Summary of Frontdoor (FTDR) FY Conference Call - May 13, 2025 Company Overview - Frontdoor is the only publicly traded home warranty company, operating on a subscription-based model that protects homeowners from inevitable breakdowns in their homes [4][5] - The company covers 29 systems and appliances, including HVAC equipment, and offers three service plans [5] - Frontdoor has a member base of over 2,100,000 and aims to leverage this for non-warranty initiatives, including partnerships and new service programs [6] Core Business and Financial Performance - The company has seen a record year of profitability and expects continued growth in 2025, having stabilized its core home warranty business [9][12] - Frontdoor reported $117 million in free cash flow in Q1, with projected revenues exceeding $2 billion [12] - The company has diversified its revenue streams and improved customer retention rates, achieving record levels [11] Industry Insights - The home warranty industry has been stagnant, with a total addressable market (TAM) of 15 million home service plans in the U.S. [14] - The company aims to increase market penetration through innovative marketing and improved value propositions [17][18] - Frontdoor has introduced a video chat feature that allows homeowners to troubleshoot issues, resulting in 17% of users resolving problems without needing a service call [16][50] Non-Warranty Initiatives - Frontdoor has launched a new HVAC program projected to become a $100 million business by 2025, offering members significant discounts on new equipment [20][22] - The company is expanding its non-warranty services to include water heaters and roof repairs [20] Macro Environment and Tariffs - In Q1, Frontdoor experienced zero inflation and no immediate impact from tariffs, although future price increases from suppliers are anticipated [26][28] - The company has built protections into its guidance to account for potential tariff impacts and inflation [32][33] Customer Acquisition Channels - The real estate market has faced challenges, with a forecast of 4 million homes sold in 2025, down from 6 million in previous years [37][38] - Direct-to-consumer (DTC) channels have shown organic growth, with a 4% increase in Q1 and a total growth of 15% including the acquisition of two ten [41][42] Pricing Strategy - The average price of a home service plan has increased from over $700 to nearly $900, with a 4% price increase planned for the year [60] - Frontdoor employs a dynamic pricing strategy that allows for tailored pricing based on individual customer circumstances, contributing to strong retention rates [62][64] Acquisition of Two Ten - The acquisition of Two Ten is expected to yield $10 million in synergies in the first year, with potential for $30 million in the coming years [56] - This acquisition enhances Frontdoor's access to new markets and customer bases, particularly in the home structural warranty sector [54] Retention and Member Experience - The company has achieved an all-time high retention rate, driven by improved contractor relationships and a focus on member experience [57] - Approximately 84% of members are on monthly auto-pay, which supports renewal rates [59] Capital Allocation Strategy - Frontdoor maintains a strong financial profile with a leverage ratio of 1.9, allowing for aggressive share repurchases and continued investment in growth [73][75] - The company has increased its share repurchase program from $180 million to over $200 million [73] Future Outlook - Frontdoor is focused on leveraging its core business while expanding into non-warranty services, aiming for a more diversified revenue stream [85][86] - The management expresses confidence in the resilience of its business model and the potential for future growth through innovation and partnerships [85][86]

Core Viewpoint - Frontdoor (FTDR) is experiencing solid improvement in earnings estimates, which is likely to positively impact its stock price momentum [1][2]. Earnings Estimate Revisions - Analysts show growing optimism regarding Frontdoor's earnings prospects, reflected in upward revisions of earnings estimates [2]. - The current quarter's earnings estimate is $1.35 per share, representing a 6.3% increase from the previous year [6]. - Over the last 30 days, the Zacks Consensus Estimate for Frontdoor has increased by 11.09%, with three estimates moving higher and one lower [6]. - For the full year, the expected earnings are $3.29 per share, indicating a 1.79% decrease from the prior year, but there is a positive trend in estimate revisions [7]. Zacks Rank - Frontdoor currently holds a Zacks Rank 2 (Buy), indicating promising estimate revisions and a favorable investment outlook [8]. - The Zacks Rank system has a strong track record, with Zacks 1 Ranked stocks averaging a 25% annual return since 2008 [3]. Stock Performance - Frontdoor shares have increased by 43.1% over the past four weeks, suggesting strong investor confidence in its earnings growth prospects [9].

[Part I. Financial Information](index=4&type=section&id=Part%20I.%20Financial%20Information) [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The company presents its unaudited condensed consolidated financial statements for the quarter ended March 31, 2025 [Condensed Consolidated Statements of Operations and Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) Q1 2025 revenue grew 12.7% to $426 million, with net income rising to $37 million Condensed Consolidated Statements of Operations (Q1 2025 vs Q1 2024) | (In millions, except per share data) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | **Revenue** | **$426** | **$378** | | Gross Profit | $235 | $195 | | Income before Income Taxes | $48 | $45 | | **Net Income** | **$37** | **$34** | | **Diluted Earnings per Share** | **$0.49** | **$0.43** | | Comprehensive Income | $30 | $35 | [Condensed Consolidated Statements of Financial Position](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Financial%20Position) Total assets reached $2.121 billion as of March 31, 2025, while shareholders' equity decreased to $198 million Condensed Consolidated Statements of Financial Position (As of March 31, 2025) | (In millions) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $506 | $421 | | Goodwill | $964 | $967 | | Intangible assets, net | $435 | $448 | | **Total Assets** | **$2,121** | **$2,107** | | **Liabilities and Shareholders' Equity** | | | | Total Current Liabilities | $414 | $369 | | Long-Term Debt | $1,164 | $1,170 | | **Total Liabilities** | **$1,923** | **$1,868** | | **Total Shareholders' Equity** | **$198** | **$239** | | **Total Liabilities and Shareholders' Equity** | **$2,121** | **$2,107** | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations increased to $124 million in Q1 2025, with financing activities using $85 million Summary of Cash Flows (Q1 2025 vs Q1 2024) | (In millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | **Net Cash Provided from Operating Activities** | **$124** | **$84** | | Net Cash Provided from (Used for) Investing Activities | $47 | $(10) | | Net Cash Used for Financing Activities | $(85) | $(21) | | **Cash Increase During the Period** | **$85** | **$53** | | Cash and Cash Equivalents at End of Period | $506 | $378 | [Notes to the Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the 2-10 HBW acquisition, revenue disaggregation, debt, and share repurchase activities - Frontdoor is the leading U.S. provider of home warranties with approximately **2.1 million active home warranties** as of March 31, 2025[24](index=24&type=chunk) - On December 19, 2024, the company acquired 2-10 HBW for aggregate cash consideration of **$585 million**[53](index=53&type=chunk)[55](index=55&type=chunk) - The company operates as **one operating and reportable segment**, with the CEO as the Chief Operating Decision Maker[69](index=69&type=chunk)[70](index=70&type=chunk) - In Q1 2025, the company repurchased **1.44 million shares for $70 million** under its $650 million share repurchase program[88](index=88&type=chunk)[89](index=89&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a 13% revenue increase, improved Adjusted EBITDA, and strong liquidity in Q1 2025 [Results of Operations](index=29&type=section&id=Results%20of%20Operations) Q1 2025 revenue grew 13% to $426 million, with Adjusted EBITDA rising significantly to $100 million Revenue by Customer Acquisition Channel (Q1 2025 vs Q1 2024) | (In millions) | Q1 2025 | Q1 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Renewals | $333 | $298 | $35 | 12% | | Real estate | $27 | $27 | $— | — | | Direct-to-consumer | $32 | $36 | $(3) | (9)% | | Other | $33 | $17 | $16 | 95% | | **Total** | **$426** | **$378** | **$48** | **13%** | - The increase in revenue was primarily due to improved price realization and the **2-10 HBW Acquisition**, which contributed approximately **$41 million** in revenue[127](index=127&type=chunk)[128](index=128&type=chunk) - Cost of services rendered increased by only **4% to $191 million**, despite a 13% revenue increase, due to cost management improvements[131](index=131&type=chunk) - Selling and administrative expenses rose **12% to $151 million**, driven by increased personnel costs from the 2-10 HBW acquisition[132](index=132&type=chunk) Reconciliation of Net Income to Adjusted EBITDA | (In millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | **Net Income** | **$37** | **$34** | | Depreciation and amortization expense | $23 | $9 | | Restructuring charges | $1 | $— | | Acquisition-related costs | $2 | $— | | Provision for income taxes | $11 | $11 | | Non-cash stock-based compensation expense | $8 | $7 | | Interest expense | $19 | $10 | | **Adjusted EBITDA** | **$100** | **$71** | [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity position with $506 million in cash and $248 million in credit availability - As of March 31, 2025, the company had **$506 million in cash** and an available borrowing capacity of **$248 million** under its Revolving Credit Facility[144](index=144&type=chunk) Cash Flow Summary (Q1 2025 vs Q1 2024) | (In millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided from operating activities | $124 | $84 | | Net cash provided from (used for) investing activities | $47 | $(10) | | Net cash used for financing activities | $(85) | $(21) | - The Board of Directors approved a new **$650 million share repurchase authorization**, with **$539 million remaining** available as of March 31, 2025[148](index=148&type=chunk) Free Cash Flow Reconciliation | (In millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided from operating activities | $124 | $84 | | Property additions | $(7) | $(10) | | **Free Cash Flow** | **$117** | **$73** | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports no material changes to its market risk exposures since its 2024 Form 10-K - There have been **no material changes** to the market risk from the risks described in the 2024 Form 10-K[163](index=163&type=chunk) [Item 4. Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls were deemed effective, excluding the recently acquired 2-10 HBW from the assessment - The CEO and CFO concluded that the company's **disclosure controls and procedures were effective** as of March 31, 2025[164](index=164&type=chunk) - Management has **excluded an assessment of internal controls for the recently acquired 2-10 HBW** from its evaluation[165](index=165&type=chunk) [Part II. Other Information](index=38&type=section&id=Part%20II.%20Other%20Information) [Item 1. Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) Current legal proceedings are not expected to have a material adverse effect on the company's business - Details regarding legal proceedings can be found in **Note 8** of the financial statements[166](index=166&type=chunk) - Management believes the disposition of pending legal actions is **not expected to have a material adverse effect** on the company[61](index=61&type=chunk) [Item 1A. Risk Factors](index=38&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors were reported during the first quarter of 2025 - There have been **no material changes** to the risk factors disclosed in the company's 2024 Form 10-K during Q1 2025[167](index=167&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=38&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased 1.44 million shares for $70 million in Q1 2025 under its repurchase program Issuer Purchases of Equity Securities (Q1 2025) | Period | Total number of shares purchased | Average price paid per share | Maximum dollar value that may yet be purchased (in millions) | | :--- | :--- | :--- | :--- | | Jan. 1 - Jan. 31, 2025 | 407,522 | $57.76 | $585 | | Feb. 1 - Feb. 28, 2025 | 279,363 | $58.92 | $569 | | Mar. 1 - Mar. 31, 2025 | 753,198 | $39.77 | $539 | | **Total** | **1,440,083** | **$48.58** | **$539** | [Item 6. Exhibits](index=40&type=section&id=Item%206.%20Exhibits) This section lists filed exhibits, including CEO/CFO certifications and Inline XBRL documents - The exhibits filed with this report include **CEO and CFO certifications** and Inline XBRL data files[172](index=172&type=chunk)

Group 1 - Frontdoor reported quarterly earnings of $0.64 per share, exceeding the Zacks Consensus Estimate of $0.37 per share, and up from $0.43 per share a year ago, representing an earnings surprise of 72.97% [1] - The company achieved revenues of $426 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 2.61% and increasing from $378 million year-over-year [2] - Frontdoor has consistently surpassed consensus EPS estimates over the last four quarters, achieving this four times [2] Group 2 - The stock has underperformed, losing about 24.8% since the beginning of the year, compared to the S&P 500's decline of 5.3% [3] - The current consensus EPS estimate for the upcoming quarter is $1.21 on revenues of $588.81 million, and for the current fiscal year, it is $3.01 on revenues of $2.02 billion [7] - The Zacks Industry Rank for Building Products - Miscellaneous is in the bottom 40% of over 250 Zacks industries, indicating potential challenges for stock performance [8]

Financial Data and Key Metrics Changes - Revenue increased by 13% to $426 million, net income grew by 9% to $37 million, and adjusted EBITDA rose by 41% to $100 million [4][18][19] - Member count grew by 7% to 2.1 million members [5] - Gross profit increased by 21% to $235 million, with a gross profit margin improvement of 380 basis points to a record 55% [20] Business Line Data and Key Metrics Changes - Direct-to-Consumer (DTC) channel member count increased by 15% to 310,000, with organic growth of 4% [7][10] - Real estate channel faced challenges, with a 6% decline in first-year organic member count [11][12] - Non-warranty revenue is growing, with expectations for HVAC program revenue at $105 million and new home structural warranty revenue at $44 million for 2025 [15][16] Market Data and Key Metrics Changes - Existing home sales decreased by 5.9% to an annual rate of 4.02 million, while the median sales price for existing homes rose to $403,700 [11] - The 30-year mortgage rate averaged nearly 7% as of mid-April, contributing to consumer market challenges [11] Company Strategy and Development Direction - The company’s strategic priorities include growing the member base, scaling revenue from non-warranty business, and optimizing the integration of the 2-10 Homebuyers Warranty [5][6] - The marketing campaign and relaunch of the American Home Shield brand are yielding positive results, particularly among millennials [9] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating macroeconomic challenges, including high interest rates and declining consumer confidence [5][29] - The company raised its full-year revenue outlook by $20 million and adjusted EBITDA by nearly $50 million, reflecting strong operational performance [18][34] Other Important Information - The company reported a record free cash flow of $117 million for the first quarter, with a free cash flow yield of 9% [27] - The company plans to increase share repurchases to at least $200 million for 2025, indicating confidence in its valuation [31] Q&A Session Summary Question: Impact of tariffs on HVAC equipment - Management indicated minimal inflation in Q1, with HVAC costs actually down, and expressed confidence in managing potential tariff impacts [42] Question: Trends in service requests - The increase in service requests was primarily driven by the addition of the 2-10 Homebuyers Warranty, with expectations to normalize around 4 million for the year [53][54] Question: Sustainability of promotional pricing strategy - The company is adopting a pulsing promotional strategy, which is expected to be sustainable while prioritizing member growth [56][57] Question: Drivers of outperformance in renewals revenue - Outperformance was attributed to stronger renewals and non-warranty revenue, particularly from HVAC and Moen partnerships [62][63] Question: Confidence in raising gross margin guidance - The company raised its gross margin guidance based on strong Q1 performance and expectations of flat inflation, while accounting for potential tariff impacts [76][80]

Financial Data and Key Metrics Changes - Revenue increased by 13% to $426 million, net income grew by 9% to $37 million, and adjusted EBITDA rose by 41% to $100 million [4][18][26] - Member count grew by 7% to 2.1 million members, with a significant increase in the use of preferred contractors to 85% of services performed [5][18] Business Line Data and Key Metrics Changes - Direct-to-Consumer (DTC) channel saw a 15% increase in member count to 310,000, driven by organic growth of 4% and the acquisition of 02/10 [6][9] - Real estate channel faced challenges with a 6% decline in organic member count, despite signs of improving conditions in the housing market [10][11] - Non-warranty revenue is growing, with expectations to generate $105 million from HVAC sales and $44 million from new home structural warranty business in 2025 [15][31] Market Data and Key Metrics Changes - Existing home sales decreased by 5.9% to an annual rate of 4.02 million, while the median sales price for existing homes rose to $403,700 [10] - The 30-year mortgage rate averaged nearly 7%, contributing to a challenging environment for homebuyers [10] Company Strategy and Development Direction - The company’s strategic priorities include growing the member base, scaling revenue from non-warranty business, and optimizing the integration of 02/10 Homebuyers Warranty [5][31] - The marketing campaign and relaunch of the American Home Shield brand are effectively targeting millennials and improving conversion rates [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating macroeconomic challenges, including high interest rates and declining consumer confidence, while maintaining strong operational performance [5][35] - The company raised its full-year revenue outlook by $20 million and adjusted EBITDA by nearly $50 million, reflecting strong performance and expectations for continued growth [17][31] Other Important Information - The company reported a record free cash flow of $117 million for the first quarter, with a free cash flow yield of 9% [26][28] - The net leverage ratio is approximately 1.9 times, below the long-term target of 2 to 2.5 times, indicating a strong financial position [28] Q&A Session Summary Question: Impact of tariffs on HVAC equipment - Management indicated minimal inflation in Q1, with HVAC costs actually down, and expressed confidence in managing potential tariff impacts [41] Question: New refrigerant impact on repairs - The company is currently managing the transition to new equipment standards and has secured old equipment, which has been beneficial [42][43] Question: Service request trends - The increase in service requests was primarily due to the addition of 02/10, with expectations to normalize around 4 million for the year [52] Question: Sustainability of promotional pricing strategy - The company has shifted to shorter promotional events and believes this strategy can be sustained while prioritizing member growth [54][55] Question: Drivers of outperformance in renewals revenue - The outperformance was attributed to strong non-warranty revenue and improved member experience leading to higher renewal rates [61] Question: Confidence in raising gross margin guidance - The company raised its gross margin guidance based on strong Q1 performance and expectations of flat inflation, while accounting for potential tariff impacts [75][78]

Financial Data and Key Metrics Changes - Revenue increased by 13% to $426 million, with net income growing by 9% to $37 million and adjusted EBITDA rising by 41% to $100 million [5][19][20] - Member count grew by 7% to 2.1 million members, with a notable increase in the use of preferred contractors to 85% of services performed [6][19] Business Line Data and Key Metrics Changes - Direct-to-Consumer (DTC) channel saw a 15% increase in member count to 310,000, driven by organic growth of 4% and the acquisition of 02/10 [8][11] - Real estate channel faced challenges, with a 6% decline in first-year organic member count, despite signs of improving conditions in the housing market [12][13] Market Data and Key Metrics Changes - Existing home sales decreased by 5.9% to an annual rate of 4.02 million, while the median sales price for existing homes rose to $403,700 [12] - The 30-year mortgage rate averaged nearly 7% as of mid-April, contributing to consumer hesitance in the market [12] Company Strategy and Development Direction - The company’s strategic priorities include growing the member base, scaling revenue from non-warranty businesses, and optimizing the integration of the 02/10 Homebuyers Warranty [6][7] - The marketing campaign and relaunch of the American Home Shield brand are yielding positive results, particularly among millennials [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating macroeconomic challenges, including high interest rates and declining consumer confidence, while maintaining strong operational performance [6][36] - The company raised its full-year revenue outlook by $20 million and adjusted EBITDA by nearly $50 million, reflecting strong financial performance [19][33] Other Important Information - The company reported a record free cash flow of $117 million for the first quarter, with a free cash flow yield of 9% [28] - The company plans to increase its share repurchase target to at least $200 million for 2025, indicating confidence in its valuation [32] Q&A Session Summary Question: Impact of tariffs on HVAC equipment - Management noted minimal inflation in Q1, with HVAC costs actually down, and expressed confidence in managing potential tariff impacts [43] Question: Trends in service requests - The increase in service requests was primarily driven by the addition of 02/10, with expectations to normalize around 4 million for the year [54] Question: Sustainability of promotional pricing strategy - The company is adopting a pulsing promotional strategy, which they believe can be sustained while prioritizing member growth [57] Question: Drivers of outperformance in renewals revenue - Outperformance was attributed to stronger renewals and improved member experience, with contributions from both warranty and non-warranty segments [63] Question: Confidence in raising gross margin guidance - The company raised its gross margin guidance based on strong Q1 performance and expectations of flat inflation, while accounting for potential tariff impacts [78][80]

Financial Highlights - Revenue increased by 13% to $426 million[17] - Net Income grew by 9% to $37 million[17] - Adjusted EBITDA increased by 41% to $100 million[17] - Gross Profit increased by 21% to $235 million, with a Gross Profit Margin of 55%[48,49] - Earnings per Share increased by 13% to $049, and Adjusted Earnings per Share increased by 46% to $064[46] Operational Performance - Member count increased by 7% to 21 million[17] - Direct-To-Consumer (DTC) Home Warranties increased by 15%[21] - Customer Retention Rates increased to 799%[26] - Percent-to-Preferred Contractors increased to 85%[17] Strategic Initiatives and Outlook - The company is raising its 2025 New HVAC sales target to approximately $105 million[36] - New Home Structural Warranty is expected to generate approximately $44 million in 2025[38] - The company is increasing its 2025 share repurchase target from $180 million+ to $200 million+[72] - The company is revising its FY 2025 Adjusted EBITDA outlook to $500 - $520 million[73]

Financial Performance - Revenue increased 13% to $426 million, driven by a 10% increase in volume primarily from the 2-10 acquisition and a 3% increase from price[5] - Gross profit margin increased 380 basis points to a record 55% in the first quarter[5] - Net income rose 9% to $37 million, with diluted earnings per share increasing 13% to $0.49[5] - Adjusted EBITDA increased 41% to $100 million compared to the prior year[5] - Revenue for Q1 2025 was $426 million, a 12.7% increase from $378 million in Q1 2024[37] - Gross profit increased to $235 million in Q1 2025, up from $195 million in Q1 2024, reflecting a gross margin improvement[37] - Net income for Q1 2025 was $37 million, compared to $34 million in Q1 2024, representing an 8.8% year-over-year growth[37] - Adjusted net income rose to $49 million in Q1 2025, up 40% from $35 million in Q1 2024[46] - Adjusted EBITDA increased to $100 million, compared to $71 million in the same quarter of the previous year, marking a 40.8% growth[48] Cash Flow and Liquidity - Cash flow from operating activities was $124 million for the three months ended March 31, 2025[13] - Free cash flow increased 60% to $117 million for the three months ended March 31, 2025[15] - Free Cash Flow is defined as net cash from operating activities less property additions, providing insight into liquidity[28] - Cash and cash equivalents increased to $506 million as of March 31, 2025, from $421 million at the end of 2024[40] - Cash and cash equivalents at the end of the period were $506 million, up from $378 million at the end of Q1 2024, reflecting a 33.9% increase[42] - Net cash provided from operating activities was $124 million, compared to $84 million in the same quarter of the previous year, a 47.6% increase[47] Member and Customer Metrics - Direct-to-consumer ending member count increased 15% to 310,000, including 4% organic growth[5] - The number of home warranties increased to 2.10 million, representing a 7% growth from 1.96 million in the previous year[50] - Customer retention rate improved to 79.9%, up from 76.3% year-over-year, indicating enhanced customer loyalty[50] Future Outlook - Full-year revenue outlook increased to a range of $2.03 billion to $2.05 billion[24] - Adjusted EBITDA range for the full year increased to $500 million to $520 million[24] Shareholder Actions - Share repurchases totaled $105 million year-to-date through April 2025, with a target increase to at least $200 million for the year[16] - The company repurchased $71 million in common stock during the quarter, compared to $13 million in the same period last year[42] Balance Sheet Highlights - Total assets as of March 31, 2025, were $2,121 million, a slight increase from $2,107 million as of December 31, 2024[40] - Current liabilities increased to $414 million as of March 31, 2025, compared to $369 million at the end of 2024[40] - The company recorded a deferred revenue of $61 million, an increase from $57 million in the previous year, indicating growth in future revenue streams[42] Risk Management - The company is focused on managing risks related to supply chain challenges, interest rates, and competition in the market[25]

Company Overview - Frontdoor, Inc. (NASDAQ: FTDR) is a leading provider of home warranty plans in the United States, primarily generating revenue through its subsidiary, American Home Shield (AHS), which is the largest home warranty provider in the country [1]. Investment Strategy - The company is positioned as a value investment opportunity, focusing on long-term growth potential at reasonable prices. It is particularly attractive for investors looking for companies undergoing strategic changes that can correct stock prices back to their intrinsic value [1]. Competitive Advantages - The analysis emphasizes the importance of understanding company strategies and competitive advantages, which are crucial for assessing future prospects and potential returns for investors [1].