ADT - NYSE

Thank you for standing by and welcome to the ADT Inc. fourth quarter and full year 2025 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. If you would like to withdraw your question, thank you. I would now like to turn the call over to Elizabeth Landers, Vice President, Investor Relations. You may begin.

Good morning, and thank you for joining us today to discuss ADT Inc.'s fourth quarter and full year results. Speaking on today's call are Jim DeVries, ADT Inc.'s Chairman, President, and CEO; Jeff Likosar, our CFO; and Omar Khan, our Chief Business Officer. We are structuring today's call a bit differently with the majority of the call focused on our strategy and key priorities to position ADT Inc. for the future. Jim will start with a broad strategic update, focusing on how we are reshaping the future of smart home security. Omar will then describe more about our recent acquisition of Origin AI, and then Jeff will briefly describe our 2025 financial results as well as our long range financial outlook and capital allocation priorities. After their prepared remarks, we will open the call for analyst questions. This morning, we issued a press release and presentation summarizing our financial results. Both are available at investors.adt.com. We will reference our non-GAAP financial measures today. Reconciliations to the most comparable GAAP measures are included in the earnings presentation on our website. Unless otherwise noted, all financials and metrics discussed reflect continuing operations. Non-GAAP cash flow measures include amounts related to our former solar business through February 2024. Included in our remarks today are a number of forward-looking statements that fall within the safe harbor provided by the Private Securities Litigation Reform Act. These forward-looking statements are subject to risks and uncertainties that are laid out in the earnings presentation on our website and in our SEC filings. Actual results may differ materially. Please refer to our SEC filings for more details. I will now turn the call over to Jim.

Thanks, Elizabeth, and good morning, everyone. I am pleased to report that ADT Inc. again delivered a solid quarter and that our overall performance for 2025 was within the guidance ranges we shared at the beginning of the year and updated on our October call. Jeff will share more regarding 2025 financial results later on this call, and he will also comment on our longer-range financial outlook and capital allocation priorities. I will spend the next several minutes sharing our vision for ADT Inc. and how we are reshaping smart home security, emphasizing our strategic focus areas, key initiatives, and investment priorities for 2026 and beyond. As you know, ADT Inc. is the most trusted brand in smart home security, and we have remained the leader in our space throughout our 150-year history. We have a national footprint, unmatched monitoring and service infrastructure, and longstanding relationships with millions of customers who rely on us every day. ADT Inc.'s mission to protect and connect what matters most remains consistent, and we are focused on providing peace of mind to our customers. As I have shared before, our overall strategy is anchored in three core differentiators: unrivaled safety, premium experience, and innovative offerings. We deliver best-in-class protection anchored by our professional monitoring and delivered with top-notch service. During my tenure as CEO, customer expectations, the state of technology, and the manner in which we fulfill our mission have evolved with increasing speed. Homes are more connected. Technology is more intelligent. Customer expectations regarding responsiveness, personalization, and convenience are higher than ever before. Security is no longer just about reacting to alarms. We see the future of smart home security different from the past, and ADT Inc. is leading the way to transform the delivery of and even the definition of smart home security. At the core of that strategy is a simple idea: combining ADT Inc.'s human experience with intelligent technologies to deliver better outcomes for our customers and with better economics for the business. More specifically, we are building technology that, combined with our more than 12,000 professionals, will provide solutions to provide increased peace of mind for our customers. Our vision is to provide protection that is always available, powered by artificial intelligence; enable real-time and split-second response with deeper information and context during emergencies; deliver a personalized experience that lives and evolves with the customer tailored to lifestyles and life stages; and offer solutions for everyone across all U.S. households, small businesses, and families through a variety of use cases. Protection that follows people, not just properties. We have made substantial progress in the foundation for this vision in recent years. These include the launch and expansion of our ADT Plus platform and features, the transition to virtual service, early accomplishments in AI, and consistent improvements in our go-to-market model. A key objective during 2026 is to invest in the acceleration and broadening of our progress. We are investing in product technology, both in ADT Plus as well as in our new technology related to ambient sensing. We are investing in customer service and artificial intelligence, as well as our related IT infrastructure. And we are investing in customer acquisition efficiency, including marketing to new segments and refining our channel strategy. I would like to share a little more detail on these key investments in 2026. First, investments in product technology. We have built a solid proprietary platform, which enables more rapid innovation and more explicit differentiation. Following the launch of Trusted Neighbor in late 2024, we continue to add more use cases and features. Just recently, we launched LiveLight, a lighted outdoor ADT sign enabling first responders to visually identify and verify an address during an emergency. We also launched MySafety, enabling on-the-go mobile security integrated with the ADT Plus ecosystem. We are expanding penetration of our ADT Plus app to more channels including, most importantly, a third-party network of more than 100 dealers who will transition to ADT Plus in the third quarter. A topic which I am very excited about is our recent acquisition of Origin AI, which, using advanced presence sensing technologies and intelligence, will enable use cases and features unique to ADT Inc. Omar Khan, our Chief Business Officer, will share more detail about Origin AI shortly. The theme of our customer service initiatives is the power we can uniquely bring to our customer by supplementing our 12,000 employees with the power of artificial intelligence. We have made substantial progress in service and efficiency in recent years. A highlight is our virtual service initiatives, under which we now handle approximately 50% of our service calls via remote diagnosis and resolution rather than utilizing a truck roll. This has led to meaningful customer service improvements with positive feedback while also improving our cost efficiency. In addition, our initial artificial intelligence efforts in 2025 have led to 23% of our calls being routed through AI, with steadily improving levels of containment, that is handling the call without any human engagement. We exited 2025 with all of our chats first routed through AI. Importantly, we continue to benefit from highly trained employees available in situations where a human interaction is the best solution, both in the event of an emergency or when an on-site service visit is the best way to resolve a customer concern. During 2026, we are planning to advance our service-oriented artificial intelligence within our call center operation and, importantly, also invest in AI beyond our call centers. Our primary focus is to strengthen our understanding of customers, which we will accomplish via transcription and analysis of a large percentage of customer interactions with our agents. We use these insights to improve our interactions—in some cases by prompting employee agents and in other cases reducing the need for human involvement. I am especially excited by the opportunities here to proactively identify and resolve customer needs or desires rather than reactively after a customer reaches out to us. We anticipate this rich information will facilitate improvements in customer satisfaction, speed of issue resolution, and cost efficiency. Working with an outstanding AI partner, Sierra, we are also beginning to leverage artificial intelligence within our lead-to-sale processes, which we believe will bring higher levels of conversion. The third area in which we are making 2026 investments is improvements in new segments and acquisition efficiency. We already enjoy the benefits of a very strong and trusted brand and a variety of routes to market. During 2025, we shifted a majority of our sales to a model that effectively combines sales with system design, configuration, and installation into a single role, most accomplished in a single home visit. We also refreshed our advertising platform to our When Every Second Counts campaign, and we continue to benefit from our capabilities to selectively buy accounts in bulk and integrate them into ADT Inc. Among our key priorities in 2026 is expansion into e-commerce channels and the launch of a new product line we are calling ADT Blue, to appeal specifically to more value-conscious and DIY customers. This will include more marketing investment to target those customers more specifically than we have in the past. We believe our ADT Blue launch will help us acquire customers for both our DIY and DIFM solutions as we now appear in e-tail channels where many customers shop. In addition, we are refining our overall marketing approach with an objective of rationalizing our highest-cost acquisition sources, which include affiliate marketing partners and, in some cases, our dealers. We expect this to have a near-term effect of reducing our organic new subscriber additions while strengthening longer-term economics for our overall go-to-market ecosystem. We will also continue to evaluate bulk account purchase options and potentially full acquisition opportunities in our industry with attractive economics. Our intent and core objectives are threefold. The first is to drive more growth. This includes in our core residential business as well as DIY-oriented or more price-conscious consumers along with small businesses and aging-in-place or health-oriented customers. The second is to strengthen customer loyalty, improving our customer retention. And the third is to improve efficiency specific in customer acquisition to fund growth. Overall, we are focused on delivering unparalleled and differentiated customer value propositions, capitalizing on large and fast-growing smart home and security markets. Our scale, our professional monitoring expertise, our employees, our advanced technologies, and our installed base give us advantages that are very difficult to replicate. Our 2026 initiatives and investments are designed to create the next generation of smart home security. We expect these initiatives to generate benefits, including growth in our core, expanded participation into adjacent TAMs, improved attrition, and greater efficiency. We have the team in place to execute this strategy. We are building on ADT Inc.'s strengths while revolutionizing the manner in which we deliver smart home security. We are focused and disciplined and absolutely committed to creating long-term value for our customers and shareholders. Before Jeff shares more about our financial outlook and capital allocation plans, I will turn the call to Omar, who will share more about why we are so excited about our acquisition of Origin AI. Omar?

Thanks, Jim, and good morning, everyone. Last week marked a defining milestone in ADT Inc.'s history with the acquisition of Origin AI. This acquisition reflects a strategic decision to integrate ambient intelligence directly into our platform, unveiling the next layer of home intelligence. Two years ago, we launched our proprietary platform, ADT Plus, which we have been advancing and scaling with hardware and software features to support additional channels and customer types. We expect AI sensing to become an integrated offering for ADT Plus customers over the next 12 to 18 months, advancing all aspects of our product and services platform. With this acquisition, we now own what we believe to be the world's leading Wi-Fi-based signal processing engine, algorithms, and AI models, backed by over 200 global patents and 50 talented innovators. Think of it as a sixth sense that knows what is happening inside the home without the use of cameras or listening devices. This technology uses existing Wi-Fi signals, the ones that are already bouncing off your walls and off your body, and uses proprietary algorithms and AI models to interpret the smallest changes in deflection. We call it AI sensing. It can distinguish a human from a dog, a fall from a nap, and even detect a person's breathing pattern, all without requiring a single wearable device or a camera. This is a privacy-first security that solves notification fatigue by significantly reducing false alarms and providing zone-based knowledge of where someone is in the home when there is a life safety incident. Why Origin? Because they have spent years perfecting the intellectual property that everyone else is just starting to talk about. For 6,000,000 existing households via software updates and simple hardware like smart plugs. Our consumer market research shows customers have a high demand and willingness to pay for these AI-verified presence, motion classification, and health-related features. Simultaneous with the acquisition, we have signed a five-year agreement with a minimum value of $30,000,000 plus activation fees with Verisure, the leading smart home security provider in Europe and Latin America, who will continue to scale Origin's technology across their footprint. We believe over time our newly acquired technology will accelerate our user engagement, increase our role in customers' lives, drive subscriber and RMR growth, and will reduce our subscriber acquisition cost. We expect to launch a pilot this year with the commercialization across the ADT Plus platform and app starting in 2027. In short, we now own the brain of the smart home. We are moving the industry from “Did the door open?” to “Is my family okay?” And we are doing it with the most advanced, privacy-compliant AI on the market. I will now turn the call over to Jeff and look forward to answering any of your questions related to Origin and product strategy for ADT Inc.

Thanks, Omar, and good morning, everyone. I will take just a couple minutes to highlight our fourth quarter and 2025 financial results, which you can see in the deck and press release we issued earlier this morning. As Jim mentioned, we are very pleased with our overall performance with all guidance measurements within the ranges we shared at the beginning of the year and updated in our October call. We continue to focus especially on strong cash generation, and we grew our adjusted free cash flow, including interest rate swaps, by 16% in 2025. This reflects our disciplined capital allocation and our balanced approach investing in our business while also returning capital to shareholders. Along with our capital structure improvements, this enabled us to return nearly $800,000,000 of capital directly to shareholders during 2025. This included roughly $600,000,000 in share repurchases and $187,000,000 in dividends. Full-year revenue was $5,100,000,000, up 5%, with adjusted EBITDA of $2,680,000,000, up 4%. The key positive year-over-year drivers included growth in monitoring and services revenue, higher install revenues and margins, efficiency improvements, and general cost controls, enabling funding of our investment priorities. Adjusted EPS was exceptionally strong, up 19% to $0.89 per share, benefiting from EBITDA growth and lower share count. Attrition ended at 13.1%, behind our record level from earlier in 2025 due mainly to elevated nonpaid disconnects. As a reminder, we divested our multifamily business in October, which represented approximately $2,600,000 in RMR from roughly 200,000 subscribers. Including the effect of this disposition, our 2025 ending RMR balance was approximately flat to 2024. I will touch more on our capital structure and flexibility in a moment, but want to also highlight that we reduced our leverage to 2.7x adjusted EBITDA with several debt transactions during 2025. During the fourth quarter, these included refinancing of our 2028 notes and all but $75,000,000 of our April 2026 notes. Our 2025 performance and progress positions us well heading into 2026 where, as Jim described, we are focused on executing several initiatives that position us for the future. I will spend the rest of the time describing how these key initiatives and priorities fit into our financial model and our commitment to generating shareholder returns. The strategy we are executing is designed to reinforce and build upon the strengths of our business model: stable recurring revenue, strong margins, durable free cash flow, and, more recently, our capital allocation flexibility. As we invest in technology, service excellence, and more efficient customer acquisition, our goal is to improve long-term growth in unit economics, not just near-term results. We enjoy very durable recurring revenue resulting from our annuity-like $4,300,000,000 annualized recurring monthly revenue balance. With its high gross margins, this is a core asset and the foundation of our cash generation and shareholder return capabilities. We have been very disciplined in management of that asset in recent years, with a focus especially on growing our cash generation while continuing to invest in our business. Our 2025 adjusted free cash flow, including interest rate swaps, has more than doubled since 2021. During that period, we have generated more than $3,000,000,000 of adjusted free cash flow while investing in subscriber acquisition spending sufficient to have grown our recurring monthly revenue balance by 9%. Our focus on unit economics, facilitated by higher install revenue per unit, has contributed to that progress. We have also invested in the technologies and infrastructure that provide the foundation for the initiatives we have described today, and we will continue to invest in 2026. Because we believe our stock is very attractively priced, we have also prioritized capital allocation towards repurchase in recent years. Including dividends, we have returned $1,600,000,000 to shareholders since 2021. Our flexibility to do this is enabled by the refinancing transactions I mentioned earlier and our having repaid more than $2,000,000,000 of debt during that time. As we enter 2026, our commitment to shareholder returns is stronger than ever. We expect the initiatives Jim outlined to generate more growth, improve customer loyalty, and strengthen subscriber acquisition efficiency. We are targeting 1,000,000 more subscribers by 2030, with growth both in our core markets and adjacencies such as DIY and aging-in-place or health applications. We are targeting 11% attrition with loyalty from expanded use cases and our commitment to customer service. And we are targeting a two-year revenue payback enabled by our broadened channel presence and reduced reliance on high-cost acquisition methods. We are consequently sharing today a multiyear financial framework that targets compounded annual growth rates of 5% for revenue, 10% for EPS, and adjusted free cash flow in excess of 10%. As part of our commitment to return capital directly to shareholders, we are today announcing a new three-year $1,500,000,000 share repurchase authorization. And we are maintaining our existing $0.055 per share quarterly dividend. Beyond direct shareholder returns, we also anticipate allocating more capital to M&A than we have in recent years. Some of this may be in the form of technology or capability development, as in our recent acquisition of Origin AI, and some may be in the form of footprint expansion or account acquisition. We will also continue to responsibly manage our debt levels. While we are very comfortable with our current capital structure, we anticipate continuing to reduce leverage, targeting 2.5x adjusted EBITDA. Relative to our longer-range framework, we expect 2026 will have very strong cash generation for which we are targeting 20% growth, which is above our multiyear framework, with some offsetting pressure in 2027 from higher cash taxes and interest next year. We expect lower 2026 growth in revenue and EPS, both of which we expect to be approximately flat to 2025. This reflects our prioritization of cash generation and share repurchases. We are also investing approximately $50,000,000 during 2026 in the product technology, service, and go-to-market initiatives Jim described. Like all companies, we face an uncertain tariff environment, and our guidance includes approximately $45,000,000 in additional subscriber acquisition costs from tariffs. Our guidance does not include the purchase accounting effects of our Origin acquisition; we will provide an update on this on our next call. We expect this year's full-year cash generation to be skewed towards the first quarter, driven by seasonally lower SAC spend and several timing items. To conclude my remarks, I want to emphasize why we see ADT Inc. as such a compelling investment. We own the most trusted brand in the smart home security space. Our valuation is underpinned by a stable, resilient, and recession-resistant recurring revenue base. We enjoy an unmatched footprint and scale with an unwavering commitment to delivering peace of mind. We increasingly own proprietary technologies and are leveraging artificial intelligence to improve both service and efficiency. We have demonstrated an ability to generate exceptionally strong free cash flow, which we have deployed in a disciplined fashion. Our flexibility from this cash generation and our efficient and well-laddered debt structure affords sufficient flexibility to return capital directly to shareholders. Overall, we are very pleased with our 2025 results and are excited by our future. Thank you again, everyone, for joining our call today. And thank you also to our more than 6,000,000 customers, our more than 12,000 employees, and to the first responders across the United States. Operator, please open the call to questions.

Thank you. We will now begin the question-and-answer session. We ask that you please limit yourself to one question and one follow-up. Your first question today comes from the line of George Tong from Goldman Sachs. Your line is open.

You are guiding to 2026 revenue and EPS to be flat. You touched on the tariff impact that you expect this year on subscriber acquisition costs. Can you talk more about factors that you expect to constrain revenue and EPS performance this year?

Sure, George. It is Jim. Thanks for the first question. I will touch on revenue, and Jeff, you want to hit earnings? So on the flat revenue, we are certainly aspiring to do better than flat in 2026, entering our year with RMR roughly flat to last year. As you know, recurring revenue makes up 85% of our revenue, and so if we are coming in flat to last year, that is a headwind for 2026. We have also about a point of headwind from the sale of our multifamily business. And then, George, you asked about some of the factors which might impact it. Some of the changes that we are contemplating in dealer and affiliate partnerships have the potential for short-term disruption. I want to mention, I am bullish on these investments. We are excited about ambient sensing, entry into some of the new TAMs, retail, e-commerce. We have a brand-new CMO who brings a great deal of experience and talent to the table. And I see no reason why after our transition we get back to our 5% revenue growth and 10% EPS growth and the numbers that Jeff outlined.

Yeah. And I would add Jim's comment about the very strong margins. We have a number of efficiency actions, some which are continuing from last year and some new ones that will lower some costs that go with that revenue, and then that is largely offset by the cost of the investments that I mentioned. I mentioned around $50,000,000 between technology in product, IT, and AI related, particularly some marketing investments, also the tariff headwind. On earnings per share, we will benefit a bit from net repurchases, offset somewhat by higher amortization, a little bit higher interest expense, and we would expect the tax rate to be approximately flat. And then I will emphasize the cash where we are expecting a very strong cash year, and that is a result of a bit less SAC investment. It is also the result of having entered the year in a strong position and aware of some working capital opportunities during the year, and cash interest we expect to be lower in 2026 than it was in 2025.

Got it. That is very helpful. And as a follow-up, you talked about initiatives you have in product technology, customer service, and acquisition efficiency to your new medium-term financial framework. Can you elaborate on which of these initiatives you consider to be relatively new or a departure from your prior strategy?

I would offer a couple, George. Obviously, the investments in ambient sensing are new for us with the acquisition of Origin. We see this new technology as a very significant change that we will be integrating into our product going forward. It is unmatched in the industry and a differentiator for us. We continue to advance our investments and our capability in AI, and I am excited about what I see on that front. Not only are we making advances in customer service, but now we are beginning to turn to sales, marketing, and growth and leveraging AI capability there. And then a third one is we will be leaning more assertively into DIY for customers who are more value conscious. And we will be in retail and e-commerce in a way that we have not been historically.

And one thing I would add, implicit in that—and Jim mentioned this in prepared remarks—is as we shift into some of those channels, generally, we expect those to be lower-cost acquisition channels, and we will rationalize the amount of marketing and selling we spend in some of the higher-cost acquisition channels. Which is among the reasons why our revenue guide is as it is, with some potential near-term disruption as we work through that transition.

Very helpful. Thank you.

Your next question comes from the line of Peter Christiansen from Citi. Your line is open.

Good morning. Thanks for the question. Nice free cash flow out, for sure. Jim, I want to talk to you about, you know, of these first steps you are making in AI-first monitoring—obviously, a huge potential trend. What is your vision on how this could evolve over the next, I do not know, five or so years, and is there an opportunity here to really change the calculus on ADT Inc.'s cost leverage?

Thanks for the question, Pete. I will offer a couple of comments, and then Omar is with us today, and he will have a couple comments as well. Short answer to your question: I think so. I think ADT Inc. is a company that is built for AI to be just incredibly transformational. We, as you know, have had a really heavy focus on customer service. Scaling AI in both voice and chat, I think something like 100% of our chat interactions already channeled through AI. Last year, 20% of our calls were channeled through AI, containment continues to improve. And then, even more exciting than how we are leveraging AI in customer service, leveraging AI in sales and marketing is sort of the next frontier for us. So we are partnered with Sierra, a fantastic partner. They are helping us expand into the e-commerce experience. We are doing two-way SMS to improve our lead contact rates. I think we mentioned in the script, we are next leveraging AI in transcription to analyze all our customer interactions, not just customer service but including sales. And so I think the future is really exciting on leveraging AI for us.

Thanks, Jim. And in addition to that, on the product and technology side, what Origin's AI sensing platform gives us for the first time is the ability to insert an intelligence layer between the signals that get generated in the home and our monitoring and response and the consumer. So for the first time, we will be able to take the signals, get some additional context from those signals. So, for instance, if there is a sensor activity in the home or a sensor signal in the home, our ability now will be to know whether or not whatever that motion is, how to classify it, whether it is a person, whether it is a pet, whether it is a mechanical vacuum cleaner. In addition to that, we will be able to help first responders in our monitoring centers to know where those intruders or people may be in the home in the event of an emergency, and then whether or not they are still in the home when a first responder arrives. So you can see that that intelligence layer is going to give us a lot more context real time about what is happening in the home, and it will absolutely positively impact the efficacy and the efficiency of our monitoring and response in our first responder communications.

That is helpful. And, Omar, I guess, generally across the industry, how do you think about this acquisition, Origin AI, strengthening ADT Inc.'s competitive moat, or perhaps just AI in general creating more entrants potentially—big tech, that kind of thing? Just curious how you are thinking about the competitive setup.

Yeah. No. It is a great question. And I think it is a core reason why we bought Origin AI and the IP portfolio because from a competitive set perspective, this gives us the ability to take off-the-shelf and traditional sensors and cameras but augment them with additional signals that are privacy-first. It gives us the ability to both enhance the use cases in the security space by giving us more intelligence on what is happening in the home and how first responders and monitoring can take advantage of those signals, but also start to push us into adjacent use cases like Jim talked about earlier on the call. The ability for us to know changes in gait and changes in motion gives us incredible opportunity to lean into the aging-in-place opportunity and grow that side of our business as well. So it becomes both a moat for us as well as an ability for us to capture additional markets and RMR growth.

And, Pete, one thing I would add, and I appreciate the way you framed the question. But as we began our efforts in AI, it was at first focused on things that have hard cost reduction—you know, easy-to-measure cost reduction. We need to answer the phone fewer times, dispatch fewer trucks. Also, with improved service, next category is customer outcomes—more means of preventing customers from canceling, proactively resolving customer needs. But as I expect you can tell, the thing we are most excited about is this third category, which is better use cases for consumers to keep them safer, to make them more protected in their homes, to open up new use cases, expand the TAM as you see in the presentation deck and as you have already heard. But that is exactly why we are making the investments we are making in 2026.

Absolutely. That is super helpful. Super interesting too. Thank you.

Thanks, Pete. Your next question comes from the line of Ronan Kennedy from Barclays. Your line is open.

Hi. Good morning. This is Ronan Kennedy on for Manav. Thank you for taking our questions. Elements of this were asked and answered as part of George's question, but I would like to ask it another way, if I may, please. The framework shows 2026 as a transition year. I want to confirm if that is how you would categorize it, with revenue and EPS flat, and then you have that return to 5% revenue and 10% EPS growth over the longer term. Is there a specific operating or market inflection point, whether it is the subscriber growth, attrition, pricing, and new products, that gives you confidence in what would appear to be a meaningful reacceleration after 2026, rather than remaining in kind of range-bound? Could you talk to those, please?

Yeah. Sure, Ronan. I will make a couple comments, and then Jeff will add his perspective. First, just from a grounding perspective, I think our 2021 to 2025 CAGR for revenue growth was 5%. And, you know, getting back to 5% to me, I see no reason why we do not get back to 5%. On the EPS front, I think the long-term objective we had was 10%. I think that is very doable, with substantial buyback and 10% free cash flow. Our five-year CAGR on cash is 21%. And so I do not think it is a significant trajectory change to get back to where we have been for the last five years. That said, some of the things that give me confidence that these investments will be substantially positive for us: we are continuing to expand ADT Plus, our proprietary platform, and having good success on that front. AI is probably a touch more advanced than I anticipated it to be, and I love the opportunities that we see with AI in sales and marketing. Origin, as Omar just pointed out, is a fantastic acquisition, and the new technology will help us both from a use case perspective and from a differentiation perspective. And I do not think Omar or Jeff mentioned this, but Verisure, the largest security player in Latin America and Europe, already through licensing agreements deploys some of the use cases that we are talking about with Wi-Fi sensing, and actually in hundreds of thousands of homes. So this is not terribly far out. And then the last thing I would mention, Ronan, we will have a pretty substantial DIY investment in 2026. It will be meaningfully EBITDA negative during the year, but I like what we are seeing. We have a new leader over DIY. Year to date, we are up almost 23%. That is prior to the new product being available in Q2 and prior to being in retail and e-commerce in a meaningful way. So I think as those investments take shape, I feel really confident about the future.

Yeah. And I would add a couple points. One is that implicit in your question is how we deploy capital. And we have, for the past few years, been focused, as we have described, on cash generation, having more than doubled our adjusted free cash flow between 2021 and 2025. The last couple years especially, but also over the last five years, we have returned significant capital to shareholders, $1,600,000,000. We are announcing today a $1,500,000,000 share repurchase program. That is because we believe the stock is very attractively priced and does not reflect what we believe is intrinsic value of the business. So as this technology rolls out, as we begin to commercialize it, as we execute the other things that Jim mentioned, and as we undertake some of the actions to make our go to market more efficient, we would anticipate some combination of deploying more capital towards adds and/or enjoying more adds for the same amount of capital. So that also becomes the inflection point—just the allocation of more capital towards adds that will go along with the completion of the things that Jim described.

Thank you both very much for that. And as a follow-up, in this multiyear framework, can you quantify or qualitatively characterize that targeted 5% revenue growth into major drivers, whether that is message subs growth, your installation activity, your RMR, adjacent TAM, the new entry, pricing, or even the M&A? How should we think about the major contributors to that targeted 5% growth?

Yeah. The main contributor will be RMR just because RMR is our largest base of revenue. We noted an objective of a million more subscribers. It is maybe worth mentioning that some of those subscribers might be more value-conscious or more price-centric. So those subscribers could be lower revenue per unit. But the crux of it will be more subs and/or RMR, with the precise combination dependent to a certain extent on how well each of these various initiatives work. Maybe worth noting that we have internal plans and objectives that are in excess of that. Then we anticipate continuing to command within any particular segment of customers or cohort of customers a pricing premium because of the fact that we deliver the best service, the best protection, the best monitoring capabilities of anybody else in our space.

Thank you, Jeff. Appreciate it.

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

Thank you for my question. I just wanted to follow up on the change in the customer acquisition strategy. Jeff, I believe you mentioned there was success in the DIY year to date, which is up 23%. So if you could just elaborate on that—one, the kind of success that you are seeing and how these new product launches in Q2 or Q3 will be a further tailwind for that strategy going forward. Maybe if I can just ask another question on the same topic, it would be just that focus on the e-com channel. How might the shift from LLM adoption impact e-com customer acquisition over the midterm? Thanks.

Thanks, Ashish. Jeff and I will tag team this one as well. So on DIY, we have not historically leaned in in an assertive way in DIY. There is a handful of reasons why, but over the course of the last six months or so, we have been paying more attention to this segment. One of the lenses, I will say, that we contemplate DIY through is having a relationship with the customer when the customer is younger and has less sophisticated security needs, and then as their security needs develop, converting them to a DIFM customer. From a customer lifetime value perspective, we need about seven, eight, maybe nine or 10 DIY customers to create the same value as a DIFM customer. And so although we are excited about the growth, the key strategic challenge for us is to get really good at conversion. And this year, we have been paying a lot more attention to fishing in the pond of value-conscious customers. DIY, while it has a small denominator, is up just under 23%, and later this year, as we roll out a new product lineup and begin to advertise more aggressively in this space and develop our e-commerce capabilities, we feel pretty good about this new segment.

Yeah. And I would add, more generally, we are always fine-tuning our customer acquisition strategy. But part of what we are doing in 2026 is a bit more than fine-tuning. And just for context, we acquire customers via phone sales, field sales. We mentioned that during 2025, we migrated to what we call a tech engineer model, which is something of a hybrid of both a salesperson or a person who configures a customer system and installs it. We have our dealer channel. We have bulk. We have e-commerce and moving to e-com and retail. All have different characteristics with respect to the cost of the sale and the commissions. And then the same on marketing. We spend marketing dollars on upper-funnel brand advertising, affiliate partnerships, social. Some of our marketing is with partners. So what we are doing this year more assertively is reducing the kinds of adds where we spend the most, combined between the marketing cost and the commission cost. And, you know, I think we have an opportunity to become more efficient—potentially, as already mentioned, with some near-term disruption. It is part of the reason that we are not counting on as many new subscriber additions during 2026 as we otherwise would. But we think beyond that, we will have reset the cost of sales and marketing and go-to-market cost more generally.

That is very helpful color. And maybe just as a follow-up, how should we think about the EBITDA growth in 2026? Should it be more in line with the revenue and EPS growth? Any color there will be helpful.

Thanks. Yeah. We are focusing on earnings per share. Many of the drivers, as you know, are similar. Earnings per share, of course, benefits from share repurchases. It also has the amortization and interest, as I mentioned earlier. But the overall operational dynamics are the same. One of the reasons that we are emphasizing earnings per share more is because some of the things I just described in terms of the way we acquire customers will have, or may have, different accounting manifestations. As you know, there is a meaningful portion of our subscriber acquisition that we capitalize. If we acquire a customer through one channel, we would capitalize the marketing cost. If we instead were to spend more money, just as a, for example, on upper-funnel advertising, we would expense all of the related advertising cost. That effect is less pronounced in EPS over time than it is in EBITDA. But aside from that, the accounting manifestation, the operational drivers are the same.

Thank you. Thanks, Jim. Thank you.

Your next question comes from the line of Greg Parrish from Morgan Stanley. Your line is open.

Hey, guys. Good morning. Thanks for taking my question. I just wanted to ask a high-level question about technology acquisition. You decided to buy this AI sensing technology. I think you spoke on the call about potentially more technology M&A in the future. So maybe just from a high level, why do you think it is an advantage for you to own rather than license some of this technology? It pertains to Origin AI and then maybe as well for the potential future investment.

I will just real quick. I mentioned on the call that in the coming years, we would anticipate potentially more on M&A than in recent years. Part of that is because we have not spent that much capital on M&A, the attractiveness of share repurchases being one of the reasons. And then we are always looking at the landscape. And, as you know, sometimes there are good assets available, sometimes not. Sometimes we pursue one and end up walking away from it. So I would not read too much into it other than that we will continue to evaluate, and then the two broad categories would be technology-related as one category. Another category would be expansion of footprint—you know, more subscribers, kind of bulk-like M&A. But I will pass it over to Omar on the more specific question as to the advantages of owning.

Thanks, Jeff. You know, we are always undergoing analysis around buy versus build, license versus acquire. There are certain situations where it will make sense for one or the other. For Origin AI specifically, the reason it made sense to acquire across our entire portfolio was multifold. One was we are integrating this into our proprietary ADT Plus platform. So it is not something where we are licensing a specific use case or a small engine. We are actually integrating Origin's intelligence layer across our entire product portfolio. It will impact pretty much every use case we have in the company. So from a foundational perspective, it is incredibly important for us to own not just the technology, but own its trajectory over time so we can continue to control it. It is one of the main reasons we innovated and brought ADT Plus to market. The second area is that we did a fairly thorough IP analysis, and Origin's IP is both seminal and foundational, and it is incredibly exciting for us to continue leveraging the 50-plus professionals that are at Origin AI to continue propagating and developing new IP in the space. It is not just a point-in-time acquisition. We also bought an engine that will continue to produce next-generation intellectual property for us to leverage going forward.

Okay. Great. That is very helpful color. And then maybe, Omar, since you are on the call here and we are talking about potential technology M&A, what capabilities or technologies are out there that maybe could bolster the platform over time? Are there capabilities that you think would fit well in the portfolio that maybe the offering does not have today that you can see adding in the next couple years?

Yeah. I mean, I think for us, as we look at it, there are use cases that we see opportunities for us to grow in. Obviously, continue to expand the core business security use case. And in those areas, generally, we are looking at licensing or sourcing technologies. There is an area of adjacent use cases like aging in place and additional types of health monitoring. In those spaces, we will continue to look at leading-edge technology where IP or technology or product acquisition could become a differentiator for us. But we are doing a lot of other work in the AI space specifically related to sensor fusion and bringing those signals together to provide insights to our customers and to our monitoring centers. But right now, our focus is really taking advantage of the Origin AI acquisition, making that operational over the next 12 to 18 months, and then integrating it into our portfolio and launching additional services and capabilities to grow our subscriber base and our RMR.

Okay. Thanks very much.

Just emphasizing the balanced capital allocation. No. Sorry. I was just going to emphasize again balanced capital allocation. We do not want to come across as a dramatic shift, but we do anticipate more M&A just because we have not spent as much, and we just did one that was a relatively sizable outflow the first part of this year. But I will remind of the $1,500,000,000 share repurchase authorization, which we think is a very attractive use of capital.

We have reached the end of our question-and-answer session. I will now turn the call back over to Jim DeVries for closing remarks.

Thank you, Rob, and thanks, everyone, for taking the time to join us today. We are confident in our plans for 2026. Key goals for our team will be to develop investments in new product technology and to meet our commitments for gross adds and retention. I would like to extend my appreciation to our ADT Inc. employees, our dealer partners. Congratulations on a good fourth quarter and a strong 2025. Thanks again for joining, everybody, and have a great day.