Frontdoor Inc. (NASDAQ:FTDR) Q3 2025 Earnings Beat Estimates, Raises Full-Year Outlook

Frontdoor, Inc. (NASDAQ:FTDR) Reports Strong Q3 2025 Earnings, Beats EPS Estimates

Quarterly Performance Versus Expectations

Frontdoor, Inc. has reported its financial results for the third quarter of 2025, delivering a performance that exceeded analyst expectations on profitability. The home warranty leader posted revenue of $618 million, which fell short of the analyst consensus estimate of $623.3 million. However, the company demonstrated significant strength in its bottom line, with Adjusted Earnings Per Share (EPS) coming in at $1.58. This figure surpassed the estimated EPS of $1.54.

The market reaction has been notably positive. In pre-market trading, the stock is indicating an opening gain of over 2.5%, suggesting investor approval of the earnings beat and the company's forward-looking guidance.

Financial and Operational Highlights

The third-quarter results underscore a period of robust growth and operational execution for Frontdoor.

• Revenue: Increased 14% year-over-year to $618 million, driven by a 12% increase in volume—primarily from the acquisition of 2-10 Home Buyers Warranty—and a 3% increase in price.
• Profitability: Gross profit rose 16% to $353 million, with the gross profit margin expanding by 60 basis points to 57.1%.
• Adjusted EBITDA: Saw a significant 18% increase to $195 million, highlighting strong operational efficiency.
• Member Base: The number of home warranties grew to 2.11 million, an 8% increase from the prior year.

The company's performance was bolstered by growth across all its customer channels, with the "Other" revenue category—which includes new HVAC and Moen programs—jumping 73%. Furthermore, Frontdoor's cash flow generation remained powerful, with Free Cash Flow for the first nine months of the year increasing 64% to $296 million. This has enabled an aggressive capital return program, with share repurchases totaling $215 million year-to-date through October 2025.

Leadership Transition

In a separate announcement, Frontdoor revealed a change in its financial leadership. The company has appointed Jason Bailey as its new Senior Vice President and Chief Financial Officer, effective November 10, 2025. Bailey, who has over 25 years of finance experience and has been with Frontdoor and its predecessor company for more than 15 years, succeeds Jessica Ross. Ross will remain with the company as an advisor to the CEO until the end of the year to ensure a smooth transition.

Updated Outlook and Comparison to Estimates

Looking ahead, Frontdoor provided an updated and raised outlook for the full year 2025, which appears to be a key driver of the positive market sentiment.

• Revenue: The company now expects revenue between $2.075 billion and $2.085 billion. This updated guidance sits slightly below the current analyst sales estimate of $2.111 billion.
• Adjusted EBITDA: Frontdoor increased its Adjusted EBITDA forecast to a range of $545 million to $550 million.

For the fourth quarter of 2025, the company provided an outlook for revenue of $415-$425 million and Adjusted EBITDA of $50-$55 million. The Q4 revenue guidance is notably close to the analyst sales estimate of $424.5 million, suggesting the company anticipates a strong finish to the year.

Conclusion

Frontdoor's third-quarter results paint a picture of a company successfully growing through acquisition and improving its profitability. While revenue slightly missed Wall Street's target for the quarter, a decisive beat on EPS and a raised, confident outlook for the full year have been well-received by investors. The market's positive pre-market reaction indicates a focus on the company's earnings power and cash flow generation rather than a minor top-line miss. The seamless transition to a new CFO with deep company knowledge also provides stability for the next chapter of growth.

For a detailed breakdown of past and estimated future earnings, you can review more information here.

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Disclaimer: This article is for informational purposes only and does not constitute financial advice or a recommendation to buy or sell any security. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.