Frontdoor’s third‑quarter revenue reached $618 million, a 14% year‑over‑year increase that fell just short of the $623.3 million consensus estimate. The growth was driven by a 12% volume lift from the 2‑10 Home Buyers Warranty acquisition and a 3% price increase, but the company’s revenue guidance for the full year was lowered to $2.075‑$2.085 billion, slightly below analysts’ $2.111 billion forecast.
Adjusted earnings per share climbed to $1.58, beating the consensus of $1.54 (or $1.49 in some reports) by $0.04‑$0.09, a 6‑8% beat. The upside was largely a result of disciplined cost management, higher pricing power, and a lower number of service requests per member, which together expanded gross profit margin to 57.1%—60 basis points above the prior‑year level.
Gross profit margin expansion was offset by a decline in operating margin to 23% from 25.7% YoY, reflecting higher operating expenses and integration costs associated with the 2‑10 acquisition. Despite the margin compression, the company’s adjusted EBITDA guidance was raised to $545‑$550 million, up from $530‑$535 million, signaling confidence in continued profitability.
Management highlighted the strategic importance of the 2‑10 acquisition and the launch of an appliance replacement pilot. CEO William Cobb said the results “reflect the continuation of superior financial and operational performance and we are on track for record financial results in 2025.” CFO Jessica Ross noted that “double‑digit increases in revenue and Adjusted EBITDA” were driven by higher pricing and cost efficiencies.
Investors reacted negatively to the earnings release, citing the revenue miss and guidance that fell short of analyst expectations, as well as broader market conditions. The market’s cautious stance underscores the importance of revenue guidance in shaping investor sentiment, even in the face of an EPS beat.
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