ADT Security Corp：2Q26业绩后重申减持评级；卖出ADT IL 5.875s '33；做空5年期CDS风险

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J P M O R G A N

North America Credit Research

31 July 2026

ADT Security Corp

Reiterating Underweight Recommendation Following

2Q26 Results; Sell the ADT 1L 5.875s of ‘33; Short Risk

5-Year CDS

Credit view: We remain Underweight the ADT Security Corp (ADT) credit. The

company’s 2Q26 performance was in line with our expectations. Our Underweight

recommendation is based on ADT’s shift in capital allocation priorities, risk the

company’s credit story could become complex, and AI home automation capabilities

that may increase competition. Additionally, while ADT has recurring contracted

revenue that is less cyclical compared to most service companies, its business is not

recession proof and could be impacted if the consumer weakens. We see fair value

for ADT 1L 5.875s of ‘33 at ~7%, about 50bp inside the JPM HY Index. We also

think 5-year ADT CDS at 121/131 is a good way to express a short-risk view.

Earnings recap: ADT reported revenue of $1,312M (+2% y/y) compared to

consensus of $1,289M, adj. EBITDA of $671M (~flat y/y) compared to consensus of

$668M with a margin of 51.1% (-130bp y/y), and adjusted FCF (including interest rate

swaps) of $406M compared to $274M in 2Q25.

Earnings Review

($ millions)

2Q.26

Revenue

1,312

Adj. EBITDA

671

Leverage Stats

JPME Consensus ($ millions)

1.9%

1,288

1,289 LTM Adj. EBITDA

-0.4%

664

668 Cash

% Margin

51.1% 52.4%

51.6%

51.8% Debt

Source: Company reports, J.P. Morgan, Bloomberg Finance L.P.

Gross Leverage

Net Leverage

2Q.25

1,287

674

y/y ∆

2Q.26

2,690

4

7,418

2.8x

1Q.26

2,693

119

7,388

2.7x

Source: Company reports, J.P. Morgan

Outlook/Guidance: ADT raised its FY26 guidance including revenue growth of

+2% y/y (previously ~flat y/y) compared to $5.13Bn in FY25, adjusted

FCF (including interest rate swaps) growth of +30% y/y (previously+20% y/y)

compared to $863M in FY25, and adjusted EPS growth of +2% y/y (previously ~flat

y/y) compared to $0.89 in FY25.

Key takeaways: 1) Recurring monthly revenue of $360M declined -1% y/y with

gross RMR additions down -17% y/y, primarily due to Multifamily divestiture 2)

2Q26 gross revenue attrition of 13.1% increased 30bp y/y driven by higher non-pay

…