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]