What changed in this filing

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Item 1. Financial Statements

2025-04-24 compared with 2024-10-24 · 319 added, 370 removed, 504 unchanged (58% of the section changed)

3 unchanged sentences

(in thousands, except share and per share data)

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Current assets:

5 unchanged sentences

Prepaid expenses and other current assets 182,255 210,613

Current assets of discontinued operations 3,322 60,957

Total current assets 857,540 1,004,920

5 unchanged sentences

Other assets 714,133 735,319

Noncurrent assets of discontinued operations 569 43,279

Total assets $ 15,830,065 $ 16,050,957

16 unchanged sentences

Preferred stock—authorized 1,000,000 shares of $ 0.01 par value;

zero issued and outstanding as of September 30, 2024 and December 31, 2023

zero issued and outstanding as of March 31, 2025 and December 31, 2024

Common stock—authorized 3,999,000,000 shares of $ 0.01 par value;

issued and outstanding shares of 857,250,221 and 867,432,337 as of September 30, 2024 and December 31, 2023, respectively

issued and outstanding shares of 788,152,561 and 836,589,761 as of March 31, 2025 and December 31, 2024, respectively

Class B common stock—authorized 100,000,000 shares of $ 0.01 par value;

issued and outstanding shares of 54,744,525 as of September 30, 2024 and December 31, 2023

issued and outstanding shares of 54,744,525 as of March 31, 2025 and December 31, 2024

Additional paid-in capital 6,840,189 7,117,098

7 unchanged sentences

(in thousands, except per share data)

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

Monitoring and related services $ 1,083,104 $ 1,062,652

7 unchanged sentences

Depreciation and intangible asset amortization 339,517 333,002

Merger, restructuring, integration, and other 1,590 9,817 15,094 32,441

Operating income (loss) 319,252 292,149

1 unchanged sentence

Other income (expense) ( 4,864 ) 15,622

Income (loss) from continuing operations before income taxes and equity in net earnings (losses) of equity method investee 182,255 160,374 588,601 470,350

Income (loss) from continuing operations before income taxes 193,509 220,321

Income tax benefit (expense) ( 51,032 ) ( 56,430 )

Income (loss) from continuing operations before equity in net earnings (losses) of equity method investee 132,020 125,947 422,096 350,363

Equity in net earnings (losses) of equity method investee — ( 2,688 ) — ( 7,103 )

Income (loss) from continuing operations 142,477 163,891

19 unchanged sentences

(in thousands)

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

Net income (loss) $ 140,246 $ 91,551

Other comprehensive income (loss), net of tax:

Cash flow hedges 1,472 22,763 4,593 30,484

Other ( 42 ) ( 17 ) 72 ( 43 )

Total other comprehensive income (loss), net of tax 1,430 22,746 4,665 30,441

Cash flow hedges and other

Comprehensive income (loss) $ 141,590 $ 93,259

3 unchanged sentences

(in thousands)

Three Months Ended September 30, 2024

Number of Common Shares Number of Class B Common Shares Common Stock Class B Common Stock Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Total Stockholders' Equity

Beginning balance 857,053 54,745 $ 8,571 $ 547 $ 7,347,061 $ ( 3,535,042 ) $ ( 12,927 ) $ 3,808,210

Net income (loss) — — — — — 127,151 — 127,151

Other comprehensive income (loss), net of tax — — — — — — 1,430 1,430

Dividends — — — — — ( 50,157 ) — ( 50,157 )

Share-based compensation expense — — — — 9,942 — — 9,942

Transactions related to employee share-based compensation plans and other 197 — 2 — 1,238 ( 531 ) — 709

Ending balance 857,250 54,745 $ 8,573 $ 547 $ 7,358,241 $ ( 3,458,579 ) $ ( 11,497 ) $ 3,897,285

Three Months Ended September 30, 2023

Beginning balance 866,409 54,745 $ 8,664 $ 547 $ 7,390,269 $ ( 4,041,963 ) $ ( 39,505 ) $ 3,318,012

Net income (loss) — — — — — ( 86,237 ) — ( 86,237 )

Other comprehensive income (loss), net of tax — — — — — — 22,746 22,746

Dividends — — — — — ( 32,321 ) — ( 32,321 )

Share-based compensation expense — — — — 15,580 — — 15,580

Transactions related to employee share-based compensation plans and other 385 — 4 — 1,315 ( 434 ) — 885

Ending balance 866,794 54,745 $ 8,668 $ 547 $ 7,407,164 $ ( 4,160,955 ) $ ( 16,759 ) $ 3,238,665

See Notes to Condensed Consolidated Financial Statements

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

Nine Months Ended September 30, 2024

Three Months Ended March 31, 2025

8 unchanged sentences

Ending balance 788,153 54,745 $ 7,882 $ 547 $ 6,840,189 $ ( 3,225,634 ) $ ( 5,692 ) $ 3,617,292

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

4 unchanged sentences

Share-based compensation expense — — — — 7,971 — — 7,971

Repurchases of common stock (including excise tax) ( 15,000 ) — ( 150 ) — ( 93,969 ) — — ( 94,119 )

Transactions related to employee share-based compensation plans and other

5 unchanged sentences

(in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

7 unchanged sentences

Provision for losses on receivables and inventory 52,545 60,765

Goodwill, intangible, and other asset impairments 21,296 521,663

Loss on extinguishment of debt 6,443 —

Intangible and other asset impairments — 20,446

Unrealized (gain) loss on interest rate swap contracts 25,041 ( 10,146 )

9 unchanged sentences

Purchases of property and equipment ( 45,420 ) ( 40,689 )

Proceeds (payments) from sale of business, net of cash sold

Proceeds (payments) from interest rate swaps

( 743 ) ( 1,816 )

Other investing, net 264 544

2 unchanged sentences

Proceeds from long-term borrowings 637,000 95,000

Repayment of long-term borrowings, including call premiums ( 511,029 ) ( 56,646 )

Proceeds from receivables facility 64,691 65,910

Repayment of receivables facility ( 76,397 ) ( 57,984 )

Proceeds (payments) from interest rate swaps 17,157 23,908

Repurchases of common stock ( 396,564 ) ( 93,356 )

Repayment of long-term borrowings, including call premiums ( 1,087,658 ) ( 888,716 )

Repayment of receivables facility ( 202,747 ) ( 144,620 )

Dividends on common stock ( 48,918 ) ( 32,207 )

12 unchanged sentences

ADT Inc., together with its wholly-owned subsidiaries (collectively, “ADT” or the “Company”), provides security, interactive, and smart home solutions to consumer and small business customers in the United States (“U.S.”).

Prior to March 11, 2024, the Company was majority-owned by Prime Security Services TopCo (ML), L.P., which is majority-owned by Prime Security Services TopCo Parent, L.P.

(“Ultimate Parent”).

Ultimate Parent is majority-owned by Apollo Investment Fund VIII, L.P.

and its related funds that are directly or indirectly managed by affiliates of Apollo Global Management, Inc.

(together with its subsidiaries and affiliates, “Apollo” or the “Sponsor”).

Following a registered secondary offering of the Company’s common stock (“Common Stock”) by certain Apollo affiliates (and the Company’s concurrent repurchase from the underwriters of 15 million shares of Common Stock that were the subject of the offering), including the exercise of the underwriters’ overallotment option which closed on March 19, 2024, Apollo beneficially owns less than 50 % of the Company’s outstanding common stock, which includes Common Stock and Class B common stock (“Class B Common Stock”) combined, and less than 50 % of the Company’s outstanding Common Stock, and the Company ceased to be a “controlled company” under the New York Stock Exchange (the “NYSE”) rules.

During the first quarter of 2024, the Company ceased to be a “controlled company” under the New York Stock Exchange (the “NYSE”) rules following a registered secondary offering of the Company’s common stock (“Common Stock”) by certain entities managed by affiliates of Apollo Global Management, Inc.

Following subsequent registered secondary offerings by Apollo, as of March 31, 2025, Apollo owned approximately 33 % of the Company’s outstanding Common Stock, including shares of Class B common stock (“Class B Common Stock”) (on an as-converted basis).

Refer to Note 14 “Related Party Transactions” for further information.

Basis of Presentation

9 unchanged sentences

For a more comprehensive understanding of the Company and its interim results, these condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Annual Report”).

In addition, the results of companies acquired, if applicable, are included from the effective dates of acquisition.

Prior to the sale of its shares in SNTNL LLC (“Canopy”) during the fourth quarter of 2023, the Company used the equity method of accounting to account for its investment in Canopy as it had the ability to exercise significant influence but did not control.

Certain prior period amounts have been reclassified to conform with the current period presentation.

Discontinued Operations

In January 2024, the Company’s board of directors (the “Board of Directors” or the “Board”) approved a plan to fully exit the residential solar business (the “Solar Business”) (the “ADT Solar Exit”).

The ADT Solar Exit represents a strategic shift that had a major effect on the Company’s financial results.

As of June 30, 2024, substantially all operations of the Solar Business had ceased, and beginning in the second quarter of 2024, the results of operations and financial position of the Solar Business are classified as discontinued operations in the Company’s Condensed Consolidated Statements of Operations and Condensed Consolidated Balance Sheets, respectively, for all periods presented.

In addition, in August 2023, ADT entered into an agreement to divest its commercial business (the “Commercial Business”), which was completed in October 2023 (the “Commercial Divestiture”).

As a result, the Commercial Business is presented as a discontinued operation in the Company’s Condensed Consolidated Statements of Operations for all periods presented.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The cash flows and comprehensive income (loss) of discontinued operations have not been segregated and are included in the Condensed Consolidated Statements of Cash Flows and Condensed Consolidated Statements of Comprehensive Income (Loss), respectively, for all periods presented.

Refer to Note 3 “Divestitures” for additional information on discontinued operations.

Unless otherwise noted, amounts and disclosures throughout these Notes to Condensed Consolidated Financial Statements relate to the Company’s continuing operations.

Amounts previously disclosed under the caption merger, restructuring, integration, and other are now presented within selling, general, and administrative expenses on the Condensed Consolidated Statements of Operations as they are no longer material for the periods presented.

Use of Estimates

2 unchanged sentences

Actual results could differ materially from these estimates under different assumptions or market conditions.

Segment Update

Beginning in the second quarter of 2024, and as a result of the ADT Solar Exit, the Company currently reports its results in a single operating and reportable segment, which reflects the business operations of the Company’s former Consumer and Small Business (“CSB”) segment, based on the manner in which the Company’s Chief Executive Officer, who is the chief operating decision maker (the “CODM”), evaluates performance and makes decisions about how to allocate resources.

Prior to the third quarter of 2023, the Commercial Business was reflected in the Commercial reportable segment, and prior to the second quarter of 2024, the Solar Business was reflected in the Solar reportable segment.

Accounting Pronouncements

Recently Adopted Accounting Pronouncements

Supplier Finance Program Obligations - Accounting Standards Update (“ASU”) 2022-04, Liabilities — Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations, requires that a reporting entity who is a buyer in a supplier finance program disclose qualitative and quantitative information about its supplier finance programs, including a roll-forward of the obligations.

The Company adopted the roll-forward requirement effective January 1, 2024.

The Company does not currently have any material supplier finance programs, and the guidance will be applied prospectively to any future arrangements.

Fair Value of Equity Investments - ASU 2022-03, Fair Value Measurement (Topic 820):

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, states that an entity should not consider the impact of contractual sale restrictions when measuring an equity security’s fair value and introduces new disclosure requirements related to such equity securities.

The Company adopted this guidance effective January 1, 2024.

This guidance did not impact the Company.

Recently Issued Accounting Pronouncements

Disclosure Improvements - ASU 2023-06, Disclosure Improvements:

Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative , represents changes to clarify or improve disclosure and presentation requirements of a variety of topics.

The effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited.

The Company is monitoring the potential impact of this guidance on its financial statements and disclosures.

Segment Information

The Company evaluates and reports information based on the manner in which our chief operating decision maker (“CODM”) evaluates performance and allocates resources.

The CODM manages the business on a consolidated basis, and as such, the Company reports results in a single operating and reportable segment.

Refer to Note 3 “Segment Information.”

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Segment Reporting - ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , improves reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses.

In addition, the guidance, among other requirements, enhances interim disclosures, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss, and provides new segment disclosure requirements for entities with a single reportable segment.

The amendments in this guidance are effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

This guidance should be applied retrospectively to all periods presented.

The Company is currently evaluating the impact of this guidance on its disclosures.

Income Taxes - ASU 2023-09, Income Taxes (Topic 740):

Discontinued Operations

The Company’s exit in 2024 from the residential solar business (the “Solar Business”) (the “ADT Solar Exit”) and the sale in 2023 of its commercial business (the “Commercial Business”) (the “Commercial Divestiture”) represented strategic shifts that had major effects on the Company’s operations and financial results.

Accordingly, the results of operations and financial position of these businesses are classified as discontinued operations.

The Condensed Consolidated Statements of Cash Flows and Condensed Consolidated Statements of Comprehensive Income (Loss) present both continuing and discontinued operations.

Refer to Note 4 “Divestitures.”

Unless otherwise noted, the following Notes to Condensed Consolidated Financial Statements refer to the Company’s continuing operations only.

Accounting Standards Updates (“ASU”)

Recently Issued

Disaggregation of Income Statement Expenses - ASU 2024-03 , Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses, requires additional disclosure in the footnotes at each interim and annual reporting period about specific types of expenses included in the expense captions presented on the face of the statement of operations as well as additional disclosures that also include information related to selling expenses.

The guidance is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027.

The requirements will be applied prospectively with the option for retrospective application.

Early adoption is permitted.

The Company is currently evaluating the impact of this guidance on its financial statements and disclosures.

Improvements to Income Tax Disclosures - ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , focuses on improvements to income tax disclosures, primarily related to the rate reconciliation and income tax paid information.

2 unchanged sentences

Early adoption is permitted.

The Company is currently evaluating the impact of this guidance on its disclosures.

The Company is currently evaluating the impact of this guidance on its financial statements and disclosures.

Disclosure Improvements - ASU 2023-06, Disclosure Improvements:

The effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited.

The Company is monitoring the potential impact of this guidance on its financial statements and disclosures.

Significant Accounting Policies

Unless otherwise noted, the Company’s accounting policies, including those discussed herein, do not materially differ from those disclosed in the 2023 Annual Report.

Unless otherwise noted, the Company’s accounting policies, including those presented herein, do not materially differ from those disclosed in the 2024 Annual Report.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Cash and Cash Equivalents and Restricted Cash and Restricted Cash Equivalents

The following table reconciles the amounts below reported in the Condensed Consolidated Balance Sheets to the total of the same such amounts shown in the Condensed Consolidated Statements of Cash Flows:

(in thousands) September 30, 2024 December 31, 2023

(in thousands) March 31, 2025 December 31, 2024

Cash and cash equivalents $ 3,744 $ 96,212

3 unchanged sentences

_______________

(1) Primarily includes funds received from State Farm Fire & Casualty Company (“State Farm”), net of payments and inclusive of interest earned, in connection with the State Farm Development Agreement (as defined and discussed in Note 13 “Related Party Transactions”).

The remaining amount of restricted cash relates to the Company’s uncommitted receivables securitization financing agreement (the “ 2020 Receivables Facility”).

Refer to Note 5 “Debt.”

(1) Primarily includes the Opportunity Fund in connection with the State Farm Development Agreement (both as defined and discussed in Note 14 “Related Party Transactions”).

Use of the funds must be agreed to by State Farm Fire & Casualty Company (“State Farm”) and the Company.

The remaining balance relates to the Company’s uncommitted receivables securitization financing agreement (the “ 2020 Receivables Facility”) (refer to Note 6 “Debt”).

Inventories, net

6 unchanged sentences

The Company depreciates and amortizes these pooled costs using an accelerated method over the estimated life of the customer relationship, which is 15 years.

(in thousands) September 30, 2024 December 31, 2023

(in thousands) March 31, 2025 December 31, 2024

Gross carrying amount $ 6,968,889 $ 6,878,490

1 unchanged sentence

Subscriber system assets, net $ 2,949,154 $ 2,981,161

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Depreciation of subscriber system assets and amortization of deferred subscriber acquisition costs are reflected in depreciation and intangible asset amortization and selling, general, and administrative expenses (“SG&A”), respectively, as follows:

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands) 2025 2024

3 unchanged sentences

Accrued Expenses and Other Current Liabilities

(in thousands) September 30, 2024 December 31, 2023

(in thousands) March 31, 2025 December 31, 2024

Accrued interest $ 57,147 $ 107,116

3 unchanged sentences

Accrued dividends 47,080 48,918

Physically settled forward share repurchase liabilities (see Note 9 “Equity”)

8,696 104,175

Other accrued liabilities 227,712 181,101

Accrued expenses and other current liabilities $ 493,967 $ 634,904

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Fair Value of Financial Instruments

The Company’s financial instruments primarily consist of cash and cash equivalents, restricted cash and restricted cash equivalents, accounts receivable, retail installment contract receivables, accounts payable, debt, and derivative financial instruments.

The Company’s financial instruments primarily consist of cash and cash equivalents, restricted cash and restricted cash equivalents, accounts receivable, retail installment contract receivables (“RICs”), accounts payable, debt, and derivatives.

Due to their short-term and/or liquid nature, the fair values of cash, restricted cash, accounts receivable, and accounts payable approximate their respective carrying amounts.

Cash Equivalents - Included in cash and cash equivalents and restricted cash and restricted cash equivalents, as applicable from time to time, are investments in money market mutual funds.

Cash and Cash Equivalents and Restricted Cash and Restricted Cash Equivalents - Included in cash and cash equivalents and restricted cash and restricted cash equivalents, as applicable from time to time, are investments in money market mutual funds.

These investments are generally classified as Level 1 fair value measurements, which represent unadjusted quoted prices in active markets for identical assets or liabilities.

As of September 30, 2024 and December 31, 2023, investments in money market mutual funds were $ 98 million and $ 55 million, respectively.

As of March 31, 2025 and December 31, 2024, investments in money market mutual funds were $ 17 million and $ 90 million, respectively.

Long-Term Debt Instruments - The fair values of the Company’s long-term debt instruments are determined using broker-quoted market prices, which represent quoted prices for similar assets or liabilities as well as other observable market data, and are classified as Level 2 fair value measurements.

The carrying amounts of debt outstanding, if any, under the Company’s first lien revolving credit facility (the “First Lien Revolving Credit Facility”) and the 2020 Receivables Facility approximate their fair values as interest rates on these borrowings approximate current market rates.

September 30, 2024 December 31, 2023

Refer to Note 6 “Debt.”

March 31, 2025 December 31, 2024

(in thousands) Carrying

Value Carrying

Long-term debt instruments subject to fair value disclosures (1)

Long-term debt instruments (1) (see Note 6 “Debt”)

$ 7,756,528 $ 7,740,120 $ 7,637,631 $ 7,589,677

________________

(1) Excludes finance leases and certain vehicle loans reported as discontinued operations.

(1) Excludes finance leases.

Derivative Financial Instruments - Derivative financial instruments are reported at fair value as either assets or liabilities that are primarily calculated using discounted cash flow models utilizing observable inputs, such as quoted forward interest rates, and incorporate credit risk adjustments to reflect the risk of default by the counterparty or the Company.

1 unchanged sentence

Refer to Note 7 “Derivative Financial Instruments” for the fair values of the Company’s derivative financial instruments.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Retail Installment Contract Receivables - The fair values of the Company’s retail installment contract receivables are determined using a discounted cash flow model and are classified as Level 3 fair value measurements.

September 30, 2024 December 31, 2023

Retail Installment Contract Receivables - The fair values of the Company’s RICs are determined using a discounted cash flow model and are classified as Level 3 fair value measurements.

Refer to Note 2 “Revenue and Receivables.”

March 31, 2025 December 31, 2024

(in thousands) Carrying

1 unchanged sentence

Retail installment contract receivables, net $ 662,487 $ 500,962 $ 669,326 $ 495,259

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

REVENUE AND RECEIVABLES

The Company allocates the transaction price to each performance obligation based on the relative standalone selling price, which is determined using observable internal and external pricing, profitability, and operational metrics.

In addition to the details provided below, the Company’s disaggregated revenue includes monitoring and related services and security installation, product, and other revenue, which are presented on the face of the Condensed Consolidated Statements of Operations.

Company-Owned - In transactions in which the Company provides monitoring and related services but retains ownership of the security system (referred to as Company-owned transactions), the Company’s performance obligations primarily include (i) monitoring and related services, which are recognized when these services are provided to the customer, and (ii) a material right associated with the one-time non-refundable fees in connection with the initiation of a monitoring contract which the customer will not be required to pay again upon a renewal of the contract (referred to as deferred subscriber acquisition revenue).

Deferred subscriber acquisition revenue is amortized on a pooled basis over the estimated life of the customer relationship using an accelerated method consistent with the treatment of subscriber system assets and deferred subscriber acquisition costs and is reflected in security installation, product, and other revenue.

Three Months Ended September 30, Nine Months Ended September 30,

The Company generates revenue from contractual monthly recurring fees received for monitoring and related services, as well as the sale and installation of security systems.

The Company’s revenue-generating contracts are entered into primarily through its main operating entity and wholly-owned subsidiary, ADT LLC.

Disaggregated Revenue

Three Months Ended March 31,

( in thousands )

Sources of Revenue:

Recurring monthly revenue

$ 1,052,799 $ 1,036,866

Other related services

30,305 25,786

Monitoring and related services

1,083,104 1,062,652

Installation revenue

$ 95,516 $ 43,644

Amortization of deferred subscriber acquisition revenue

Customer-Owned - In transactions involving security systems sold outright to the customer (referred to as outright sales), the Company’s performance obligations generally include the sale and installation of the system, which is primarily recognized at a point in time based upon the nature of the transaction and contractual terms, and any monitoring and related services, which are recognized when these services are provided to the customer.

88,871 83,376

Security installation, product, and other 184,387 127,020

Total revenue $ 1,267,491 $ 1,189,672

Customer-Owned Transactions - In transactions involving security systems sold outright to the customer (referred to as outright sales ), the Company’s performance obligations generally include the sale and installation of the security system, which is primarily recognized at a point in time based upon the nature of the transaction and contractual terms, and any monitoring and related services, which are recognized when these services are provided to the customer.

Company-Owned Transactions - In transactions in which the Company provides monitoring and related services but retains ownership of the security system, the Company’s performance obligations primarily include (i) monitoring and related services, which are recognized when these services are provided to the customer, and (ii) a material right associated with the one-time non-refundable fees in connection with the initiation of a monitoring contract which the customer will not be required to pay again upon a renewal of the contract (referred to as deferred subscriber acquisition revenue).

Remaining Performance Obligations

As of March 31, 2025, the Company’s total remaining unsatisfied performance obligation relating to the provision of monitoring and related services is as follows (in thousands) :

$ 1,819,230 $ 1,008,517 $ 462,214 $ 229,899 $ 3,519,860

Allowance for Credit Losses

2 unchanged sentences

The allowance for credit losses is not material for the individual pools of customers.

Nine Months Ended September 30,

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended March 31,

(in thousands) 2025 2024

6 unchanged sentences

(1) Recoveries were not material for the periods presented.

As such, the Company presented write-offs, net of recoveries.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As such, write-offs are presented net of recoveries.

Retail Installment Contract Receivables, Net

For security system transactions occurring under both Company-owned and customer-owned equipment models, the Company’s retail installment contract option allows qualifying residential customers to pay the fees due at installation over a 24-, 36-, or 60-month interest-free period, and there is no significant financing component.

Upon origination of a retail installment contract, the Company utilizes external credit scores to assess customer credit quality and determine eligibility.

Subsequent to origination, the Company monitors the delinquency status of retail installment contract receivables as the key credit quality indicator.

The balance of unbilled retail installment contract receivables is comprised of:

(in thousands) September 30, 2024 December 31, 2023

The Company’s RICs allow qualifying residential customers to pay the fees due at installation over a 12-, 24-, 36-, or 60-month interest-free period.

The financing component is not significant.

Upon origination of a RIC, the Company utilizes external credit scores to assess customer credit quality and determine eligibility.

Subsequent to origination, the Company monitors the delinquency status of the RICs as the key credit quality indicator.

Delinquent billed RICs are not material.

The allowance for credit losses relates to RICs from outright sales transactions and is not material.

(in thousands) March 31, 2025 December 31, 2024

Retail installment contract receivables, gross $ 682,093 $ 678,174

5 unchanged sentences

Retail installment contract receivables, net $ 662,487 $ 669,326

The allowance for credit losses relates to retail installment contract receivables from outright sales transactions.

As of September 30, 2024, the current and delinquent billed retail installment contract receivables, net were not material.

As of September 30, 2024 and December 31, 2023, retail installment contract receivables, net, used as collateral for borrowings under the 2020 Receivables Facility were $ 599 million and $ 610 million, respectively.

As of March 31, 2025 and December 31, 2024, RICs, net, for which the Company grants a security interest as collateral for borrowings under the 2020 Receivables Facility were $ 590 million and $ 575 million, respectively.

Refer to Note 6 “Debt” for further discussion regarding the 2020 Receivables Facility.

1 unchanged sentence

Contract assets represent the Company’s right to consideration in exchange for goods or services transferred to the customer.

The contract asset is reclassified to accounts receivable when the Company’s right to the consideration becomes unconditional, which generally occurs over the course of a 24-, 36-, or 60-month period as additional services are performed and billed.

The contract asset is reclassified to accounts receivable as additional services are performed and billed, which is when the Company’s right to the consideration becomes unconditional.

The Company has the right to bill customers as services are provided over time, which generally occurs over the course of a 12-, 24-, 36-, or 60-month period as additional services are performed and billed.

There is no significant financing component.

During the nine months ended September 30, 2024 and 2023, contract assets recognized were not material.

The balance of contract assets for residential transactions is comprised of:

(in thousands) September 30, 2024 December 31, 2023

Gross contract assets recognized were not material for the periods presented.

(in thousands) March 31, 2025 December 31, 2024

Contract assets, gross $ 50,654 $ 46,031

5 unchanged sentences

Contract assets, net $ 45,360 $ 40,810

The Company may decide to divest or exit a portion of its business for various reasons, including efforts to focus on its other businesses.

The Company presents discontinued operations for components of the business that are either disposed of through sale (or qualify as held for sale), abandonment, or spin-off if these actions also represent a strategic shift that has or will have a major effect on the Company’s financial results.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Refer to Note 10 “Net Income (Loss) per Share” for basic and diluted earnings per share information for discontinued operations.

ADT Solar Exit

As discussed in Note 1 “Description of Business and Summary of Significant Accounting Policies,” as a result of the ADT Solar Exit, the Solar Business is now presented as a discontinued operation in the Company’s Condensed Consolidated Statements of Operations and Condensed Consolidated Balance Sheets for the periods presented as substantially all operations have ceased.

During the three months ended September 30, 2024, aggregate exit charges incurred were not material.

During the nine months ended September 30, 2024, the Company incurred aggregate exit charges of $ 88 million, which have been recognized within income (loss) from discontinued operations, net of tax related to (i) $ 34 million, associated with the write-down and disposition of inventory and asset impairments, (ii) $ 29 million, associated with the disposition of the existing installation pipeline, (iii) $ 13 million, associated with employee separation costs, and (iv) $ 11 million, associated with contract termination and other charges.

During the nine months ended September 30, 2024, the Company paid approximately $ 21 million associated with the ADT Solar Exit primarily related to employee separation and other restructuring costs.

The following reconciliations represent the major classes of line items of the Solar Business presented within discontinued operations in the Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Operations and certain information in the Condensed Consolidated Statements of Cash Flows for the periods presented.

Balance Sheet Information

(in thousands) September 30, 2024 December 31, 2023

Accounts receivable, net

SEGMENT INFORMATION

The Company reports results in a single operating and reportable segment.

The Company’s CODM is its Chairman, President, and Chief Executive Officer.

The CODM evaluates performance and allocates resources on a consolidated basis using various measures primarily through reviews of various operational performance packages, earnings releases, investor presentations, and the Company’s SEC filings, as well as through the approval of the Company’s annual budget and forecast.

The Company’s reported segment profit measure is net income (loss) as this measure is most consistent with the amounts included in the Condensed Consolidated Statements of Operations.

In addition, segment assets reviewed by the CODM are reported on the Company’s Condensed Consolidated Balance Sheets as total assets.

The accounting policies of the Company’s reportable segment are the same as those of the Company.

The following presents a reconciliation to the Company’s net income (loss) as reported in the Condensed Consolidated Statements of Operations and includes segment revenues, significant segment expenses that are regularly provided to or easily computed from information regularly provided to the CODM, other segment expenses, and adjustments to reconcile to net income (loss).

Three Months Ended March 31,

(in thousands) 2025 2024

Total segment revenue

$ 1,267,491 $ 1,189,672

Inventories, net — 28,714

Prepaid expenses and other current assets

Total current assets of discontinued operations

Property and equipment, net 473 29,512

Other assets 96 13,767

Total assets of discontinued operations

Less significant segment expenses:

Customer service costs (1)

106,390 103,226

Maintenance costs (1)

51,460 51,487

Security installation, product, and other costs

82,272 39,592

Selling costs, including commissions (2)

46,124 51,816

Amortization of deferred subscriber acquisition costs (2)

60,358 54,605

Advertising costs (2)

18,514 24,498

Provision for credit losses (2)

50,479 33,744

Other general and administrative costs (2)

167,539 181,775

Share-based compensation (2)

Depreciation and intangible asset amortization

339,517 333,002

Interest expense

123,170 91,599

Income tax expense (benefit)

51,032 56,430

Total significant segment expenses

1,117,376 1,029,849

Less other segment items (3) :

Other items in SG&A (2)

2,573 ( 19,771 )

Total other segment items

7,638 ( 4,068 )

Reconciliation of profit or loss:

(Income) loss from discontinued operations, net of tax (4)

Net income (loss) $ 140,246 $ 91,551

________________

(1) Included in monitoring and related services cost of revenue in the Condensed Consolidated Statements of Operations.

(2) Included in SG&A in the Condensed Consolidated Statements of Operations.

(3) Other segment items generally include other income and expenses, interest income, as well as certain other items included in SG&A that are not considered significant segment expenses.

Interest income is not material for the periods presented.

(4) Represents activity related to the Commercial and Solar Businesses (as applicable during the periods), which are presented as discontinued operations.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

ADT Solar Exit

As discussed in Note 1 “Description of Business and Summary of Significant Accounting Policies,” the Solar Business is presented as a discontinued operation in the Company’s Condensed Consolidated Statements of Operations and Condensed Consolidated Balance Sheets for all periods presented.

During the three months ended March 31, 2025, exit charges incurred and paid were not material.

During the three months ended March 31, 2024, the Company incurred aggregate exit charges of $ 75 million, which have been recognized within income (loss) from discontinued operations, net of tax related to (i) $ 35 million, associated with the write-down and disposition of inventory and asset impairments, (ii) $ 19 million, associated with the disposition of the existing installation pipeline, (iii) $ 11 million, associated with employee separation costs, and (iv) $ 10 million, associated with contract termination and other charges.

During the three months ended March 31, 2024, the Company paid approximately $ 11 million associated with the ADT Solar Exit primarily related to employee separation and other restructuring costs.

The following reconciliations represent the major classes of line items of the Solar Business presented within discontinued operations.

Cash flows related to discontinued operations were not significant during the three months ended March 31, 2025 and March 31, 2024.

Balance Sheet Information

There were no material assets of discontinued operations as of March 31, 2025 and December 31, 2024.

(in thousands) March 31, 2025 December 31, 2024

Current maturities of long-term debt $ — $ 22

Accounts payable 5,777 6,953

Deferred revenue 165 9,177

Accrued expenses and other current liabilities 25,139 24,788

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Statements of Operations Information

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands) 2025 2024

1 unchanged sentence

Cost of revenue

1,091 49,424 62,450 212,666

Selling, general, and administrative expenses 1,241 73,419

Depreciation and intangible asset amortization 18 1,351

Merger, restructuring, integration, and other ( 1,558 ) 6,480 36,592 9,898

Goodwill impairment

— 88,367 — 511,176

Other (income) and expense items

5 337 1,478 1,121

Income (loss) from discontinued operations before income taxes ( 3,054 ) ( 98,134 )

1 unchanged sentence

Income (loss) from discontinued operations, net of tax $ ( 2,231 ) $ ( 72,359 )

Cash Flow Information

Nine Months Ended September 30,

(in thousands) 2024 2023

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Depreciation and intangible asset amortization $ 1,872 $ 12,330

Goodwill, intangible, and other asset impairments $ 13,770 $ 515,730

Cash flows from investing activities:

Purchases of property and equipment $ ( 80 ) $ ( 3,233 )

Commercial Divestiture

As discussed in Note 1 “Description of Business and Summary of Significant Accounting Policies,” on October 2, 2023, the Company completed the Commercial Divestiture.

At the time of closing, the total purchase price was approximately $ 1,613 million, and the Company received net proceeds of approximately $ 1,585 million, subject to certain customary post-closing adjustments as set forth in the purchase agreement.

In July 2024, the Company paid the purchaser of the Commercial Business $ 21 million related to the settlement of post-closing adjustments.

During the three months ended March 31, 2025 and March 31, 2024, activity presented in discontinued operations relating to the Commercial Divestiture was not material.

In connection with the Commercial Divestiture, the Company entered into a Transition Services Agreement (the “Commercial TSA”).

During the three and nine months ended September 30, 2024, the Company recognized $ 14 million and $ 36 million, respectively, of income from the Commercial TSA, which is reflected in other income (expense).

The following reconciliations represent the major classes of line items of the Commercial Business presented within discontinued operations in the Condensed Consolidated Statements of Operations and certain information in the Condensed Consolidated Statements of Cash Flows for any period presented prior to the Commercial Divestiture.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Statements of Operations Information

During the nine months ended September 30, 2024, activity, net of tax, relating to the Commercial Divestiture was approximately $ 9 million primarily related to the settlement of post-closing adjustments.

(in thousands) Three Months Ended September 30, 2023 Nine Months Ended September 30, 2023

Revenue $ 351,400 $ 1,033,962

Cost of revenue

233,204 688,305

Selling, general, and administrative expenses 72,601 213,113

Depreciation and intangible asset amortization ( 3,186 ) 37,691

Other (income) and expense items

Income (loss) from discontinued operations before income taxes 39,967 75,631

Income tax benefit (expense) ( 105,539 ) ( 38,740 )

Income (loss) from discontinued operations, net of tax $ ( 65,572 ) $ 36,891

Cash Flow Information

(in thousands) Nine Months Ended September 30, 2023

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Depreciation and intangible asset amortization $ 37,691

Share-based compensation expense $ 11,699

Cash flows from investing activities:

Subscriber system asset expenditures $ ( 8,902 )

Purchases of property and equipment $ ( 4,399 )

During the three months ended March 31, 2025, Commercial TSA income was not material.

During the three months ended March 31, 2024, the Company recognized $ 12 million of Commercial TSA income, which is reflected in other income (expense) within continuing operations.

GOODWILL AND OTHER INTANGIBLE ASSETS

There were no changes in the carrying amounts of goodwill since December 31, 2024.

All accumulated goodwill impairment losses were associated with the Solar reporting unit, which is now presented as a discontinued operation.

Other Intangible Assets

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

(in thousands) Gross Carrying

19 unchanged sentences

Amortization ( 134,066 )

Balance as of September 30, 2024 $ 2,717,588

Balance as of March 31, 2025 $ 2,666,260

________________

1 unchanged sentence

Payments for customer contract additions under the Company’s authorized dealer program and from other third parties are reflected as dealer generated customer accounts and bulk account purchases on the Condensed Consolidated Statements of Cash Flows.

During the third quarter of 2024, the Company purchased customer accounts from a third party for an aggregate contractual purchase price of approximately $ 98 million, subject to reduction based on customer retention.

The Company paid initial cash at closing of approximately $ 81 million, which is included in dealer generated customer accounts and bulk account purchases on the Condensed Consolidated Statements of Cash Flows.

Definite-Lived Intangible Asset Amortization Expense

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands) 2025 2024

4 unchanged sentences

Description Issued Maturity Interest Rate (1)

Interest Payable September 30, 2024 December 31, 2023

Interest Payable March 31, 2025 December 31, 2024

First Lien Term Loan B due 2030

1 unchanged sentence

Quarterly $ 1,979,130 $ 1,984,090

First Lien Term Loan B-2 due 2032 3/7/2025 3/7/2032 Term SOFR + 1.75 %

Quarterly 600,000 —

First Lien Revolving Credit Facility

3/16/2018 10/1/2029 Term SOFR + 2.00 %

Term Loan A Facility 3/14/2023 3/14/2028 Term SOFR + 2.25 %

Quarterly — 625,625

First Lien Notes due 2026 4/4/2019 4/15/2026 5.750 % 3/15 and 9/15 850,000 1,350,000

1 unchanged sentence

First Lien Notes due 2029 7/29/2021 8/1/2029 4.125 % 2/1 and 8/1 1,000,000 1,000,000

Second Lien Notes due 2028 1/28/2020 1/15/2028 6.250 % 1/15 and 7/15 1,300,000 1,300,000

ADT Notes due 2032 5/2/2016 7/15/2032 4.875 % 1/15 and 7/15 728,016 728,016

ADT Notes due 2042 7/5/2012 7/15/2042 4.875 % 1/15 and 7/15 21,896 21,896

Second Lien Notes due 2028 1/28/2020 1/15/2028 6.250 % 1/15 and 7/15 1,300,000 1,300,000

2020 Receivables Facility (2)

10 unchanged sentences

_________________

(1) Interest rate as of September 30, 2024.

Interest on the 2020 Receivables Facility is primarily based on the Secured Overnight Financing Rate (“SOFR”) + 0.95 % and Cost of Funds (“COF”) + 0.85 %.

Interest on the First Lien Revolving Credit Facility is based on Term SOFR + 2.75 % + Credit Spread Adjustment (“CSA”).

(1) Interest rate as of March 31, 2025.

Interest on the 2020 Receivables Facility is primarily based on the Secured Overnight Financing Rate (“SOFR”) + 0.95 % and Lender Cost of Funds (“COF”) + 0.85 %.

(2) Maturity date for the 2020 Receivables Facility represents the final maturity date of current loans borrowed under the facility.

(3) Refer to Note 13 “Leases” for additional information regarding the Company’s finance leases.

As of September 30, 2024, the Company was in compliance with all financial covenant and other maintenance tests for all of its debt obligations.

Significant changes in the Company’s debt during the nine months ended September 30, 2024 were as follows:

As of March 31, 2025, the Company was in compliance with all financial covenant and other maintenance tests for all of its debt obligations.

First Lien Credit Agreement

The Company’s first lien credit agreement, dated as of July 1, 2015 (together with subsequent amendments and restatements, the “First Lien Credit Agreement”), contains a term loan (the “First Lien Term Loan B due 2030”) and the First Lien Revolving Credit Facility.

During the nine months ended September 30, 2024, the Company borrowed $ 325 million and repaid $ 325 million under the First Lien Revolving Credit Facility;

and as of September 30, 2024, the available borrowing capacity was $ 575 million.

During the nine months ended September 30, 2023, there were no borrowings or repayments under the First Lien Revolving Credit Facility.

Significant amendments to the First Lien Credit Agreement since December 31, 2023 are as follows:

• April 2024 - The Company amended and restated the First Lien Credit Agreement, which reduced the interest rate on the First Lien Term Loan B due 2030 from Term SOFR + 2.50 % to Term SOFR + 2.25 %.

The Company’s first lien credit agreement, dated as of July 1, 2015 (together with subsequent amendments and restatements, the “First Lien Credit Agreement”), consists of term loans (the “First Lien Term Loan B due 2030” and “First Lien Term Loan B-2 due 2032”) and the First Lien Revolving Credit Facility.

During the three months ended March 31, 2025, the Company borrowed $ 40 million under the First Lien Revolving Credit Facility;

and as of March 31, 2025, the available borrowing capacity was $ 760 million.

During the three months ended March 31, 2024, the Company borrowed $ 95 million and repaid $ 45 million under the First Lien Revolving Credit Facility.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

• May 2024 - The Company amended and restated the First Lien Credit Agreement, which included the exchange of $ 143 million principal amount of loans under the Company’s Term Loan A Facility for its First Lien Term Loan B due 2030.

In addition, later that month, the Company further amended and restated the First Lien Credit Agreement, pursuant to which the Company incurred an additional $ 474 million of outstanding principal under the First Lien Term Loan B due 2030 with the proceeds used to pay off the remaining outstanding balance of the Company’s Term Loan A Facility.

• Subsequent event - In October 2024, the Company amended and restated the First Lien Credit Agreement to extend the maturity date of the First Lien Revolving Credit Facility to October 2029 (as extended, the “Extended First Lien Revolving Credit Facility”), subject to a springing maturity of 91 days prior to the maturity date of certain long-term indebtedness, and obtain an additional $ 225 million of Extended First Lien Revolving Credit Facility commitments.

After giving effect to the amendment, the aggregate amount of commitments under the Extended First Lien Revolving Credit Facility is $ 800 million.

Borrowings under the Extended First Lien Revolving Credit Facility bear interest at a rate equal to either (a) Term SOFR with a floor of zero or (b) a base rate (“Base Rate”) determined by reference to the highest of (i) the federal funds rate plus 0.50 % per annum, (ii) the rate of interest per annum last quoted by The Wall Street Journal as the “Prime Rate” in the United States and (iii) the one-month adjusted term SOFR plus 1.00 % per annum, in each case, plus an applicable margin of 2.00 % per annum for Term SOFR loans and 1.00 % per annum for Base Rate loans, subject to two step-downs based on certain specified net first lien leverage ratios.

In addition, the amendment reduced the commitment fee in respect of the Extended First Lien Revolving Credit Facility to 0.30 % per annum in respect of the unutilized commitments thereunder, subject to two step-downs based on certain specified net first lien leverage ratios.

Proceeds and repayments of long-term borrowings include the impact of $ 646 million from the amendments described above.

In addition, debt issuance costs, loss on extinguishment of debt, and financing and consent fees were not material as a result of these amendments.

Other than as described above, the loans under the amended and restated First Lien Credit Agreement continue to have the same terms as provided under the existing First Lien Credit Agreement, and the parties to the amended and restated First Lien Credit Agreement continue to have the same obligations set forth in the existing First Lien Credit Agreement.

Term Loan A Facility Redemption

Significant activity since December 31, 2024 is as follows:

• May 2024 - The Company exchanged $ 143 million of loans under its Term Loan A Facility for its First Lien Term Loan B due 2030, as discussed above.

In addition, later that month, the Company redeemed the remaining outstanding principal balance of $ 474 million of its Term Loan A Facility, excluding accrued and unpaid interest, using proceeds under the First Lien Term Loan B due 2030, as discussed above.

As a result, the Term Loan A Facility has been terminated.

First Lien Notes due 2024 Redemption

• March 2025 - The Company amended and restated the First Lien Credit Agreement, which provided for the issuance of a new $ 600 million first lien seven-year term loan facility (the “First Lien Term Loan B-2 due 2032”) due March 7, 2032 (subject to a springing maturity of 91 days prior to the maturity date of certain long-term indebtedness of Prime Security Services Borrower, LLC and its subsidiaries if, on such date, the aggregate principal amount of such indebtedness equals or exceeds $ 1 billion).

Loans under the First Lien Term Loan B-2 due 2032 are treated as a separate class from the existing loans under the First Lien Term Loan due 2030.

The First Lien Term Loan B-2 due 2032 requires scheduled quarterly amortization payments, commencing on June 30, 2025, equal to 0.25 % of the original principal amount of the First Lien Term Loan B-2 due 2032, with the remaining balance payable at maturity.

Debt issuance costs were not material.

The Company may make voluntary prepayments on the First Lien Term Loan B-2 due 2032 at any time prior to maturity at par, however, such prepayment will be subject to a 1.00 % prepayment premium in the event of certain specified refinancing events during the first six months after March 7, 2025.

Other than as described above, the term loans under the amended and restated First Lien Credit Agreement continue to have the same terms as provided under the existing First Lien Credit Agreement, and the parties to the amended and restated First Lien Credit Agreement continue to have the same obligations set forth in the existing First Lien Credit Agreement.

Subsequent event - As of April 24, 2025, there were no amounts outstanding under the First Lien Revolving Credit Facility.

First Lien Notes due 2026 Partial Redemption

Significant activity since December 31, 2024 is as follows:

• April 2024 - The Company redeemed the remaining outstanding principal balance of $ 100 million of the First Lien Notes due 2024, excluding accrued and unpaid interest, using proceeds from the Company’s First Lien Revolving Credit Facility.

• March 2025 - The Company redeemed $ 500 million of the First Lien Notes due 2026, excluding accrued and unpaid interest, for a total redemption price of $ 506 million, which includes a make-whole payment, using proceeds from the Company’s issuance of the First Lien Term Loan B-2 due 2032.

Loss on extinguishment of debt was not material.

2020 Receivables Facility

Under the 2020 Receivables Facility, the Company obtains financing by selling or contributing certain retail installment contract receivables to the Company’s wholly-owned consolidated bankruptcy-remote special purpose entity (the “SPE”), which then grants a security interest in those retail installment contract receivables as collateral for cash borrowings.

Under the 2020 Receivables Facility, the Company obtains financing by selling or contributing certain RICs to the Company’s wholly-owned consolidated bankruptcy-remote special purpose entity (the “SPE”), which then grants a security interest in those RICs as collateral for cash borrowings.

Significant activity since December 31, 2024 is as follows:

• March 2024 - The Company amended the agreement governing the 2020 Receivables Facility, pursuant to which the uncommitted revolving period was extended from March 2024 to April 2024.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

• April 2024 - The Company further amended the agreement governing the 2020 Receivables Facility, pursuant to which, among other things, the borrowing capacity was increased from $ 500 million to $ 550 million and the uncommitted revolving period was extended from April 2024 to April 2025.

In addition, proceeds and repayments of long-term borrowings include the impact of $ 32 million from the amendments described above.

As of September 30, 2024, the Company had an uncommitted available borrowing capacity under the 2020 Receivables Facility of approximately $ 127 million.

• March 2025 - The Company amended the agreement governing the 2020 Receivables Facility to extend the uncommitted revolving period to March 2026, reduce the interest rate on outstanding borrowings, and increase the advance rate on pledged collateral.

Additionally, during the first quarter of 2025, the Company voluntarily prepaid $ 23 million of the remaining balance.

As of March 31, 2025, the Company had an uncommitted available borrowing capacity under the 2020 Receivables Facility of approximately $ 154 million.

Variable Interest Entity

1 unchanged sentence

As such, the Company consolidates the SPE’s assets, liabilities, and financial results of operations.

The SPE’s assets and liabilities primarily consist of a portion of the Company’s unbilled retail installment contract receivables, net, as discussed in Note 2 “Revenue and Receivables,” and borrowings under the 2020 Receivables Facility, as presented above.

The 2020 Receivables Facility did not have a material impact to the Condensed Consolidated Statements of Operations during the periods presented.

Solar Receivables Facility

On August 2, 2023, Compass Solar Group, LLC (“Compass”) and ADT Solar Finance LLC (“ADT Solar Finance”), each an indirect wholly-owned subsidiary of ADT Inc.

entered into a Receivables Financing Agreement with Mizuho Bank, Ltd.

(the “Solar Receivables Financing Agreement”) to finance receivables generated by the installation of residential solar systems.

Prior to its expiration in August 2024, the Solar Receivables Financing Agreement, among other things, provided for an uncommitted revolving loan facility in the aggregate principal amount of up to $ 300 million which loans were to be secured by substantially all the assets of ADT Solar Finance (the “Solar Receivables Facility”).

The Company did not borrow any amounts under the Solar Receivable Facility prior to its expiration.

The SPE’s assets and liabilities primarily consist of a portion of the Company’s unbilled RICs, net, as discussed in Note 2 “Revenue and Receivables,” and borrowings under the 2020 Receivables Facility, as presented above.

The impact to the Condensed Consolidated Statements of Operations from the 2020 Receivables Facility was primarily due to the allowance for credit losses and interest expense.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DERIVATIVE FINANCIAL INSTRUMENTS

The Company's derivative financial instruments primarily consist of interest rate swap contracts, which were entered into with the objective of managing exposure to variability in interest rates on the Company's debt.

As of July 2023, SOFR is the applicable benchmark for all of the Company's interest rate swap contracts.

SOFR is the applicable benchmark for all of the Company's interest rate swap contracts.

All interest rate swap contracts are reported in the Condensed Consolidated Balance Sheets at fair value.

10 unchanged sentences

The cash flows associated with interest rate swap contracts that were entered into with the intention of offsetting the economic overhedged position of a portion of the Company’s existing interest rate swaps are reflected as cash flows from investing activities.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The cash flows associated with interest rate swap contracts that included an other-than-insignificant financing element at inception are reflected as cash flows from financing activities.

Interest Rate Swaps

As of September 30, 2024 and December 31, 2023, the Company’s interest rate swaps consisted of the following (in thousands) :

The Company’s interest rate swaps as of March 31, 2025 and December 31, 2024, consisted of the following:

Execution Maturity Designation Notional Amount

(in thousands)

October 2019 September 2026 Not designated $ 2,800,000

4 unchanged sentences

Total notional amount $ 3,800,000

_________________

(1) Interest rate swaps entered into to offset the excess notional interest rate swaps as a result of the partial redemption of the First Lien Term Loan B due 2026.

The changes in fair value associated with these swaps and the over-hedged swaps are reflected in other income (expense).

Classification and Fair Value of Interest Rate Swaps

(in thousands) September 30, 2024 December 31, 2023

Balance Sheet Classification (in thousands)

March 31, 2025 December 31, 2024

Prepaid expenses and other current assets $ 51,228 $ 56,164

2 unchanged sentences

Other liabilities — ( 208 )

Unrealized Gain (Loss) on Interest Rate Swaps

Three Months Ended September 30, Nine Months Ended September 30,

Statement of Operations Classification (in thousands)

2024 2023 2024 2023

Fair value of interest rate swaps - net asset (liability) $ 83,551 $ 108,592

Three Months Ended March 31,

Unrealized Gains (Losses) Classification (in thousands)

Interest expense, net $ ( 21,009 ) $ 16,747

$ ( 58,051 ) $ 16,380 $ ( 46,429 ) $ 38,477

Other income (expense) $ ( 4,032 ) $ ( 6,601 )

$ ( 4,821 ) $ — $ ( 14,699 ) $ —

Cash Flow Hedges Reclassifications out of AOCI

Three Months Ended September 30, Nine Months Ended September 30,

( in thousands )

2024 2023 2024 2023

Interest expense, net $ 1,943 $ 30,008 $ 6,057 $ 40,186

Income tax (benefit) expense $ ( 471 ) $ ( 7,245 ) $ ( 1,464 ) $ ( 9,702 )

As of September 30, 2024 and December 31, 2023, AOCI, net of tax, related to previously designated cash flow hedges was $ 9 million and $ 13 million, respectively.

As of September 30, 2024, AOCI associated with previously designated cash flow hedges that is estimated to be reclassified to interest expense, net, within the next twelve months is not material.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended March 31,

Cash Flow Hedges Reclassifications out of AOCI (in thousands)

Interest expense, net $ 1,786 $ 2,129

Income tax (benefit) expense $ ( 432 ) $ ( 512 )

As of March 31, 2025 and December 31, 2024, AOCI, net of tax, related to previously designated cash flow hedges was not material.

Unrecognized Tax Benefits

1 unchanged sentence

federal, state and local, and foreign jurisdictions.

During the nine months ended September 30, 2024, the Company did not have a material change to its unrecognized tax benefits from those disclosed in the 2023 Annual Report.

Based on the current status of its income tax audits, the Company expects approximately $ 29 million of its unrecognized tax benefits will be resolved in the next twelve months.

During the three months ended March 31, 2025, the Company did not have a material change to its unrecognized tax benefits from those disclosed in the 2024 Annual Report.

Based on the current tax statutes and current status of its income tax audits, the Company does not expect unrecognized tax benefits to change significantly in the next twelve months.

Effective Tax Rate

1 unchanged sentence

The discussion below is based on the continuing operations of the Company.

The Company’s income tax expense for the three months ended September 30, 2024 was $ 50 million, resulting in an effective tax rate for the period of 27.6 %.

The effective tax rate primarily represents the federal statutory rate of 21.0 %, a state tax rate, net of federal benefits, of 6.2 %, and an unfavorable impact from unrecognized tax benefits of 4.0 %, partially offset by a favorable impact from a prior year tax return adjustment of 4.0 %.

The Company’s income tax expense for the three months ended September 30, 2023 was $ 34 million, resulting in an effective tax rate for the period of 21.5 %.

The effective tax rate primarily represents the federal statutory tax rate of 21.0 %, and a state tax rate, net of federal benefits, of 5.1 %, partially offset by favorable impacts from dispositions of 3.1 %, and prior year tax return adjustments of 1.2 %.

The Company’s income tax expense for the nine months ended September 30, 2024 was $ 167 million, resulting in an effective tax rate for the period of 28.3 %.

The effective tax rate primarily represents the federal statutory rate of 21.0 %, a state tax rate, net of federal benefits, of 5.8 %, unfavorable impacts from dispositions of 1.6 %, and unrecognized tax benefits of 0.8 %, partially offset by a favorable impact from a prior year tax return adjustment of 1.2 %.

The Company’s income tax expense for the nine months ended September 30, 2023 was $ 120 million, resulting in an effective tax rate for the period of 25.5 %.

The effective tax rate primarily represents the federal statutory tax rate of 21.0 %, a state tax rate, net of federal benefits, of 5.8 %, and an unfavorable impact from permanent non-deductible items of 1.2 %, partially offset by a favorable impact from dispositions of 1.0 %.

The Company’s income tax expense for the three months ended March 31, 2025 was $ 51 million, resulting in an effective tax rate for the period of 26.4 %.

The effective tax rate primarily represents the federal statutory rate of 21.0 %, and a state tax rate, net of federal benefits, of 5.6 %.

The Company’s income tax expense for the three months ended March 31, 2024 was $ 56 million, resulting in an effective tax rate for the period of 25.6 %.

The effective tax rate primarily represents the federal statutory tax rate of 21.0 %, and a state tax rate, net of federal benefits, of 5.4 %, partially offset by a favorable impact from a decrease in unrecognized tax benefits of 1.2 %.

Common Stock and Class B Common Stock

The Company has two classes of common stock, including Common Stock and Class B Common Stock.

During the nine months ended September 30, 2024, shares issued resulted from the vesting of restricted stock units (“RSUs”) and stock option exercises related to share-based compensation awards.

The Company has two classes of common stock, which comprises Common Stock and Class B Common Stock.

Share Issuances

During the three months ended March 31, 2025, shares issued resulted from the vesting of restricted stock units (“RSUs”) and stock option exercises related to fully vested share-based compensation awards as presented on the Condensed Consolidated Statements of Stockholders’ Equity.

Share Repurchases

2024 Share Repurchase Plan

On January 24, 2024, the Company's Board of Directors announced a share repurchase plan (the “Share Repurchase Plan”), pursuant to which the Company is authorized to repurchase, through January 29, 2025, up to a maximum aggregate amount of $ 350 million of shares of the Company's Common Stock under this Share Repurchase Plan.

The Company may effect these repurchases pursuant to one or more open market or private transactions, including pursuant to a plan that qualifies for the affirmative defense provided by Rule 10b5‐1 under the Exchange Act, or pursuant to one or more accelerated share repurchase agreements.

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.

In January 2024, the Company's Board of Directors announced a share repurchase plan (the “2024 Share Repurchase Plan”), pursuant to which the Company was authorized to repurchase, through January 29, 2025, up to a maximum aggregate amount of $ 350 million of shares of the Company's Common Stock.

In March 2024, the Company repurchased, and subsequently retired, 15 million shares of its Common Stock under the 2024 Share Repurchase Plan for $ 93 million (or $ 6.22 per share) in connection with a secondary offering of the Company’s Common Stock by Apollo.

Refer to Note 14 “Related Party Transactions” for further information.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

During the first quarter of 2024, the Company repurchased and retired 15 million shares of its Common Stock under the Share Repurchase Plan and paid approximately $ 93 million (or approximately $ 6.22 per share).

In addition, the Company entered into an agreement in December 2024 to repurchase 15 million shares of Common Stock from a non-affiliate individual at a price per share of $ 6.95 for a total of $ 104 million under the 2024 Share Repurchase Plan.

The transaction settled in January 2025, and the Company retired the shares.

The 2024 Share Repurchase Plan expired in January 2025 with $ 5 million authorized repurchases remaining.

2025 Share Repurchase Plan

In February 2025, the Company's Board of Directors announced a new 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.

The 2025 Share Repurchase Plan allows the Company to purchase 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.

In March 2025, the Company repurchased, and subsequently retired, 20 million shares of its Common Stock under the 2025 Share Repurchase Plan for $ 152 million (or $ 7.62 per share) in connection with a secondary offering of the Company’s Common Stock by Apollo.

Refer to Note 14 “Related Party Transactions” for further information.

There were no other share repurchases during the nine months ended September 30, 2024.

As of September 30, 2024, the Company had approximately $ 257 million remaining under the Share Repurchase Plan.

Subsequent event - In October 2024, the Company repurchased 5 million shares of Common Stock at a price per share of $ 6.40 for an aggregate purchase price of $ 32 million.

As a result, the Company has approximately $ 225 million remaining under the Share Repurchase Plan.

Additionally, in March 2025, the Company repurchased, and subsequently retired, an additional 18 million shares in the open market pursuant to Rule 10b5-1 and Rule 10b-18 of the Exchange Act in multiple transactions for $ 140 million (or $ 7.79 per share).

As of March 31, 2025, the Company recorded a liability and reduction to additional paid-in capital of $ 9 million for the repurchase of an additional 1 million shares, which settled in April 2025.

This transaction is also considered a non-cash financing activity during the three months ended March 31, 2025.

As of March 31, 2025, the Company had $ 208 million remaining under the 2025 Share Repurchase Plan.

Subsequent event - In April 2025, the Company repurchased, and subsequently retired, an additional 6 million shares (excluding the shares noted above) in the open market pursuant to Rule 10b5-1 and Rule 10b-18 of the Exchange Act in multiple transactions for a total of $ 52 million (or $ 8.04 per share).

As a result, the Company has $ 148 million remaining under the 2025 Share Repurchase Plan.

(in thousands, except per share data)

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Declaration Date Record Date Payment Date Per Share Aggregate Per Share Aggregate

Nine Months Ended September 30, 2024

1/24/2024 3/14/2024 4/4/2024 $ 0.055 $ 47,059 $ 0.055 $ 3,011

4/25/2024 6/13/2024 7/9/2024 0.055 47,137 0.055 3,011

8/1/2024 9/13/2024 10/4/2024 0.055 47,146 0.055 3,011

Total $ 0.165 $ 141,342 $ 0.165 $ 9,033

Nine Months Ended September 30, 2023

2/28/2023 3/16/2023 4/4/2023 $ 0.035 $ 30,342 $ 0.035 $ 1,916

Three Months Ended March 31, 2025

2/27/2025 3/13/2025 4/3/2025 $ 0.055 $ 44,175 $ 0.055 $ 3,011

Three Months Ended March 31, 2024

1/24/2024 3/14/2024 4/4/2024 $ 0.055 $ 47,059 $ 0.055 $ 3,011

Total $ 0.105 $ 91,003 $ 0.105 $ 5,748

Subsequent Event - On October 24, 2024, the Company announced a dividend of $ 0.055 per share to holders of Common Stock and Class B Common Stock of record on December 12, 2024, which will be paid on January 9, 2025.

Subsequent Event - On April 24, 2025, the Company announced a dividend of $ 0.055 per share to holders of Common Stock and Class B Common Stock of record on June 12, 2025, which will be paid on July 8, 2025.

Accumulated Other Comprehensive Income (Loss)

During the three and nine months ended September 30, 2024, there were no material reclassifications out of AOCI.

During the three months ended March 31, 2025, there were no material reclassifications out of AOCI.

Refer to Note 7 “Derivative Financial Instruments” for AOCI reclassifications associated with previously designated cash flow hedges.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SHARE-BASED COMPENSATION

During the first quarter of 2024, the Company completed its annual long-term incentive plan equity award to employees and granted approximately 3.9 million RSUs under its 2018 Omnibus Incentive Plan, as amended (the “2018 Plan”), with a grant date fair value of $ 6.51 equal to the closing price per share of the Company’s Common Stock on the date of grant.

During the first quarter of 2025, the Company completed its annual long-term incentive plan equity award to employees and granted approximately 3.4 million RSUs under its 2018 Omnibus Incentive Plan, as amended (the “2018 Plan”), with a grant date fair value of $ 7.59 , which is equal to the closing price per share of the Company’s Common Stock on the date of grant.

These RSUs are service-based awards with a three-year graded vesting period from the date of grant.

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These options are service-based awards with a three-year graded vesting period from the date of grant and have an exercise price of $ 7.59 , which is equal to the closing price per share of the Company’s Common Stock on the date of grant, and a contractual term of ten years from the grant date.

The weighted-average grant date fair value for the options granted was $ 2.56 .

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The weighted-average grant date fair value for the options granted during the period was $ 2.65 .

The Company used a binomial lattice model to determine the grant date fair value for options granted and included the following assumptions:

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Treasury yield curve.

During the second quarter of 2024, the Company modified certain share-based compensation awards and recorded additional share-based compensation expense of $ 11 million associated with the modifications.

NET INCOME (LOSS) PER SHARE

The Company applies the two-class method for computing and presenting net income (loss) per share for each class of common stock, which allocates current period net income (loss) to each class of common stock and participating securities based on dividends declared and participation rights in the remaining undistributed earnings or losses.

Basic net income (loss) per share is computed by dividing the net income (loss) allocated to each class of common stock by the related weighted-average number of shares outstanding during the period.

Diluted net income (loss) per share gives effect to all securities representing potential common shares that were dilutive and outstanding during the period for each class of common stock and excludes potentially dilutive securities whose effect would have been anti-dilutive.

During the first quarter of 2025, the Company modified certain share-based compensation awards and recorded additional share-based compensation expense of $ 11 million associated with these modifications.

EARNINGS PER SHARE

The Company applies the two-class method for computing and presenting earnings per share for each class of common stock, which allocates current period income (losses) to each class of common stock and participating securities based on dividends declared and participation rights in the remaining undistributed earnings or losses.

Basic earnings per share is computed by dividing the income (losses) allocated to each class of common stock by the related weighted-average number of shares outstanding during the period.

Diluted earnings per share gives effect to all securities representing potential common shares that were dilutive and outstanding during the period for each class of common stock and excludes potentially dilutive securities whose effect would have been anti-dilutive.

Potential shares of Common Stock include (i) incremental shares related to the vesting or exercise of share-based compensation awards, warrants, and other options to purchase additional shares of the Company’s Common Stock calculated using the treasury stock method and (ii) incremental shares of Common Stock issuable upon the conversion of Class B Common Stock.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

in thousands, except per share amounts

2024 2023 2024 2023

Allocation of income (loss) from continuing operations - basic $ 133,446 $ 154,086

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Income (loss) from continuing operations per share - diluted $ 0.16 $ 0.17

Income (loss) per share from discontinued operations, net of tax - basic $ ( 0.01 ) $ ( 0.23 ) $ ( 0.12 ) $ ( 0.50 )

Income (loss) per share from discontinued operations, net of tax - diluted $ ( 0.01 ) $ ( 0.21 ) $ ( 0.11 ) $ ( 0.47 )

Income (loss) from discontinued operations, net of tax, per share - basic

$ — $ ( 0.08 )

(1) During the three and nine months ended September 30, 2024, 21 million and 20 million shares of Common Stock, respectively, that would be dilutive were excluded from the diluted earnings per share calculations because their effects would have been anti-dilutive.

During the three and nine months ended September 30, 2023, 22 million and 18 million shares of Common Stock, respectively, that would be dilutive were excluded from the diluted earnings per share calculations because their effects would have been anti-dilutive.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Income (loss) from discontinued operations, net of tax, per share - diluted

$ — $ ( 0.07 )

_________________

(1) During the three months ended March 31, 2025 and March 31, 2024, 19 million and 17 million shares of Common Stock, respectively, that would be dilutive were excluded from the diluted earnings per share calculations because their effects would have been anti-dilutive.

Class B Common Stock

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

in thousands, except per share amounts

Allocation of income (loss) from continuing operations - basic

$ 9,031 $ 9,805

Allocation of net income (loss) from continuing operations - basic $ 7,942 $ 7,385 $ 25,356 $ 20,580

Dilutive effect ( 409 ) ( 433 )

Allocation of net income (loss) from continuing operations - diluted $ 7,626 $ 7,046 $ 24,321 $ 19,631

Allocation of income (loss) from continuing operations - diluted

$ 8,622 $ 9,372

Allocation of income (loss) from discontinued operations, net of tax - basic $ ( 141 ) $ ( 4,314 )

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Weighted-average shares outstanding - diluted 54,745 54,745

Net income (loss) from continuing operations per share - basic $ 0.15 $ 0.13 $ 0.46 $ 0.38

Net income (loss) from continuing operations per share - diluted $ 0.14 $ 0.13 $ 0.44 $ 0.36

Income (loss) per share from discontinued operations, net of tax - basic $ ( 0.01 ) $ ( 0.23 ) $ ( 0.12 ) $ ( 0.50 )

Income (loss) per share from discontinued operations, net of tax - diluted $ ( 0.01 ) $ ( 0.21 ) $ ( 0.11 ) $ ( 0.47 )

Income (loss) from continuing operations per share - basic

$ 0.17 $ 0.18

Income (loss) from continuing operations per share - diluted

$ 0.16 $ 0.17

Income (loss) from discontinued operations, net of tax, per share - basic

$ — $ ( 0.08 )

Income (loss) from discontinued operations, net of tax, per share - diluted

$ — $ ( 0.07 )

________________

(1) There were no potential shares of Class B Common Stock during the periods presented.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

COMMITMENTS AND CONTINGENCIES

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Google Commercial Agreement

In July 2020, the Company and Google entered into a Master Supply, Distribution, and Marketing Agreement (the “Google Commercial Agreement”), as subsequently amended, pursuant to which Google has agreed to supply the Company with certain Google devices as well as certain Google video and analytics services (“Google Devices and Services”), for sale to the Company’s customers.

The Google Commercial Agreement also specifies that each party shall contribute $ 150 million toward joint marketing, customer acquisition, training of the Company’s employees, and product technology updates related to the Google Devices and Services.

In July 2020, the Company and Google entered into a Master Supply, Distribution, and Marketing Agreement (as amended, the “Google Commercial Agreement”), which, among other things, specifies that each party shall contribute $ 150 million toward joint marketing, customer acquisition, training of the Company’s employees, and product technology updates related to the Google Devices and Services.

In August 2022, the Company and Google executed an amendment to the Google Commercial Agreement, pursuant to which Google has agreed to commit an additional $ 150 million to fund growth, data and insights, product innovation and technology advancements, customer acquisition, and marketing, as mutually agreed by the Company and Google, (together with the initial amounts, the “Google Success Funds”).

During the three and nine months ended September 30, 2024, $ 7 million and $ 22 million, respectively, of the Google Success Funds were reimbursed to the Company primarily for certain joint marketing and customer acquisition expenses incurred by the Company, substantially all of which was recorded as a reduction to advertising expenses.

During the three and nine months ended September 30, 2023, the Company was reimbursed $ 28 million and $ 40 million, respectively.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

During the three months ended March 31, 2025, $ 7.5 million of the Google Success Funds were reimbursed to the Company primarily for certain joint marketing and customer acquisition expenses incurred by the Company, substantially all of which was recorded as a reduction to advertising expenses.

Google Cloud Agreement Addendum

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The Company may elect to cancel the commitment in return for a cancellation fee of 30 % of the total remaining commitment amount and loss of any discounts, remaining credits, or other incentives provided under the Google Cloud Agreement Addendum.

During the three and nine months ended September 30, 2024, the Company made purchases toward this commitment of $ 9 million and $ 19 million, respectively.

As of March 31, 2025, the Company continues to work to meet this commitment.

Other Commitments

During the fourth quarter of 2023, the Company entered into an agreement with one of its vendors to purchase at least $ 190 million of security system equipment and components through March 2025.

During the second quarter of 2024, the Company increased its commitment by approximately $ 130 million.

As of March 31, 2025 and December 31, 2024, the Company was party to an agreement with one of its vendors to purchase at least $ 370 million of security system equipment and components through December 2025.

This commitment is also satisfied through purchases made by the Company’s dealer network.

During the three and nine months ended September 30, 2024, purchases toward this commitment were approximately $ 44 million and $ 144 million, respectively.

As of December 31, 2024, the remaining amount under this commitment was $ 172 million.

During the three months ended March 31, 2025, purchases toward this commitment were approximately $ 46 million.

In the normal course of business, the Company is liable for contract completion and product performance.

As of September 30, 2024 and December 31, 2023, the Company’s guarantees primarily relate to standby letters of credit related to its insurance programs and totaled $ 74 million and $ 78 million, respectively.

As of March 31, 2025 and December 31, 2024, the Company’s guarantees primarily relate to standby letters of credit related to its insurance programs and totaled $ 53 million and $ 74 million, respectively.

The Company does not believe such obligations will materially affect its financial position, results of operations, or cash flows.

Legal Proceedings

The Company is subject to various claims and lawsuits in the ordinary course of business, which include among other things commercial general liability claims, automobile liability claims, contractual disputes, worker’s compensation claims, labor law and employment claims, claims that the Company infringed on the intellectual property of others, and consumer and employment class actions.

The Company is subject to various claims and lawsuits in the ordinary course of business, which include among other things commercial general liability claims, automobile liability claims, contractual disputes, worker’s compensation claims, labor law and employment claims, claims related to alleged alarm system failures, claims that the Company infringed on the intellectual property of others, and consumer and employment class actions.

The Company is also subject to regulatory and governmental examinations, information requests and subpoenas, inquiries, investigations, and threatened legal actions and proceedings.

In connection with such formal and informal inquiries, the Company receives numerous requests, subpoenas, and orders for documents, testimony, and information in connection with various aspects of its activities.

There have been no material changes to these matters from those disclosed in the 2023 Annual Report.

In connection with such formal and informal inquiries, the Company receives numerous requests, subpoenas, and orders for

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

documents, testimony, and information in connection with various aspects of its activities.

There have been no material changes to the disclosures in the Company’s 2024 Annual Report.

The Company records accruals for losses that are probable and reasonably estimable.

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The Company has not accrued for any losses for which the likelihood of loss cannot be assessed, is less than probable, or the range of possible loss cannot be estimated.

As of September 30, 2024 and December 31, 2023, the Company’s accrual for ongoing claims and lawsuits within the scope of an insurance program, including amounts related to the Solar Business, totaled $ 102 million and $ 110 million, respectively.

As of March 31, 2025 and December 31, 2024, the Company’s accrual for ongoing claims and lawsuits within the scope of an insurance program, including certain amounts related to discontinued operations, totaled $ 88 million and $ 94 million, respectively.

The Company’s accrual related to ongoing claims and lawsuits not within the scope of an insurance program is not material.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Company as Lessee

As part of normal operations, the Company leases real estate, vehicles, and equipment primarily through its main operating entity, ADT LLC.

As part of normal operations, the Company leases real estate, vehicles, and equipment primarily through its main operating entity and wholly-owned subsidiary, ADT LLC.

Right-of-Use Assets and Lease Liabilities

(in thousands)

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Presentation and Classification:

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_________________

(1) Finance lease right-of-use assets are recorded net of accumulated depreciation, which was approximately $ 61 million and $ 50 million as of September 30, 2024 and December 31, 2023, respectively.

Three Months Ended September 30, Nine Months Ended September 30,

(1) Finance lease right-of-use assets are recorded net of accumulated depreciation, which was approximately $ 72 million and $ 66 million as of March 31, 2025 and December 31, 2024, respectively.

Three Months Ended March 31,

( in thousands )

2024 2023 2024 2023

Operating lease cost $ 6,317 $ 6,869

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Total lease cost $ 22,525 $ 19,196

Right-of-Use Assets Obtained in Exchange for Lease Obligations (1)

Nine Months Ended September 30,

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Lease Liabilities Arising from Obtaining Right-of-Use Assets (1)

Three Months Ended March 31,

( in thousands )

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_________________

(1) Includes both continuing and discontinued operations.

(1) Includes both continuing and discontinued operations, as applicable.

Company as Lessor

The Company is a lessor in certain Company-owned transactions as the Company has identified a lease component associated with the right-of-use of the security system and a non-lease component associated with the monitoring and related services.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For transactions in which (i) the timing and pattern of transfer is the same for the lease and non-lease components and (ii) the lease component would be classified as an operating lease if accounted for separately, the Company applies the practical expedient to aggregate the lease and non-lease components and accounts for the combined transaction based upon its predominant characteristic, which is the non-lease component.

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RELATED PARTY TRANSACTIONS

The Company’s related party transactions primarily relate to products and services received from, or monitoring and related services provided to, other entities affiliated with Apollo, and, from time to time, management, consulting, and transaction advisory services provided by Apollo to the Company, as well as transactions between the Company and State Farm.

The Company’s related party transactions primarily relate to products and services received from, or monitoring and related services provided to, other entities affiliated with Apollo, and, from time to time, certain transactions between the Company and Apollo and State Farm.

There were no notable related party transactions during the periods presented other than as described below.

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On March 3, 2025, the Company and certain entities managed by affiliates of Apollo Global Management, Inc.

(the “Selling Stockholders”) entered into an underwriting agreement (the “Underwriting Agreement”) with Morgan Stanley & Co.

LLC and Barclays Capital Inc., as representatives of the underwriters named therein, including Apollo Global Securities, LLC, an affiliate of Apollo (collectively, the “Underwriters”), in connection with the offer and sale by the Selling Stockholders (the “Offering”) of 65 million shares of the Company’s Common Stock, and, at the option of the Underwriters, up to an additional 9.75 million shares of Common Stock (the “Underwriters’ Option”).

As part of the Offering, the Company purchased 15 million shares of Common Stock under its Share Repurchase Plan from the Underwriters (the “Share Repurchase”).

The Company paid approximately $ 93 million (or approximately $ 6.22 per share) for the Share Repurchase, which was the same per share price paid by the Underwriters to the Selling Stockholders.

(the “Selling Stockholders”) entered into an underwriting agreement (the “March 2025 Underwriting Agreement”) with Barclays Capital Inc.

and Citigroup Capital Markets Inc., as representatives of the underwriters named therein, including Apollo Global Securities, LLC, an affiliate of Apollo (collectively, the “March 2025 Underwriters”), in connection with the offer and sale by the Selling Stockholders of 70 million shares of the Company’s Common Stock (the “March 2025 Offering”), and, at the option of the March 2025 Underwriters, up to an additional 10.5 million shares of Common Stock (the “March 2025 Underwriters’ Option”).

As part of the March 2025 Offering, the Company repurchased, and subsequently retired, 20 million shares of its Common Stock under its 2025 Share Repurchase Plan from the March 2025 Underwriters (the “March 2025 Share Repurchase”) for an aggregate purchase price of $ 152 million (or approximately $ 7.62 per share), which was the same per share price paid by the March 2025 Underwriters to the Selling Stockholders.

The repurchase is reflected as a reduction to additional paid-in-capital and as a financing cash outflow.

The Offering and the Share Repurchase closed on March 11, 2024.

On March 15, 2024, the Underwriters exercised the Underwriters’ Option in full, which subsequently closed on March 19, 2024.

The Company did not pay any underwriting fees in connection with the Share Repurchase, including on behalf of the Selling Stockholders or otherwise.

All the shares in the Offering were sold by the Selling Stockholders.

The Company did not receive any of the proceeds from the sale of shares by the Selling Stockholders in the Offering.

During the nine months ended September 30, 2024, other fees incurred to Apollo were not material.

During the nine months ended September 30, 2023, the Company incurred fees to Apollo of $ 1 million related to Apollo’s performance of placement agent services related to the initial funding of the Term Loan A Facility.

The March 2025 Offering and the March 2025 Share Repurchase closed on March 4, 2025.

On March 7, 2025, the March 2025 Underwriters exercised the March 2025 Underwriters’ Option in full, which subsequently closed on March 11, 2025.

During the three months ended March 31, 2024, the Selling Stockholders sold 65 million shares of the Company’s Common Stock (plus an additional 9.75 million shares at the option of the underwriters) (the “March 2024 Offering”).

In connection with the March 2024 Offering, the Company repurchased, and subsequently retired, 15 million shares of its Common Stock under the 2024 Share Repurchase Plan for an aggregate purchase price of $ 93 million (or approximately $ 6.22 per share).

The shares in the above offerings were sold by the Selling Stockholders;

and the Company did not receive any of the proceeds from the sale of shares by the Selling Stockholders.

In addition, the Company did not pay any underwriting fees, including on behalf of the Selling Stockholders or otherwise.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

During the three months ended March 31, 2025 and 2024, other fees incurred to Apollo were not material.

State Farm owns more than 10 % of the Company’s issued and outstanding common stock, and as a result, is a related party.

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Amounts held by the Company in the Opportunity Fund are restricted until the Company uses the funds, as agreed upon with State Farm, in accordance with the State Farm Development Agreement.

As of September 30, 2024 and December 31, 2023, the balance in the portion of the Opportunity Fund held by the Company was $ 87 million and $ 94 million, respectively.

During the nine months ended September 30, 2024 and 2023, the Company made payments from the Opportunity Fund of $ 10 million and $ 6 million, respectively.

As of March 31, 2025 and December 31, 2024, the balance in the portion of the Opportunity Fund held by the Company was $ 83 million and $ 85 million, respectively, which is presented in restricted cash and restricted cash equivalents and accrued expenses and other current liabilities.

During the three months ended March 31, 2025 and 2024, the Company made payments from the Opportunity Fund of $ 2 million and $ 3 million, respectively.

Interest earned on the Opportunity Fund was not material.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Sunlight Financial LLC

ADT Solar used Sunlight Financial LLC (“Sunlight”), an entity previously affiliated with Apollo, to access certain loan products for ADT Solar customers.

As of December 2023, Sunlight was no longer affiliated with Apollo, and as a result, was no longer a related party.

During the three and nine months ended September 30, 2023, total loans funded by Sunlight were $ 9 million and $ 71 million, respectively, and the Company incurred financing fees of $ 2 million and $ 11 million, respectively.

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.

What changed 10-Q

Item 1. Financial Statements