating results relative to expectations, and, during the third quarter of 2023, our decision to close a significant number of branches and reduce headcount.
+Added: Following these goodwill impairment charges, the balance of goodwill in the former Solar reporting unit was zero.
It is possible that we may never realize the full value of our intangible assets.
−Removed: Any future determination of impairment of goodwill or other identifiable intangible assets in our CSB segment could have a material adverse effect on our financial condition and results of operations.
+Added: Any future determination of impairment of goodwill or other identifiable intangible assets could have a material adverse effect on our financial condition and results of operations.
We have significant deferred tax assets, and any impairments of or valuation allowances against these deferred tax assets in the future could materially adversely affect our results of operations, financial condition, and cash flows.
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Changes in current or future laws or regulations, the imposition of new or changed tax laws or regulations, or new related interpretations by taxing authorities in the jurisdictions in which we file could materially adversely affect our business, financial condition, results of operations, and cash flows.
−Removed: Our future consolidated federal and state income tax liability may be significantly reduced by tax credits and tax net operating loss (“NOL”) carryforwards available to us under the applicable tax codes.
−Removed: Certain of the entities we have acquired had material NOL carryforwards prior to our acquisition.
−Removed: Our ability to fully utilize these deferred tax assets, however, may be limited for various reasons, including whether projected future taxable income becomes insufficient to recognize the full benefit of our NOL carryforwards prior to their expirations.
−Removed: If a corporation experiences an “ownership change,” Sections 382 and 383 of the Internal Revenue Code (“IRC”) provide annual limitations with respect to the ability of a corporation to utilize its NOL (as well as certain built-in losses) and tax credit carryforwards against future U.S.
+Added: Our future consolidated federal and state income tax liability may be significantly reduced by tax attributes such as tax credits, tax net operating loss (“NOL”), and disallowed interest carryforwards available to us under the applicable tax codes.
+Added: Our ability to fully utilize these tax attributes, however, may be limited for various reasons, including whether projected future taxable income becomes insufficient to recognize the full benefit of our tax attributes prior to their expirations.
+Added: If a corporation experiences an “ownership change,” Sections 382 and 383 of the Internal Revenue Code (“IRC”) provide annual limitations with respect to the ability of a corporation to utilize its tax attributes against future U.S.
taxable income.
In general, an ownership change may result from transactions increasing the ownership of certain stockholders in the stock of the corporation by more than 50 percentage points over a three-year testing period.
−Removed: Because our ability to fully utilize the NOL carryforwards of our entities is subject to the limitations under Section 382 of the IRC, it is also possible that future changes in the direct or indirect ownership in our equity might result in additional ownership changes that may trigger the imposition of additional limitations under Section 382 of the IRC with respect to these tax attributes.
+Added: Because our ability to fully utilize our tax attributes is subject to the limitations under Section 382 of the IRC, it is also possible that future changes in the direct or indirect ownership in our equity might result in additional ownership changes that may trigger the imposition of additional limitations under Section 382 of the IRC with respect to these tax attributes.
In addition, audits by the U.S.
−Removed: Internal Revenue Service (“IRS”) as well as state, territorial, provincial, and local tax authorities could reduce our tax attributes and/or subject us to tax liabilities if tax authorities make adverse determinations with respect to our NOL or tax credits carryforwards.
−Removed: Any future disallowance of some or all of our tax credits or NOL carryforwards as a result of legislative change could materially adversely affect our tax obligations.
+Added: Internal Revenue Service (“IRS”) as well as state, territorial, provincial, and local tax authorities could reduce our tax attributes and/or subject us to tax liabilities if tax authorities make adverse determinations with respect to our tax attributes.
+Added: Any future disallowance of some or all of our tax attributes as a result of legislative change could materially adversely affect our tax obligations.
Any increase in taxation or limitation of benefits could have a material adverse effect on our business, financial condition, results of operations, or cash flows.
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The amounts disallowed each year can be carried forward indefinitely and used in subsequent years if an excess limitation exists.
−Removed: We have begun to accumulate a significant deferred tax asset related to this disallowed interest carryforward.
+Added: We have accumulated a significant deferred tax asset related to this disallowed interest carryforward.
However, there is a risk that we will not recognize the benefit of this deferred tax asset in the foreseeable future due to our annual interest expense exceeding the imposed limitation.
We may need to record a valuation allowance against this deferred tax asset in the future as the deferred tax asset grows, which may have a material adverse effect on our future financial condition and results of operations.
−Removed: After the utilization of our NOLs, there is a risk that the interest disallowance may have a material adverse impact on our financial condition, results of operations, and cash flows.
+Added: There is a risk that the interest disallowance may have a material adverse effect on our financial condition, results of operations, and cash flows.
Risks Related to Our Indebtedness
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In 2023, we used the net proceeds of the Commercial Divestiture and cash on hand to reduce our debt by approximately $2 billion.
−Removed: However, we can provide no assurance that our business will generate sufficient cash flow from operations to service or repay our debt, or that we will have the ability to issue new debt, draw on our revolving credit facility or fund other alternative sources of funds to satisfy our obligations.
+Added: However, we can provide no assurance that our business will generate sufficient cash flow from operations to service or repay our debt, or that we will have the ability to issue new debt, draw on our revolving credit facility or find other alternative sources of funds to satisfy our obligations.
Our inability to generate sufficient cash flow to satisfy our debt obligations, or to refinance our indebtedness on commercially reasonable terms or at all, could result in a material adverse effect on our business, financial condition, results of operations, and cash flows.
−Removed: Our debt agreements contain restrictions that limit our flexibility and limit the manner in which we conduct our business and finance future operations or capital needs, which would have a material adverse effect on our business and financial condition.
+Added: On February 7, 2025, we issued an irrevocable notice of partial redemption for $500 million of the First Lien Notes due 2026, which will be redeemed on March 9, 2025.
+Added: Prior to the issuance of such notice, certain lenders provided commitments that they will fund a new $600 million first lien seven-year term loan facility.
+Added: The closing of this new facility, which remains subject to market and other customary conditions, is expected to occur on or around March 7, 2025.
+Added: The Company intends to use proceeds of this new facility for the partial redemption of the First Lien Notes due 2026 among other general corporate purposes.
+Added: Our debt agreements contain restrictions that limit our flexibility and limit the manner in which we conduct our business and finance future operations or capital needs, which could have a material adverse effect on our business and financial condition.
Our debt agreements contain, and any future indebtedness of ours would likely contain, a number of covenants that impose significant operating and financial restrictions on us, including restrictions on our and our subsidiaries’ ability to, among other things:
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Among others, the following factors could affect our stock price:
−Removed: • our business performance and prospects, including the success of our strategic relationship with State Farm, our partnership with Google and our ADT Solar rationalization activity and subsequent determination to exit the ADT Solar business;
−Removed: • sales of our common stock, or the perception that such sales may occur, by us or by our stockholders, including our controlling stockholder Apollo (which has already and may continue to sell shares in registered offerings pursuant to demand registration requests), State Farm, Google, or any of the recipients of our common stock upon our acquisition of ADT Solar;
+Added: • our business performance and prospects, including the success of our strategic relationship with State Farm and our partnership with Google;
+Added: • sales of our Common Stock, or the perception that such sales may occur, by us or by our stockholders, including Apollo (which has already and may continue to sell shares in registered offerings pursuant to demand registration requests), State Farm, or Google;
• quarterly variations in the rates of growth of our operating and financial indicators, such as net income (loss) per share, net income (loss) and total revenue;
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Such litigation, if instituted against us, could result in very substantial costs, divert our management’s attention and resources, and have a material adverse effect on our business, financial condition, results of operations, and cash flows.
−Removed: We continue to be controlled by Apollo, and Apollo’s interests may conflict with our interests and the interests of other stockholders.
−Removed: Apollo has the power to elect a majority of our directors.
−Removed: Therefore, individuals affiliated with Apollo will have effective control over the outcome of votes on all matters requiring approval by our stockholders, including entering into significant corporate transactions such as mergers, tender offers, and the sale of all or substantially all of our assets and issuance of additional debt or equity.
+Added: Apollo continues to exert significant influence over us, and its interests may conflict with our interests and the interests of other stockholders, and could negatively impact our ability to enter into corporate transactions.
+Added: While we are no longer a “controlled company,” Apollo continues to be able to exert significant influence over us and as of December 31, 2024, had the right to, among other things, nominate 50% of our directors pursuant to the Amended and Restated Stockholders Agreement, dated December 14, 2018, (the “Stockholders Agreement”) between the Company and Ultimate Parent and the Co-Investors (as defined therein).
The interests of Apollo and its affiliates, including funds affiliated with Apollo, could conflict with or differ from our interests or the interests of our other stockholders.
−Removed: For example, the concentration of ownership held by funds affiliated with Apollo could delay, defer, or prevent a change in control of our company or impede a merger, takeover, or other business combination which may otherwise be favorable for us.
+Added: For example, the concentration
+Added: of ownership held by funds affiliated with Apollo could (i) delay, defer, or prevent a change in control of our company, (ii) impede a merger, takeover, or other business combination which may otherwise be favorable for us or that another stockholder may otherwise view favorably or (iii) cause us to enter into transactions or agreements that are not in the best interests of all stockholders.
Additionally, Apollo and its affiliates are in the business of making investments in companies and may, from time to time, acquire and hold interests in or provide advice to businesses that compete directly or indirectly with us, or are suppliers or customers of ours.
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So long as funds affiliated with Apollo continue to directly or indirectly own a significant amount of our equity, even if such amount is less than 50%, Apollo and its affiliates will continue to be able to substantially influence or effectively control our ability to enter into corporate transactions.
−Removed: In addition, as long as Apollo beneficially owns a majority of our common stock, Apollo will control all matters requiring stockholder approval including the election of directors or amendments to any certificate of incorporation which would impede the ability to undertake a change in control and otherwise negatively impact our stock price.
−Removed: We are a “controlled company” within the meaning of the NYSE rules and, as a result, qualify for and intend to continue to rely on exemptions from certain corporate governance requirements.
−Removed: Apollo controls a majority of the voting power of our outstanding voting stock, and as a result, we are a controlled company within the meaning of the NYSE corporate governance standards.
−Removed: Under the NYSE rules, a company of which more than 50% of the voting power is held by another person or group of persons acting together is a controlled company and may elect not to comply with certain corporate governance requirements, including the requirements that:
−Removed: • a majority of the Board of Directors consist of independent directors;
−Removed: • the nominating and corporate governance committee be composed entirely of independent directors;
−Removed: • the compensation committee be composed entirely of independent directors.
−Removed: We use, and intend to continue using, these exemptions as long as we remain a controlled company.
−Removed: Accordingly, stockholders may not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of the NYSE.
−Removed: If we fail to establish and achieve the objectives of our ESG program, or if we fail to report on such ESG matters, consistent with investor, customer, employee, or other stakeholder expectations, and in compliance with legal and regulatory requirements, we may not be viewed as an attractive investment, service provider, workplace, or business, which could have a negative effect on our Company.
−Removed: Investors are placing a greater emphasis on non-financial factors, including ESG, when evaluating investment opportunities.
−Removed: In 2022, we released our first publicly-available corporate ESG Report which included a Sustainable Accounting Standards Board (“SASB”) Index report.
−Removed: In our Impact Report and other disclosures, including in various filings with the SEC, we detail our sustainability progress.
−Removed: ESG initiatives and goals may be difficult and expensive to implement and may not advance at a sufficient pace.
−Removed: If we are unable to provide sufficient and accurate disclosures about our ESG practices, or if we fail to establish and achieve the objectives of our ESG program, which could include targets or commitments, consistent with investor, customer, employee, or other stakeholder expectations, we may not be viewed as an attractive investment, service provider, workplace, or business and we may be exposed to potential liability or litigation, which could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
−Removed: In addition, there exists certain “anti-ESG” sentiment among some individuals and government institutions.
−Removed: Given the dynamic nature of ESG standards, expectations and regulations, which may change over time, we may from time to time need to update or otherwise revise our current practices, goals and initiatives, including in response to legislative or legal developments.
−Removed: As we continue to establish our ESG related initiatives, we could face a negative reaction or legislation that impedes our activities or reflects poorly upon the Company, any of which could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
+Added: In addition, we are party to the Stockholders Agreement with Ultimate Parent and the Co-Investors.
+Added: The Stockholders Agreement specifies that we will not take certain significant actions without the prior consent of Ultimate Parent, including, among other things, hiring or terminating any executive officer of our company, designating any new executive officer of our company, entering into certain merger, consolidation or other “change of control” transactions or changing the size of our Board of Directors.
+Added: The Stockholders Agreement also specifies that Ultimate Parent has the right to nominate individuals for election to our Board of Directors and that we are, to the fullest extent permitted by applicable law, required to nominate and recommend that each such individual be elected as a director, and the right to designate a member to each committee of our Board of Directors.
+Added: Relatedly, our amended and restated Bylaws (the “Bylaws”) provide that Ultimate Parent has the right, subject to certain conditions, to have its representatives appointed to serve on committees of our Board of Directors.
+Added: If we fail to establish and achieve the objectives of our sustainability program, or if we fail to report on such sustainability matters, consistent with investor, customer, employee, or other stakeholder expectations, and in compliance with legal and regulatory requirements, we may not be viewed as an attractive investment, service provider, workplace, or business, which could have a negative effect on our company.
+Added: Investors are placing a greater emphasis on non-financial factors, including sustainability matters, when evaluating investment opportunities.
+Added: We have published an annual corporate ESG Report (the “ESG Report”), including a Sustainable Accounting Standards Board (“SASB”) Index report, each year since 2022.
+Added: Additionally, since 2022 we have completed the annual Corporate Questionnaire provided by the Carbon Disclosure Project, a non-profit organization focused on sustainability reporting.
+Added: In our ESG Report and other disclosures, including in various filings with the SEC, we detail our sustainability progress.
+Added: Sustainability initiatives and goals may be difficult and expensive to implement and may not be advanced at a sufficient pace.
+Added: If we are unable to provide sufficient and accurate disclosures about our sustainability practices, or if we fail to establish and achieve the objectives of our sustainability program, which could include targets or commitments, consistent with investor, customer, employee, or other stakeholder expectations, we may not be viewed as an attractive investment, service provider, workplace, or business and we may be exposed to potential liability or litigation, which could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
+Added: In addition, there exists certain negative sentiment among some individuals and government institutions toward certain sustainability practices and initiatives.
+Added: Given the dynamic nature of sustainability standards, expectations and regulations, which may change over time, we may from time to time need to update or otherwise revise our current practices, goals and initiatives, including in response to legislative, regulatory, or legal developments.
+Added: As we continue to establish our sustainability-related initiatives, we could face a negative response or legislation that impedes our activities or reflects poorly upon the Company, any of which could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
Our organizational documents may impede or discourage a takeover, which could deprive our investors of the opportunity to receive a premium on their shares.
−Removed: Provisions of our amended and restated certificate of incorporation and amended and restated bylaws may make it more difficult for, or prevent a third-party from, acquiring control of us without the approval of our Board of Directors.
+Added: Provisions of our amended and restated certificate of incorporation (as amended, our “Certificate of Incorporation”) and Bylaws may make it more difficult for, or prevent a third-party from, acquiring control of us without the approval of our Board of Directors.
These provisions include:
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An interested stockholder includes a person, individually or together with any other interested stockholder, who within the last three years has owned 15% or more of our outstanding voting stock, or who is our affiliate or associate and owned 15% or more of our outstanding voting stock at any time within the three years immediately prior to the date on which it is sought to be determined whether such person is an interested stockholder.
−Removed: Our amended and restated certificate of incorporation includes a provision that, with limited exceptions, restricts us from engaging in any business combination with an interested stockholder for three years following the date that person becomes an interested stockholder.
−Removed: Such restrictions do not apply to any business combination between Apollo or their direct and indirect transferees (as these
−Removed: terms are defined in the amended and restated certificate of incorporation) and any affiliate thereof, on the one hand, and us, on the other.
−Removed: Our amended and restated certificate of incorporation provides for exclusive forum provisions which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes.
−Removed: Our amended and restated certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Chancery Court of the State of Delaware shall be, to the fullest extent permitted by law, the sole and exclusive forum for (a) any derivative action or proceeding brought on our behalf;
+Added: Our Certificate of Incorporation includes a provision that, with limited exceptions, restricts us from engaging in any business combination with an interested stockholder for three years following the date that person becomes an interested stockholder.
+Added: Such restrictions do not apply to any business combination between Apollo or their direct and indirect transferees (as these terms are defined in our Certificate of Incorporation) and any affiliate thereof, on the one hand, and us, on the other.
+Added: Our Certificate of Incorporation provides for exclusive forum provisions which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes.
+Added: Our Certificate of Incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Chancery Court of the State of Delaware shall be, to the fullest extent permitted by law, the sole and exclusive forum for (a) any derivative action or proceeding brought on our behalf;
(b) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, or stockholders;
−Removed: (c) any action asserting a claim arising pursuant to any provision of the DGCL or of our amended and restated certificate of incorporation or our amended and restated bylaws;
+Added: (c) any action asserting a claim arising pursuant to any provision of the DGCL or of our Certificate of Incorporation or our Bylaws;
or (d) any action asserting a claim against us or any of our directors or officers governed by the internal affairs doctrine.
−Removed: In addition, our amended and restated certificate of incorporation also provides that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.
−Removed: The exclusive forum provision in our amended and restated certificate of incorporation does not apply to suits brought to enforce any duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.
+Added: In addition, our Certificate of Incorporation also provides that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.
+Added: The exclusive forum provision in our Certificate of Incorporation does not apply to suits brought to enforce any duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.
To the extent that any such claims may be based upon federal law claims, Section 27 of the Exchange Act creates federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder.
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These provisions may limit a stockholders’ ability to bring a claim in a judicial forum of their choosing, which may discourage lawsuits against us and our directors, officers, and other employees.
−Removed: Our amended and restated certificate of incorporation contains a provision renouncing our interest and expectancy in certain corporate opportunities.
−Removed: Funds affiliated with or managed by Apollo and certain other investors in our indirect parent entities (“Co-Investors”) received certain rights, including the right to designate one person to serve as a director (such director, the “Co-Investor Designee”) as long as such Co-Investor’s ownership exceeds a specified threshold.
−Removed: As of the date of this Annual Report, one Co-Investor has the right to designate a Co-Investor Designee.
−Removed: Under our Stockholders Agreement with Prime Security Services TopCo Parent L.P., dated January 23, 2018, as amended, Ultimate Parent has the right, but not the obligation, to nominate the Co-Investor Designee to serve as a member of our Board of Directors.
−Removed: Ultimate Parent’s right to nominate the Co-Investor Designee is in addition to Ultimate Parent’s right to nominate a specified percentage of the directors (“Apollo Designees”) based on the percentage of our outstanding common stock beneficially owned by Apollo.
−Removed: Under our amended and restated certificate of incorporation, none of Apollo, the one Co-Investor that maintains a right to appoint a director, or any of their respective portfolio companies, funds, or other affiliates, or any of their officers, directors, agents, stockholders, members, or partners have any duty to refrain from engaging, directly or indirectly, in the same business activities, similar business activities, or lines of business in which we operate.
−Removed: In addition, our amended and restated certificate of incorporation provides that, to the fullest extent permitted by law, no officer or director of ours who is also an officer, director, employee, managing director, or other affiliate of Apollo or the Co-Investor will be liable to us or our stockholders for breach of any fiduciary duty by reason of the fact that any such individual directs a corporate opportunity to Apollo or the Co-Investor, as applicable, instead of us, or does not communicate information regarding a corporate opportunity to us that the officer, director, employee, managing director, or other affiliate has directed to Apollo or the Co-Investor, as applicable.
−Removed: As of the date of this Annual Report, this provision of our amended and restated certificate of incorporation relates only to the Apollo Designees and the Co-Investor Designee.
−Removed: There are currently twelve directors of our Company, six of whom are Apollo Designees and one of whom is a Co-Investor Designee.
−Removed: These potential conflicts of interest could have a material adverse effect on our business, financial condition, results of operations, cash flows, or prospects if attractive corporate opportunities are allocated by Apollo or the Co-Investor to itself or their respective portfolio companies, funds, or other affiliates instead of to us.
+Added: Our Certificate of Incorporation contains a provision renouncing our interest and expectancy in certain corporate opportunities, which could have a material adverse effect if attractive corporate opportunities are allocated by Apollo to itself or its portfolio companies, funds, or other affiliates instead of to us.
+Added: Under the Stockholders Agreement, funds affiliated with or managed by Apollo received certain rights, including the right to nominate a specified percentage of the directors to serve on our Board of Directors (the “Apollo Designees”) based on the percentage of our outstanding Common Stock beneficially owned by Apollo.
+Added: Under our Certificate of Incorporation, none of Apollo nor any of its portfolio companies, funds, or other affiliates, or any of its officers, directors, agents, stockholders, members, or partners have any duty to refrain from engaging, directly or indirectly, in the same business activities, similar business activities, or lines of business in which we operate.
+Added: In addition, our Certificate of Incorporation provides that, to the fullest extent permitted by law, no officer or director of ours who is also an officer, director, employee, managing director, or other affiliate of Apollo will be liable to us or our stockholders for breach of any fiduciary duty by reason of the fact that any such individual directs a corporate opportunity to Apollo instead of us, or does not communicate information regarding a corporate opportunity to us that the officer, director, employee, managing director, or other affiliate has directed to Apollo.
+Added: As of the date of this Annual Report, this provision of our Certificate of Incorporation relates only to the Apollo Designees.
+Added: There are currently fifteen directors of our Company, six of whom are Apollo Designees.
+Added: These potential conflicts of interest could have a material adverse effect on our business, financial condition, results of
+Added: operations, cash flows, or prospects if attractive corporate opportunities are allocated by Apollo to itself or its respective portfolio companies, funds, or other affiliates instead of to us.
We may issue preferred securities, the terms of which could adversely affect the voting power or value of our Common Stock.
−Removed: Our amended and restated certificate of incorporation authorizes us to issue, without the approval of our stockholders, one or more classes or series of preferred securities having such powers;
+Added: Our Certificate of Incorporation authorizes us to issue, without the approval of our stockholders, one or more classes or series of preferred securities having such powers;
designations;
and relative, participating, optional, or other rights, including preferences over our Common Stock with respect to dividends and other distributions, as our Board of Directors may determine.
−Removed: The terms of one or more classes or series of preferred securities could adversely impact the voting power or value of our common stock.
−Removed: For example, we might grant holders of preferred securities the right to elect some number of our directors in all events or on the happening of specified events or the right to veto specified
−Removed: transactions.
−Removed: Similarly, the repurchase or redemption rights or liquidation preferences we might assign to holders of preferred securities could affect the residual value of the common stock.
+Added: The terms of one or more classes or series of preferred securities could adversely affect the voting power or value of our Common Stock.
+Added: For example, we might grant holders of preferred securities the right to elect some number of our directors in all events or on the happening of specified events or the right to veto specified transactions.
+Added: Similarly, the repurchase or redemption rights or liquidation preferences we might assign to holders of preferred securities could affect the residual value of our Common Stock.
We cannot guarantee that our share repurchase program will be fully consummated or that it will enhance long-term shareholder value.
Share repurchases and dividend payments, including recent changes in the amount of our dividend, could also increase the volatility of the trading price of our stock and will diminish our cash reserves.
−Removed: Our Board of Directors has authorized a share repurchase plan (the “Share Repurchase Plan”), pursuant to which the Company is authorized to repurchase, through late January 2025, up to a maximum aggregate amount of $350 million of shares of the Company's common stock.
+Added: On February 20, 2025, our Board of Directors authorized a share repurchase plan (the “2025 Share Repurchase Plan”), pursuant to which the Company is authorized to repurchase, through April 30, 2026, up to a maximum aggregate amount of $500 million of shares of the Company's Common Stock.
We cannot guarantee that the 2025 Share Repurchase Plan will be fully consummated.
−Removed: The Company is not obligated to repurchase any of its shares of common stock, and the timing and amount of any repurchases will depend on legal requirements, market conditions, stock price, the availability of the safe harbor provided by Rule 10b-18 under the Exchange Act, alternative uses of capital, and other factors.
+Added: The 2025 Share Repurchase Plan allows the Company to purchase shares of its Common Stock from time to time in one or more open market or privately negotiated transactions, including pursuant to Rule 10b5-1 or Rule 10b-18 of the Exchange Act or pursuant to one or more accelerated share repurchase agreements, subject to certain requirements and other factors.
+Added: The Company is not obligated to repurchase any of its shares of common stock, and the timing and amount of any repurchases will depend on legal requirements, market conditions, stock price, the availability of certain safe harbors provided under the Exchange Act, alternative uses of capital, and other factors.
Further, our share repurchases could affect our share trading prices, increase their volatility, reduce our cash reserves and may be suspended or terminated at any time, which may result in a decrease in the trading price of our stock.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.