ADT Inc.ADT
ADT Inc. Goodwill & Intangibles Disclosure
GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill
During the third quarter of 2025, the Company recorded a goodwill impairment charge of $12 million in connection with the Multifamily Divestiture, which is reflected in SG&A, and derecognized the remaining $6 million of goodwill upon completion of the divestiture on October 1, 2025. Refer to Note 4 “Divestitures.”
The Company also had previously reported accumulated goodwill impairment losses that were associated with the Solar reporting unit, which is presented as a discontinued operation.
Other Intangible Assets
| December 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||
| (in thousands) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||||||||||||||
| Definite-lived intangible assets: | |||||||||||||||||||||||||||||||||||
Contracts and related customer relationships | $ | 6,754,810 | $ | (4,012,248) | $ | 2,742,562 | $ | 6,158,349 | $ | (3,464,926) | $ | 2,693,423 | |||||||||||||||||||||||
Dealer relationships(1) | 1,518,020 | (776,413) | 741,607 | 1,518,020 | (697,324) | 820,696 | |||||||||||||||||||||||||||||
Other(2) | 199,973 | (199,146) | 827 | 209,773 | (202,793) | 6,980 | |||||||||||||||||||||||||||||
| Total definite-lived intangible assets | 8,472,803 | (4,987,807) | 3,484,996 | 7,886,142 | (4,365,043) | 3,521,099 | |||||||||||||||||||||||||||||
| Indefinite-lived intangible assets: | |||||||||||||||||||||||||||||||||||
Trade name(3) | 1,333,000 | — | 1,333,000 | 1,333,000 | — | 1,333,000 | |||||||||||||||||||||||||||||
| Intangible assets | $ | 9,805,803 | $ | (4,987,807) | $ | 4,817,996 | $ | 9,219,142 | $ | (4,365,043) | $ | 4,854,099 | |||||||||||||||||||||||
__________________
(1)Originated from the Formation Transactions and the ADT Acquisition in 2015 and 2016, respectively. Amortized primarily over 19 years on a straight-line basis based on management estimates about attrition and the longevity of the underlying dealer network that existed at the time of acquisition.
(2)Primarily relates to trade names and other technology assets. Amortized over a period of up to 10 years on a straight-line basis.
(3)ADT trade name acquired as part of the ADT Acquisition.
Contracts and Related Customer Relationships
Contracts and related customer relationships comprise contracts with customers purchased under the ADT Authorized Dealer Program (as defined below) or from other third parties as well as customer relationships that originated from business acquisitions.
Additionally, the Company maintains a network of agreements with third-party independent dealers who sell alarm equipment and ADT Authorized Dealer-branded monitoring and interactive services to residential end users (the “ADT Authorized Dealer Program”). The dealers in this program generate new end-user contracts with customers which the Company has the right, but not the obligation, to purchase from the dealer. Purchases of contracts with customers under the ADT Authorized Dealer Program, or from other third parties, are considered asset acquisitions and are recognized based on the cost to acquire the assets, which may include cash consideration, non-cash consideration, contingent consideration, and directly-attributable transaction costs. The Company may charge back the purchase price of any end-user contract if the contract is canceled during the charge-back period, which is generally thirteen months from the date of purchase. The Company records the amount of the charge back as a reduction to the purchase price.
Purchases of contracts with customers under the ADT Authorized Dealer Program, or from other third parties, are accounted for on a pooled basis based on the month and year of acquisition. The Company amortizes its pooled contracts with customers using an accelerated method over the estimated life of the customer relationship, which is 15 years. The accelerated method for amortizing these contracts utilizes an average declining balance rate of approximately 300% and converts to straight-line methodology when the resulting amortization charge is greater than that from the accelerated method, resulting in an average amortization of approximately 65% of the pool within the first five years, 25% within the second five years, and 10% within the final five years.
Customer relationships acquired as part of business acquisitions, which primarily originated from the Formation Transactions, are amortized over a period of up to 15 years based on management estimates about the amounts and timing of estimated future revenue from customer accounts and average customer account life that existed at the time of the related business acquisition.
The change in the net carrying amount of contracts and related customer relationships during the period was as follows:
| Years Ended December 31, | |||||||||||
| (in thousands) | 2025 | 2024 | |||||||||
| Balance as of December 31, 2024 | $ | 2,693,423 | $ | 2,634,211 | |||||||
| Customer contract additions, net of dealer charge-backs | 598,127 | 586,994 | |||||||||
| Amortization | (548,988) | (527,782) | |||||||||
| Balance as of December 31, 2025 | $ | 2,742,562 | $ | 2,693,423 | |||||||
During 2025 and 2024, the weighted-average amortization period for customer contract additions under the ADT Authorized Dealer Program and from other third parties was approximately 15 years.
During 2025 and 2024, the Company completed multiple customer account purchases for an aggregate contractual purchase price of $132 million and $98 million, respectively, subject to reductions based on customer retention. The Company paid total cash at the closings in the aggregate amounts of $115 million and $81 million, respectively, which is included in dealer generated customer accounts and bulk account purchases on the Consolidated Statements of Cash Flows.
Definite-Lived Intangible Asset Amortization Expense
| Years Ended December 31, | |||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Definite-lived intangible asset amortization expense | $ | 630,936 | $ | 610,389 | $ | 613,679 | |||||||||||
As of December 31, 2025, the estimated aggregate amortization expense on our existing intangible assets is expected to be as follows (in thousands):
| 2026 | 2027 | 2028 | 2029 | 2030 | Thereafter | |||||||||||||||||||||||||||
| $ | 589,793 | $ | 507,650 | $ | 444,625 | $ | 396,975 | $ | 338,643 | $ | 1,207,310 | |||||||||||||||||||||
Goodwill and Indefinite-Lived Intangible Assets Impairment
Goodwill and indefinite-lived intangible assets are not amortized and are tested for impairment at least annually as of the first day of the fourth quarter of each year and more often if an event occurs or circumstances change which indicate it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount. The Company may perform the impairment test for its reporting unit or indefinite-lived intangible asset through a qualitative assessment or elect to proceed directly to a quantitative impairment test, however, the Company may resume a qualitative assessment in any subsequent period if facts and circumstances permit.
Goodwill
Under a qualitative approach, the Company assesses whether it is more-likely-than-not that a reporting unit’s fair value is less than its carrying amount. If the Company elects to bypass the qualitative assessment for any reporting unit, or if a qualitative assessment indicates it is more-likely-than-not that the estimated fair value of a reporting unit is less than its carrying amount, the Company proceeds to a quantitative approach.
Under a quantitative approach, the Company estimates the fair value of a reporting unit and compares it to its carrying amount. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. The Company estimates the fair values of its reporting units using the income approach, which discounts projected cash flows using market participant assumptions. The income approach includes significant assumptions including, but not limited to, forecasted revenue, operating profit margins, Adjusted EBITDA margins, operating expenses, cash flows, perpetual growth rates, and discount rates. The estimated fair value of a reporting unit calculated using the income approach is sensitive to changes in the underlying assumptions. In developing these assumptions, the Company relies on various factors including operating results, business plans, economic projections, anticipated future cash flows, and other market data. Examples of events or circumstances that could reasonably be expected to negatively affect the underlying judgments and factors and ultimately impact the estimated fair value determinations may include such items as a prolonged downturn in the business environment, changes in economic conditions that significantly differ from the Company’s assumptions in timing or degree,
volatility in equity and debt markets resulting in higher discount rates, and unexpected regulatory changes. As a result, there are inherent uncertainties related to these judgments and factors that may ultimately impact the estimated fair value determinations.
During the third quarter of 2025, the Company recorded a goodwill impairment charge of $12 million in connection with the Multifamily Divestiture, which is reflected in SG&A. Refer to Note 4 “Divestitures.”
Additionally, the Company performed a qualitative goodwill impairment test as of October 1, 2025 on its single reporting unit. The Company concluded that it is more- likely-than-not that the fair value of the Company’s reporting unit exceeds its carrying value, and as a result, the Company did not perform a quantitative impairment test or record any additional goodwill impairment losses.
The Company did not record any goodwill impairment losses in income/(loss) from continuing operations during 2024 and 2023.
The Company’s previously recorded goodwill impairment charges associated with the Solar reporting unit are presented in income (loss) from discontinued operations, net of tax.
Indefinite-Lived Intangible Assets
Under a qualitative approach, the impairment test for an indefinite-lived intangible asset consists of an assessment of whether it is more-likely-than-not that an asset’s fair value is less than its carrying amount. If the Company elects to bypass the qualitative assessment for any indefinite-lived intangible asset, or if a qualitative assessment indicates it is more-likely-than-not that the estimated carrying amount of such asset exceeds its fair value, the Company proceeds to a quantitative approach.
Under a quantitative approach, the Company estimates the fair value of an asset and compares it to its carrying amount. If the carrying amount exceeds fair value, an impairment loss is recognized in an amount equal to that excess. The estimated fair value of an indefinite-lived intangible asset is determined using a valuation approach that is based on the nature of the underlying asset.
The Company’s only indefinite-lived intangible asset is the ADT trade name. The fair value of the ADT trade name is determined under a relief from royalty method, which is an income approach that estimates the cost savings that accrue to the Company that it would otherwise have to pay in the form of royalties or license fees on revenue earned through the use of the asset. The utilization of the relief from royalty method requires the Company to make significant assumptions including revenue growth rates, the implied royalty rate, and the discount rate.
As of October 1, 2025, the Company quantitatively tested the ADT trade name for impairment. Based on the results of the test, the Company did not record any impairment losses as the estimated fair value of the trade name substantially exceeded its carrying amount.
During 2024 and 2023, the Company did not record any impairment losses on its indefinite lived intangible asset.
Definite-Lived Intangible Asset Impairment
Definite-lived intangible asset impairments were not material during 2025, 2024, and 2023.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 2, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 28, 2024 | |
| 2022 | Feb 28, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Mar 10, 2020 | |
| 2018 | Mar 11, 2019 | |
About Goodwill & Intangibles Disclosures
Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.
Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.