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Item 2. Management’s Discussion and Analysis

2025-11-04 compared with 2025-07-24 · 147 added, 112 removed, 278 unchanged (48% of the section changed)

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• Business and Basis of Presentation

• Factors Affecting Operating Results

• Key Performance Indicators

• Trends, Uncertainties, and Factors Affecting Operating Results

• Results of Operations

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Results of our former Solar and Commercial businesses are presented within discontinued operations for current and historical periods, as applicable.

FACTORS AFFECTING OPERATING RESULTS

The factors described herein could have a material effect on our business, financial condition, results of operations, cash flows, and key performance indicators.

KEY PERFORMANCE INDICATORS

We evaluate our results using certain key performance indicators, including operating metrics such as recurring monthly revenue and gross customer revenue attrition, as well as GAAP total revenue and the non-GAAP measures Adjusted Earnings per Share (“Adjusted EPS”) and Adjusted EBITDA (“Adjusted EBITDA”), both from continuing operations.

Computations of our key performance indicators may not be comparable to other similarly titled measures reported by other companies.

Certain operating metrics are approximated, as there may be variations to reported results due to certain adjustments we might make in connection with the integration over several periods of acquired companies that calculated these metrics differently or periodic reassessments and refinements in the ordinary course of business, including changes due to system conversions or historical methodology differences in legacy systems.

Total Revenue

Management and the Board use total revenue, which is calculated in accordance with GAAP, to evaluate the performance of employees (including members of management) and the Company as a whole, as well as to allocate resources.

Refer to the section titled “Results of Operations—Revenue” for additional information.

End-of-Period Recurring Monthly Revenue (“RMR”)

RMR is generated by contractual recurring fees for monitoring and other recurring services provided to our customers, including contracts monitored but not owned.

We use RMR to evaluate our overall sales, installation, and retention performance.

Additionally, we believe the presentation of RMR is useful to investors because it measures the volume of revenue under contract at a given point in time, which is useful for forecasting future revenue performance as the majority of our revenue comes from recurring sources.

Gross Customer Revenue Attrition

Gross customer revenue attrition is defined as RMR lost as a result of customer attrition, net of dealer charge-backs and reinstated customers, excluding contracts monitored but not owned and self set-up/do-it-yourself (“DIY”) customers.

Customer sites are considered canceled when all services are terminated.

Dealer charge-backs represent customer cancellations charged back to the dealers because the customer canceled service during the charge-back period, which is generally thirteen months.

Gross customer revenue attrition is calculated on a trailing twelve-month basis, the numerator of which is the RMR lost during the period due to attrition, net of dealer charge-backs and reinstated customers, and the denominator of which is total annualized RMR based on an average of RMR under contract at the beginning of each month during the period, in each case, excluding contracts monitored but not owned and self set-up/DIY customers.

We use gross customer revenue attrition to evaluate our retention and customer satisfaction performance, as well as evaluate subscriber trends by vintage year.

Additionally, we believe the presentation of gross customer revenue attrition is useful to investors as it provides a means to evaluate drivers of customer attrition and the impact of retention initiatives.

Adjusted EPS (from continuing operations) is a non-GAAP measure.

Our definition of Adjusted EPS, a reconciliation of Adjusted EPS to diluted income (loss) from continuing operations per share (the most directly comparable GAAP measure), and additional information, including a description of the limitations relating to the use of Adjusted EPS, are provided under “Results of Operations—Non-GAAP Measures.”

Adjusted EBITDA

Adjusted EBITDA (from continuing operations) is a non-GAAP measure.

Our definition of Adjusted EBITDA, a reconciliation of Adjusted EBITDA to income (loss) from continuing operations (the most directly comparable GAAP measure), and additional information, including a description of the limitations relating to the use of Adjusted EBITDA, are provided under “Results of Operations—Non-GAAP Measures.”

TRENDS, UNCERTAINTIES, AND FACTORS AFFECTING OPERATING RESULTS

The information described herein could have a material effect on our business, financial condition, results of operations, cash flows, and key performance indicators.

Unless otherwise noted, our results of operations discussed below relate to continuing operations.

As of June 30, 2025, we served approximately 6.4 million security monitoring service subscribers.

Generally, a significant upfront investment is required to acquire new subscribers that in turn provide ongoing and predictable recurring revenue generated from our monitoring services and other subscriber-based offerings.

Although the economics of an installation may vary depending on the customer type, acquisition channel, and product offering, we generally achieve revenue break-even in approximately two years.

Our results are impacted by the mix of transactions accounted for under a Company-owned equipment model versus a customer-owned equipment model (referred to as outright sales), as there are different accounting treatments applicable to each model.

Historically, the majority of professional installation transactions took place under a Company-owned model.

However, beginning in the second quarter of 2024, a growing number of our direct channel new customer adds are outright sales in connection with the national launch of our new ADT+ platform.

We expect outright sales to be an increasing proportion of our transactions as we continue to roll out ADT+, build our partnership with Google, introduce new or enhance our current offerings, and refine our go-to-market approach.

In addition, the mix, price, and type of offerings sold may impact our results.

For example, the mix of professional installation solutions versus self set-up solutions may impact our results in future periods, as self set-up solutions typically earn lower contractual fees than our professional installation solutions as a result of differences in pricing, offer tactics, and level of services in each channel.

New customer additions and customer attrition have a direct impact on our financial results, including revenue, operating income, and cash flows.

A portion of our recurring customer base can be expected to cancel its service each year for a variety of reasons, including relocation, cost, loss to competition, or service issues.

Relocations are sensitive to changes in the residential housing market, and fewer relocations generally lead to improvements in gross customer revenue attrition, but fewer new customer additions.

As of September 30, 2025, we served approximately 6.3 million security monitoring service subscribers (including approximately 200 thousand subscribers associated with the Multifamily business that was divested on October 1, 2025).

Generally, a significant upfront investment is required to acquire new subscribers that in turn provide ongoing and predictable recurring revenue (RMR) generated from our monitoring services and other subscriber-based offerings.

Although the economics of each installation may vary depending on the customer type, acquisition channel, and product and service offerings, we generally achieve revenue break-even in approximately two years.

New subscriber additions and customer attrition have a direct impact on our financial results, including revenue, operating income, and cash flows.

A portion of our recurring subscriber base can be expected to cancel its service each year for a variety of reasons, including relocation, cost, loss to competition, or service issues, or we may disconnect service due to non-payment.

For example, a 1% change in customer attrition typically has approximately a $40 million impact on recurring revenue on an annualized basis.

As of September 30, 2025, gross customer revenue attrition was 13.0%, as compared to 12.8% in the prior year, driven by higher non-payment and voluntary disconnects partially offset by fewer relocations.

Relocations are sensitive to changes in the residential housing market, and fewer relocations generally lead to improvements in customer attrition, but fewer subscriber additions.

Additionally, non-payment disconnects generally increase in a weaker macroeconomic environment.

We may experience fluctuations in these or other trends in the future as changes in the general macroeconomic environment or housing market develop.

We may experience an increase in costs associated with factors such as (i) offering a wider variety of products and services;

Revenue and Offerings

The mix, price, offerings, sales and distribution channel, and equipment ownership of transactions impacts our results.

For example, our results are impacted by the mix of transactions accounted for under a Company-owned equipment model versus a customer-owned equipment model (referred to as outright sales), as there are different accounting treatments applicable to each model, as discussed in Note 2 “Revenue and Receivables.” Historically, the majority of professional installation transactions occurred under a Company-owned model.

However, since the second quarter of 2024, a growing percentage of our direct channel new subscriber adds are outright sales in connection with the national launch of our new ADT+ platform.

During the nine months ended September 30, 2025, we have experienced an increase in both security installation, product, and other revenue and related costs due to the transition to our ADT+ platform, in which the equipment is sold outright to the customer.

Currently, approximately 25% of new direct subscribers are outright sales.

As we continue to roll out ADT+ to additional subscribers including add-ons, upgrades, and resales, build our partnership with Google, introduce additional Google products into our offerings, launch new or enhance our current offerings, and refine our go-to-market approach, we expect outright sales to continue to be an increasing proportion of our direct channel transactions in future periods, which is expected to result in an increase in security installation, product, and other revenue and cost of revenue recognized in the statements of operations.

Changes in our recurring revenue base, including subscriber count, price escalations, or change in offerings, can also impact our results.

As of September 30, 2025, RMR was $362 million, as compared to $359 million in the prior year, driven by an increase in average prices.

Additionally, the mix of professional installation solutions versus self set-up solutions may impact our results in future periods, as professional installation solutions typically have higher contractual fees than our self set-up solutions as a result of differences in pricing, offer tactics, and level of products and services.

We currently expect that the majority of our sales will continue to be professional installation solutions.

We may also experience an increase in other costs associated with factors such as (i) offering a wider variety of products and services;

(ii) providing a greater mix of interactive and smart home solutions;

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and (vi) other changes in prices, interest rates, or terms from our suppliers, vendors, or third-party lenders.

Macroeconomic and Other Trends and Uncertainties

We are currently monitoring, and will continue to monitor, macroeconomic trends and uncertainties such as key components of inflation, the status and effects of recently implemented or threatened tariffs and other trade restrictions, as well as potential changes to these tariffs or the imposition of reciprocal or other tariffs or trade restrictions by other countries.

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As such, we evaluate the financial and business impacts these events have or may have in the future.

During the six months ended June 30, 2025, we did not experience any material losses related to natural disasters.

During the nine months ended September 30, 2025, we did not experience any material losses related to natural disasters.

Other Tax Matters

As a result of Apollo selling shares of our Common Stock (as discussed in Note 14 “Related Party Transactions”) and our share repurchase program, an ownership change (as defined under Sections 382 and 383 of the IRC) occurred during the second quarter of 2025.

Generally, an ownership change occurs when the aggregate ownership of certain shareholders shifts, for federal income tax purposes, by more than 50 percentage points in total over a rolling three-year period.

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As such, we currently do not expect a material impact to our results from this ownership change.

On July 4, 2025, the OBBBA was signed into law, which includes a broad range of tax reform provisions, some of which we expect may be favorable to our results.

We are currently evaluating the impact of the bill.

KEY PERFORMANCE INDICATORS

We evaluate our results using certain key performance indicators, including operating metrics such as recurring monthly revenue and gross customer revenue attrition, as well as the non-GAAP measures Adjusted Earnings per Share (“Adjusted EPS”) and Adjusted EBITDA, both from continuing operations.

Computations of our key performance indicators may not be comparable to other similarly titled measures reported by other companies.

End-of-Period Recurring Monthly Revenue (“RMR”)

RMR is generated by contractual recurring fees for monitoring and other recurring services provided to our customers, including contracts monitored but not owned.

We use RMR to evaluate our overall sales, installation, and retention performance.

Gross Customer Revenue Attrition

Customer sites are considered canceled when all services are terminated.

Dealer charge-backs represent customer cancellations charged back to the dealers because the customer canceled service during the charge-back period, which is generally thirteen months.

We use gross customer revenue attrition to evaluate our retention and customer satisfaction performance, as well as evaluate subscriber trends by vintage year.

Adjusted EPS is a non-GAAP measure.

Our definition of Adjusted EPS, a reconciliation of Adjusted EPS to diluted income (loss) from continuing operations per share (the most comparable GAAP measure), and additional information, including a description of the limitations relating to the use of Adjusted EPS, are provided under “Results of Operations—Non-GAAP Measures.”

Adjusted EBITDA

Adjusted EBITDA is a non-GAAP measure.

Our definition of Adjusted EBITDA, a reconciliation of Adjusted EBITDA to income (loss) from continuing operations (the most comparable GAAP measure), and additional information, including a description of the limitations relating to the use of Adjusted EBITDA, are provided under “Results of Operations—Non-GAAP Measures.”

On July 4, 2025, the OBBBA was signed into law, which includes a broad range of tax reform provisions, some of which we expect may be favorable in 2025 to cash taxes.

We are currently evaluating the impact of the OBBBA on future periods.

RESULTS OF OPERATIONS

Three Months Ended June 30, Six Months Ended June 30,

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

(in thousands, except per share data or as otherwise indicated)

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Interest expense, net

(112,617) (161,830) 49,213 (349,294) (358,980) 9,686

Other income (expense) (3,835) 17,735 (21,570) (7,896) 44,907 (52,803)

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Key Performance Indicators:

RMR $ 362,750 $ 355,179 $ 7,571 $ 362,750 $ 355,179 $ 7,571

Gross customer revenue attrition (percent) 12.8% 12.9% N/A* 12.8% 12.9% N/A*

$ 362,434 $ 358,881 $ 3,553 $ 362,434 $ 358,881 $ 3,553

Gross customer revenue attrition (percent) (2)

13.0% 12.8% N/A* 13.0% 12.8% N/A*

Adjusted EPS (4)

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(1) Refer to the “—Key Performance Indicators” section for the definitions of these key performance indicators.

(2) Refer to the “—Factors Affecting Operating Results” section for additional details and comparison of current to prior period results.

(3) Includes approximately $2.6 million of RMR as of September 30, 2025, associated with the Multifamily business that was divested on October 1, 2025.

(4) Refer to the “—Non-GAAP Measures” section for the definitions of these non-GAAP measures and reconciliations to the most comparable GAAP measures.

* Not applicable.

The three and six months ended June 30, 2025, as compared to the prior year periods, primarily reflects:

The three and nine months ended September 30, 2025, as compared to the prior year periods, primarily reflects:

• Monitoring and related services revenue (“M&S Revenue”) :

higher recurring revenue of $16 million and $32 million, respectively, primarily driven by an increase in average prices.

higher recurring revenue of $15 million and $47 million, respectively, primarily driven by an increase in average prices of $27 million and $85 million, respectively, partially offset by a decrease in volume of $9 million and $33 million, respectively.

• Security installation, product, and other revenue :

higher installation revenue of $32 million and $141 million, respectively, primarily driven by a higher mix of professionally installed systems under the outright sales model at higher average prices in connection with the transition to our ADT+ platform.

The increase in RMR, as compared to the prior year periods, was primarily driven by an increase in average prices on new and existing subscribers.

Gross customer revenue attrition, as compared to the prior year periods, was relatively flat and included a reduction in voluntary and other disconnects as well as relocations, partially offset by higher non-payment disconnects.

Cost of Revenue

The three and six months ended June 30, 2025, as compared to the prior year periods, primarily reflects:

The three and nine months ended September 30, 2025, as compared to the prior year periods, primarily reflects:

• Monitoring and related services costs (“M&S Costs”):

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Selling, General, and Administrative Expenses

The three months ended June 30, 2025, as compared to the prior year period, primarily reflects:

• a decrease in general and administrative costs of $23 million primarily as a result of $20 million related to a legal settlement in the prior year, as well as cost savings initiatives, and

• a decrease in share-based compensation of $10 million due to the modification of certain awards in the prior period.

The six months ended June 30, 2025, as compared to the prior year period, primarily reflects:

• a decrease in general and administrative costs of $39 million primarily as a result of $20 million related to a legal settlement in the prior year, as well as cost savings initiatives, and

• a decrease in advertising costs of $12 million as a result of lower media spend, partially offset by

• an increase in the allowance for credit losses of $15 million primarily as a result of an increase in revenue and customer delinquencies.

The three months ended September 30, 2025, as compared to the prior year period, primarily reflects:

• goodwill impairment of $12 million associated with the Multifamily Divestiture,

• an increase in the allowance for credit losses of $9 million primarily as a result of an increase in outright sales revenue and customer delinquencies, and

• an increase in the amortization of deferred subscriber acquisition costs of $8 million partially offset by

• a decrease in general and administrative expenses of $14 million primarily as a result of cost savings initiatives.

The nine months ended September 30, 2025, as compared to the prior year period, primarily reflects:

• a decrease in general and administrative costs of $55 million primarily as a result of $20 million related to a legal settlement in the prior year, as well as cost savings initiatives, partially offset by

• an increase in the allowance for credit losses of $25 million primarily as a result of an increase in outright sales revenue and customer delinquencies and

• an increase in the amortization of deferred subscriber acquisition costs of $21 million.

Depreciation and Intangible Asset Amortization

The three and six months ended June 30, 2025, as compared to the prior year periods, primarily reflects an increase in the amortization of acquired customer contracts of $4 million and $8 million, respectively.

The three and nine months ended September 30, 2025, as compared to the prior year periods, primarily reflects an increase in the amortization of acquired customer contracts of $9 million and $18 million, respectively.

Interest Expense, Net

The three months ended June 30, 2025, as compared to the prior year period, primarily reflects unrealized losses on our interest rate swaps of $13 million in the current year as compared to $5 million in the prior year.

The six months ended June 30, 2025, as compared to the prior year period, primarily reflects an unrealized loss on our interest rate swaps of $34 million in the current year as compared to an unrealized gain of $12 million in the prior year.

The three months ended September 30, 2025, as compared to the prior year period, primarily reflects unrealized losses on our interest rate swaps of $11 million in the current year as compared to $58 million in the prior year.

The nine months ended September 30, 2025, as compared to the prior year period, primarily reflects a decrease in interest rates on our long-term debt.

Other Income (Expense)

The three and six months ended June 30, 2025, as compared to the prior year periods, primarily reflects lower Commercial TSA income of $10 million and $21 million, respectively.

The three and nine months ended September 30, 2025, as compared to the prior year periods, primarily reflects lower Commercial TSA income of $14 million and $35 million, respectively.

Income Tax Benefit (Expense)

The Company’s income tax expense for the three months ended June 30, 2025 was $59 million, resulting in an effective tax rate for the period of 25.9%.

The effective tax rate primarily represents the federal statutory rate of 21.0%, and a state tax rate, net of federal benefits, of 4.9%.

The Company’s income tax expense for the three months ended June 30, 2024 was $60 million, resulting in an effective tax rate for the period of 32.2%.

The effective tax rate primarily represents the federal statutory tax rate of 21.0%, and a state tax rate, net of federal benefits, of 5.9%, and an unfavorable impact from dispositions of 5.0%.

The Company’s income tax expense for the six months ended June 30, 2025 was $110 million, resulting in an effective tax rate for the period of 26.1%.

The Company’s income tax expense for the three months ended September 30, 2025 was $55 million, resulting in an effective tax rate for the period of 27.7%.

The effective tax rate primarily represents the federal statutory rate of 21.0%, a state tax rate, net of federal benefits, of 5.2%, and an unfavorable impact from a non-deductible goodwill impairment charge of 1.5%.

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 tax rate of 21.0% and a state tax rate, net of federal benefits, of 6.2%.

The Company’s income tax expense for the nine months ended September 30, 2025 was $165 million, resulting in an effective tax rate for the period of 26.6%.

The effective tax rate primarily represents the federal statutory rate of 21.0%, and a state tax rate, net of federal benefits, of 5.2%.

The Company’s income tax expense for the six months ended June 30, 2024 was $116 million, resulting in an effective tax rate for the period of 28.6%.

The effective tax rate primarily represents the federal statutory tax rate of 21.0%, and a state tax rate, net of federal benefits, of 5.6%, and an unfavorable impact from dispositions of 2.3%.

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 tax rate of 21.0%, a state tax rate, net of federal benefits, of 5.8%, and an unfavorable impact from dispositions of 1.6%.

NON-GAAP MEASURES

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The table below reconciles Adjusted EPS to diluted income (loss) from continuing operations per share of Common Stock:

Three Months Ended June 30, Six Months Ended June 30,

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

2025 2024 $ Change 2025 2024 $ Change

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0.01 — 0.01 0.02 0.02 —

Goodwill impairment (1)

0.01 — 0.01 0.01 — 0.01

Interest rate swaps, net (2)

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Loss on extinguishment of debt 0.01 — 0.01 0.01 — 0.01

0.01 (0.01) 0.02 0.01 (0.01) 0.02

Tax impact on adjustments (3)

(0.01) (0.02) 0.01 (0.04) (0.03) (0.01)

Adjusted EPS (from continuing operations) (3)

Adjusted EPS (4)

$ 0.23 $ 0.20 $ 0.03 $ 0.67 $ 0.56 $ 0.11

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(1) Includes unrealized gains or losses on interest rate swaps presented in interest expense, net and other income (expense).

(1) Represents a goodwill impairment charge associated with the Multifamily Divestiture.

Refer to Note 5 “Goodwill and Other Intangible Assets.”

(2) Represents unrealized gains or losses on interest rate swaps presented in interest expense, net and other income (expense).

(3) Represents the tax impact on adjustments using the federal and state blended statutory rate.

(4) Amounts may not sum in this table due to rounding.

During the three and six months ended June 30, 2025, the increase in Adjusted EPS, as compared to the prior year periods, was primarily due to (i) an increase of approximately $0.04 and $0.05 per share, respectively, due to an increase in revenue, net of the related costs including the allowance for credit losses, an increase of approximately $0.02 and $0.04 per share, respectively, due to lower general and administrative costs, and (ii) an increase of approximately $0.02 and $0.03 per share, respectively, due to a decrease in our diluted weighted average shares outstanding as a result of share repurchases during the period.

This was partially offset by a decrease of approximately $0.01 and $0.02 per share, respectively, due to lower Commercial TSA income.

During the three and nine months ended September 30, 2025, the increase in Adjusted EPS, as compared to the prior year periods, was primarily due to (i) increases of approximately $0.02 and $0.07 per share, respectively, due to increases in revenue, net of the related costs including the allowance for credit losses, (ii) increases of approximately $0.02 and $0.06 per share, respectively, due to lower general and administrative costs, and (iii) increases of approximately $0.02 and $0.05 per share, respectively, due to a decrease in our diluted weighted average shares outstanding as a result of share repurchases.

This was partially offset by decreases of approximately $0.02 and $0.05 per share, respectively, of other income (expense) primarily due to lower Commercial TSA income.

The factors listed above exclude amounts that are outside of our definition of Adjusted EPS.

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The table below reconciles Adjusted EBITDA to income (loss) from continuing operations:

Three Months Ended June 30, Six Months Ended June 30,

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

(in thousands) 2025 2024 $ Change 2025 2024 $ Change

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5,836 1,590 4,246 12,958 15,094 (2,136)

Goodwill impairment (1)

12,023 — 12,023 12,023 — 12,023

Unrealized (gain) loss on interest rate swaps (2)

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Loss on extinguishment of debt 4,798 — 4,798 11,241 4,509 6,732

Other, net (3)

5,333 (5,321) 10,654 6,741 (5,727) 12,468

Adjusted EBITDA (from continuing operations)

Adjusted EBITDA

$ 675,646 $ 658,691 $ 16,955 $ 2,010,071 $ 1,925,669 $ 84,402

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(1) Includes unrealized gains or losses on interest rate swaps presented in other income (expense).

During the three and six months ended June 30, 2025, the increase in Adjusted EBITDA, as compared to the prior year periods, was primarily due to:

(1) Represents a goodwill impairment charge associated with the Multifamily Divestiture.

Refer to Note 5 “Goodwill and Other Intangible Assets.”

(2) Represents unrealized gains or losses on interest rate swaps presented in other income (expense).

(3) During 2025, primarily includes one-time costs associated with debt transactions.

During the three and nine months ended September 30, 2025, the increase in Adjusted EBITDA, as compared to the prior year periods, was primarily due to:

• a decrease in general and administrative costs of $22 million and $57 million, respectively,

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• a decrease in Commercial TSA income of $14 million and $35 million, respectively, and

• an increase in the allowance for credit losses of $15 million during the six months ended June 30, 2025.

• an increase in the allowance for credit losses of $9 million and $25 million, respectively.

The factors listed above exclude amounts that are outside of our definition of Adjusted EBITDA.

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Liquidity and capital resources primarily consisted of the following:

(in thousands) June 30, 2025

(in thousands) September 30, 2025

Cash and cash equivalents $ 62,806

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Debt Principal

As of June 30, 2025, our next significant debt maturity will occur in April 2026 with respect to the remaining outstanding balance of our First Lien Notes due 2026.

We intend, and believe that we will have the ability through use of our ongoing sources of liquidity, and through the refinancing transaction to be closed in July 2025 discussed above, to redeem these notes before maturity.

As of September 30, 2025, our next debt maturity will occur in April 2026 with respect to the remaining outstanding balance of our First Lien Notes due 2026.

We intend, and believe that we will have the ability through use of our ongoing sources of liquidity, to redeem these notes before or at maturity.

Share Repurchase Plans

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

In February 2025, our Board of Directors announced the 2025 Share Repurchase Plan, pursuant to which we are authorized to repurchase, through April 30, 2026, up to a maximum aggregate amount of $500 million of shares of our Common Stock.

The 2025 Share Repurchase Plan allows us 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.

We are not obligated to repurchase any of our 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 March 2025, we repurchased, and subsequently retired, 20 million shares of our Common Stock under the 2025 Share Repurchase Plan and paid approximately $152 million (or approximately $7.62 per share) in connection with a secondary offering of our Common Stock by Apollo.

In February 2025, our Board of Directors announced the 2025 Share Repurchase Plan, pursuant to which we were authorized to repurchase, through April 30, 2026, up to a maximum aggregate amount of $500 million of shares of our Common Stock.

The 2025 Share Repurchase Plan allowed us 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.

We were not obligated to repurchase any of our shares of Common Stock, and the timing and amount of any repurchases depended 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 March 2025, we repurchased, and subsequently retired, 20 million shares of our Common Stock under the 2025 Share Repurchase Plan and paid approximately $152 million (or $7.62 per share) in connection with a secondary offering of our Common Stock by Apollo.

Additionally, in March 2025, we repurchased, and subsequently retired, an additional 18 million shares of our Common Stock in the open market pursuant to Rule 10b5-1 and Rule 10b-18 of the Exchange Act under the 2025 Share Repurchase Plan in multiple transactions for a total of $140 million (or $7.79 per share).

During the second quarter of 2025, we repurchased.

and subsequently retired, 12 million shares of our Common Stock in the open market pursuant to Rule 10b5-1 and Rule 10b-18 of the Exchange Act under the 2025 Share Repurchase Plan in multiple transactions for a total of $96 million (or $8.14 per share).

As of June 30, 2025, we have approximately $112 million remaining under the 2025 Share Repurchase Plan.

During July 2025, we repurchased, and subsequently retired, 2 million shares in the open market pursuant to Rule 10b5-1 and Rule 10b-18 of the Exchange Act under the 2025 Share Repurchase Plan in multiple transactions for a total of $16 million (or $8.45 per share).

As of July 22, 2025, we had approximately $96 million remaining under the 2025 Share Repurchase Plan.

Throughout the second quarter of 2025, we repurchased, and subsequently retired, 12 million shares of our Common Stock in the open market pursuant to Rule 10b5-1 and Rule 10b-18 of the Exchange Act under the 2025 Share Repurchase Plan in multiple transactions for a total of $96 million (or $8.14 per share).

In July 2025, we repurchased, and subsequently retired, 11 million shares of our Common Stock under the 2025 Share Repurchase Plan for $93 million (or $8.31 per share) in connection with a secondary offering of the Company’s Common Stock by Apollo.

Additionally, we repurchased, and subsequently retired, 2 million shares of our Common Stock in the open market pursuant to Rule 10b5-1 and Rule 10b-18 of the Exchange Act under the 2025 Share Repurchase Plan in multiple transactions for a total of $19 million (or $8.45 per share).

As of September 30, 2025, there were no authorized amounts remaining under the 2025 Share Repurchase Plan.

Other Contractual Obligations

As of June 30, 2025, we continue to work to meet our commitment of $200 million of aggregate purchases under the Google Cloud Agreement Addendum.

As of September 30, 2025, we continue to work to meet our commitment of $200 million of aggregate purchases under the Google Cloud Agreement Addendum.

In addition, we are party to an agreement with one of our vendors to purchase at least $370 million of security system equipment and components through December 2025.

During the six months ended June 30, 2025, purchases toward this commitment were $91 million.

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

During the nine months ended September 30, 2025, purchases toward this commitment were $140 million.

Refer to Note 12 “Commitments and Contingencies.”

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The specific payment amounts may fluctuate each quarter based on our financial results and tax positions taken.

On July 24, 2025, we announced a dividend of $0.055 per share to holders of Common Stock and Class B Common Stock of record on September 11, 2025, which will be paid on October 2, 2025.

On November 4, 2025, we announced a dividend of $0.055 per share to holders of Common Stock and Class B Common Stock of record on December 11, 2025, which will be paid on January 8, 2026.

State Farm Opportunity Fund

On October 24, 2025, we repaid to State Farm substantially all of the balance of the Opportunity Fund held by us, which was classified as restricted cash as of September 30, 2025.

Long-Term Debt

Significant changes and activity related to our long-term debt since our 2024 Annual Report are discussed below.

Refer to Note 6 “Debt.”

Refer to Note 6 “Debt” for additional information.

First Lien Credit Agreement

In March 2025, we amended and restated the First Lien Credit Agreement and issued the First Lien Term Loan B-2 due 2032.

In March 2025, we amended and restated the First Lien Credit Agreement and issued $600 million aggregate principal amount of the First Lien Term Loan B-2 due 2032, and received net proceeds of $597 million.

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.

During the six months ended June 30, 2025, we borrowed and repaid $133 million under the First Lien Revolving Credit Facility.

We had no amounts outstanding as of June 30, 2025.

In June 2025, certain lenders provided commitments to fund an additional $550 million of term loans as part of the First Lien Term Loan B-2 due 2032.

The closing of this transaction, which remains subject to market and other customary conditions, is expected to occur on or around July 25, 2025.

Also in June 2025, we issued a notice of partial redemption for $550 million of the First Lien Notes due 2026, which will be redeemed on July 27, 2025.

We intend to use proceeds from the First Lien Term Loan B-2 due 2032 for the partial redemption of the First Lien Notes due 2026.

In July 2025, we further amended and restated the First Lien Credit Agreement, which provided for the issuance of $550 million of incremental borrowings under the First Lien Term Loan B-2 due 2032, and received net proceeds of $545 million.

Additionally, we used net proceeds and cash on hand to redeem $550 million of the First Lien Notes due 2026.

Debt issuance costs were not material during the period.

During the nine months ended September 30, 2025, we borrowed and repaid $198 million under the First Lien Revolving Credit Facility.

We had no amounts outstanding as of September 30, 2025.

In October 2025, we amended and restated the First Lien Credit Agreement, which provided for the issuance of $300 million of incremental borrowings under the First Lien Term Loan B-2 due 2032.

We used the proceeds to partially redeem the Second Lien Notes due 2028.

Also in October 2025, we partially redeemed $200 million of the First Lien Term Loan B due 2030 with proceeds from the Term Loan A due 2030.

Term Loan A due 2030 Issuance

In October 2025, we entered into a term loan credit agreement for an aggregate principal amount of $325 million of the Term Loan A due 2030.

We used a portion of the proceeds to redeem $200 million of the First Lien Term Loan B due 2030 and intend to use the remaining proceeds for additional debt redemption.

First Lien Notes due 2033 Issuance

In October 2025, we issued $1 billion aggregate principal amount of the First Lien Notes due 2033.

The Company used the net proceeds to redeem the majority of the Second Lien Notes due 2028.

First Lien Notes due 2026 Partial Redemptions

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

In July 2025 we redeemed $550 million of the First Lien Notes due 2026, excluding accrued and unpaid interest, for a total redemption price of $554 million, including a make-whole payment, using proceeds from the Company’s issuance of the First Lien Term Loan B-2 due 2032 and cash on hand.

Loss on extinguishment of debt was not material.

In June 2025 we issued a notice of partial redemption for $550 million of the First Lien Notes due 2026, which will be redeemed on July 27, 2025.

We intend, and believe that we will have the ability through use of our ongoing sources of liquidity, or through refinancing, to redeem the remaining outstanding balance of these notes before maturity.

Second Lien Notes due 2028 Redemption

In October 2025, we redeemed the Second Lien Notes due 2028, using proceeds from the First Lien Notes due 2033, incremental borrowings under the First Lien Term Loan B-2 due 2032, and cash on hand.

2020 Receivables Facility

In March 2025, we 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.

As of June 30, 2025, the outstanding balance was $440 million.

As of September 30, 2025, the outstanding balance was $441 million.

Debt Covenants

As of June 30, 2025, we were in compliance with all financial covenant and other maintenance tests for all our debt obligations.

As of September 30, 2025, we were in compliance with all financial covenant and other maintenance tests for all our debt obligations.

We do not believe there is a material risk of future noncompliance with our financial covenant and other maintenance tests.

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The amounts and discussion below include cash flows from both continuing operations and discontinued operations, as appropriate, consistent with the presentation on the Statements of Cash Flows.

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands) 2025 2024 $ Change

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Cash Flows from Operating Activities

The increase in net cash provided by operating activities, as compared to the prior year period, was primarily due to the benefit of lower outflows in the current year related to our former Solar Business, improved operating performance, and changes in assets and liabilities due to the volume and timing of other operating cash receipts and payments with respect to when the transactions are reflected in earnings, partially offset by an increase in cash tax payments and a higher proportion of outright sales transactions.

The increase in net cash provided by operating activities, as compared to the prior year period, was primarily due to improved operating performance, changes in assets and liabilities due to the volume and timing of other operating cash receipts and payments with respect to when the transactions are reflected in earnings, lower interest payments, and the benefit of lower outflows in the current year related to our former Solar Business, partially offset by an increase in cash tax payments and a higher proportion of outright sales transactions.

Refer to the discussions above under “—Results of Operations” for further details.

Cash Flows from Investing Activities

The decrease in net cash used in investing activities, as compared to the prior year period, was primarily due to:

• a decrease in subscriber system assets expenditures of $75 million primarily due to a higher proportion of outright sales partially offset by

• an increase in dealer generated customer accounts and bulk account purchases of $71 million primarily due to bulk account purchases during the second quarter of 2025.

The majority of the decrease in net cash used in investing activities, as compared to the prior year period, was due to a decrease in subscriber system assets expenditures of $99 million primarily due to a higher proportion of outright sales in the current year.

Cash Flows from Financing Activities

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• higher share repurchases of $513 million, partially offset by

• net borrowings on long-term debt of $80 million during the current period primarily due to the issuance of the First Lien Term Loan B-2 due 2032, partially offset by the partial redemption of the First Lien Notes due 2026, as compared to net repayments of $112 million during the prior period primarily due to the repayment of the First Lien Notes due 2024, and

• an increase in net borrowings on our 2020 Receivables Facility of $44 million.

• net borrowings on long-term debt of $62 million during the current period primarily due to the issuance of the First Lien Term Loan B-2 due 2032, partially offset by the partial redemptions of the First Lien Notes due 2026, as compared to net repayments of $117 million during the prior period primarily due to the repayment of the First Lien Notes due 2024, and

• an increase in net borrowings on our 2020 Receivables Facility of $46 million due to timing of proceeds and the amendment in March 2025.

CRITICAL ACCOUNTING ESTIMATES

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the expected benefits of the Commercial Divestiture and ADT Solar Exit, including that the costs of the ADT Solar Exit may exceed our best estimates;

the expected favorable effect of the OBBBA on cash taxes;

the integration of strategic bulk purchases of customer accounts;

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the successful development, commercialization, and timing of new or joint products;

the expected timing of product commercialization with State Farm or any changes thereto, including the ADT home security program for State Farm;

business prospects;

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• risks related to the expansion and further development of our next-generation platform and our efforts to migrate our information technology infrastructure, including our customer relationship management and enterprise resource planning systems, to the cloud;

• our ability to effectively implement our strategic partnership with, commercialize products with, or utilize any of the amounts invested in us by State Farm or provided by State Farm for research and development or other purposes;

• our ability to effectively implement our strategic partnership or commercialize products with State Farm;

• our ability to effectively implement our strategic partnership with or utilize any of the amounts invested in us by Google;

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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 2. Management’s Discussion and Analysis