ADI sees continued weakness in residential AV as housing market drags on demand

MELVILLE, N.Y.—ADI Global Distribution reported record second-quarter revenue of $1.286 billion, but the company said weakness in the residential audiovisual market (AV) remains a significant headwind.

The comments came during ADI's first earnings call as an independent public company following its Aug. 3 separation from Resideo.

"Overall, demand across our commercial markets remained resilient, while residential audiovisual continued to reflect the soft U.S. housing environment," ADI President and CEO Rob Aarnes told investors. He added that the company has "yet to see signs of meaningful recovery" in the category.

Exclusive brands feel the impact

The residential AV slowdown is particularly significant because it is affecting ADI's exclusive brands portfolio, a higher-margin segment expanded through the company's 2024 Snap One acquisition. Exclusive brands represented approximately 18% of ADI's revenue in 2025.

The decline weighed on profitability during the quarter because exclusive brands are a higher-margin part of ADI's business.

"Residential AV has remained softer than we anticipated," CFO Mike Carlet said. "Exclusive brands revenue, which today is currently focused in the challenged residential market, was down nearly 3% compared to the prior year."

Preparing for a recovery

Despite the housing-related challenges, ADI said it is continuing to invest in residential AV and position the business for an eventual rebound.

"We are not standing still," Aarnes said. "We are strengthening the portfolio, investing in new products, and positioning ADI to capitalize when housing activity improves."

The company is also seeking to reduce its reliance on residential new construction by expanding select exclusive-brand offerings into commercial applications and increasing adoption among existing customers.

"We have several initiatives underway to work to improve that trajectory, including increasing attachment across our customer base, expanding selected solutions into commercial applications, and using better data and pricing capabilities to identify additional penetration opportunities," Carlet said.

Commercial security provides stability

While residential AV remains challenged, ADI's broader commercial business continues to provide stability. Approximately 70% of the company's 2025 revenue came from commercial end markets, where demand is driven largely by retrofit projects, replacement activity and technology upgrades rather than new construction.

During the quarter, Datacom revenue grew in the low teens, commercial security increased in the mid-single digits and professional AV posted low-single-digit growth.

"Growth was led by Datacom up in the low teens, commercial security up in the mid-single digits and Pro AV up in the low single digits," Aarnes said, noting those gains were "primarily offset by continued weakness in the residential audiovisual."

Looking ahead, ADI's outlook does not assume a recovery in residential AV during the second half of 2026. The company nevertheless expects full-year revenue of $4.95 billion to $5 billion, supported by continued strength in commercial markets and ongoing market share gains.

• Related: ADI begins trading as independent public company following Resideo spin-of