Frontdoor (FTDR) Q4 2025 earnings summary

Executive summary

• Achieved record 2025 results with revenue up 14% to $2.093B, net income up 9% to $255M, and Adjusted EBITDA up 25% to $553M.

• Gross margin expanded 150 basis points to 55%; member count stabilized with sequential growth in the last two quarters and is expected to grow in 2026.

• Non-warranty revenue, especially from HVAC and Moen programs, grew 66% to $128M, supported by the 2-10 acquisition.

• Returned $280M to shareholders via share repurchases in 2025, reducing shares outstanding by 17% since 2021.

• Raised long-term Adjusted EBITDA margin target to the mid-20% range, reflecting structural improvements in pricing, contractor management, and cost discipline.

Financial highlights

• FY2025 revenue: $2.093B (+14% YoY); Q4 revenue: $433M (+13% YoY); gross profit: $1.16B (+17% YoY); gross margin: 55% (+150bps YoY).

• Net income: $255M (+9% YoY); Adjusted EBITDA: $553M (+25% YoY); margin: 26%.

• Free cash flow reached $390M; liquidity stood at $660M with net leverage at 1.4x.

• Adjusted diluted EPS for FY2025: $4.09 (+22% YoY); diluted EPS: $3.42 (+14% YoY).

• SG&A as % of revenue: 32% (down 120bps YoY); cash conversion rate of 70%.

Outlook and guidance

• 2026 revenue expected between $2.155B and $2.195B (+3–5% YoY), with gross margin of 54–55%.

• Adjusted EBITDA projected at $565M–$580M (~26% margin); CapEx guidance of $30M–$35M; effective tax rate expected at 25%.

• Home warranty member count projected to turn positive, led by ~5% growth in first-year members.

• Long-term revenue target of $2.5B by 2028, with mid to high single-digit percentage growth expected.

• SG&A of $660M–$680M planned for 2026.