ADT Issues Cautious FY23 Outlook After Q4 Earnings Miss, EBITDA Margin Decline

  • ADT Inc ADT reported fourth-quarter FY22 sales growth of 19% year-on-year to $1.645 billion, beating the consensus of $1.620 billion.
  • The end-of-period recurring monthly revenue (RMR) of $374 million rose 4% Y/Y.
  • Consumer and small business revenue grew 6% to $1.12 billion, and Commercial revenue climbed 15%.
  • The operating margin improved from 0.7% a year ago to 12.5%.
  • The company held $373 million in cash and equivalents. Net cash provided by operating activity totaled $567 million.
  • Adjusted EBITDA margin decreased by 400 bps to 38% due to a decline in CSB and Solar margins.
  • Adjusted EPS of $0.10 missed the consensus of $0.18.
  • "Our results reflect the progress ADT is making as we shift from a traditional security company towards an innovative business poised for accelerating growth in new markets," said ADT President and CEO, Jim DeVries. 
  • "We concluded the year with positive momentum in our business, along with launching our partnership with State Farm and advancing our strategic relationship with Google."
  • Outlook: ADT expected FY23 sales of $6.60 billion - $6.85 billion, against the consensus of $6.85 billion.
  • It expects adjusted EPS of $0.30 - $0.40 (consensus $0.69).
  • Dividend: The board declared a cash dividend of $0.035 per share.
  • Price Action: ADT shares traded lower by 8.33% at $7.21 on the last check Tuesday.
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