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, with gross margin expanding 150bps to 55%.

• Member count stabilized in 2025, with sequential growth in the last two quarters and expected growth in 2026 for the first time since 2020.

• Non-warranty revenue, especially from HVAC and builder programs, grew 48% to $128M and surged 66% YoY, with the 2-10 acquisition delivering over $20M in cost synergies ahead of schedule.

• Share repurchases reached $280M in 2025, reducing shares outstanding by 7% and 17% since 2021, with plans to complete the current authorization ahead of schedule.

• Moen partnership contributed $15M in its first year, and the appliance upgrade program launched in select markets.

Financial highlights

• Full-year 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); net income margin: 12%; diluted EPS: $3.42 (+14% YoY); adjusted EPS: $4.09 (+22% YoY).

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

• Free cash flow: $390M; operating cash flow: $416M; liquidity of $660M; net leverage at 1.4x.

• Renewal revenue grew 10%, first-year real estate revenue rose 13%, and non-warranty revenue surged 66%.

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); long-term margin target raised to mid-20% range by 2028.

• CapEx anticipated at $30M–$35M; effective tax rate expected at 25%.

• Member count forecasted to grow 5% in both DTC and real estate channels, with home warranty member count projected to turn positive.

• Q1 2026 revenue: $440M–$445M; adjusted EBITDA: $95M–$105M.