Frontdoor (FTDR) Q1 2026 earnings summary

Executive summary

• Revenue grew 6% year-over-year to $451 million in Q1 2026, with net income up 11% to $41 million and adjusted EBITDA up 3% to $104 million, driven by higher realized prices and volume in key channels.

• Member count is expected to grow approximately 1% for the year, marking the first organic growth since 2020, with accelerated growth in first-year channels.

• Share repurchases totaled $60 million in Q1 2026, reflecting disciplined capital allocation, with $650 million authorized and $269 million remaining as of March 31, 2026.

• 78% of revenue came from renewals, 6% from real estate, 7% from direct-to-consumer, and 9% from non-warranty and other channels.

• Approximately 2.1 million active home warranties were in force as of March 31, 2026.

Financial highlights

• Gross profit margin held steady at 55%, with gross profit up 5% to $248 million year-over-year.

• Adjusted diluted EPS increased 14% to $0.73 per share; diluted EPS rose 18% to $0.57.

• Free cash flow was $114 million, with an expected EBITDA-to-free-cash-flow conversion rate over 60% for 2026.

• Liquidity at quarter-end was $603 million in cash and equivalents, with $448 million unrestricted.

• SG&A as a percentage of revenue increased by 50 bps to 36%, mainly due to higher marketing and personnel costs.

Outlook and guidance

• Q2 2026 revenue expected between $635 million and $650 million; adjusted EBITDA guidance is $198 million–$208 million.

• Full-year 2026 revenue guidance: $2.155 billion to $2.195 billion; adjusted EBITDA: $565 million to $580 million; gross profit margin projected at 54% to 55%.

• Member count expected to grow ~1% in 2026, led by ~5% growth in first-year members.

• Full-year 2026 outlook reaffirmed, with 53–54% of adjusted EBITDA expected in the first half due to seasonality.

• Management expects macroeconomic headwinds, including inflation, high interest rates, and a challenging real estate market, to continue impacting demand and costs.