Frontdoor Delivers Exceptional Third-Quarter 2025 Financial Results

MEMPHIS, Tenn--( BUSINESS WIRE)-- Frontdoor, Inc. (NASDAQ: FTDR), the nation’s leading provider of home warranties, today announced its third-quarter 2025 results.

Financial Results

Three Months Ended

September 30,

(In millions except as noted)

2025

2024

Change

Revenue

618

540

Gross Profit

353

306

Net Income

106

100

Diluted Earnings per Share

1.42

1.30

Adjusted Net Income (1)

117

106

Adjusted Diluted Earnings per Share (1)

1.58

1.38

Adjusted EBITDA (1)

195

165

Home Warranties (number in millions)

2.11

1.95

Third-Quarter 2025 Summary

Updated Full-Year 2025 Outlook

“Frontdoor is on pace for another year of record financial performance," said Chairman and Chief Executive Officer Bill Cobb. “Our results are driven by contributions from the 2-10 acquisition and our continuous improvement in execution across the business. Real estate member count increased sequentially for the first time in five years, and our non-warranty business continues to demonstrate robust momentum. We have an extremely attractive business model that generates a tremendous amount of cash, which has us on track to repurchase up to 6% of our outstanding shares in 2025."

"We delivered exceptional financial performance in the third-quarter with double digit increases in revenue and Adjusted EBITDA," said Chief Financial Officer Jessica Ross. “Gross profit margin grew 60 basis points to 57%, which includes the benefit of higher price, a lower number of service requests per member and low-to-mid-single digit inflation."

Third-Quarter 2025 Results

Revenue by Customer Channel

Three Months Ended

September 30,

(In millions)

2025

2024

Change

Renewals

461

422

Real estate (First-Year)

Direct-to-consumer (First-Year)

Other

Total

618

540

Revenue increased 14% to $618 million and was comprised of a 12% increase from higher volume, primarily driven by the 2-10 acquisition, and a 3% increase from price.

Period-over-Period Net Income and Adjusted EBITDA (1) Bridge

(In millions)

Net Income

Adjusted EBITDA

Three Months Ended September 30, 2024

100

165

Impact of change in revenue

Sales and marketing costs

)

Customer service costs

)

Stock-based compensation expense

)

—

Acquisition-related costs

—

Other general and administrative costs

(11

)

(11

)

Depreciation and amortization expense

(12

)

—

Restructuring charges

—

Interest expense

(10

)

—

Interest and net investment income

Provision for income taxes

)

—

Three Months Ended September 30, 2025

106

195

Third-quarter 2025 Net Income increased 5% to $106 million and third-quarter 2025 Adjusted EBITDA (1) increased 18% to $195 million. The table above shows the change versus the prior-year period, and includes:

Cash Flow

Nine Months Ended

September 30,

(In millions)

2025

2024

Net cash provided from (used for):

Operating activities

315

212

Investing activities

(31

)

Financing activities

(210

)

(131

)

Cash increase during the period

142

Net cash provided from operating activities was $315 million for the nine months ended September 30, 2025 and was comprised of $355 million in earnings adjusted for non-cash charges, partially offset by $40 million in cash used primarily for working capital.

Net cash provided from investing activities was $37 million for the nine months ended September 30, 2025 and was primarily comprised of the sales and maturities of available-for-sale securities, partially offset by capital expenditures related to technology projects.

Net cash used for financing activities was $210 million for the nine months ended September 30, 2025 and was primarily comprised of $193 million of share repurchases (excluding taxes and fees) and $22 million of scheduled debt payments.

Free Cash Flow (1) increased 64% to $296 million for the nine months ended September 30, 2025.

Cash as of September 30, 2025 was $563 million and was comprised of $178 million of restricted net assets and $385 million of Unrestricted Cash.

Fourth-Quarter 2025 Outlook

Updated Full-Year 2025 Outlook

Third-Quarter 2025 Earnings Conference Call

Frontdoor has scheduled a conference call today, November 5, 2025, at 7:30 a.m. Central time (8:30 a.m. Eastern time). During the call, management will discuss the company’s operational performance and financial results for third-quarter 2025 and respond to questions from the investment community. Participants can register for the conference call by clicking https://www.webcaster5.com/Webcast/Page/3067/53089. Once completed, each participant will receive access details via email. Additionally, the conference call will be available via webcast which will include a slide presentation highlighting the company’s results. To participate via webcast and view the presentation, visit https://investors.frontdoorhome.com.

The call will be available for replay for approximately 60 days. To access the replay of this call, please call 877-481-4010 and enter conference passcode 53089 (international participants: 919-882-2331, conference passcode 53089). To view a replay of the webcast, visit the company’s https://investors.frontdoorhome.com.

About Frontdoor, Inc.

Frontdoor is the industry leader in home warranties and new home structural warranties, and a leading provider of on-demand home repair and maintenance services. As the parent company of two leading brands – American Home Shield and 2-10 Home Buyers Warranty – totaling more than two million members – we bring over 50 years of experience in the home warranty category, a cultivated national network of independent service contractors, and a reputation for delivering quality service and product innovation. American Home Shield, the leader in home warranties, gives homeowners peace of mind, budget protection and convenience, covering up to 29 home systems and appliances from costly and unexpected breakdowns. 2-10 Home Buyers Warranty is the leader in new home structural warranties, providing home builders with coverage for structural failures. These two brands, together with Frontdoor’s cutting-edge non-warranty services, provide an unbeatable combination that meets the full suite of homeowner repair and maintenance needs. For more information about Frontdoor, Inc., please visit frontdoorhome.com.

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 Act of 1934, as amended, including, in particular, projected future performance and any statements about Frontdoor’s plans, strategies and prospects. Forward-looking statements can be identified by the use of forward-looking terms such as “believe,” “expect,” “estimate,” “could,” “should,” “intend,” “may,” “plan,” “seek,” “anticipate,” “project,” “will,” “shall,” “would,” “aim,” or other comparable terms. These forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control. Such risks and uncertainties include, but are not limited to: changes in macroeconomic conditions, including inflation, tariffs and global supply chain challenges and changing interest rates, especially as they may affect existing or new home sales, consumer confidence, labor availability or our costs; our ability to successfully implement our business strategies; the ability of our marketing efforts to be successful and cost-effective; our dependence on our first-year direct-to-consumer and real estate acquisition channels and our renewal channel; changes in the source and intensity of competition in our market, including risks related to the development, deployment, and use of artificial intelligence in our business and industry; our ability to attract, retain and maintain positive relations with third-party contractors and vendors; increases in parts, appliance and home system prices, and other operating costs; changes in U.S. tariffs or import/export regulations; our ability to attract and retain qualified key employees and labor availability in our customer service operations; our dependence on third-party vendors, including business process outsourcers, and third-party component suppliers; cybersecurity breaches, disruptions or failures in our technology systems; our ability to protect the security of personal information about our customers; compliance with, or violation of, laws and regulations, including consumer protection laws, or lawsuits or other claims by third parties, increasing our legal and regulatory expenses; weather, including adverse conditions, Acts of God and seasonality, along with related regulations; our ability to underwrite risks accurately and to charge adequate prices to builder members, as well as our ability to effectively re-insure a large portion of those risks; the availability of reinsurance to manage a substantial portion of our potential loss exposure for our new home structural warranty business; evolving corporate governance and disclosure regulations and expectations; our ability to protect our intellectual property and other material proprietary rights; negative reputational and financial impacts resulting from acquisitions or strategic transactions; a requirement to recognize impairment charges; third-party use of our trademarks as search engine keywords to direct our potential customers to their own websites; inappropriate use of social media by us or other parties to harm our reputation; special risks applicable to operations outside the United States by us or our business process outsource providers; risks related to our acquisition of 2-10 Home Buyers Warranty (the “2-10 HBW Acquisition”), including the risk that the 2-10 HBW Acquisition may not achieve its intended results; any liabilities, losses, or other exposures for which we do not have adequate insurance coverage, indemnification, or other protection; increase in our indebtedness as a result of financing the 2-10 HBW Acquisition; a return on investment in our common stock is dependent on appreciation in the price; inclusion in our certificate of incorporation a forum selection clause that could discourage an acquisition of our company or litigation against us and our directors and officers; the effects of our significant indebtedness, our ability to incur additional debt and the limitations contained in the agreements governing such indebtedness; increases in interest rates increasing the cost of servicing our indebtedness and counterparty credit risk due to instruments designed to minimize exposure to market risks; increased borrowing costs due to lowering or withdrawal of the credit ratings, outlook or watch assigned to us or our credit facilities; and our ability to generate the significant amount of cash needed to fund our operations and service our debt obligations. We caution you that forward-looking statements are not guarantees of future performance or outcomes and that actual performance and outcomes, including, without limitation, our actual results of operations, financial condition and liquidity, and the development of new markets or market segments in which we operate, may differ materially from those made in or suggested by the forward-looking statements contained in this news release. For a discussion of other important factors that could cause Frontdoor’s results to differ materially from those expressed in, or implied by, the forward-looking statements included in this document, refer to the risks and uncertainties detailed from time to time in Frontdoor’s periodic reports filed with the SEC, including the disclosure contained in Item 1A. Risk Factors in our 2024 Annual Report on Form 10-K filed with the SEC, as such factors may be updated from time to time in Frontdoor’s periodic filings with the SEC. Except as required by law, Frontdoor does not undertake any obligation to update or revise the forward-looking statements to reflect new information or events or circumstances that occur after the date of this news release or to reflect the occurrence of unanticipated events or otherwise. Readers are advised to review Frontdoor’s filings with the SEC, which are available from the SEC’s EDGAR database at sec.gov, and via Frontdoor’s website at frontdoorhome.com.

Non-GAAP Financial Measures

To supplement Frontdoor’s results presented in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”), Frontdoor has disclosed the non-GAAP financial measures of Adjusted EBITDA, Free Cash Flow, Adjusted Net Income, Adjusted Diluted Earnings Per Share, and Unrestricted Cash.

We define "Adjusted EBITDA" as net income before depreciation and amortization expense; goodwill and intangibles impairment; restructuring charges; acquisition-related costs; provision for income taxes; non-cash stock-based compensation expense; interest expense; loss on extinguishment of debt; and other non-operating expenses. We believe Adjusted EBITDA is useful for investors, analysts and other interested parties as it facilitates company-to-company operating performance comparisons by excluding potential differences caused by variations in capital structures, taxation, the age and book depreciation of facilities and equipment, restructuring and acquisition initiatives and equity-based, long-term incentive plans.

We define “Free Cash Flow” as net cash provided from operating activities less property additions. Free Cash Flow is not a measurement of our financial performance or liquidity under U.S. GAAP and does not purport to be an alternative to net cash provided from operating activities or any other performance or liquidity measures derived in accordance with U.S. GAAP. Free Cash Flow is useful as a supplemental measure of our liquidity. Management uses Free Cash Flow to facilitate company-to-company cash flow comparisons, which may vary from company-to-company for reasons unrelated to operating performance.

We define “Adjusted Net Income” as net income before: amortization expense; restructuring charges; loss on extinguishment of debt; other non-operating expenses; and the tax impact of the aforementioned adjustments. We believe Adjusted Net Income is useful for investors, analysts and other interested parties as it facilitates company-to-company operating performance comparisons by excluding potential differences caused by items listed in this definition.

We define “Adjusted Diluted Earnings per Share” as Adjusted Net Income divided by the weighted-average diluted common shares outstanding.

We define “Unrestricted Cash” as cash not subject to third-party restrictions. For additional information related to our third-party restrictions, see “Liquidity and Capital Resources — Liquidity” under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2024 Annual Report on Form 10-K filed with the SEC.

See the schedules attached hereto for additional information and reconciliations of such non-GAAP financial measures. Management believes these non-GAAP financial measures provide useful supplemental information for its and investors’ evaluation of Frontdoor’s business performance and are useful for period-over-period comparisons of the performance of Frontdoor’s business. While we believe that these non-GAAP financial measures are useful in evaluating our business, this information should be considered as supplemental in nature and is not meant to be considered in isolation or as a substitute for the related financial information prepared in accordance with U.S. GAAP. In addition, these non-GAAP financial measures may not be the same as similarly entitled measures reported by other companies.

© 2025 Frontdoor, Inc. All rights reserved. The following terms, which may be used in this press release, are trademarks of Frontdoor, Inc. and its subsidiaries: Frontdoor®, American Home Shield®, HSA™, OneGuard®, Landmark Home Warranty®, Streem®, 2-10 HBW®, and related logos and designs. All other trademarks used herein are the property of their respective owners.

(1)

See “Reconciliations of Non-GAAP Financial Measures” accompanying this release for a reconciliation of Adjusted EBITDA, Free Cash Flow, Adjusted Net Income and Adjusted Diluted Earnings per Share, each a non-GAAP measure, to the nearest GAAP measure. See “Non-GAAP Financial Measures” included in this release for descriptions of calculations of these measures. Amounts presented in the reconciliations and other tables presented herein may not sum due to rounding.

(2)

A reconciliation of the forward-looking Adjusted EBITDA outlook to net income cannot be provided without unreasonable effort because of the inherent difficulty of accurately forecasting the occurrence and financial impact of the various adjusting items necessary for such reconciliation that have not yet occurred, are out of our control, or cannot be reasonably predicted. For the same reasons, the company is unable to assess the probable significance of the unavailable information, which could have a material impact on its future GAAP financial results.

(3)

Revenue conversion includes the impact of the change in the number of home warranties as well as the impact of year-over-year price changes. The impact of the change in the number of home warranties considers the associated revenue on those plans less an estimate of contract claims costs based on margin experience in the prior year period.

(4)

Contract claims costs includes the impact of changes in service request incidence, inflation and other drivers associated with the number of home warranties in the prior year period. The impact on contract claims costs resulting from year-over-year changes in the number of home warranties is included in revenue conversion above.

Frontdoor, Inc.

Consolidated Statements of Operations and Comprehensive Income (Unaudited)

(In millions, except per share data)

Three Months Ended

Nine Months Ended

September 30,

2025

2024

2025

2024

Revenue

618

540

1,660

1,461

Cost of services rendered

264

235

716

655

Gross Profit

353

306

944

806

Selling and administrative expenses

174

154

498

456

Depreciation and amortization expense

Restructuring charges

Interest expense

Interest and net investment income

)

(16

)

(15

)

Income before Income Taxes

142

134

336

303

Provision for income taxes

Net Income

106

100

253

226

Other Comprehensive Loss, Net of Income Taxes:

Unrealized loss on derivative instruments, net of income taxes

)

(13

)

Total Other Comprehensive Loss, Net of Income Taxes

)

(13

)

Comprehensive Income

105

240

223

Earnings per Share:

Basic

1.45

1.32

3.44

2.92

Diluted

1.42

1.30

3.38

2.90

Weighted-average Common Shares Outstanding:

Basic

72.8

76.2

73.6

77.4

Diluted

74.4

77.1

75.0

78.0

Frontdoor, Inc.

Condensed Consolidated Statements of Financial Position (Unaudited)

(In millions, except share data)

As of

September 30,

December 31,

2025

2024

Assets:

Current Assets:

Cash and cash equivalents

563

421

Marketable securities

—

Receivables, less allowance of $4 and $4, respectively

Prepaid expenses and other current assets

Contract assets

—

Assets held for sale

—

Total Current Assets

695

488

Other Assets:

Property and equipment, net

Goodwill

971

967

Intangible assets, net

400

448

Operating lease right-of-use assets

Long-term marketable securities

—

Deferred reinsurance

Deferred customer acquisition costs

Other assets

Total Assets

2,227

2,107

Liabilities and Shareholders' Equity:

Current Liabilities:

Accounts payable

104

Accrued liabilities:

Payroll and related expenses

Home warranty claims

Income taxes payable

Other

Deferred revenue

123

Current portion of long-term debt

Total Current Liabilities

401

369

Long-Term Debt

1,151

1,170

Other Long-Term Liabilities:

Deferred tax liabilities, net

Operating lease liabilities

Unearned insurance premium

238

233

Long-term deferred revenue

Other long-term liabilities

Total Other Long-Term Liabilities

360

329

Commitments and Contingencies

Shareholders' Equity:

Common stock, $0.01 par value; 2,000,000,000 shares authorized; 88,389,769 shares issued and 72,433,160 shares outstanding as of September 30, 2025 and 87,434,468 shares issued and 75,314,243 shares outstanding as of December 31, 2024

Additional paid-in capital

184

152

Retained earnings

784

530

Accumulated other comprehensive loss

(14

)

—

Less treasury stock, at cost; 15,956,609 shares as of September 30, 2025 and 12,120,225 shares as of December 31, 2024

(639

)

(444

)

Total Shareholders' Equity

316

239

Total Liabilities and Shareholders' Equity

2,227

2,107

Frontdoor, Inc.

Consolidated Statements of Cash Flows (Unaudited)

(In millions)

Nine Months Ended

September 30,

2025

2024

Cash and Cash Equivalents at Beginning of Period

421

325

Cash Flows from Operating Activities:

Net Income

253

226

Adjustments to reconcile net income to net cash provided from operating activities:

Depreciation and amortization expense

Deferred income tax benefit

—

Stock-based compensation expense

Other

Changes in:

Prepaid expenses and other current assets

(79

)

(74

)

Deferred reinsurance

)

—

Deferred customer acquisition costs

)

—

Accounts payable

Deferred revenue

(21

)

(12

)

Accrued liabilities

(12

)

(10

)

Deferred insurance premiums

—

Current income taxes

Net Cash Provided from Operating Activities

315

212

Cash Flows from Investing Activities:

Purchases of property and equipment

(20

)

(31

)

Business acquisitions, net of cash acquired

—

Purchases of available-for-sale securities

)

—

Sales and maturities of available-for-sale securities

—

Net Cash Provided from (Used for) Investing Activities

(31

)

Cash Flows from Financing Activities:

Repayments of debt

(22

)

(13

)

Repurchases of common stock

(195

)

(120

)

Other financing activities

Net Cash Used for Financing Activities

(210

)

(131

)

Cash Increase During the Period

142

Cash and Cash Equivalents at End of Period

563

375

Reconciliations of Non-GAAP Financial Measures

The following table presents reconciliations of Net Income to Adjusted Net Income.

Three Months Ended

Nine Months Ended

September 30,

(In millions, except per share amounts)

2025

2024

2025

2024

Net Income

106

100

253

226

Amortization expense

Acquisitions-related Costs

Restructuring Charges

Tax Impact of Adjustments

)

(10

)

Adjusted Net Income

117

106

288

240

Adjusted Earnings per Share:

Basic

1.61

1.39

3.91

3.11

Diluted

1.58

1.38

3.84

3.08

Weighted-average Common Shares outstanding:

Basic

72.8

76.2

73.6

77.4

Diluted

74.4

77.1

75.0

78.0

The following table presents reconciliations of net cash provided from operating activities to Free Cash Flow.

Nine Months Ended

September 30,

(In millions)

2025

2024

Net cash provided from operating activities

315

212

Property additions

(20

)

(31

)

Free Cash Flow

296

181

The following table presents reconciliations of Net Income to Adjusted EBITDA.

Three Months Ended

Nine Months Ended

September 30,

(In millions)

2025

2024

2025

2024

Net Income

106

100

253

226

Depreciation and amortization expense

Restructuring charges

Acquisition-related costs

Provision for income taxes

Non-cash stock-based compensation expense

Interest expense

Other

—

Adjusted EBITDA

195

165

494

394

Key Business Metrics

As of September 30,

2025

2024

Number of home warranties (in millions)

2.11

1.95

Renewals

1.58

1.50

First-Year Direct-To-Consumer

0.32

0.27

First-Year Real Estate

0.21

0.18

Increase (Reduction) in number of home warranties (1)

)

Customer retention rate (1)

79.4

77.7

(1)

Customer retention rate is presented on a rolling 12-month basis in order to avoid seasonal anomalies. As of September 30, 2025, excluding the 2-10 home warranties acquired on December 19, 2024, the reduction in home warranties was one percent, and the customer retention rate was 78.1 percent.