ADT - NYSE

Thank you for staying by. My name is Rebecca, and I will be your conference operator today. At this time, I would like to welcome everyone to the ADT Fourth Quarter 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Elizabeth Landers with ADT Investor Relations. Please go ahead.

Thank you, operator, and good morning, everyone. We appreciate you joining today's call to discuss ADT's fourth quarter and full year 2024 results. Speaking on today's call will be ADT's Chairman, President and CEO, Jim DeVries, and our Chief Financial Officer, Jeff Likosar. Following the prepared remarks, we'll have time for analyst questions. Earlier this morning, we issued a press release and slide presentation summarizing our financial results. These materials are available on our website at investor.adt.com. As a reminder, financials and metrics for current and historical periods discussed on this call will be for continuing operations except for non-GAAP cash flow measures, which include amounts related to the commercial business through the date of sale and solar through the second quarter of 2024. Today's remarks also include forward-looking statements that represent our beliefs or expectations about future events. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially. Some of the factors that may cause differences are detailed in our SEC filings. We will also discuss non-GAAP financial measures on the call. The most directly comparable GAAP measures along with a reconciliation to these measures can be found in our earnings presentation on the ADT Investor Relations website. And with that, I'm happy to turn the call over to Jim.

Good morning, everyone, and thank you for joining us today to discuss ADT's fourth quarter and full year results as well as our strategic progress during 2024 and our outlook for 2025. Jeff will provide more detail later, but as we shared in our earnings release, ADT delivered very strong top and bottom line results for the fourth quarter and the full year 2024 consistent with our objectives. I especially want to highlight our record high recurring monthly revenue balance, our record customer retention, and our very strong cash generation. For the full year, our total revenue was $4.9 billion, up 5%. We generated adjusted net income from continuing operations of $685 million, or $0.75 per diluted share, an increase of 25%. Our adjusted free cash flow, including interest rate swaps, was up 42% to $744 million. As a reminder, following the wind down of our solar operation in 2024, ADT is now completely focused on our core security and smart home business. This market is large and growing to what analysts project at $23 billion in consumer spending within four years. We're also excited at the incremental opportunity in the close adjacencies of standalone devices and aging in place within residential as well as growing our footprint in small business. I'm pleased with our overall 2024 progress and momentum during the year in which we also celebrated our 150th anniversary. At our core, we remain centered on delivering safe, smart, and sustainable solutions to our customers. We will continue to anchor our strategy in three areas: innovative offerings, unrivaled safety, and a premium best-in-class customer service experience. A key component of our strategy has been investing in our product and experience ecosystem to create innovative offerings for our customers. To this end, during 2024, we accomplished a very significant milestone by launching our proprietary ADT Plus platform, which is now available across the entire country to a growing percentage of our new customers. Our platform provides refreshed hardware, a new user interface, and an enhanced overall user experience, along with offering installation flexibility and configurability, new use cases, and several other advantages for our customers. Our ADT Plus app has also consistently received positive end-user feedback, averaging 4.8 stars across thousands of reviews in the Apple App Store and Google Play Store. Our ADT Plus platform is the foundation on which we will innovate and build unique experiences tailored to our customers' individual needs. The first example of this type of experience is Trusted Neighbor, which we launched in the third quarter of last year, enabling customers to grant trusted individuals secure access to their homes for everyday events such as package delivery or more urgent issues like water leaks. We're also excited about the innovative ways our customers are able to grant secure access, such as with the ADT Plus app on a neighbor's phone, customized codes, or in combination with Google via Nest's familiar face feature. We are pleased with the initial results and customer feedback we are receiving on this new feature and the overall ADT Plus experience. We're also pleased that Trusted Neighbor was named Home Security Innovation of the Year at the ninth annual Internet of Things Breakthrough Awards, recognizing technology and reimagining how ADT connects and protects customers. While we're energized by the new capabilities and smart home features we're able to offer our customers, I want to underscore the heart of what we do is focused on delivering unrivaled safety, security, and trust to our 6.4 million customers every day. Accordingly, we're proud to be the first company to adopt and implement the Alarm Validation Scoring standard, also known as AVS-01, at the national level. This standard uses historical and real-time information to provide first responders with crucial details, including the severity of a threat, that can help them quickly determine a well-informed plan of action. Additionally, ADT again earned the title of the Most Trusted Home System Brand for the sixth consecutive year in a study based on consumer ratings conducted by Life Story Research. We're also proud to have earned the Monitoring Association Monitoring Center of the Year Award, recognizing ADT's significant contribution to the alarm industry and exceptional customer service. Another 2024 highlight was our continued improvements to enhance and deliver the best-in-class customer experience. We improved our overall customer satisfaction, with significant improvements in various customer perception measurements resulting from our continuous improvements in several areas, including virtual service, first call resolution, and customer onboarding processes. We were rewarded in kind with record-level customer retention, and I'm proud that we were able to drive these improvements while also increasing ADT's operating efficiency. The resulting cost savings contributed to our strong financial results and enabled continued investment in our business. While many initiatives contributed to our progress, we are especially pleased with the progress we made with our virtual service and very early artificial intelligence efforts. For the full year, we successfully resolved more service calls utilizing cost-efficient remote alternatives rather than conducting in-person service visits, avoiding thousands of truck rolls, and contributing to reductions in our field service costs. Additionally, we formally launched our partnership with Sierra, focused on call center artificial intelligence with an objective of resolving customer needs in a more efficient and expeditious process, especially by reducing the need for lengthy telephonic interactions. During 2024, we also continued to progress several go-to-market efficiency improvements, which included the rollout of our new brand platform, "When Every Second Counts." We made several enhancements in our go-to-market process concurrent with the launch of ADT Plus, such as more flexibility in product bundles, configurations, and pricing. And we continue to make steady progress with our dealer partners and in the new sales channels such as State Farm, with whom we now have offers available in seventeen states, including solutions in select states focused on leak detection and self-setup or DIY alternatives. As we enter 2025, our primary objectives are to continue execution of our strategy and, importantly, optimize our newly developed and launched capabilities. This specifically includes further expansion of the ADT Plus platform to a large percentage of our new customers, availability across additional sales channels, and capabilities to enable existing customers to enjoy some of the features available to new customers. It also includes even stronger emphasis and focus on our core residential professional install customer additions, where we enjoyed particularly strong momentum exiting 2024 and entering 2025. Additionally, as we build our experience with our new offering, we will optimize our sales process and go-to-market approaches, including refinement of the offer structure, bundling, pricing, and marketing messages to improve our appeal to more segments of customers and drive efficiency in our subscriber acquisition cost. We will also continue exploring and innovating ways to enhance our product offerings, which may include additional means with which customers can access their systems or grant access to others, such as via biometrics, new use cases oriented towards specific customer needs such as aging in place or surveillance of pets, or enhanced configurations to our consumer app based on early customer input and feedback. We're doing this while continuing to advance service and efficiency initiatives. These initiatives include continued progress on remote service diagnosis and issue remediation, with broadened capabilities beyond our core security system to, for example, include resolution of customers' home WiFi network issues. And as I mentioned earlier, we expect continued progress on our call center artificial intelligence initiative with an objective of exiting the year at a meaningfully reduced run rate of volume in our call centers. Jeff will share more about our 2025 financial outlook momentarily, with continued commitment to generate free cash flow and shareholder returns. This commitment anchors our 2025 financial plan and, combined with our significant recent debt and leverage reduction, enabled the $500 million share repurchase authorization we announced this morning. We believe our stock is very attractively valued at current prices, and our share repurchase plan enables us to return capital directly to our shareholders. Before I turn the call over to Jeff, I wanted to take just a moment to express my gratitude to our nearly thirteen thousand employees, our dealers, and our equity and business partners, State Farm and Google. I am very grateful for the contributions of all our stakeholders, and we are committed to generating positive outcomes, including for the audience on this call, strong returns. I'm honored to lead this company into its 151st year. Thank you for your time today. I'll now turn the call over to Jeff, who will take you through our 2024 financial results in more detail and share our financial guidance for 2025.

Thanks, Jim, and thank you everyone for joining our call today. I'll take the next few minutes to share some additional detail on our 2024 financial results and then turn to our 2025 guidance. I'm very pleased with our overall 2024 financial results, especially our continued strong cash flow growth. In the fourth quarter, we delivered $224 million in adjusted free cash flow, including interest rate swaps, and $744 million for the full year, an increase of 42% over 2023. This outcome is the result of continued revenue growth, operational efficiency, and overall cost and capital structure improvements. Another key highlight for 2024 was our 25% growth in adjusted earnings per share to $0.75 on adjusted net income from continuing operations of $685 million. Total revenue was $1.3 billion for the fourth quarter and $4.9 billion for the full year, up 5%. Monitoring and services revenue grew 3% for the year, driven primarily by a record RMR balance, which benefited from higher average pricing and strong customer retention. We generated 836,000 gross customer additions and $49.7 million of new RMR additions for the full year. Installation revenue for the year was $605 million, up $131 million or 28%. Outright sales revenue was up 50% for the year and more than doubled in the fourth quarter compared to the prior year. The key driver here is that for new subscriber additions on our ADT Plus platform, the customer acquires ownership of the relevant equipment. This is a transition from our historic model under which ADT retained ownership of most equipment installed in customers' homes. Amortization of deferred subscriber acquisition revenue from installations under our company-owned model was also up by 15% for the full year. Installation revenue per unit remained strong at approximately $1,300, as the trend towards larger system sizes contributed to our efficient revenue payback of 2.2 years. Gross revenue attrition was a record 12.7%, reflecting superior customer service and related retention improvements, partially offset by higher non-payment cancellation. Adjusted EBITDA from continuing operations was $653 million for the quarter and $2.6 billion for the year, an increase of 4%. For both periods, our performance was primarily attributable to revenue growth and efficiency actions, including the progress in virtual service Jim mentioned. These improvements were partially offset by investments in our innovation initiatives and longer-term objectives. We remain very disciplined with capital allocation and continue to benefit from the enhanced flexibility of our improved capital structure. A noteworthy highlight is our reduced leverage, with net debt at 2.9 times adjusted EBITDA, below the 3.0 threshold we committed to reach. We finished the year with just under $100 million of unrestricted cash on hand and no outstanding revolver balance. Our ending net debt of $7.4 billion was down approximately $200 million from 2023. Our overall capital structure remains very efficient, with a weighted average interest rate of approximately 4.5%. We have continued our methodical improvements, which include several debt transactions during the past year. We repaid the remaining $100 million of our April 2024 notes at maturity. We refinanced our $600 million term loan A with incremental term loan B maturing in 2030, we reduced the interest spread on our existing first lien term loan B by 25 basis points, and we upsized our revolving credit facility by $225 million and extended its maturity to 2029. In total, our 2024 debt transactions reduced $10 million in interest and $26 million in mandatory amortization payments. Additionally, earlier this month, we secured lender commitments for a new $600 million seven-year term loan, which we expect to close next week. The interest spread on this new facility is set to be another 25 basis points tighter than our recently repriced existing term loan, reflecting investor confidence in our business. We plan to use proceeds to repay the first $500 million of our April 2026 notes, for which we issued a redemption notice earlier this month. As Jim mentioned, we are committed to generating shareholder returns. And to that end, we increased our quarterly dividend, distributing $182 million during 2024, a 41% increase over 2023. And under our 2024 repurchase authorization, we retired 51 million shares for an aggregate price of $345 million, including $104 million in January of 2025. Turning to 2025, our plans are anchored on our resilient and growing recurring monthly revenue, overall operating and cost discipline, and increasingly efficient SAC. We are continuing to emphasize our commitment to cash generation, balanced and disciplined capital allocation, and shareholder returns. Our confidence in continued cash generation and our capital allocation flexibility enabled the new $500 million share repurchase authorization Jim mentioned. We are again targeting strong growth in adjusted free cash flow, including swaps, which we expect to be in a range of $800 to $900 million in 2025. At the midpoint, this represents an increase of 14% following last year's 42% growth. This improvement is driven by our overall profitability and SAC efficiency, which more than offsets some pressure as we become a more significant cash taxpayer this year. We also expect continued meaningful growth in our earnings per share, revenue, and adjusted EBITDA. We are guiding to adjusted earnings per share of $0.77 to $0.85, an increase of 8% at the midpoint. This includes growth in our underlying profitability and the benefit of lower share count from repurchases in 2024 and some anticipated repurchases in 2025. We expect full-year revenue in a range of $5.025 to $5.225 billion, an increase of 5% at the midpoint, with M&S revenue growing by approximately 2%. The remainder is from installation revenue growth driven by the continued rollout of our ADT Plus platform. As I mentioned earlier, this ownership model transition effectively shifts subscriber acquisition costs to our P&L rather than our historic capitalization and amortization model. Additionally, we are increasingly incurring expenses in EBITDA associated with our cloud transition, replacing expenditures that were previously capitalized. These non-cash headwinds pressure our EBITDA growth but are more than offset by planned M&S revenue growth and net overall cost efficiencies. We therefore expect adjusted EBITDA to be in a range of $2.65 to $2.75 billion, up 5% at the midpoint. Consistent with historical patterns, we expect the first quarter to be our lowest growth quarter across all our guidance metrics. This is due to some seasonality and the timing of several items, especially cash interest. Before turning to questions, I want to close by again highlighting our exceptionally strong overall 2024 performance and delivery of the objectives we outlined a year ago. We are especially pleased to have generated these solid results while also investing for the future and accomplishing the milestones Jim mentioned in his remarks. Finally, I will again underscore the strength of our capital structure, our ability to generate cash, and our commitment to delivering shareholder returns. I'm very grateful for the contributions of our employees, dealers, partners, and investors to deliver our strong 2024 results and for our early momentum in 2025. Thank you again everyone for joining today. Operator, please open the line for questions.

At this time, I would like to remind everyone, in order to ask a question, press star one on your telephone keypad. Your first question comes from the line of George Tong with Goldman Sachs.

Hi. This is Alex Lacher on for George Tong. ADT completed a sizable bulk account purchase in Q3 from the same seller. Does ADT plan on acquiring more bulk accounts from this seller or another in 2025?

Sure, Alex. This is Jim. Thanks for the question. I'll address the bulk question and look to Jeff to chime in on capital allocation. So a little bit of color on the bulk. In 2024, we executed bulk deals for about 49,000 accounts. We did not do bulk deals in Q4. We have opportunities available to us with some consistency. We won't chase these transactions, but when the economics work for us, we'll definitely pursue them. Right now, we're exploring alternatives with two or three parties, including the organization that we acquired bulk from last year. I'd offer the returns for bulk are generally consistent with our dealer business. I think we'll continue to have opportunities to explore bulk additions. We've done them, I think, five out of the last six years. And we'll continue to look at capital allocation, make capital decisions comparing bulk opportunities, dealer, and incremental subscriber ads in our direct business. Jeff, you wanna take capital?

Yeah. I'll add a little more on capital allocation. So consistent with what we've said the last several calls, we feel really good about the progress we've made the last couple of years. A whole lot more flexibility. Your net debt's below $7.5 billion. It was more than $10 billion not long ago. Leverage below three, our cost of debt around 4.5%. Maturities well stacked. All the transactions I've noted in the prepared remarks. So three broad priorities: continuing to invest in the business consistent with a variety of avenues including what Jim just described. You're targeting strong returns. We'll remain disciplined and won't chase, but we'll deploy capital there. We'll continue to strengthen the balance sheet, including additional incremental debt reduction, but again, because we're below three, we feel less beholden to debt reduction because of the strength of our current capital structure. And then the third area is returning capital to shareholders. So we increased our quarterly dividend meaningfully last year. We consumed almost all of our $350 million share repurchase authorization last year and, with confidence, announced an incremental $500 million share repurchase authorization, which we intend to deploy during the course of the year. Just another order beyond what Jim noted that we think the stock's very attractively valued. We added a page to the IR deck. I think it's page sixteen. Just but with our $4.3 billion annuity-like base plus our growth prospects, plus our focus on efficiency, our consistent cash growth, and our commitment to return capital to shareholders, we think share repurchases is a good use of capital.

Got it. Thank you. And can you elaborate on the State Farm partnership? And how Q4 came in from a sales perspective relative to prior quarters?

Sure, Alex. It's Jim. So we continue to chip away on regulatory and compliance work. A great deal has been accomplished. The teams are working together consistently. We're now in four more states for a total of seventeen states. That represents something in the neighborhood of 45% of State Farm policies in force. We just did some trials using DIY in two states and water leak detection, kind of a leak detection-centric product in two additional states. The total sales for us through State Farm in 2024 was 18,000. That compares to 5,500 in 2023. Customer satisfaction is holding very high. And the working teams right now are meeting to finalize plans for the remainder of 2025, including state expansion.

Very helpful. Thank you.

Your next question comes from the line of Ronan Kennedy with Barclays.

Hi. Good morning. This is Ronan Kennedy for Manav. Thank you for taking my questions. I just ask you to expand on the progress and initiatives around optimizing the sales process to go to market and the refinement of the offer structure and the bundling and pricing. Progress there and the expectations for that in 2025.

Yeah. Sure. Thanks for the question. It's Jeff. I would highlight that we launched this new offer structure or the new set of offers, I should say, first last year on the ADT Plus platform. There's a variety of changes at the same time. So it's a new app. It's a new set of equipment. And more use cases available for customers. So concurrent with that, we offered our customers new choices, bundled things in somewhat different ways with respect to the equipment versus the services, warranty, and other kinds of features. And the reason that we make the comment about optimization is because we rolled this out to first select geographies, then all geographies, and as Jim noted, we're continuing to expand to different kinds of customers. And as we build experience, we're learning how to adjust the so-called knobs and dials to find the right kind of offer to put in front of the right kind of customer in the right channel. In some cases, even the right balance between installation prices versus recurring revenue prices, in some cases, how and when and if we make financing alternatives available to the customer. So the reason we make the point is just because it's new, we believe there's significant opportunity to make adjustments to optimize the outcomes, both economic outcomes and take rates and volumes, as we work our way through 2025.

Oh, and one quick addition, Ronan. It's Jim here. You mentioned sales motion. We've got a terrific sales leadership team in the field, and we're making, I'd say, really good progress in our ground game. We're refining territory management, we're leaning a little more aggressively into resales. You're familiar, Ronan, with our tech engineer model. We can continue to leverage our tech engineer model, and conversion is continuing to improve. So there's, as Jeff said, lots of knobs and dials at the intersection of sales and marketing, pricing and bundling, etcetera, but feel real good about 2025.

Thank you very much. And then can I ask you to please talk about progress made on the digitization and AI front in terms of the virtual service, the call center efficiency, I think even some opportunity was in propensity analytics as you scale up IT in that regard?

Sure. So I'll do virtual first and AI second. On the virtual front, we're actually now over three million customers served all time for virtual. Just over a million, I think, million, two hundred and fifty thousand or so of those were in 2024. More than fifty percent of our jobs created are now addressed virtually versus a truck role. The customer satisfaction is actually a tech hire for virtual than truck rolls. It's going exceptionally well. And we're holding at that fifty percent holding at that fifty percent of jobs created even though the number of jobs, the kinds of jobs that we're addressing is being expanded. So that's a fantastic win for us. We're just beginning to look at some AI applications in the virtual arena, but it's early in the game. And then, your second question about AI overall, as you know, we're starting with customer experience, customer service, is our first foray, leveraging artificial intelligence. We've partnered with who we think are a couple of the best industry providers to enable our customers and our employees with some of the best AI tools. We in customer experience, started with chat and fifty percent of our customer service chats are now being processed by AI agents. That'll be ninety percent by the end of Q1. And we'll be beginning to roll out AI agents for voice this quarter, and expect to have something in the arena of twenty percent of our voice calls contained by AI agents by the end of the year. Thanks for the question, Ronan.

Thank you. Appreciate it.

Your next question comes from the line of Ashish Sabadra with RBC Capital Markets.

Hi. Good morning. This is David Page on for Ashish. I wanted to ask about some of the incremental opportunities. You mentioned small to medium-sized businesses as an opportunity. So if you could just give an overview on what you see the opportunity there, and then an overview and just incremental opportunities overall. Thank you.

Sure, David. Thanks for the question. Yeah. SMB for us has been a business that we have been in for a long time. It represents something in the neighborhood of five hundred thousand of our 6.4 million customers. And we have, I think, renewed our efforts to go after this market. We have a new leader assigned to the area. We're looking at new product and functionality to make our offering more contemporary. The business has been performing well for us both from a SAC efficiency perspective and from a customer retention perspective. And we think can be an important incremental growth opportunity for us. So in 2025, it will be something that we lean into more assertively.

And I would add to building on Ronan's question about optimization is as we're out with our new offering set for some but not all of our customer base. The other area there where we're optimizing is example for relocating customers we have some capability to enable new customers to avail themselves of some of the features on the new platform without having to replace all the equipment. And then we are beginning to learn and we'll learn over time about more segments of customers who might be especially attracted, for example, to pets or, for example, to older relatives with features that could help them age in place, and we will prioritize our participation in these adjacent spaces. You're slightly separate from specific areas of small and medium business, but the point we're trying to convey is that we believe we have meaningful opportunities with our increasingly flexible offering set to target different kinds of customers who might have slightly different needs than our story customers.

Oh, great. That's helpful. Thank you. And just on a follow-up on the aging in place, is it possible to comment on just the general health of the US residential market, the health of the US consumer, and just in terms of new installs? Anything in that regard. Thank you.

So generally, from a macro perspective, David, the thing that influences our business the most is the number of relocations. And that cuts both ways. When relocations are down, it tends to be a tailwind for us from a customer attrition perspective, customer retention perspective. But it is a bit of a headwind when it comes to new ads because of the opportunity to acquire new customers upon relocation. Your comment about new builds, that it tends to be a small-ish percentage of our new ads. I'm going to say six, seven percent approximately of our ads are in the new builds category. And so that isn't meaningfully tied to our six. In terms of aging in place, last comment here, we've got a health business today. It's a small-ish part of our portfolio, but we think that there's some opportunity in that adjacency around aging in place, especially with the demographic tailwinds behind us. So, another what we see as an interesting call option.

Thank you so much.

Your final question comes from the line of Peter Christiansen with Citigroup.

Good morning. Other question. Jim, or Jeff, I was just curious. How should we think about subscriber asset spending? On a normalized basis, does that, at least on a year-over-year looking at year-over-year, does that start declining? I mean, I guess the app's been also tariffs and other costs issues there. Just curious.

Hey. Thanks for the question, Pete. I'll maybe I'll just share a little bit of context of our guidance overall. So and we feel really good about our continued progress. You know, we shared the guidance in the prepared remarks and in some of the accompanying materials. I would say the key drivers in our business of the EBITDA first and foremost, is our growth in monitoring services revenue. It comes at a high margin. We continue to drive significant operating efficiencies, cost controls. You know, we do have, as I noted in our EBITDA, some non-cash headwinds. Included among those headwinds that affect the EBITDA rate a little bit is the transition to more installation revenue that's because of the incremental outright sales. So then to your question, when I go to cash, you know, cash is unaffected definitionally by the non-cash items and our adjusted free cash flow guidance where we are counting on continued SAC efficiency that, you know, helps offset pressures in a couple areas. Maybe the most noteworthy I would call out is our transition to become a cash taxpayer. So, you know, we are planning on continued progress in SAC efficiency that's related to a number of the things that we've described, including ADT Plus, the opportunity to get more install revenue, but it's really everything. Equipment cost, production opportunities, labor cost opportunities, sales and marketing efficiency, and, you know, that kind of all goes into the overall scenario and we feel really good about being able to guide to another meaningful cash flow increase on top of last year's 42%.

Thanks, Jeff. And then, Jim, I'm curious. You know, I think about how Pulse was rolled out many years ago. And now with the new system as the new system set up, does and the corresponding platform and services that go behind that to serve, you know, two operating systems in a way at the same time. Does it make sense to be more aggressive perhaps later on in upgrading existing individuals on the new platform versus kind of like what the rollout was with Pulse years ago?

I would say absolutely. You know, to the extent that we're able to standardize, that's beneficial for us. From a service perspective, our organization is incredibly equipped to support a number of different panels and a number of different hardware ecosystems because we've been doing it for so many years. I think this is something you're familiar with actually, Pete, that our average tenure of our service tech is ten years. And so we're pretty good at hitting any pitch that comes our way. But in terms of upgrading existing cost plus ecosystem, I take your point in its absolutely advantageous to us. We're working with some of our manufacturing partners now on solutions on how to do that cost-effectively and feel pretty good, cautiously optimistic that we're going to get to a point where we'll be able to make those upgrades happen. Thanks for the question, Pete.

Hey. And Pete, one other thing I'll ask Pete, I just want to add one other thing on our overall guidance is our guidance contemplates tariffs. We didn't address it explicitly in our prepared remarks. I expect we will get that question from individual investors. You're evaluating this situation just like everybody else. We reviewed all of our contracts who would seek to mitigate any effects, our high margins insulate us a little bit, you know, with respect to the effect it has on our bottom line. But significant tariffs would put pressure on our business, of course, but the magnitude would be within the guidance ranges that we've laid out. And I just share that because I expect it will come up, we'll be on some investors' minds.

Absolutely. Good point. Thank you, Jeff.

I would now like to turn the call over to Jim DeVries for closing remarks.

Thank you, Rebecca. And thanks everyone for taking the time to join us today. We closed the year strong and feel very good about the momentum in the business. We're confident in our plans for 2025. One more time, I'd like to extend my appreciation to our ADT employees and dealer partners. Congratulations on an excellent quarter and an outstanding 150th year. Thanks everyone again, and have a great day.