By Emma Nitzsche
Last summer, ADT announced a long-term partnership with Google to create the next generation of smart home security offerings. But ADT is betting on the partnership to do more than release new products. Faced with intense competition from other home security companies, ADT is looking to Google to help grow revenue and get out of debt.
ADT reported a net loss of $48 million during the first quarter due to fewer installations during the pandemic. Total revenue for the quarter dropped 5% to 1.3 billion. So far, Google’s partnership has allowed ADT to repay $300 million in debt. This year, the company is $9.7 billion in net debt, compared with $10.3 billion in 2020.
ADT’s primary source of income is the reoccurring monthly revenue from alarm monitoring services. As of March 31, the system monitoring service made up 80% of ADT’s total quarterly revenue. Currently, ADT has 6.6 million recurring customers, and it is hoping a partnership with Google will increase the number of customers using its monitoring services.
In April, ADT started selling Google’s hardware with its professional and DIY-installed hardware. In addition, ADT’s website now features Google Nest Mini, Hub, and Hub Max products and offers consolation by ADT’s nationwide network of smart home technicians.
The two companies advertise a more robust security system because of their partnership. For instance, an ADT system can recognize Google voice commands and temperature controls. Likewise, Google’s digital assistant can operate the Nest cameras and the Home Hub through voice commands. In the future, ADT plans to use Google’s surveillance technology to assign risks to different types of home invasions.
“We are thrilled to partner with Google to provide the smart home market with a strong, differentiated product and service offering that integrates the best technology, hardware, and smart home security expertise from our two brands,” said Jim DeVries, President and CEO of ADT.
Following the agreement, Google invested $450 million in ADT, taking a 6.6% stake. In addition, each company committed $150 million for co-marketing, product development, technology, and employment training to advance the partnership.
Google benefits from the partnership by having utilizing ADT’s 5,700 technicians and strong customer service capabilities. Google began developing its home management product line in 2014 when it bought Nest for $3.2 billion. With the increase in home security competition from Amazon and Ring, the two companies hope to attract new consumers seeking adaptable technology that communicates with their current devices.
In the future, ADT hopes sales will increase with the housing boom, more people going back to work, and a quick economic recovery.
