Frontdoor, Inc. reported fourth‑quarter and full‑year 2025 financial results that surpassed analyst expectations. Q4 revenue reached $433 million, up 13% year‑over‑year, while net income was $1 million and adjusted EBITDA was $59 million. The company’s gross profit margin for the quarter was 49%, a modest improvement over the 47% margin reported in Q4 2024. For the full year, revenue totaled $2.09 billion, a 14% increase, net income was $255 million, and adjusted EBITDA reached $553 million. The full‑year gross profit margin expanded to 55%, up 150 basis points from the previous year.
Frontdoor’s adjusted earnings per share of $0.23 beat the consensus estimate of $0.13 by $0.10, a 74% beat. The strong EPS performance was driven by disciplined cost management, higher realized prices, and the continued integration of the 2‑10 Home Buyers Warranty acquisition, which added volume and higher‑margin non‑warranty revenue. The company’s pricing strategy and operational efficiencies helped offset the modest increase in service‑request volume.
Revenue growth was supported by a 66% jump in non‑warranty and other revenue, a 10% rise in renewal revenue, and a 13% increase in the real‑estate channel. The non‑warranty segment, which includes HVAC and Moen programs, grew 48% in Q4, reflecting the success of new service offerings and the momentum from the 2‑10 acquisition. Renewal revenue growth was driven by a stable member base and modest price increases, while the real‑estate channel benefited from a rebound in home‑warranty demand.
Margin expansion in Q4 was largely a result of higher realized prices and favorable weather conditions that reduced the volume of service requests. The 49% gross margin in Q4, compared to 47% in Q4 2024, demonstrates the company’s ability to maintain pricing power even as it scales its non‑warranty business. For the full year, the 55% gross margin, up 150 basis points, reflects the cumulative effect of pricing gains, cost controls, and the integration of 2‑10’s operations.
Management guided for Q1 2026 revenue of $440 million to $445 million, a range that falls short of the consensus estimate of $457.1 million, indicating a cautious outlook for near‑term demand. Full‑year 2026 revenue guidance of $2.155 billion to $2.195 billion also trails analyst expectations of $2.2 billion. However, the company raised its FY 2026 adjusted EBITDA guidance to $572.5 million, above the consensus estimate of $553.5 million, signaling confidence in margin expansion and cost discipline moving forward.
Frontdoor completed $280 million of share repurchases in 2025, representing 7% of the company’s shares outstanding. The buyback program underscores the company’s commitment to returning value to shareholders while maintaining sufficient liquidity to support growth initiatives.
Frontdoor’s Q4 results and full‑year performance illustrate a successful turnaround, driven by strategic acquisitions, a growing non‑warranty business, and disciplined cost management. The company’s guidance reflects a measured view of near‑term revenue growth, tempered by a focus on sustaining margin expansion and shareholder returns.
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