Frontdoor Reports 13% Revenue Growth to $426 Million in Q1 2025

Frontdoor, Inc. reported a revenue increase of 13% for the first quarter of 2025, reaching $426 million compared to $378 million in the same period of 2024. The company's net income also rose to $37 million, up from $34 million year-over-year. This growth was attributed to a 12% increase in renewal revenue, which accounted for 78% of total revenue, alongside contributions from the recent acquisition of 2-10 HBW, which added approximately $41 million to revenue. The company’s earnings per share improved to $0.50 from $0.43, reflecting a positive trend in profitability.

In terms of operational metrics, Frontdoor reported approximately 2.1 million active home warranties as of March 31, 2025, a 7% increase from the previous year. The customer retention rate also improved to 79.9%, up from 76.3% in the prior year. However, the company faced challenges in the direct-to-consumer segment, where revenue declined by 9% due to lower price realization as part of efforts to drive sales. The overall increase in revenue was partially offset by a decrease in the number of renewed home warranties, reflecting the impact of a challenging real estate market.

The company’s financial position showed a slight increase in total assets, which rose to $2.121 billion from $2.107 billion at the end of 2024. Cash and cash equivalents increased to $506 million, up from $421 million, while long-term debt decreased slightly to $1.164 billion. Selling and administrative expenses rose to $151 million, driven by costs associated with the 2-10 HBW acquisition and increased customer service expenses. Interest expense also increased significantly to $19 million, reflecting a higher debt balance compared to the previous year.

Strategically, Frontdoor completed the acquisition of 2-10 HBW on December 19, 2024, for $585 million, which is expected to enhance its market position and diversify its service offerings. The acquisition is anticipated to provide new sales channels and increase revenue from home warranty customers. The company has also initiated a share repurchase program, with $111 million spent on repurchasing shares as of March 31, 2025, under a broader authorization of up to $650 million over three years.

Looking ahead, Frontdoor remains cautious about the macroeconomic environment, including inflation and high interest rates, which could impact consumer sentiment and demand for home warranties. The company plans to continue leveraging its acquisition strategy to expand its customer base and enhance its service offerings while navigating the challenges posed by the current economic landscape.