BOCA RATON, Fla. — ADT posted stronger-than-expected results during its fiscal third quarter as customers purchased more of its equipment and services, executives said during an earnings call Wednesday.
The Boca Raton, Fla.-based company reported a quarterly profit of $82 million, or 47 cents per share, compared to $113 million, or 52 cents per share, during the same period last year. Excluding non-recurring items, ADT’s earnings were 55 cents per share, beating analysts’ estimates of 47 cents per share.
The year-over-year decrease in earnings is primarily due to high operating costs during the third quarter associated with being a standalone public company.
ADT’s sales ticked upward 1.9% to $849 million, versus estimates of $847.5 million. Recurring monthly revenue (RMR) jumped 2.7% to $785 million primarily driven by a 3.9% year-over-year increase in average revenue per customer to $41.85.
Revenue attrition for the quarter was down 30 basis points sequentially to 13.9% and unit attrition for residential and small business was 13.5%, down 20 basis points sequentially, the company reported.
“On a sequential basis, we reduced attrition, grew gross adds, increased margins and reduced our overall creation multiple. And while we’re pleased with our progress, we do recognize we still have much more to accomplish in the future,” ADT CEO and President Naren Gursahaney said during the call.
The company added 250,000 new customers and closed the quarter with 6.4 million accounts. The success of Pulse continues to be an important driver behind ADT’s results, Gursahaney said, as take rates for the home automation platform continued to increase across all channels for new system sales, as well as Pulse upgrades. Nearly 50% of ADT’s total gross adds during the third quarter were Pulse units, up from 44% the previous quarter and 28% from last year.
“We currently have approximately 875,000 Pulse customers, representing about 14% of our total customer base, showing that we still have a tremendous opportunity to further increase Pulse penetration,” Gursahaney said.
Among other third quarter performance indicators, ADT reported operating cash flow of $408 million and steady-state free cash flow of $934 million. EBITDA before special items of $452 million was up $19 million or 4.4%, and EBITDA margin before special items of 53.2%, up 120 basis points.