Part 4/8:
ADT's business model is heavily reliant on recurring revenue from long-term customer contracts. Typically, residential contracts last about three years, while commercial contracts extend up to five years. After paying an upfront fee, customers are bound to monthly payments, leading to about 90% of ADT’s revenue being recurring. However, onboarding new customers entails significant upfront costs, meaning the investment in acquisition can take up to three years to break even.