ADT arrived at the middle of 2026 with two stories running in opposite directions. The top line is nearly standing still: total revenue rose just 2% to $1.31 billion, and the core recurring-monitoring line actually fell 1% as the company keeps shifting new customers to outright equipment sales under the ADT+ platform and absorbed the October 2025 divestiture of its multifamily business. Earnings fell too - GAAP income from continuing operations dropped 8% to $155 million and adjusted earnings per share was flat at $0.23. Read on any one of those lines and the quarter looks like a stable-to-stalling security business.
The second story is a cash machine working at full throttle. Net cash from operations jumped 18% to $666 million, and adjusted free cash flow including interest-rate swaps surged 48% to $406 million - the strongest point of the quarter by a wide margin. Management took that cash and returned $523 million to shareholders during the quarter, $478 million of it buying back 68 million shares, helping complete the exit of Apollo, the company's former controlling shareholder, whose legacy stake was sold in a May secondary offering in which ADT bought back 29 million shares. Through the half, the company returned $684 million in buybacks and dividends, and it used the year-to-date results to raise its 2026 outlook: roughly 30% adjusted free-cash-flow growth, about 2% revenue growth, and roughly 2% adjusted EPS growth.
The thesis that connects these two stories is capital allocation discipline. ADT is a mature, highly leveraged subscriber business that grows slowly but throws off cash, and this management team has chosen to valve that cash toward repurchasing a cheaply priced stock instead of chasing subscriber growth. Investors are being asked to accept flat revenue and 2% EPS growth in exchange for ~10x trailing earnings, a ~3% dividend, and a buyback running at a pace that retired more than 11% of common shares in a single half. That trade works only if the cash holds and leverage stays controlled - which is exactly where the quarter's two tensions, rising attrition and a debt-funded buyback, come into focus.