Fourth-Quarter & Full Year 2025 Earnings Webcast February 26th, 2026 1 Today's Presenters Chairman & Chief Executive Officer Bill Cobb Matt Davis Jason Bailey Senior Vice President & Chief Financial Officer Vice President, Investor Relations and Treasurer 2 Forward Looking Statements This presentation 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 Act of 1934, as amended, including, in particular, pr ...

Core Viewpoint - Frontdoor, Inc. emphasizes the importance of home warranties as a means to protect homeowners' investments from costly repairs and unexpected breakdowns, coinciding with National Home Warranty Day on February 10 [1] Company Summary - Frontdoor, Inc. is recognized as the nation's leader in home warranties, highlighting its role in providing peace of mind to homeowners [1] Industry Summary - The home warranty industry is positioned to remind homeowners of the value of safeguarding their properties, particularly during occasions like Valentine's Day, which traditionally focuses on gifts for loved ones [1]

Core Viewpoint - Frontdoor, Inc. is set to release its fourth-quarter and full-year 2025 financial results on February 26, 2026, at 7:30 a.m. Central time, indicating a significant upcoming event for stakeholders [1]. Group 1: Financial Results Announcement - The financial results will be discussed in a conference call, which participants can join via a dedicated phone line or webcast [2]. - A slide presentation will accompany the conference call, providing a visual summary of the company's results [2]. - The call will be available for replay for approximately 60 days, allowing stakeholders to access the information at their convenience [3]. Group 2: Company Overview - Frontdoor, Inc. is recognized as the leading provider of home warranties and on-demand home repair services, with over 50 years of experience in the industry [4]. - The company operates two major brands, American Home Shield and 2-10 Home Buyers Warranty, serving more than two million members [4]. - American Home Shield covers up to 29 home systems and appliances, while 2-10 Home Buyers Warranty focuses on new home structural warranties, providing comprehensive solutions for homeowners [4].

Summary of Frontdoor FY Conference Call (November 18, 2025) Company Overview - **Company**: Frontdoor (NasdaqGS:FTDR) - **Industry**: Home Warranty Services - **Business Model**: Frontdoor operates a recurring revenue model through home warranties, covering 29 systems and appliances with over 2 million members and 17,000 contractors. The service is initiated via a call or app, with a trade service fee charged for repairs or replacements [9][10]. Key Points Market Dynamics - **Total Addressable Market (TAM)**: The home services market is approximately $500 billion, with an addressable market for home warranties estimated at 15 million homes in the U.S. Currently, about 5 million home warranties are sold, with Frontdoor holding a 40% market share [11][12]. - **Impact of COVID-19**: The pandemic shifted the market dynamics, affecting the traditional real estate channel, which has seen a decline in transactions [11][12]. Real Estate Channel - **Current Trends**: Existing home sales are at a cyclical trough, with inventory increasing but still low. Frontdoor targets about 200,000-210,000 units this year, down from nearly 500,000 six years ago [13][15]. - **Growth Strategy**: The company is enhancing its sales force and introducing promotional pricing to attract real estate agents and customers [16][17]. Direct-to-Consumer (DTC) Channel - **Performance**: The DTC business has shown strong growth, particularly among millennials and Hispanic demographics. The advertising campaign has improved brand relevance and customer engagement [19][20]. - **Future Outlook**: The company anticipates positive growth in customer accounts by 2026, driven by both DTC and real estate channels [23][25]. Retention and Renewal Rates - **Improvement in Retention**: Retention rates have improved by 300 basis points due to better contractor performance and initiatives like autopay and auto-renewal [31][34]. - **Operational Execution**: Focus on member experience and operational discipline has been key to maintaining retention rates and managing cancellations [35][36]. Revenue Growth and Margins - **Revenue Projections**: The company expects 3% organic revenue growth this year, with further expansion anticipated in 2026 and 2027 [40][41]. - **Margin Management**: Frontdoor has achieved record margins through dynamic pricing strategies and strong contractor relationships, managing inflation effectively [65][66]. Non-Warranty Business Expansion - **New Offerings**: The company is expanding into non-warranty services, starting with HVAC and planning to include appliances, roofs, and water heaters by 2026. This strategy aims to increase share of wallet among existing members [45][50]. - **Contractor Relationships**: Strong relationships with contractors allow for competitive pricing and improved customer satisfaction [58][59]. Capital Allocation and M&A Strategy - **Focus on Growth**: The company aims to maintain a strong balance sheet while considering share repurchases and potential M&A opportunities, particularly focusing on integrating the recently acquired 2-10 business [83][89]. AI and Technology Integration - **AI Utilization**: Frontdoor is leveraging AI to enhance service request processing and sales interactions, improving efficiency and customer experience [95][106]. Additional Insights - **Market Recovery**: A recovery in the real estate market could positively impact revenue but may also introduce inflationary pressures [73][74]. - **Long-term Strategy**: The company is focused on sustainable growth through operational excellence, customer retention, and strategic pricing [72][71].

Financial Highlights - Q3 2025 revenue reached $618 million, a 14% increase year-over-year[17, 43] - Gross profit for Q3 2025 was $353 million, with a gross profit margin of 57%[17, 46] - Net income for Q3 2025 increased by 5% to $106 million[17, 49] - Adjusted EBITDA for Q3 2025 increased by 18% to $195 million[17, 49] - Year-to-date free cash flow increased by 64%[55] Business Performance - Organic direct-to-consumer member count grew by 8% compared to the prior year[17] - Real estate member count increased sequentially for the first time in five years[17] - The company repurchased $215 million of shares year-to-date through October 31[17, 59] - Retention rates are near all-time highs at 79.4%[32] Outlook - Q4 2025 revenue is projected to be between $415 million and $425 million[61] - Q4 2025 adjusted EBITDA is projected to be between $50 million and $55 million[61]

Core Viewpoint - Frontdoor, Inc. has appointed Jason Bailey as the new Senior Vice President and Chief Financial Officer, succeeding Jessica Ross, who will remain as an advisor until the end of 2025 to ensure a smooth transition [1]. Company Summary - Jason Bailey has been appointed as the Senior Vice President and Chief Financial Officer of Frontdoor, Inc. [1] - Jessica Ross, the former CFO, resigned effective November 10, 2025, but will continue to assist the company until December 31, 2025 [1].

Core Insights - Frontdoor, Inc. celebrates its Chief People Officer, Meredith Diagostino, being recognized as one of Memphis Business Journal's 2025 Women Who Lead, highlighting her positive impact in the Memphis metro area [1] Company Initiatives - Diagostino has played a crucial role in developing and implementing various talent initiatives since joining Frontdoor in 2018, following the company's IPO [1]

Core Insights - Frontdoor reported strong Q2 2025 results with non-GAAP EPS of $1.63, exceeding analyst expectations of $1.44, and GAAP revenue of $617 million, surpassing the estimate of $602.6 million [1][2] - Year-over-year, both profit and sales increased at a double-digit pace, with GAAP revenue rising 14% and net income growing 21% to $111 million [1][2][8] - The company achieved a record gross margin of 58%, up 1.5 percentage points from the previous year, supported by effective cost management and favorable weather conditions [2][7] Financial Performance - Q2 2025 diluted EPS (Non-GAAP) was $1.63, a 28% increase from $1.27 in Q2 2024 [2] - Revenue for Q2 2025 reached $617 million, a 14% increase from $542 million in Q2 2024 [2] - Adjusted EBITDA for the quarter was $199 million, reflecting a 26% increase from $158 million in the prior year [2] Business Operations - Frontdoor provides home warranties and services through brands like American Home Shield and 2-10 Home Buyers Warranty, focusing on household systems and appliances [3] - The company’s strategy includes maintaining leadership in the home warranty sector, growing its renewing customer base, and expanding into non-warranty offerings [4] - The fastest-growing segment, "Other Revenue," increased by 63%, driven by new HVAC programs and smart water shutoff solutions [6] Customer Metrics - The total number of home warranty contracts rose to 2.09 million, a 7% increase from the previous year, with customer retention improving to 79.7% [8] - Direct-to-consumer first-year sales increased by 12%, indicating strong momentum from marketing efforts [5] Future Outlook - Management raised its full-year 2025 revenue guidance to $2.055 to $2.075 billion, with expectations for gross profit margin between 55-56% and adjusted EBITDA of $530-550 million [9] - For Q3 2025, revenue is anticipated to be between $605-615 million, with adjusted EBITDA of $180-190 million [9] - The company plans to return up to $250 million to shareholders through share repurchases, increasing its buyback target [9]

Core Insights - Frontdoor (FTDR) reported $617 million in revenue for Q2 2025, a year-over-year increase of 13.8% and exceeding the Zacks Consensus Estimate of $602.1 million by 2.48% [1] - The company achieved an EPS of $1.63, up from $1.27 a year ago, surpassing the consensus EPS estimate of $1.44 by 13.19% [1] Revenue Performance - Revenue from Renewals was $461 million, slightly above the estimated $458.9 million, reflecting a 9.5% increase year-over-year [4] - Revenue from Other channels reached $56 million, significantly exceeding the estimated $47.45 million, marking a 60% increase compared to the previous year [4] - Direct-to-consumer (First-Year) revenue was $56 million, aligning with the average estimate of $55 million, representing a 12% year-over-year growth [4] - Revenue from Real estate (First-Year) was $44 million, surpassing the estimated $41.4 million, showing a 22.2% increase year-over-year [4] Stock Performance - Over the past month, Frontdoor's shares returned -0.4%, while the Zacks S&P 500 composite increased by 1% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Financial Data and Key Metrics Changes - Revenue increased 14% year over year to $617 million, with net income growing 21% to $111 million and adjusted EBITDA rising 26% to $199 million [4][22][26] - For the full year, revenues grew 13% to over $1 billion, net income increased 17% to $148 million, and adjusted EBITDA grew 31% to $300 million [22] Business Line Data and Key Metrics Changes - Direct to consumer (DTC) revenue grew 12%, supported by organic volume growth and the addition of the two ten acquisition [22] - Real estate revenue increased 21%, primarily due to the two ten acquisition [22] - Other revenue grew 63%, driven by success in the new HVAC and Moen programs, as well as the addition of two ten's new home structural business [22] Market Data and Key Metrics Changes - The real estate market remains challenging, with home sales slipping 2.7% month over month to a seasonally adjusted annual rate of 3.93 million, among the lowest in thirty years [8] - The inventory of unsold existing homes rose 18% year over year to 1.53 million homes, indicating a potential transition to a buyer's market [9] Company Strategy and Development Direction - The company focuses on three strategic priorities: growing and retaining home warranty members, scaling revenue from non-warranty business, and optimizing the integration of the two ten Homebuyers Warranty [5][6][18] - The new HVAC program is expected to generate nearly 40% higher revenue than last year, with an increased full-year outlook of $120 million [15] Management's Comments on Operating Environment and Future Outlook - Management noted that the macro environment has improved, leading to better-than-expected results in various areas, including gross profit margin and revenue conversion [26][50] - The company is optimistic about the potential for increased home warranty attach rates as the real estate market shows signs of improvement [64] Other Important Information - The company repurchased $150 million worth of shares year to date through July 31, with an increased full-year share repurchase target of approximately $250 million [29][31] - Free cash flow for the first half of the year was $237 million, a 44% increase versus the prior year period [30] Q&A Session Summary Question: What drove the increase in two ten cost synergies from $10 million to $15 million for 2025? - Management indicated that efficiencies were found across all functions, leading to the increase, and confirmed expectations of $30 million in run rate synergies by 2028 [40] Question: Is your guidance all for HVAC or does that include water heaters? - The guidance is currently focused solely on HVAC, with ongoing tests for potential future offerings [41] Question: What contributed to the strong performance in the real estate channel this quarter? - Management attributed the performance to seasonal investments and effective integration of the two ten acquisition [46][48] Question: Are you still expecting $50 million in headwinds for the back half of the year? - Management noted that the macro environment has improved, leading to better-than-anticipated results, and adjusted expectations for the back half of the year [49][50] Question: How is the two ten structural warranty sales process performing? - Management expressed satisfaction with the sales process and noted that the transition has gone smoothly, with good momentum in sales [59][60]