ADT Inc. 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Table of Contents • Introduction • Business and Basis of Presentation • Key Performance Indicators • Trends, Uncertainties, and Factors Affecting Operating Results • Results of Operations • Non-GAAP Measures • Liquidity and Capital Resources • Critical Accounting Estimates • Cautionary Statements Regarding Forward-Looking Statements INTRODUCTION The following section contains forward-looking statements about our business, operations, and financial performance based on current plans and estimates that involve risks, uncertainties, and assumptions, which could differ materially from actual results. Factors that could cause such differences are discussed in the sections of this Quarterly Report on Form 10-Q titled “Cautionary Statements Regarding Forward-Looking Statements” and Item 1A “Risk Factors.” The discussion and analysis below focuses on significant or material items to the Company. To obtain a more comprehensive understanding of our financial condition, changes in financial condition, and results of operations, the following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q, as well as our audited consolidated financial statements and the related notes included in our 2025 Annual Report. BUSINESS AND BASIS OF PRESENTATION Our Business ADT (or “we,” “our,” and “us”), provides security, interactive, and smart home solutions to consumer and small business customers in the U.S. Our mission is to empower people to protect and connect what matters most with safe, smart, and sustainable solutions, delivered through innovative offerings, unrivaled safety, and a premium experience because we believe that everyone deserves to feel safe. Basis of Presentation We report our results as a single operating and reportable segment. All financial information presented in this section has been prepared in U.S. dollars in accordance with GAAP, excluding any non-GAAP measures, and includes the accounts of ADT Inc. and its wholly-owned subsidiaries. All intercompany transactions have been eliminated. Results of our former Solar and Commercial businesses are presented within discontinued operations for current and historical periods, as applicable. 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. 28 Table of Contents 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. 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. 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. Adjusted EPS 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.” 29 Table of Contents 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. Subscribers As of March 31, 2026, we served approximately 6.1 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 (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. A 100 basis point change in customer attrition typically has approximately a $40 million impact on recurring revenue on an annualized basis. As of March 31, 2026, gross customer revenue attrition was 13.1%, as compared to 12.6% in the prior year, driven by higher non-payment disconnects slightly offset by fewer relocations and voluntary disconnects. 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. 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 ADT+ platform. As a result, we have continued to experience 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 30% of new subscribers are outright sales. In early 2026, the Company refined its go-to-market approach for certain non-ADT+ residential transactions and transitioned such transactions to an outright sales model where equipment will be customer owned, which aligns with the equipment ownership model for ADT+ transactions. Accordingly, we expect this to continue to result in an increase in security installation, product, and other revenue and cost of revenue recognized in the statements of operations in subsequent periods. 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. As we refine our go-to-market approach and explore additional sales channels, we may experience an increase in the proportion of ADT self set-up customers, which are considered outright sales. Although the DIY market typically has lower monthly recurring fees than our professional installations, we believe this approach will allow us to grow our subscriber base. Changes in our recurring revenue base, including subscriber count, price escalations, or change in offerings, can also impact our results. As of March 31, 2026, RMR was $359 million, as compared to $360 million in the prior year period, primarily reflecting lower recurring monthly revenue due to the sale of our multifamily business in October 2025 (the “Multifamily Divestiture”), partially offset by an increase in average prices. 30 Table of Contents Macroeconomic and Other Trends and Uncertainties 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; (iii) replacing or upgrading certain system components due to technological advancements, cybersecurity upgrades, software or hardware end-of-life or otherwise; (iv) supply chain disruptions or other impacts such as tariffs or trade restrictions; (v) inflationary pressures on costs such as materials, labor, and fuel including those related to the ongoing conflict in the Middle East; and (vi) other changes in prices, interest rates, or terms from our suppliers, vendors, or third-party lenders. We are currently monitoring, and will continue to monitor, macroeconomic trends and uncertainties such as the ongoing global memory chip shortage, potential supply chain disruptions and fuel shortages stemming from the ongoing conflict in the Middle East, 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. In February 2026, the U.S. Supreme Court ruled that certain tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”) were unauthorized. However, the ruling did not establish a process or timing for any potential refunds. We have not recorded a receivable for any refund of IEEPA tariffs, and the amount of IEEPA tariff refunds that we ultimately recover may differ from the full amount we previously paid. In addition, subsequent actions by the U.S. government to impose tariffs under alternative authorities, along with the possibility of further changes in trade policy, continue to create uncertainty in the global trade environment. Any of these may have negative consequences for our supply chain due to price increases from our vendors or suppliers or supply chain delays. At this time, we do not anticipate material negative impacts that cannot be mitigated through arrangements with our vendors and suppliers, price increases to our customers, or other actions but there is no guarantee that we will be able to successfully mitigate the negative effects of any such macroeconomic trends and uncertainties. We are also unable at this time to determine any future negative impacts from reduced consumer spending as a result of inflationary or other pressures or uncertainty that may result from the imposition of current or future tariffs or other trade restrictions. As part of our response to changes or pressures in the current macroeconomic environment, we have been evaluating, and continue to evaluate, cost-saving opportunities such as leveraging technology, reducing headcount or our physical facilities footprint when appropriate, and reducing non-essential spend. While we have experienced some increase in costs as a result of inflation, we have, for the most part, been able to offset the rising costs through cost-saving opportunities, as well as price increases to our customers. Origin AI Acquisition In February 2026, we acquired Origin AI, a provider of patented AI‑enabled presence detection and ambient sensing technology. Origin AI’s technology uses artificial intelligence and proprietary algorithms to analyze ubiquitous radio frequency signals to detect and classify human presence and activity within the home or other premises without the use of cameras, audio, or wearable devices. This technology is expected to enhance our ability to improve alarm verification, reduce false alarms, and support new intelligent security and smart home use cases over time. Total consideration transferred in connection with the Origin AI Acquisition was $164 million, of which we recognized $114 million of goodwill. The Company does not expect a material impact to revenue or cost of revenue from the Origin AI Acquisition during 2026. 31 Table of Contents RESULTS OF OPERATIONS Three Months Ended March 31, (in thousands, except per share data or as otherwise indicated) 2026 2025 $ Change Revenue: Monitoring and related services $ 1,080,476 $ 1,083,104 $ (2,628) Security installation, product, and other 198,053 184,387 13,666 Total revenue 1,278,529 1,267,491 11,038 Cost of revenue (exclusive of depreciation and amortization shown separately below) : Monitoring and related services 155,690 157,850 (2,160) Security installation, product, and other 87,165 82,272 4,893 Total cost of revenue 242,855 240,122 2,733 Selling, general, and administrative expenses 364,769 368,600 (3,831) Depreciation and intangible asset amortization 345,486 339,517 5,969 Operating income (loss) 325,419 319,252 6,167 Interest expense, net (98,381) (120,879) 22,498 Other income (expense) 426 (4,864) 5,290 Income (loss) from continuing operations before income taxes 227,464 193,509 33,955 Income tax benefit (expense) (58,113) (51,032) (7,081) Income (loss) from continuing operations 169,351 142,477 26,874 Income (loss) from discontinued operations, net of tax (977) (2,231) 1,254 Net income (loss) $ 168,374 $ 140,246 $ 28,128 Diluted income (loss) from continuing operations per share of Common Stock $ 0.20 $ 0.16 $ 0.04 Diluted weighted-average shares outstanding of Common Stock 821,857 871,312 (49,455) Key Performance Indicators: (1) RMR (2) $ 358,899 $ 359,534 $ (635) Gross customer revenue attrition (percent) (2) 13.1% 12.6% N/A* Adjusted EPS (3) $ 0.23 $ 0.21 $ 0.02 Adjusted EBITDA (3) $ 673,750 $ 660,801 $ 12,949 _______________________ (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) 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. Period‑over‑period changes in income (loss) from continuing operations, including on a per share basis, are discussed through the analysis of the underlying GAAP components below: Revenue The three months ended March 31, 2026, as compared to the prior year period, primarily reflects: • Monitoring and related services revenue (“M&S Revenue”) : (i) lower recurring revenue of $7 million primarily driven by a decrease in volume, including the Multifamily Divestiture, of $28 million, partially offset by an increase in price of $20 million, and (ii) higher revenue of $4 million primarily attributable to an increase in time and materials billings. • Security installation, product, and other revenue : higher installation revenue of $12 million primarily driven by a higher mix of professionally installed systems under the outright sales model in connection with our refined equipment ownership go-to-market approach. 32 Table of Contents Cost of Revenue The three months ended March 31, 2026, as compared to the prior year period, primarily reflects: • Monitoring and related services costs (“M&S Costs”): a decrease in M&S Costs of $2 million primarily due to lower customer service and maintenance costs of $4 million partially offset by higher interactive fees of $2 million. • Security installation, product, and other costs : an increase in installation and product costs of $5 million primarily due to a higher mix of professionally installed systems under the outright sales model discussed above. Selling, General, and Administrative Expenses The three months ended March 31, 2026, as compared to the prior year period, primarily reflects: • a decrease in general and administrative costs of $27 million primarily as a result of a loss recovery from a legal settlement during the current period, partially offset by • an increase in the allowance for credit losses of $19 million. Depreciation and Intangible Asset Amortization The three months ended March 31, 2026, as compared to the prior year period, primarily reflects: • an increase in the amortization of customer contracts acquired under our authorized dealer program and from other third parties of $5 million and • an increase in the depreciation of property, plant, and equipment of $5 million, partially offset by • a decrease in depreciation of subscriber system assets of $5 million. Interest Expense, Net The three months ended March 31, 2026, as compared to the prior year period, primarily reflects a decrease in unrealized losses on interest rate swaps of $17 million, with the remaining change due to lower interest rates on our long-term debt. Other Income (Expense) The three months ended March 31, 2026, as compared to the prior year period, primarily reflects a loss on extinguishment of debt of $6 million recorded in the prior year period. Income Tax Benefit (Expense) The Company’s income tax expense for the three months ended March 31, 2026 was $58 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% and a state tax rate, net of federal benefits, of 4.9%. 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 tax rate of 21.0%, and a state tax rate, net of federal benefits, of 5.6%. NON-GAAP MEASURES To provide investors with additional information in connection with our results as determined in accordance with GAAP, we disclose the following non-GAAP measures. These measures are not financial measures calculated in accordance with GAAP, and should not be considered as a substitute for net income, income (loss) from continuing operations, operating income, or their respective per share amounts as applicable, or any other measure calculated in accordance with GAAP, and may not be comparable to similarly titled measures reported by other companies. 33 Table of Contents Adjusted EPS We define Adjusted EPS as diluted income (loss) from continuing operations per share adjusted for the per share amounts related to (i) share-based compensation expense; (ii) merger, restructuring, integration, and other items; (iii) impairment charges; (iv) unrealized (gains) or losses on interest rate swaps; (v) other non-cash or non-routine adjustments not necessary to operate our business; and (vi) the impact these items have on taxes. The diluted weighted average shares outstanding used in Adjusted EPS is equal to diluted weighted average shares outstanding of Common Stock calculated in accordance with GAAP. We believe Adjusted EPS is a benchmark used by analysts and investors in our industry to compare our performance against the performance of other companies, although this measure may not be directly comparable to similar measures reported by other companies. We believe the presentation of Adjusted EPS is useful to investors as it provides additional information about how our management evaluates the business, including the performance of employees (including members of management). There are material limitations to using Adjusted EPS as it does not include certain significant items, including the adjustments discussed above, which directly affect our diluted income (loss) from continuing operations per share (the most comparable GAAP measure). These limitations are best addressed by considering the economic effects of the excluded items independently and by considering Adjusted EPS in conjunction with diluted income (loss) from continuing operations per share as calculated in accordance with GAAP. The table below reconciles Adjusted EPS to diluted income (loss) from continuing operations per share of Common Stock: Three Months Ended March 31, 2026 2025 $ Change Diluted income (loss) from continuing operations per share of Common Stock $ 0.20 $ 0.16 $ 0.04 Share-based compensation expense 0.02 0.02 — Merger, restructuring, integration, and other 0.01 — 0.01 Interest rate swaps, net (1) 0.01 0.03 (0.02) Loss on extinguishment of debt — 0.01 (0.01) Other, net — — — Tax impact on adjustments (2) (0.01) (0.01) — Adjusted EPS (3) $ 0.23 $ 0.21 $ 0.02 ________________ (1) Represents unrealized gains or losses on interest rate swaps presented in interest expense, net and other income (expense). (2) Represents the tax impact on adjustments using the federal and state blended statutory rate. (3) Amounts may not sum in this table due to rounding. The increase in Adjusted EPS for the three months ended March 31, 2026, as compared to the prior year period, was primarily due to: • $0.03 per share due to lower general and administrative costs and • $0.01 per share due to a decrease in our diluted weighted average shares outstanding as a result of share repurchases, partially offset by • $0.02 per share due to an increase in the allowance for credit losses. The factors listed above exclude amounts that are outside of our definition of Adjusted EPS. Refer to the discussions above under “—Results of Operations” for further details. Adjusted EBITDA We define Adjusted EBITDA as income (loss) from continuing operations adjusted for (i) interest; (ii) taxes; (iii) depreciation and amortization, including depreciation of subscriber system assets and other fixed assets and amortization of dealer and other intangible assets; (iv) amortization of deferred costs and deferred revenue associated with subscriber acquisitions; (v) share-based compensation expense; (vi) merger, restructuring, integration, and other items; (vii) impairment charges; and (viii) other non-cash or non-routine adjustments not necessary to operate our business. 34 Table of Contents We believe Adjusted EBITDA is useful to investors to measure the operational strength and performance of our business. We believe the presentation of Adjusted EBITDA is useful as it provides investors additional information about our operating profitability adjusted for certain non-cash items, non-routine items we do not expect to continue at the same level in the future, as well as other items not core to our operations. Further, we believe Adjusted EBITDA provides a meaningful measure of operating profitability because we use it for evaluating our business performance, making budgeting decisions, and comparing our performance against other peer companies using similar measures, although this measure may not be directly comparable to similar measures reported by other companies. There are material limitations to using Adjusted EBITDA as it does not include certain significant items, including interest, taxes, depreciation and amortization, and other adjustments which directly affect our income (loss) from continuing operations (the most comparable GAAP measure). These limitations are best addressed by considering the economic effects of the excluded items independently and by considering Adjusted EBITDA in conjunction with income (loss) from continuing operations as calculated in accordance with GAAP. The table below reconciles Adjusted EBITDA to income (loss) from continuing operations: Three Months Ended March 31, (in thousands) 2026 2025 $ Change Income (loss) from continuing operations $ 169,351 $ 142,477 $ 26,874 Interest expense, net 98,381 120,879 (22,498) Income tax expense (benefit) 58,113 51,032 7,081 Depreciation and intangible asset amortization 345,486 339,517 5,969 Amortization of deferred subscriber acquisition costs 67,445 60,358 7,087 Amortization of deferred subscriber acquisition revenue (89,595) (88,871) (724) Share-based compensation expense 13,626 20,521 (6,895) Merger, restructuring, integration, and other (1) 6,559 3,905 2,654 Unrealized (gain) loss on interest rate swaps (2) 3,709 4,032 (323) Loss on extinguishment of debt — 6,443 (6,443) Other, net 675 508 167 Adjusted EBITDA $ 673,750 $ 660,801 $ 12,949 ________________ (1) During 2026, primarily includes costs related to the Origin AI Acquisition. (2) Represents unrealized gains or losses on interest rate swaps presented in other income (expense). The increase in Adjusted EBITDA for the three months ended March 31, 2026, as compared to the prior year period, was primarily due to: • a decrease in general and administrative costs of $27 million and • higher installation revenue, net of the associated costs and commissions, of $5 million, partially offset by • an increase in the allowance for credit losses of $19 million. The factors listed above exclude amounts that are outside of our definition of Adjusted EBITDA. Refer to the discussions above under “—Results of Operations” for further details. LIQUIDITY AND CAPITAL RESOURCES Liquidity and capital resources primarily consisted of the following: (in thousands) March 31, 2026 Cash and cash equivalents $ 119,328 Restricted cash and restricted cash equivalents $ 32,470 Availability under First Lien Revolving Credit Facility $ 800,000 Uncommitted available borrowing capacity under 2020 Receivables Facility $ 117,392 Carrying amount of total debt outstanding, including finance leases $ 7,668,864 35 Table of Contents Liquidity We expect our ongoing sources of liquidity to include cash generated from operations, borrowings under our credit facilities, and the issuance of equity and/or debt securities as appropriate given market conditions. Our future cash needs are expected to include cash for operating activities including working capital, principal and interest payments on our debt, income tax payments, capital expenditures, expected dividend payments to our stockholders, potential share repurchases, and other business initiatives as they arise. We are a highly leveraged company with significant debt service requirements and have both fixed-rate and variable-rate debt. We may periodically seek to repay, redeem, repurchase, or refinance our indebtedness, or seek to repurchase and retire our outstanding securities through cash purchases in the open market, privately negotiated transactions, a 10b5-1 repurchase plan, or otherwise, and any such transactions may involve material amounts. Cash outflows for interest payments are not consistent between quarters, with larger outflows occurring in the first and third quarters, and may vary as a result of our variable rate debt. We believe our cash position, available borrowing capacity under our credit agreements, and cash provided by operating activities are, and will continue to be, adequate to meet our operational and business needs in the next twelve months, as well as our long-term liquidity needs. Material Cash Requirements There have been no significant changes to our material cash requirements, commitments and contingencies, or off-balance sheet arrangements from those disclosed in our 2025 Annual Report, except as discussed below. Debt Principal In April 2026, we redeemed the remaining outstanding balance of our First Lien Notes due 2026. Our next debt maturity will occur in August 2027 with respect to the remaining outstanding balance of our First Lien Notes due 2027. We intend, and believe that we will have the ability, to refinance or redeem these notes before or at maturity. Share Repurchase Plans In February 2026, our Board of Directors approved the 2026 Share Repurchase Plan, pursuant to which we were authorized to repurchase, through April 30, 2029, up to a maximum aggregate amount of $1.5 billion of shares of our Common Stock. The 2026 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 depends 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. During the first quarter of 2026, we repurchased, and subsequently retired, 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 2026 Share Repurchase Plan in multiple transactions for a total of $116 million (or $6.57 per share). As of March 31, 2026, there was $1.4 billion remaining under the 2026 Share Repurchase Plan. In April 2026, we repurchased, and subsequently retired, 17 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 2026 Share Repurchase Plan in multiple transactions for a total of $114 million (or $6.92 per share). After these repurchases, we had $1.3 billion remaining under the 2026 Share Repurchase Plan. Other Contractual Obligations As of March 31, 2026, we continue to work to meet our commitment of $200 million of aggregate purchases under the Google Cloud Agreement Addendum. Refer to Note 12 “Commitments and Contingencies.” 36 Table of Contents Cash Taxes While we did not make any material cash payments during the three months ended March 31, 2026, we expect to make initial estimated federal and state tax payments in the second quarter of 2026, with subsequent payments scheduled for the periods they correspond to. The specific payment amounts may fluctuate each quarter based on our financial results and tax positions taken. Dividends On April 30, 2026, we announced a dividend of $0.055 per share to holders of Common Stock and Class B Common Stock of record on June 11, 2026, which will be paid on July 7, 2026. Long-Term Debt Significant changes and activity related to our long-term debt since our 2025 Annual Report are discussed below. Refer to Note 6 “Debt” for additional information. First Lien Notes due 2026 Redemption In April 2026, we redeemed the remaining outstanding balance of the First Lien Notes due 2026 at maturity for a redemption price of $75 million using cash on hand. 2020 Receivables Facility In March 2026, we amended the agreement governing the 2020 Receivables Facility to extend the uncommitted revolving period to April 2026. In April 2026, we amended the agreement governing the 2020 Receivables Facility to extend the uncommitted revolving period to April 2027, among other things. Debt Covenants As of March 31, 2026, 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. Cash Flow Analysis 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. Three Months Ended March 31, (in thousands) 2026 2025 $ Change Net cash provided by (used in): Operating activities $ 638,093 $ 466,626 $ 171,467 Investing activities $ (405,608) $ (258,259) $ (147,349) Financing activities $ (189,227) $ (321,246) $ 132,019 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 lower interest payments and the timing of certain payroll-related payments, as well as 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. Refer to the discussions above under “—Results of Operations” for further details. 37 Table of Contents Cash Flows from Investing Activities The increase in net cash used in investing activities, as compared to the prior year period, was primarily due to: • outflows of $164 million related to the Origin AI Acquisition, partially offset by • a decrease in subscriber system assets expenditures of $15 million primarily due to our continued transition to an outright sales model. Cash Flows from Financing Activities The decrease in net cash used in financing activities, as compared to the prior period, was primarily due to: • lower share repurchases of $281 million, partially offset by • a reduction in net borrowings on long-term debt of $137 million primarily related 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 in the prior year. CRITICAL ACCOUNTING ESTIMATES We disclosed our critical accounting estimates in our 2025 Annual Report, which include estimates prepared in accordance with GAAP that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the financial condition or results of operations. Critical accounting estimates are based on, among other things, estimates, assumptions, and judgments made by management that include inherent risks and uncertainties. Our estimates are based on relevant information available at the end of each period. Actual results could differ materially from these estimates under different assumptions or market conditions. There have been no material changes to our critical accounting estimates as disclosed in our 2025 Annual Report. CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q contains certain information that may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and are made in reliance on the safe harbor protections provided thereunder. While we have specifically identified certain information as being forward-looking in the context of its presentation, we caution you that all statements contained in this Form 10-Q that are not clearly historical in nature, including statements regarding the ADT Solar Exit; the Commercial Divestiture; 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 effects of the One Big Beautiful Bill Act on cash taxes; the anticipated changes to our internal control over financial reporting in 2026 resulting from ongoing information technology system implementations; the integration of strategic bulk purchases of customer accounts and other acquired businesses; any repurchases of our common stock under an authorized share repurchase plan; our ability to refinance or reduce debt or improve leverage ratios, or to achieve or maintain our leverage goals; anticipated financial performance; management’s plans and objectives for future operations; the expected benefits of the Origin AI Acquisition, including the expected integration of Origin AI’s technology into the Company’s products and services; the successful development, commercialization, and timing of new or joint products; the successful development, commercialization and integration of artificial intelligence (“AI”) technologies into the Company’s products, services, and operations; business prospects; outcomes of regulatory proceedings; market conditions; our ability to deploy our business continuity and disaster plans and procedures to successfully respond to catastrophic events; our strategic partnership and ongoing relationship with Google; the expected timing of product commercialization with Google or any changes thereto; the successful internal development, commercialization, and timing of our next generation platform and innovative offerings; the successful conversion of customers who continue to utilize outdated technology; the current and future market size for existing, new, or joint products; any stated or implied outcomes with regards to the foregoing; and other matters. Forward-looking statements are contained principally in the sections of this report entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Without limiting the generality of the preceding sentences, any time we use the words “ongoing,” “expects,” “intends,” “will,” “anticipates,” “believes,” “confident,” “continue,” “propose,” “seeks,” “could,” “may,” “should,” “estimates,” “forecasts,” “might,” “goals,” “objectives,” “targets,” “planned,” “projects,” and, in each case, their negative or other various or comparable terminology, and similar expressions, we intend to clearly express that the information deals with possible future events and is forward-looking in nature. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. 38 Table of Contents Particular uncertainties that could cause our actual results to be materially different than those expressed in our forward- looking statements include, without limitation: • our ability to retain and hire key personnel and to maintain relationships with customers, suppliers, and other business partners; • risks related to the Commercial Divestiture and ADT Solar Exit, including our business becoming less diversified and the possible diversion of management’s attention from our core business operations; • our ability to keep pace with rapid technological changes and other industry changes; • 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 or utilize any of the amounts invested in us by Google; • the impact of supply chain disruptions; • our ability to maintain and grow our existing customer base and to integrate strategic bulk purchases of customer accounts; • our ability to sell our products and services or launch new products and services, including those incorporating AI or advanced sensing capabilities, in highly competitive markets, including the home security and automation market, and to achieve market acceptance with acceptable margins; • our ability to successfully execute and scale our DIY offerings, including customer adoption, digital acquisition, and expansion into new distribution channels such as traditional retail and e-commerce channels; • our ability to successfully upgrade obsolete equipment installed at our customers’ premises in an efficient and cost-effective manner; • any changes in regulations or laws, economic and financial conditions, including labor and tax law changes or any impacts on the global economy or consumer discretionary spending due to tariffs or otherwise, changes to privacy requirements, changes to telemarketing, email marketing and similar consumer protection laws, interest volatility, and trade tariffs and restrictions applicable to the products we sell; • any impacts from current global, economic, sovereign and political conditions and uncertainties, including the effects of, and uncertainty regarding, new or proposed tariff or trade regulations; • any material changes to the valuation allowances we take with respect to our deferred tax assets; • the impact of cyber attacks or related breaches with respect to information technology systems, cybersecurity, or data security involving us, our business partners, or other third parties whose systems are interconnected with ours, and any similar future or still undetected attacks or incidents; • risks related to the development, deployment, and use of AI in our products, services, and operations, including technological and legal uncertainties surrounding AI technologies; • our dependence on third-party providers, suppliers, and dealers to enable us to produce and distribute our products and services in a cost-effective manner that protects our brand; • our ability to successfully implement an equipment ownership model that best satisfies the needs of our customers and to successfully implement and maintain our receivables securitization financing agreement or similar arrangements; • our ability to successfully pursue alternate business opportunities and strategies; • our ability to successfully integrate acquired businesses, including bulk acquisitions of customer accounts, technologies, and intellectual property, and to realize the anticipated benefits of such acquisitions in an efficient and cost-effective manner; • the amount and timing of our cash flows and earnings, which may be impacted by customer, competitive, supplier and other dynamics and conditions; • our ability to maintain or improve margins through business efficiencies; • risks related to the restatement of our consolidated financial statements included in our Amendment No. 1 to our Annual Report on Form 10-K for the year ended December 31, 2022 (the “Amended 2022 Annual Report”) and in our Quarterly Reports on Form 10-Q/A for the quarters ended September 30, 2022, and March 31, 2023, each as filed with the SEC on July 27, 2023; • any litigation or investigation related to such restatements; 39 Table of Contents • our ability to maintain effective internal control over financial reporting (“ICFR”) and disclosure controls and procedures (“DCPs”), including our ability to remediate any potential material weakness in our ICFR, the timing of any such remediation, and anticipated changes to our ICFR from ongoing system implementations, as well as the ability to maintain effective DCPs at a reasonable assurance level; • the expected shift in our transaction mix (including increased outright equipment sales) and the related effects to the timing and mix of revenue and costs; and • the other factors that are described under the heading “Risk Factors” in our 2025 Annual Report. Forward-looking statements and information involve risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied in, or reasonably inferred from, such statements, including without limitation, the risks and uncertainties disclosed or referenced under the heading “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q and Part I, Item 1A in our 2025 Annual Report. Therefore, caution should be taken not to place undue reliance on any such forward-looking statements. Much of the information in this report that looks toward future performance is based on various factors and important assumptions about future events that may or may not actually occur. As a result, our operations and financial results in the future could differ materially and substantially from those we have discussed in the forward-looking statements included in this Quarterly Report on Form 10-Q. Any forward-looking statement made in this Quarterly Report on Form 10-Q speaks only as of the date on which it is made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future developments, or otherwise unless required by law.