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Frontdoor: Frontdoor's Strong 2025 Results Set Stage for Continued Growth

Frontdoor's 2025 revenue increased 14% year-over-year to nearly $2.1 billion, driven by a 2-10 volume growth, expansion in non-warranty, and price increases. The company's gross profit margin reached a record 55%, and net income grew 9% to $255 million. Adjusted EBITDA grew 25% to $553 million, with a record $280 million spent on share repurchases. The actual EPS came out at $0.23, beating estimates of $0.11, showcasing the company's strong profitability.

FTDR

USD 68.57

4.27%

A-Score: 4.7/10

Publication date: February 26, 2026

Full Report

Author: Analystock.ai

📋 Highlights
  • Revenue Growth 2025 revenue rose 14% to $2.1 billion, driven by 2-10 volume, non-warranty expansion, and price increases.
  • Gross Margin Record Gross profit margin hit 55%, while net income grew 9% to $255 million, and adjusted EBITDA surged 25% to $553 million.
  • Share Repurchases $280 million spent on share repurchases, with $390 million in free cash flow and a target to complete authorizations by early 2027.
  • Member Growth & Programs Member count stabilized in 2025, with 5% growth expected in 2026; HVAC upgrade program grew 48% to $128 million.
  • 2026 Outlook Revenue forecasted at $2.155–$2.195 billion, with 26% adjusted EBITDA margins and a long-term EBITDA margin target raised to mid-20% range.

Operational Highlights

The company stabilized its member count in 2025, a key milestone, and expects member count to grow in 2026, driven by continued strength in first-year channels. The new HVAC upgrade program grew 48% to $128 million, and the company launched an appliance upgrade program in select markets, indicating a successful expansion of its service offerings.

Outlook and Guidance

For 2026, revenue is expected to be in the range of $2.155 billion to $2.195 billion, with adjusted EBITDA margins around 26%. The company expects to maintain strong gross margin levels and generate significant cash flow, driving long-term value creation. Analysts estimate next year's revenue growth at 5.8%, aligning with the company's guidance for low single-digit growth.

Valuation and Return Metrics

Frontdoor's current valuation metrics, including a P/E Ratio of 19.28, P/S Ratio of 2.36, and EV/EBITDA of 11.56, indicate a reasonable valuation. The company's ROIC of 20.73% and ROE of 101.09% demonstrate its ability to generate strong returns on capital and equity. The Free Cash Flow Yield of 7.87% is also attractive, suggesting a potential upside in the stock.

Growth Initiatives and Investments

The company plans to invest in growth engines like non-warranty, sales and marketing, and AI tools to drive efficiency. They are prioritizing growing ending member count, with a balanced approach to investments and low CapEx of $30 million to $35 million, generating significant cash. The home warranty count is expected to grow 5% this year, driven by growth in first-year real estate and direct-to-consumer channels.

Frontdoor's A-Score