VVNT (2021 - Q2)

Good evening. Thank you for attending the Vivint Smart Home Second Quarter 2021 Earnings call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I would now like to pass the conference over to your host, Nate Stubbs, VP of Investor Relations with Vivint Smart Home. Thank you. You may proceed, Mr. Stubbs. Nate Stu

Good afternoon, everyone. Thank you for joining us this afternoon to discuss the results of Vivint Smart Home for the 3- and 6-month periods ended June 30, 2021. Joining me on the conference call this afternoon are David Bywater, Vivint Smart Home's Chief Executive Officer and Dale Gerard, Vivint's CFO. I would like to begin by reminding everyone that the discussion today may contain forward-looking statements, including with regard to the company's future performance and prospects. Forward-looking statements are inherently subject to risks and uncertainties that could cause actual outcomes or results to differ materially from those indicated in any such statements. We describe some of these risks and uncertainties in the Risk Factors section in our annual report on Form 10-K/A for our fiscal year 2020 and in other filings we make with the SEC from time to time. The company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. In today's remarks, we will also refer to certain non-GAAP financial measures. Reconciliation of these non-GAAP financial measures to the most comparable measures calculated and presented in accordance with GAAP, to the extent available without unreasonable effort, are available in the earnings release and accompanying presentation, which are available on the Investor Relations section of our website. I will now turn the call over to David.

Thank you, Nate, and good afternoon, everyone. I appreciate your interest in our company. Given that this is my first earnings call as the CEO of Vivint, I plan to focus my comments on 4 topics. First, I'll provide my background and outline my deep relationship with Vivint. I will then outline why I'm so bullish in the company and what I've rediscovered about them after being gone for the last 5 years. Next, I'll outline my preliminary thoughts on where I believe Vivint needs to focus over the next few years and why I believe that will position us to be an attractive differentiated investment. Finally, I'll touch upon a few key highlights of the quarter before turning the time over to Dale to take you through the details of the second quarter and our outlook for the full year. I know Vivint very well. I joined the company in the summer of 2013 as the Chief Operating Officer and spent 3 years helping the company during those pivotal years of transforming from being a security company to a fully integrated smart home platform company. As a result, I was intimately involved in skilling the company, operationalizing our service and product offerings, scaling and maturing our supply chain capabilities, collaborating closely with our direct-to-home and national inside sales leadership to expand and grow, helping hire many of the leaders that are still with the company and improving our installed service and customer care operations. It was an incredible time of innovation and maturation of the company. In May of 2016, I was asked to be the CEO of Vivint Solar, our publicly traded former sister company. During my 5 years at Vivid Solar, we rebuilt that company across almost every vector. Key achievements including expanding our go-to-market strategy to be Omni-channel, revamping our operational model to reduce costs and materially improve quality, establishing a customer-centric focus on delighting our customers and reigniting growth while ensuring that our growth rate was accretive to shareholders by taking share in the most attractive solar markets. We sold Vivint Solar to Sunrun in October of 2020, making the combined company the clear and dominant leader in the residential solar market. As a result, the market cap of Vivint Solar went from around $300 million in May of 2016 to over $5.4 billion on the last day of trading prior to closing the deal with Sunrun. Following the transaction, I remained on the Board at Sunrun and advise the combined companies until rejoining Vivint Smart Home this past June. Prior to my time with Vivint, I spent ten years running many of the largest service companies within Xerox, which were also tech-enabled and data driven. Hence, I feel right at home at Vivint and in this role as the new CEO. I pride myself on being a straight shooter as a person who enables good companies to become great companies. I also pride myself on doing what I say I will do and working to delight our customers, employees, partners and shareholders. I demand the very best from our employees and will work tirelessly to ensure that they help build a great company, the right way and create value while we protect our company, our reputation, our customers and our shareholders. As I've rejoined Vivint, it has been incredible to rediscover how amazing this company is. I was familiar with some of the advancements during my absence, but upon my return, I've been very pleased at just how much progress has been made and on so many fronts. The transition from being a company that uses cash to one that generates cash through the consumer financing agreements we have with our banking partners is a game changer. And the team has achieved that while simultaneously improving our underwriting requirements and sales processes; all while delivering consistent revenue growth. That's an incredible achievement. The team has streamlined costs and redirected that spend to fund innovation and growth. The technology has gotten so much better as well, and we believe the product and service offerings we provide to the market are incredible. I am more convinced now than ever that it's illogical for any consumer to trust the protection of their largest financial asset, their home, to inferior products that are often incorrectly scoped, improperly installed and either incorrectly or not monitored and maintained by DIY or me too solutions. Our fully integrated solution is intended to align every person within Vivint to ensure that the solutions meet or exceed customer needs that they are sold, installed and serviced correctly, resulting in an average contract term of over eights years and what we believe to be among the lowest customer attrition rates in the industry. I have also rediscovered the incredible core asset we own with an average of 15 devices per home. We own a data-rich environment that helps us not only protect our customers but also improve the efficiency of their homes and elevate their peace of mind. This proprietary solution that we design, engineer, deploy and manage, provides a platform upon which we believe we can continue to integrate and leverage additional solutions that logically link to our smart home platforms. We believe this will lead to new solutions that will create deeper value and savings for our customers. Finally, it has been a delight to reunite with so many employees and leaders that I previously worked with. They are professionals who share my deep conviction to delight our customers, to bring innovative solutions to the market that create more value for our customers, to work in a respectful and professional environment that saw bridge each other and diversity and to do the right thing in every situation every time. Vivint isn't a perfect company, like every company out there, it has room for improvement, but it is a company that learns and improves. One that has an incredible culture and DNA to win and win the right way. We will continue to learn from our mistakes and get better every day. I'm so delighted to innovate Ford with this company and with his team. Going forward, we will aim to deepen our competitive advantage within our core smart home platform and business. We expect to continue to introduce industry-leading smart home products that our customers trust and value. We believe that these products and solutions will further entrench us in the homes of our customers and allow us to create more value than our peers. We will continue to work to strengthen our balance sheet, deliver smart growth and invest intelligently to defend and expand our market position. An example of this smart growth is the recent announcement of our strategic partnership with Freedom Forever, one of the nation's largest and fastest-growing solar installers. This partnership will expand upon our smart home solution to include clean energy and will allow us to continue our exclusive arrangement with Sunrun for solar PPA's. The partnership will work to bundle a Vivint smart home solution with each new solar cell. We believe this is one of the most desired bundled solutions for solar customers, and it allows a home to truly be smart by producing smart energy and consuming energy more intelligently through our integrated smart home platform. Our goal is to enable consumers to make better decisions regarding their energy consumption as they better understand what is happening in their homes. We are just beginning to introduce a solution into select markets. But given my experience and background in both smart home and solar, I'm confident this will be another game changer. More details will be forthcoming on future calls. Another example of smart growth is our insurance pilot. We are working with a variety of large insurance companies to develop solutions for our customers that will leverage the data we have on their homes. We collect data around occupancy and other usage patterns derived from our smart home devices that will allow insurance carriers to underwrite home insurance policies more intelligently. We believe a consumer that has our solution which includes significant home occupancy data and properly working sensors that reduce the risk of fire, flood or theft catastrophes should pay less than a consumer without our solution. Our customers should save money on their home insurance because of our solutions. This is another logical growth opportunity for us to leverage our core smart home solutions and expand the value we bring to our customers. More details will follow as we work to bring these solutions to market in a controlled and effective manner. Finally, wrapping up, we delivered a strong second quarter across all key metrics; revenue, adjusted EBITDA and cash, and we expect to deliver on our full year guidance. The debt refinancing and recently completed underscores the strength of our business model and the confidence the capital markets have in our team and path forward. I appreciate the incredible teamwork across our company to deliver that result. With that, let me turn the time over to Dale to take you through the details of the second quarter and the guidance for the full year. Dale?

Thanks, David, and welcome back. This afternoon, I will provide an overview of our second quarter and year-to-date results as well as our updated thoughts on guidance for the full year. We will open the call for Q&A after my prepared remarks. I will be referencing the slides from our second quarter earnings presentation that was posted to our Investor Relations website prior to this call. Turning to Slide 6. We highlight a few of our key subscriber portfolio metrics. Total subscribers as of June 30, 2021, were $1.78 million, up 10.6% from June 30, 2020. Average monthly recurring revenue per user, or AMRRU, for the quarter increased by 2.6% versus the prior year period, driven by customers purchasing more smart home and security products at the point of sale. The combination of growth in total subscribers and growth in AMRRU lift the total monthly recurring revenue by 13.8% year-over-year to $114.8 million. Moving to Slide 7. We highlight our revenue for the second quarter and 6-month period ended June 30, 2021. For the second quarter of 2021, revenue was $355.2 million, an increase from the prior period of 16.9% or $51.3 million. The primary drivers of the revenue growth were $34.5 million from the increase in total subscribers and $5.6 million from the increase in average monthly recurring revenue per user. Our sales pilot initiatives also contributed $9.5 million to the year-over-year revenue growth. The 16.9% revenue growth in the second quarter of 2021 was more than double the growth rate for the same period in 2020. Revenue for the 6 months ended June 30, 2021, was $698.5 million, an increase of 15.1% from the 6-month period in the prior year. Like the second quarter, growth in total subscribers, AMRRU and sales pilots were the primary drivers of the revenue growth during the 6-month period in 2021. On Slide 8, adjusted EBITDA was up 3.6% in the second quarter of 2021 versus the year ago period. The adjusted EBITDA growth in the second quarter was in line with our expectations. As we have stated on previous calls, we plan to make investments in brand, innovation and information technology during 2021, with a large portion of the spend hitting in the second and third quarters. The investment spending for the 3 aforementioned items in the second quarter was roughly $11 million. The other year-over-year anomaly when comparing adjusted EBITDA growth is the impact that the COVID-19 pandemic had on our second quarter 2020 results. As a reminder, we paused our entire direct-to-home sales program for 6 weeks, which delayed the normal start of the summer selling season. Due to the noise in the second quarter of 2020 related to the pandemic, we believe it's appropriate to look at the comparison of adjusted EBITDA growth in the second quarter of 2021 versus the second quarter of 2019. The adjusted EBITDA in the second quarter of 2021 grew by 76.7% as compared to the same period in 2019, and our adjusted EBITDA margin expanded from 31.4% in the second quarter of 2019 to 43.9% in 2021. Adjusted EBITDA for the 6-month period ended June 30, 2021, was $318.1 million, up 11.4% compared to the same period in 2020 and up 62.6% compared to 2019. Adjusted EBITDA margins for the 6-month period in 2021 remained strong at 45.5%. Now moving to Slide 9. We highlight new subscriber originations during the second quarter of 2021, led by 22.4% year-over-year growth in our national inside sales channel, we installed 121,599 new subscribers during the quarter. We continue to focus on underwriting high-quality, profitable customers. For the second quarter of 2021, more than 99% of new subscribers either paid in full or financed the purchase of their equipment. For the 6-month period ended June 30, 2021, the company added 181,726 new subscribers; up 15% from the same period in 2020. Turning to Slide 10. I will cover net service cost per subscriber and net subscriber acquisition cost per new subscriber. Net service cost per subscriber for the second quarter of 2021 was essentially flat versus the second quarter of 2020 at $10.03. Our net service margin in the second quarter of 2021 remained robust at 79%. While we've seen customer interactions in our call centers and in-home service business rebound from the abnormally low levels during the height of the pandemic in the second quarter of last year, I'm pleased that our teams have been able to provide exceptional service to our customers while managing net service cost per subscriber to be essentially flat versus the same period last year. I would note that given the seasonality of how we generally put on new subscribers, particularly in the summer, we tend to see an increase in service costs during the third and fourth quarter of the year. On the right side of Slide 10, we highlight the significant reduction in net subscriber acquisition costs over the past 3 years. Net subscriber acquisition cost per new subscriber for the period ended June 30, 2021, decreased to $70, an 88.9% or $560 reduction from the prior year period, while the average proceeds collected at the point-of-sale increased to $2,144. For the period ended June 30, 2021, we are seeing the full impact of the changes we made in the upfront product and installation pricing in April of 2020, the reduction of RIC's to approximately 1% and the impact of discontinuing direct-to-home sales in Canada. Moving to Slide 11. Our last 12-month attrition rate was 11.6% for the period ended June 30, 2021; 210 basis points lower than the same period last year and a 12-quarter low for customer attrition. We are very pleased with the resilience of our subscriber portfolio, and we continue to see favorable trends in key leading indicators. In terms of cash from operating activities, we had another strong quarter, generating over $78 million. I would note that our cash flow from operations in the quarter includes the impact of the change in timing of payments associated with the new citizens agreement, the investments in brand, innovation and IT as well as cash costs associated with changes in executive management. We finished the second quarter with over $345 million of cash on hand and a solid liquidity position of approximately $661 million. In July, we completed a global refinancing of our existing debt structure, which decreased our total debt outstanding by approximately $90 million, lowered our average cost of debt and increased our revolving credit facility from $334 million to $370 million. We expect the refinancing to save the company approximately $50 million in annualized interest expense. Finally, in terms of guidance for the full year on Slide 12, the top of the slide reiterates several of the attractive fundamental characteristics of our financial model, including monthly reoccurring revenue from long-term subscriptions, a highly predictable business model and the ability to thrive in all economic environments, which we believe has been proven out during the past year. As we have reviewed on this call, our second quarter results were strong across the board. We believe there is a lot of positive momentum in our business, and we remain optimistic about the rest of the year despite a few of the following headwinds. Recent flare-ups of COVID variants across the U.S., continued disruption in the global supply chain and manufacturing environment and inflationary pressures and hiring constraints. While any or all of the above-mentioned factors could affect our performance during the second half of the year, we still expect to achieve the guidance we previously provided for 2021. As such, we are reaffirming our original guidance for the full year as follows; total subscribers in the range of 1.80 million to 1.85 million. Total revenue in the range of $1.38 billion to $1.42 billion and adjusted EBITDA between $640 million and $655 million. This concludes our prepared remarks. Operator, please open the call for Q&A.

. The first question is from the line of Rod Hall with Goldman Sachs.

This is RK on behalf of Rod. Nice results. David, could you talk about what are the areas that you think Vivint needs to improve the most?

Sure. Well, thanks for the question and the interest in the company. I think for us as a company, there's still a lot of areas where we can improve upon around maintaining value for our customers. So one of the key things that the team has done a great job on is you can see it manifest in attrition and also the value that we're bringing to the customer around the number of devices in the home and just what they pay us for that solution. I think the thing I'm most interested in is to continuing to figure out how we bring more value to them. So when you think about the adjacent growth opportunities, they're all focused on helping consumers save more money, having us have more solutions in the home, having it be more centric to who they are. And then they're just enjoying the home, being safe in the home, having the home be more efficient. And to me, that all would draw upon this core asset that we which is this smart new platform, which is proprietary to us. We own it. We own the technology, but we own the install, we own the maintenance and the servicing; it's a fully integrated package. So I'm really excited about the stuff that we've already got going. These pilots and insurance are very logical. It can really help our customers see additional value in their wallets by leveraging our system more. And this pilot with this partnership we have with Freedom is another extension and makes the smart home that much smarter. And I think it will also bring additional savings to consumers. So I think we continue to push down that avenue, we'll bring more value to the customers. And I've been really pleased with how the technology suite and the focus on quality has really tried to manifest itself with the customers. I mean, we don't talk about what our servicing costs are in Q2. If you get really into that, that's really incredible. To be flat to where we were last year despite the fact that call volumes are up and kind of full cost are back in the system to service those customers to see the manifestation in that low-cost per month per subscriber is really incredible because there's a lot of things that have come to fruition around the technology stack being that much more effective I mean the number of calls that we're getting from consumers is much less than we had before around all of it, even though we've increased more cameras in the home. And so I think just the operational and technical sophistication of our solution has improved, we still see room for improvement. The way we install our solutions, Day 1, and the reduction in the number of issues that's been resolved has gone down. There's always room for improvement. And then for us to be able to articulate the value that we can share to our customers as they trust us as we expand our relationship with them; we'll continue to improve. And then we're also looking for additional ways to meet the customer on how they want to engage with us. So we love our direct-to-home team. It's phenomenal. It is the right answer for so many customers. We love our inside sales team, the right answer for silent customers. And we're always looking at other partnerships in other ways that we can meet the customers. So a lot of improvement, but I'm really pleased with what I'm inheriting and what the team has already accomplished and it will minimally have.

Appreciate all the color, David. Are you seeing any difference in the spending environment or attrition as we enter reopening?

On what do you mean? Attrition with the customers or -- can you just elaborate a bit on just...

Yes, just either the demand environment in terms of your new subscriber adds or attrition within your customer base. Is there any change as we move into reopening?

We're seeing more customers purchasing cameras. So it's interesting, there's definitely been a shift more and more of that adoption with our customers. And so the number of devices we have in the home has actually been going up, not down. So that's been very, very positive. And then you try to see more and more people pulling the solution for inside sales. So you're seeing -- I mean more people in the home, thinking about their home, I think that's here to stay. And so we've seen some stronger demand, you see that inside sales is really strong; 20% growth. So that's a very favorable thing. Once again, we're trying to be customer-centric and give them a solution and meet them where they want us to meet. So I think it's very positive. So and our attrition, you've seen our trend there. They're actually going in the right direction. So I think the model is being -- is proving out to be very robust. It was robust before the pandemic. It's been very robust during the pandemic. And as we've emerged from the pandemic, it's very robust. So I think there's a validation there of what we're doing. And then for me, like I said before, I think the fact that we own the technology stack, both the back end and the solution stack and the install and service stack, as we continue to refine that, we're delighting customers more at every point of interaction with them. So I think that the customers are more pleased, which bodes well for us around referrals and put them and continue to trust us. So I'm seeing positive trends. I'm not seeing negative trends. I'm seeing positive trends.

Great. And last question from me. Were you supply-constrained in the quarter? And how much cost inflation are you seeing?

Yes. I read an article the other day that said like 97% or 95% of all of the global Fortune 500 are having some kind of supply constraints. Were we impacted? We were. But the team did an incredible job of managing through it. So -- and that manifested in us maintaining our full year guidance. So were we impacted? Yes. Did the team worked hard and with our partners to find solutions? They did. Were we able -- or we are confident that we're able to navigate through that for the year, we are -- we've reiterated organic for the full year. But it has been a challenge. Shout out to our entire team who has worked tirelessly to make that happen. And to our partners, we really appreciate our partners that cited with us and help us and support us in the process. But I think it was a function of good planning, I think, deep relationships and also there's some good old-fashioned grit by our team to find solutions. And so we've navigated through it so far and feel very confident for the balance of the year. So impacted, but managed through and that's what you guys pay us to do. And that's what the team's delivered on.

And then I'll answer there, the cost in terms of additional shipping costs and all of those are factored into our full year guidance. So that doesn't change what we're saying for the full year.

The next question is from the line of Erik Woodring with Morgan Stanley.

David, very nice to meet you over the phone here, looking forward to working with you into the future. I guess if I wanted -- if I started just at the top here. So over the last few years, you've generated about 48% of your annual revenue in the first half of the year. Right now, based on your annual guidance, you're trending at about 50%. So a little bit more front-end loaded of a year. Is that how we should think about it the front half of the year being more front-end loaded? Or would you say your guidance for the full year is a bit conservative, and you think you can achieve that? And if so, what are the major constraints in the back half of the year, if any? And then I have a follow-up.

Great, good to meet you, I look forward to meeting in person and definitely working with you. I think 48%, 50%, not a big difference, but there's a difference. I think the key among that is our inside sales is a year-round model. So with that strong growth you see in inside sales, you probably see a bit that flattening because we're working -- the demand for our solution isn't just the seasonal demand, it's a year-round demand. So I think with the growth there in inside sales, that's not surprising. So you might see a bit more of a flatting between the first half and the second year. But Dale, I'll turn it to you to see if you have anything you want to -- on that, but that's the natural hydraulics. So the mix of business.

Yes. Yes. I think you're right, David. I mean, if you think about, Erik, as we've said, we got this long-term subscription business, recurring revenues. So we come into the full year into each year, we know we've got 85%-plus of our revenue kind of for that year. And then as David said, because we're seeing kind of this more kind of roundable volume or new subscribers come on because of that inside sales channel, we'll see it just probably a little shift. But again, I don't -- 2%. It's -- some of it, by the way, it's also related to the fact that we have the sales pilots. And in previous years, those sales pilots were kind of really insignificant in terms of the dollars. I think we said we called out the sales files for the first half of the year were about $15 million of the year-over-year increase. And some of these pilots that David talked about earlier around insurance and solar continue to grow, and we continue to look at other initiatives and adjacencies that aside from kind of what I call the core smart home that that revenue mix may change a little bit in terms of whether the growth in the first half of the year versus the second half.

Yes. And I think the final thing is, as Dale mentioned a bit on the adjusted EBITDA, we did have a bit of a delay last year in our direct home. Directly home is super important to us. It's a super valuable channel. But it was a bit delayed last year, too. And this year, it went out on schedule. So you probably saw a bit more -- that may have accounted for it as well, but I think will it evolve over time? Yes, it will. But we think it's all good evolution where all of our channels will grow and looking forward to that.

Okay. That color is really helpful. Maybe one follow-up will just be similar to RK, just in terms of thinking about component constraints in the supply chain. So your inventory balance came down fairly considerably this quarter. If we look back at the last 2 years, it's come up. Is there -- or maybe I'd add to that, you see other companies trying to build inventory ahead of what could be cost -- further cost inflation or further constraints. So just any thoughts there on how you expect your inventory on the balance sheet to trend over time? Are there any issues? Or when it comes to issues procuring components, are they acute in any certain products or -- No, that's great. And then maybe just a quick one to end it there is, Dale, you were talking about servicing costs and how you guys have been able to basically serve the higher call volumes and maintain your higher service margins. So just curious, do you think high 70% is more sustainable now versus kind of mid-70s before? Or is mid-70s still how we should think about the more kind of run rate net service margins? And that's it for me.

Yes. Thanks, Erik. I mean, I'm still -- the way I look at this, the way I'm still modeling this one, I think our operations team and our innovation team -- because it's really -- because we have this integrated platform, we all are working together to make sure we're providing the best experience and the best products to the customers that we can. I'm still saying in terms of how I think about it, we're probably in that mid to maybe -- maybe it's 76% or 77% service margin, but I'm still thinking for your model and how I've been thinking about it still kind of in that kind of mid-70 range.

The next question is from the line of Brian Ruttenbur with Imperial Capital.

Great. A couple of quick questions. First of all, David, welcome. And I just have a couple of questions for you, then maybe some questions that you may want to pawn off. But you mentioned attacking some issues facing the company as you step into this new role. Can you talk about maybe selling practices that Vivint has had in the past in terms of current and past lawsuits and other things like that and how you plan to address that? And then I have a follow-up.

Sure. So as I mentioned in my comments, we're not perfect. No company is -- all the companies that I've run over the time, you always find areas for improvement and this is an area for improvement. The company actually addressed a lot of these issues and they've been working on for the past several quarters. So they're being proactive on trying to close some of those gaps that they had and have done a good job. They've worked closely with government agencies to prove that they close those gaps. And we have an ongoing compliance that we've invested heavily to do that. So there is a -- there's a very regular cadence trust me, where we have the team report out, and we have independent others working with us and also we make up our internal audit team. And they're very, very attentive to making sure we address the identify gaps and keep those gaps closed as well as continue to test all of our processes moving forward. So I think the level of investment there is significantly higher. And I'm very pleased with the results that I've seen from all of our audits and appreciate all the folks that have been involved. And I also, it's really important to mention a specific company. We've got really good people. Unfortunately, every company has a few bad apples and you have to be diligent in making sure that, that apple is not with the company. And you have to be diligent in making sure that we're always retesting, retesting, retesting. And so I know the culture of this company and it's a good company and people are great. So I think we've done a really good job of addressing those issues. We will continue to be very diligent about doing that. We've just hired a new chief compliance officer, he'll be joining shortly. Very excited about the resume background to this individual and what they'll bring to further augment our efforts there. That compliance officer reports could happen to our Audit Committee and also to me. So very excited for this person to continue to elevate and be the industry leader on this.

That's great. And then...

I hope that answers your question, but I take this very serious, Brian. So if anyone ever has any questions about that, talk to me personally, this is a very important matter. And I know that resonates with my entire leadership team and our entire committee.

That's great. Maybe an easier question or harder, whatever way you want to look at it is attrition. Right now, you're at a record low, 11.6%. Where can this go? Can it hold fast here? Can you get below 11%, can you get into the 10s? What is realistic over the next couple of quarters, next year?

You know, we'll get into this more. I'm actually really pleased where it's at. I was the COO of this company. and we focused on attrition then. And I think where the company is at right now, I'm a really proud of what they've done. So I'll continue to do some modeling with the team and look into this one and figure out what we want to do as far as trade-offs. So true to low attrition, that and obviously, high attrition can be good and bad, but we compared it to our peers and I compare it to attrition some of our DIY competitors, and I think we're in we're half theirs. So compared to our peers, we're doing really, really well. So hey, if we can get to below 11%, into 10%, fantastic. You got to know what the costs are. So I don't have a very good answer for you right now. We'll look into it. But we'll try to always make the right decision and the right trade-offs. Dale, you got anything you want to add to that?

. The next question is from the line of Michael Fisher with Evercore.

Wanted to get a little more detail around the Sunrun deal, specifically looking at the go-to-market strategy there? Is this going to be more Sunrun sales force selling Vivint equipment or the other way around or a bit of a mix?

I'll take that one as well. Michael, look forward to getting to know you as well. This is David. So the relationship, we've always had -- the last few years been selling solar in certain assets. There's a bundled desire by our customers to do both. And so we have been doing some products here in there. The relationship we have is with Freedom Forever. Freedom Forever that we just announced is one of the largest installers in the country. Prior to this relationship, we had a commitment with Sunrun where we were selling some PPAs from them. So that relationship will continue. Continue to do our exclusive PPA through Sunrun. I know the company very well. They bought my old company and I'm very confident in their ability to deliver and quality of product they bring. Freedom also sources their PPAs through Sunrun. And so it was a very natural extension for us to partner with Freedom, who has a very broad array of installation people across the country. And the key to this relationship is they are also very committed to installing a Vivid smart home package of each of their solar installs. We get the true definition of a smart home. Smart home has smart production of power on the roof and really intelligent consumption of power in the home. And our platform, I think uniquely positions to do that. And the integration that we'll do through the apps and the information we'll bring to bear for our customers, it's really compelling. So there is this group of partners that are working together around financing, which is through Sunrun for the PPAs and Mosaic for the loans. We're working with Freedom Forever on the installation. And service at the solar base. And of course, we will take all of the smart home, the relationship with this smart home. So we think it's -- we will sell that ourselves and there are dealers that work for Freedom Forever and for Sunrun who can also sell. I think it's very compelling to the consumer. So we're excited about it. We're very measured in how we are investing to make sure we have really good integration. We measured in how we roll it out, make sure we're delighting customers. There will be a learning curve, learn quickly and make sure we're delighting customers. But it is a very exciting partnership. We think it's with the right partners. We know that. And we think that it is going to address very high bundling a : And well go back to our key thesis with having to delight customers and add more value to the customers. So in our minds, it checks all the boxes and we're looking forward to it.

And then the other thing I wanted to dig into a little bit was the national marketing campaign. I think it's been going around 6, 7 months now. And I was just curious, maybe reflect on it a little bit. You think it's been successful so far? And how are you thinking about your marketing spend going forward?

Yes. I'll take that one as well. Dale is shy, he's afraid to take any hard questions. So I'll take them all. No, I think it's -- we're pleased so far. We're pleased so far with the results and the early data. Marketing and branding has a long gestation cycle and a long payback period. But we've seen -- it's really interesting in the market that we forward indexed on, on a lot of the national marketing campaigns. We've seen an improvement in our average sales per professional salesperson. So we're still collecting all the data. We're still working on value at all. We'll continue to make revisions to that. But the early days have been encouraging, but we're still learning. But definitely are encouraged about what we see.

Thank you, Mr. Fisher. . There are no additional questions waiting at this time. I would like to pass the conference back over to David Bywater for any closing remarks.

Great. I appreciate that. Thank you. Guys, we appreciate your interest. We'll continue to grow the company, make good decisions and work to create value for our customers and our shareholders and our employees. I think it was a solid, solid quarter. If we think about growth on revenue, we are 17%, subscribers up by 13%. That's really, really impressive. Attrition is at 12 quarter low. Our SAC is now sub-$100 and $70; an amazing -- came down almost 90% from last year. Servicing costs are at $10.00 and that is with a fully normalized workload, and that's a function of the benefits from our innovation team and our operations team really working together to bring down costs. Our EBITDA growth, if you put on a true apples-to-apples campaign, 2019 is up considerably. So I think the cost management really tip my hat to the team on what they've done there; quite incredible. Cash is positive. It's accretive. It's pretty amazing. And once again it could normalize, I think it's a really impressive level. We further de-levered the company. We're now at 2.9 and 2.8 in terms of debt; continue to trend down, which is nice. And the refinancing, I thought, was an incredible endorsement of what the team has done in the business model. And we've also -- we're reaffirming our full year guidance. We've done that while also advancing our strategic initiatives around logical or extensions of solutions to our customers that provide value to them and deepen our relationship. So pretty pleased with all of that. We have a lot of work to do still. We'll keep our heads down and keep driving forward. So thank you for your interest in the company and until we talk again.

That concludes the Vivint Smart Home Second Quarter 2021 Earnings call. I hope you all enjoy the rest of your day.