Frontdoor, Inc.

Second-quarter revenue increased 5% year over year to $645 million. Gross profit was $378 million and gross margin improved about 100 basis points to 59%. Net income grew 13% to $125 million, adjusted EBITDA rose 10% to $220 million, and adjusted EBITDA margin expanded 200 basis points to 34%. For the first half, revenue grew 5% to $1.1 billion, adjusted EBITDA increased 8% to $324 million, net income rose 13% to $167 million, and adjusted diluted EPS increased 17% to $2.66. Full-year guidance was raised: revenue is now expected at $2.19 billion to $2.21 billion, adjusted EBITDA at $585 million to $600 million, gross margin at approximately 55%, SG&A at $685 million to $695 million, capex at about $30 million, and the tax rate at approximately 25%. For Q3, revenue is expected at $642 million to $652 million and adjusted EBITDA at $197 million to $207 million.

Bill Cobb framed the quarter as an inflection point, emphasizing that total member count is growing again for the first time since 2021. He highlighted three strategic themes: member growth, structurally higher margins, and disciplined capital returns, including the plan to finish the current repurchase authorization by year-end. He was optimistic about the DTC playbook, the multi-brand approach with 2-10, and the HVAC upgrade program, which he said still has substantial runway with only 3% penetration of the member base.

Jason Bailey emphasized that the business is increasingly cash generative and margin-accretive, pointing to more than 60% conversion of adjusted EBITDA to free cash flow and $233 million of free cash flow in the first half. He cited $472 million of unrestricted cash and $722 million of total liquidity at quarter-end, and reiterated the plan to buy back about $330 million of shares this year. On margins, he said Q2 benefited from about $5 million of weather and about $4 million of favorable cost development, while full-year adjusted EBITDA guidance was raised to $585 million to $600 million despite a planned second-half marketing step-up of more than $10 million.

Analysts focused on the 7% real estate member growth despite flat existing-home sales, asking whether pricing, local strategy, or market share gains were driving it. Management said the channel is being pushed more locally with franchisees and brokers, supported by selective discounting, more agent education, and better use of technology; they also noted higher inventory is helping attach rates. Questions also centered on HVAC growth and margins, with management saying the program is scaling quickly, margins are currently in the low 20%s, dynamic pricing should improve profitability over time, and refrigerant changes have not had a major impact.