BPN Feed

Strong ADT Interactive growth necessary to offset traditional weakness. The combination of both Pulse and the recently released Control, ADT's home automation offerings,now have ~3.05M total users and has averaged quarterly user growth of ~14% since the beginning of 2017. This strong growth within ADT's Interactive offerings has helped to offset declines in its non-Interactive business (primarily ADT's traditional offering), which we estimate has averaged a 7% quarterly decline since the beginning of 2017, but still represents ~50% of ADT's customer base of ~7.1M customers. Besides faster user growth, ARPU within Interactive is also higher than ADT's traditional offering, with pricing running ~$50+/month compared to the traditional offering closer to ~$40. This pricing differential compounds the importance of Interactive growth,as revenue from Interactive customers needs to grow at a significant rate to offset customer losses within the traditional business.

The emergence of DIY security options (e.g., SimpliSafe, Frontpoint, Nest) and Amazon’s acquisition of video doorbell maker Ring have ratcheted up discussion and angst around the competitive landscape and ADT’s positioning therein. No doubt, we see DIY as having a place in the home security landscape; however, we do not believe it represents ADT’s demise. We believe DIY is well suited for apartments, condos or small homes (and perhaps renters), but less effective for ADT’s core demographic of homeowners with families. In our RBC Home Security Survey, just 15% of responders indicated they felt DIY was as good as professional installed/monitored service, whereas 30% said they don’t trust the service. Thus, we see DIY as a way to expand the monitored security market, from the current ~20% penetration where it has been for some time. We see opportunity for ADT to capitalize on a growing market via its offerings and outsourced monitoring, gaining access to a previously untapped market.

In a survey of 3,001 adults in the U.S., only 38% of Americans own a home security product. The survey also showed that younger cohorts (18-34) are more likely to own a security system.Younger generations are more likely to own some kind of home security device than older generations, especially less expensive DIY options like smart locks and self-monitored systems. Younger generations are digital natives and are more comfortable with tech in the house. As this generation gets older, they may opt to combine a professionally monitored system with IoT devices such as Nest, Alexa, etc (ADT Pulse integration)

Today, we’re announcing a long-term, strategic partnership between Google and ADT, a leading U.S. security and home automation provider . . . Google will combine its Nest devices, services and technology with ADT’s leadership position providing security solutions for millions of homes and small businesses in the U.S. The partnership pairs more than 20,000 ADT professionals together with Nest’s portfolio of helpful home devices. The company’s network of thousands of professional technicians will be able to sell and install devices like Nest Cameras and Nest Hub Max, all powered by Google Assistant.

The Z-Wave Alliance announced that ADT (NYSE: ADT), a leading provider of security, automation, and smart home solutions serving consumers and businesses, has joined the Z-Wave Alliance as a new Principal Member, granting them a seat on the Board of Directors....As the newest Principal Member of the Z-Wave Alliance, ADT joins other industry leaders including Alarm.com, Assa Abloy, Leedarson, Ring, Silicon Labs, StratIS, and Qolsys in advancing Z-Wave technology.