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Yahoo Finance’s Myles Udland, Julie Hyman, and Brian Sozzi speak with ADT CEO Jim DeVries about how the company is faring amid COVID-19.
MYLES UDLAND: All right, let's switch gears here and talk about a company that certainly had an eventful 2020 as people continue to invest in their homes, and that would be ADT. Jim DeVries is the company's CEO, and he joins us now to discuss how the business is going, Jim, and what the year has been like for you. I want to start with just your most recent quarter and the guidance that you offered, raising the revenue range a little bit, you said in your presentation, related to the third quarter, but have you seen momentum carry as we've gotten the fourth quarter underway here as well?
JIM DEVRIES: Yeah I mean, it's been a-- thanks, first, thanks for having me this morning. I appreciate the time to talk about our company. We're excited about a lot of momentum. Earlier in the year during April and May, during the height of shelter in place, the business was a little slower, and then over the course of the summer we had a real healthy summer. Of course I can't comment on Q4 updates, but I can tell you that the momentum for our business continues to be positive. The demand for our security and smart home services continues to be strong, and we feel really good about the year.
BRIAN SOZZI: Jim, you mentioned on your earnings call, you are accelerating the timeline on new Google products. So for those not familiar, Google took a 6.6% stake in ADT early this year, so accelerating that product rollout. When will those products start to hit the market, and what in fact are they?
JIM DEVRIES: Yeah, that's right Brian, we accelerated the roll out, the launch of ADT plus Google, to the third quarter of 2021. And that is a result of a collective effort from the folks at Google and our own product and marketing teams. The product that will be available at that time will be the ADT smart home ecosystem with Google hardware and devices, and also the Nest video services, all integrated into one platform. So that will include things like Google Camera, Nest Thermostat, Mesh Wi-Fi, all part of one ecosystem with one control app that will allow a customer to interact with their home seamlessly, one app, all devices.
JULIE HYMAN: And Jim, it's Julie here. So what kind of interest-- I mean, obviously people can't we can't buy that quite yet, but what interest are you hearing about from your customers? Are they aware that this partnership is coming? Do you even have people who are maybe waiting to upgrade until the Nest products are available?
JIM DEVRIES: Yeah, two things to share on that front Julie, it's a great question. Our customers, when we roll out the integration with Google, will be able to upgrade their systems, will be able to integrate the Google equipment with our legacy product. The offer that we have today is a smart home offering. We have a security-centric product, but our average install today includes 14 devices.
So today we're installing cameras, we're installing thermostats, doorbells, we're connecting lights and locks and the garage door opener all with our system. The change going forward will be that we'll market ourselves as ADT plus Google, and we'll include exclusive Google hardware in that ecosystem.
BRIAN SOZZI: Jim, my understanding is that ADT is working with Operation Warp Speed to secure a distribution center as it relates to COVID-19 vaccines. How much is that deal worth, and do you have any like that in the mix, or more deals like that in the mix with the administration?
JIM DEVRIES: Yeah, I mean, we couldn't be more excited than to have been selected for Operation Warp Speed. I think it's a number of warehouses. I think there's five or six warehouses throughout the United States where we're providing security. Those are integrated systems, so it's intrusion and video services, card access, and we feel great about it.
In terms of the overall value, we have a pretty substantial commercial business, And about $1 billion in revenue or so. About 20% of our revenues is in the commercial space. And from a materiality standpoint, the Operation Warp Speed deal is an important win for us, we feel great about it. But it won't materially impact the top line for us in commercial.
MYLES UDLAND: You know Jim, hearing you talk about some of the things that you're going to be doing with Google answers this question in part, but I am curious as we've seen a lot of people buy homes this year, a lot of people for the first time, if there are any different or specific needs that that generation of homeowner has or wants when they're setting up a security system that might differ from what was popular or available even, you know, 10 or 15 years ago?
JIM DEVRIES: Yeah, Myles, another great question. There's-- I'll frame the answer this way. There's central demand catalysts for our business right now. The first is de-urbanization, a significant move from urban centers to suburban centers. Secondly, is new home builds, very significant demand catalyst for our service, and then the last one that you just mentioned is really around smart home adoption. And much of that household formation is driven by millennials and millennials are particularly interested in smart home. So that provides a real significant opportunity for us.
Our goal is to make the home smarter, to make the home more helpful through things like temperature control and cameras, automated locks, and then of course, security systems. So the continuing trend for smart home adoption will, we think, be a tailwind for our company for years to come.
JULIE HYMAN: Jim, finally I do want to ask you a little bit about the stock price, although I know most CEOs usually say that well, I pay attention to the fundamental business, not the stock price. But the stock price has come down since your IPO in 2018. And the growth that you're talking about would suggest, you know, a rebound, perhaps, in the stock price as well. I mean, so I'm just curious how you're thinking about that and what kind of pace of growth you expect from these various initiatives and also the secular trends that you're talking about.
JIM DEVRIES: Yeah. You know, we will continue to focus on subscriber growth, our growth, Julie, will be disciplined growth. We're confident that the stock will respond to performance. Our focus is to execute on delivering great services to our customers to leverage the relationship that we have with Google and continue to grow our commercial business, which we think we can return to pre-COVID levels in fairly short order. So our focus is on execution, and we think with performance the stock will follow.
MYLES UDLAND: All right, Jim Devries is the CEO of ADT. Jim, great to speak with you this morning. Thanks so much for joining the program.
JIM DEVRIES: Thanks for your time.