Frontdoor (FTDR) investor relations material

Executive summary

• Q3 revenue rose 6% YoY to $655M; net income increased 10% to $116M and Adjusted EBITDA rose 5% to $205M.

• Total home warranties grew 1% to 2.14M; retention was 79.7%, up from 79.4% a year earlier.

• FY 2026 revenue and Adjusted EBITDA outlook increased; a new $1B share repurchase authorization was approved.

Financial highlights

• Q3 revenue was $655M versus $618M; gross profit was $362M versus $353M, and gross margin declined to 55%, down 190 bps YoY.

• Net income was $116M versus $106M; GAAP diluted EPS was $1.65 versus $1.42, while Adjusted diluted EPS was $1.81 versus $1.58.

• Nine-month revenue was $1.752B versus $1.660B; net income was $283M versus $253M, and Adjusted EBITDA was $528M versus $494M.

• Nine-month operating cash flow was $318M and Free Cash Flow was $298M, versus $315M and $296M, respectively.

Outlook and guidance

• FY 2026 revenue outlook increased to $2.205B–$2.215B from $2.19B–$2.21B; Adjusted EBITDA outlook rose to $590M–$600M from $585M–$600M.

• FY assumptions include ~4% realized price growth, ~2% volume growth, ~1% home warranty growth, gross margin of ~55%, and SG&A of $685M–$695M.

• FY 2026 tax rate outlook was lowered to ~24%; CapEx is expected to be ~$30M.

• Q4 outlook implies revenue of $453M–$463M and Adjusted EBITDA of $62M–$72M.

• HVAC upgrade revenue is forecast at $175M in 2026, versus $128M in 2025.