Frontdoor | 8-K: FY2026 Q2 Revenue Beats Estimate at USD 645 M

Revenue: As of FY2026 Q2, the actual value is USD 645 M, beating the estimate of USD 643.64 M.

EPS: As of FY2026 Q2, the actual value is USD 1.76.

EBIT: As of FY2026 Q2, the actual value is USD 186 M.

Second-Quarter 2026 Financial Summary

For the second quarter of 2026, Frontdoor, Inc. reported a gross profit margin of 59%. Net Income increased by 13% to $125 million, and Adjusted EBITDA increased by 10% to $220 million. Adjusted Net Income for the quarter was $137 million, up 13% from $122 million in the prior year period. The company completed $181 million in share repurchases year-to-date through July 2026, marking an increase of over 21% from the same period in the prior year. The home warranty ending member count grew by 1% to 2.11 million members.

Revenue by Customer Channel (Three Months Ended June 30, 2026)

• Renewals: Revenue increased by 4% to $479 million, primarily driven by higher realized price.
• Real estate (First-Year): Revenue increased by 3% to $45 million, mainly due to higher volume, partially offset by lower realized price.
• Direct-to-consumer (First-Year): Revenue decreased by -2% to $55 million, attributed to lower realized price from promotional strategies, partially offset by higher volume.
• Other: Revenue increased by 19% to $67 million, primarily due to the New HVAC upgrade program.

Period-over-Period Net Income and Adjusted EBITDA Bridge (Three Months Ended June 30, 2026 vs. 2025)

Net Income and Adjusted EBITDA saw contributions from various factors: $16 million from higher revenue conversion, $7 million from decreased contract claims costs (reflecting a lower number of service requests per member, including $5 million from favorable weather, partially offset by low-single digit cost inflation), - $3 million from higher sales and marketing costs, - $2 million from customer service costs, - $2 million from stock-based compensation expense (for Net Income), $1 million from acquisition and integration costs (for Net Income), $2 million from other general and administrative costs, $1 million from depreciation and amortization expense (for Net Income), - $2 million from restructuring charges (for Net Income), $1 million from interest expense (for Net Income), $1 million from interest and net investment income (for Net Income), and - $6 million from provision for income taxes (for Net Income).

Cash Flow (Six Months Ended June 30, 2026)

Net cash provided from operating activities was $245 million, comprising $223 million in earnings adjusted for non-cash charges and $22 million from working capital. Net cash used for investing activities was - $14 million, primarily due to capital expenditures for technology projects. Net cash used for financing activities was - $169 million, mainly from $151 million in share repurchases and $14 million in scheduled debt payments. Free Cash Flow was $233 million. Cash and cash equivalents at the end of the period totaled $627 million, including $155 million of restricted net assets and $472 million of unrestricted cash.

Key Business Metrics (As of June 30, 2026)

The total number of home warranties was 2.11 million, representing a 1% increase. This included 1.57 million renewals, 0.33 million first-year direct-to-consumer, and 0.22 million first-year real estate home warranties. The customer retention rate was 79.6%.

Outlook / Guidance

Frontdoor, Inc. is raising its full-year 2026 outlook based on strong performance. For the third quarter of 2026, the company anticipates revenue between $642 million and $652 million and Adjusted EBITDA between $197 million and $207 million. For the full-year 2026, revenue is projected to be between $2.19 billion and $2.21 billion, with a gross profit margin of approximately 55% and an Adjusted EBITDA margin of approximately 27%.