ADT reported a quarterly loss and forecast 2019 revenue and EBITDA below Wall Street estimates amid intensifying competition from fast-growing do-it-yourself home security offerings such as Google Nest.
ADT’s shares fell more than 10 percent in after-hours trading.
Security products such as Google Nest, SimpliSafe and Frontpoint can be self-installed, have a lower monthly fee and may or may not be monitored by a third party.
These products compete with ADT’s Pulse, which allows users to monitor and manage their home remotely.
ADT’s 2019 free cash flow growth forecast of 6 percent to 13 percent was a sharp deceleration from the more than 33 percent growth in 2018, as the company invests $40 million this year in initiatives such as branding to counter competition and hiring staff to expand its business.
“We will make selective brand investments and we continue to solidify ADT’s position as the leader in home automation and security,” Chief Financial Officer Jeffrey Likosar said on a conference call.
ADT has expanded its home security and commercial security offering through acquisitions over the past few months.
The company bought do-it-yourself home security provider Lifeshield for about $25 million in February and purchased Advanced Cabling Systems — a provider of fire alarm and video surveillance systems — in January.
ADT said it expects 2019 revenue in a range of $4.90 billion to $5.10 billion, largely below the average analyst estimate of $4.92 billion, according to IBES data from Refinitiv.
The company’s full-year earnings before interest, tax, depreciation and amortization (EBITDA) outlook of between $2.46 billion and $2.50 billion was also below Wall Street expectations of $2.56 billion.
ADT reported a net loss of $149 million, or 20 cents per share, in the fourth quarter ended Dec. 31, compared with a profit of $638 million, or 99 cents per share, a year earlier, when it recorded a benefit due to the U.S. tax reform.
ADT took a goodwill impairment charge of $88 million in 2018 due to underperformance of its Canadian business.
Revenue rose 7.1 to $1.19 billion.
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