ADT's (ADT) artificial intelligence-driven initiatives are translating into more stable customer attrition and lower cancellation rates, RBC Capital Markets said in a Thursday note.

The recent launch of the ADT Blu system has gained early traction with customers, while AI-driven initiatives are making operations more efficient by lowering the number of times customers interact with agents and boosting customer satisfaction, RBC analysts said.

Over the last 12 months, customer attrition has been stable at around 13.1%, with cancellations improving due to stronger customer service, driven by AI improvements, according to the note. ADT plans to expand AI deployment into call transcription and analytics, two-way SMS engagement, and AI-enabled fleet safety technology in Q3, the analysts said.

Regarding its self-install offering ADT Blu, majority of the customers are opting for a more expensive professional security package rather than the entry-level basic plan, which is a better-than-expected mix outcome, the analysts said. They noted that the company aims to increase advertising and expand retail partnerships in H2, expecting volumes to ramp in Q3 and Q4.

RBC's has a sector-perform rating on the stock with a price target of $9.

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