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Sep 30, 2022
Frontdoor Q3 2022 Earnings Report
Frontdoor's third-quarter performance in 2022 showed revenue growth, but net income and adjusted EBITDA decreased due to rising costs, however, full-year revenue and adjusted EBITDA guidance were raised.
Key Takeaways
Frontdoor reported a 3% increase in revenue to $484 million for Q3 2022. However, net income decreased by 63% to $28 million, and adjusted EBITDA decreased by 35% to $79 million. The company broadened cost reduction initiatives and reduced its workforce by 7%. Despite these challenges, Frontdoor raised its full-year 2022 revenue and adjusted EBITDA guidance.
Revenue increased by 3% to $484 million, driven by price and product mix changes.
Net income decreased 63% to $28 million, impacted by a Streem impairment charge and restructuring costs.
Adjusted EBITDA decreased 35% to $79 million due to higher contract claims costs.
Full-year revenue guidance increased to $1.65 billion to $1.66 billion, and adjusted EBITDA guidance increased to $185 million to $195 million.
Frontdoor
Frontdoor
Frontdoor Revenue by Segment
Revenue by Segment
Renewals Revenue
CapyFin.comOther Revenue
CapyFin.com Forward Guidance
Frontdoor expects revenue between $326 million and $336 million and adjusted EBITDA between $4 million and $14 million for Q4 2022. For the full year 2022, the company anticipates revenue between $1.65 billion and $1.66 billion and adjusted EBITDA between $185 million and $195 million.
Positive Outlook
- Upper single-digit revenue growth in the renewal channel.
- Upper single-digit revenue growth in the direct-to-consumer channel.
- SG&A range updated to $515 million to $520 million, an approximately $45 million reduction from the original 2022 outlook.
- Gross profit margin updated to approximately 41 percent, driven primarily by the continuation of high cost inflation that is partly offset by higher pricing and process improvement efforts.
- Revenue growth is mostly driven by higher price and product mix.
Challenges Ahead
- Approximately 30 percent revenue decline in the real estate channel.
- Low-single digit revenue decline in the direct-to-consumer channel.
- Adjusted EBITDA of $4 million to $14 million, a decline from the prior year period.
- Revenue growth customer growth is expected to decline approximately 5 percent.
- High cost inflation that is partly offset by higher pricing and process improvement efforts.
Revenue & Expenses
Visualization of income flow from segment revenue to net income