andresr Introduction In continuation with our coverage of Frontdoor (NASDAQ:FTDR), we had ascribed a 'Strong Buy' rating on the back of its strong brand resonance, customer stickiness driving up its retention numbers and relative undervaluation. With the stock achieving its target price since the publication, we would revisit the thesis following its recent results. Investment Thesis FTDR has been the leader in home service plan business, well positioned to deliver sustained growth leveraging its significan ...

Core Viewpoint - Momentum investing focuses on following a stock's recent price trends, aiming to buy high and sell higher, with the expectation that established trends will continue [1] Company Overview: Frontdoor (FTDR) - Frontdoor currently holds a Momentum Style Score of B, indicating a positive momentum outlook [2] - The company has a Zacks Rank of 1 (Strong Buy), suggesting strong potential for outperformance in the market [3] Performance Metrics - FTDR shares have increased by 15.27% over the past week, while the Zacks Building Products - Miscellaneous industry has decreased by 6.16% during the same period [5] - Over the past month, FTDR's price change is 30.23%, significantly outperforming the industry's 1.84% [5] - In the last quarter, FTDR shares rose by 20.46%, and over the past year, they are up 19.57%, compared to the S&P 500's increases of 1.55% and 17.43%, respectively [6] Trading Volume - FTDR's average 20-day trading volume is 989,355 shares, which serves as a bullish indicator when combined with rising stock prices [7] Earnings Outlook - In the past two months, two earnings estimates for FTDR have been revised upwards, increasing the consensus estimate from $2.52 to $2.64 [9] - For the next fiscal year, two estimates have also moved upwards, with no downward revisions noted [9] Conclusion - Given the positive performance metrics and earnings outlook, FTDR is positioned as a strong buy with a Momentum Score of B, making it a compelling option for investors seeking short-term gains [9]

Financial Data and Key Metrics Changes - Revenue grew 4% to $542 million in Q2 2024, with net income increasing 32% to $92 million and adjusted EBITDA rising 31% to $158 million [4][17][24] - Gross margin expanded by 470 basis points to a record 56%, with gross profit increasing 13% to $306 million [4][17][24] - Free cash flow more than doubled to $91 million, with a strong free cash flow conversion of 72% of EBITDA for the first half of 2024 [4][22] Business Line Data and Key Metrics Changes - The on-demand business has shown significant growth, with HVAC program revenue expected to surpass $50 million for 2024, compared to $50 million for all of 2023 [7][17] - Customer retention rate reached an all-time high of 76.6%, despite a lower mix of real estate customers [8][17] Market Data and Key Metrics Changes - The real estate market remains a significant headwind, with existing home sales projected to decline to 3.9 million homes in 2024, a 5% year-over-year decrease [10][11] - Home prices increased by 4% year-over-year to a record median price of $427,000, while mortgage rates remain elevated [11] Company Strategy and Development Direction - The primary strategic priority is to grow the customer base through increased home warranty sales, despite macroeconomic headwinds impacting sales [5][29] - The company is focused on closing the acquisition of 2-10 Home Buyers Warranty, which is expected to diversify the product portfolio and generate significant synergies [6][24] - A new marketing campaign for American Home Shield has resulted in increased brand awareness and website traffic, indicating positive momentum [13][40] Management's Comments on Operating Environment and Future Outlook - Management acknowledges near-term challenges due to consumer stress and spending reductions, but maintains long-term optimism about the home warranty market [9][29] - The company expects to maintain its full-year revenue outlook of $1.81 billion to $1.84 billion, despite a projected decline in home warranty volume [25][27] Other Important Information - The company has initiated a new three-year $650 million share repurchase authorization, which is 63% higher than the previous authorization [24][30] - The Investor Day has been rescheduled to February 27, 2025, to focus on integration and synergy planning for the 2-10 acquisition [27] Q&A Session Summary Question: Update on pricing strategy for the next year - Management plans to maintain consistent renewal pricing with targeted discounts to grow new members, reflecting a more elastic approach for new customers [31][32] Question: Reason for lowering full-year outlook for direct growth - The decline is attributed to a tough macro environment and ongoing challenges in the home warranty category, particularly due to real estate market conditions [33][34] Question: Details on the Moen partnership - The partnership is off to a strong start, with plans to expand into other states, indicating a significant opportunity for the business [36][38] Question: Changes in customer demographics post-relaunch - The relaunch has attracted a broader demographic, not limited to older or lower-income households, with positive indicators in consumer engagement [39][40] Question: Contribution to margin from HVAC on-demand - HVAC sales contributed an $11 million increase over the prior year, indicating strong performance in this segment [41] Question: Expectations for marketing spend - Management plans to increase marketing spend to drive demand and retention, viewing it as an opportunity despite macro headwinds [50]

| --- | --- | --- | --- | --- | --- | |-------|-------|-------|-------|-------|-------| | | | | | | | | | | | | | | | | | | | | | Today's Speakers Bill Cobb Chairman & Chief Executive Officer Jessica Ross Senior Vice President & Chief Financial Officer Vice President Investor Relations & Treasurer Matt Davis Forward Looking Statements This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange A ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ________________________________________________ FORM 10-Q ________________________________________________ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2024 or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-38617 ________________________________________ ...

For the quarter ended June 2024, Frontdoor (FTDR) reported revenue of $542 million, up 3.6% over the same period last year. EPS came in at $1.27, compared to $0.87 in the year-ago quarter. The reported revenue represents a surprise of +0.87% over the Zacks Consensus Estimate of $537.31 million. With the consensus EPS estimate being $1.00, the EPS surprise was +27.00%. While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine their ...

Frontdoor (FTDR) came out with quarterly earnings of $1.27 per share, beating the Zacks Consensus Estimate of $1 per share. This compares to earnings of $0.87 per share a year ago. These figures are adjusted for nonrecurring items. This quarterly report represents an earnings surprise of 27%. A quarter ago, it was expected that this home services provider would post earnings of $0.20 per share when it actually produced earnings of $0.43, delivering a surprise of 115%. Over the last four quarters, the compan ...

Revenue and Profitability - Revenue for Q2 2024 increased 4% to $542 million, driven by a 7% price increase offset by a 3% decline in volume [2]. - Gross profit margin reached a record high of 56%, an increase of 470 basis points, primarily due to higher realized prices and process improvements [2]. - Net income rose 32% to $92 million, with diluted earnings per share increasing 38% to $1.18 [2]. - Adjusted EBITDA for Q2 2024 increased 31% to $158 million, benefiting from higher revenue conversion and lower contract claims costs [5]. - Revenue for the three months ended June 30, 2024, was $542 million, an increase of 3.6% from $523 million for the same period in 2023 [26]. - Gross profit for the six months ended June 30, 2024, was $500 million, compared to $440 million for the same period in 2023, reflecting a 13.6% increase [26]. - Net income for the three months ended June 30, 2024, was $92 million, up 31.4% from $70 million in the same period of 2023 [26]. - Adjusted EBITDA for the three months ended June 2024 was $158 million, compared to $121 million in the same period of 2023, marking a 30.6% rise [36]. - Adjusted net income for the six months ended June 2024 was $134 million, compared to $94 million for the same period in 2023, reflecting a 42.6% growth [34]. Cash Flow and Financial Position - Net cash provided from operating activities doubled to $187 million for the six months ended June 30, 2024 [7]. - Free cash flow increased 70% to $164 million for the six months ended June 30, 2024 [8]. - Cash and cash equivalents at the end of the period were $419 million, up from $325 million at the beginning of the period [29]. - Total assets increased to $1,200 million as of June 30, 2024, from $1,089 million as of December 31, 2023 [29]. - Current liabilities rose to $365 million as of June 30, 2024, compared to $331 million at the end of 2023 [29]. - Free cash flow for the six months ended June 2024 was $164 million, significantly higher than $96 million for the same period in 2023, indicating a 70.8% increase [35]. Future Outlook - The company anticipates closing the acquisition of 2-10 Home Buyers Warranty in Q4 2024 [1]. - Full-year 2024 revenue outlook maintained at $1.81 billion to $1.84 billion, with an expected gross profit margin slightly above 51% [11]. - Q3 2024 revenue expected to be between $530 million and $545 million, reflecting a 3% increase year-over-year [10]. - The company has not provided specific forward-looking guidance for Adjusted EBITDA due to the inherent difficulty in forecasting necessary adjustments [24]. Shareholder Returns - New 3-year, $650 million share repurchase authorization approved, representing a 63% increase over the previous authorization [9]. Customer Metrics - The number of home warranties decreased to 1.95 million as of June 30, 2024, down from 2.07 million in the previous year, reflecting a reduction of 5.8% [37]. - Customer retention rate improved to 76.6% on a rolling 12-month basis, up from 76.3% in the previous year, indicating a positive trend in customer loyalty [37]. Earnings Per Share - The company reported a basic earnings per share of $1.18 for the three months ended June 30, 2024, compared to $0.86 for the same period in 2023 [27]. - The company reported a diluted adjusted earnings per share of $1.27 for the three months ended June 2024, compared to $0.87 in the same period of 2023, representing a 46% increase [34]. - The weighted-average diluted shares outstanding decreased to 78.1 million for the three months ended June 2024, down from 81.8 million in the same period of 2023 [34]. Acquisition Costs - The company incurred acquisition-related costs of $6 million for the three months ended June 2024, compared to no costs in the same period of 2023 [36]. - The company reported a tax impact of adjustments of $(1) million for the six months ended June 2024, consistent with the previous year [34].

The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. This reflects how the analysts covering the stock have collectively reevaluated their initial estimates during this timeframe. While investors typically use consensus earnings and revenue estimates as a yardstick to evaluate the company's quarterly performance, scrutinizing analysts' projections for some of the company's key metrics can offer a more comprehensive perspective. Analysts' assessment points toward 'Revenue ...

Please note that a negative Earnings ESP reading is not indicative of an earnings miss. Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and/or Zacks Rank of 4 (Sell) or 5 (Strong Sell). For Frontdoor, the Most Accurate Estimate is lower than the Zacks Consensus Estimate, suggesting that analysts have recently become bearish on the company's earnings prospects. This has resulted in an Earnings ESP of -3.76%. So, ...