FTDR - Earnings call transcript Q3 2019

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Operator

Greetings and welcome to the frontdoor Third Quarter Earnings Conference Call and Webcast. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]

It is now my pleasure to introduce your host Matt Davis, Vice President of Investor Relations and Treasurer. you. Thank

begin. may You

Matt Davis

Good quarter and XXXX operator. joining you frontdoor’s third earnings afternoon, you, thank everyone, for Thank conference call.

today's frontdoor's Brian on Rex me call Chief frontdoor's Joining Executive Tibbens; and Chief Turcotte. Officer, Financial are Officer,

will release website, that Before updates. today's I can today's reporting located financial presentation to of third release during slide a be Relations out as and website call our our frontdoor's all to is www.frontdoorhome.com. find be company. as used open Investor The our provide more the the overall purpose section further quarter well at visit our of financial listeners details would today, regarding encourage market The found issued which on press frontdoor results. also of to frontdoor's press is about call XXXX business investors an with results

X These risk company's with Please explained and related stated discussion any actual various detailed you and Securities uncertainties cause this results call statements remind the on in presentation, factors detail forward-looking should and filings which of those materially risks Commission. As Risk to aware discussed to to in risks refer uncertainties contain for Investors and the Exchange Factors Slide I'd the more a are subject the from to such section today. like could to that statements filings statements. are be will here our of webcast and the differ forward-looking forward-looking of that statements. our

forward-looking whether or future no or by new of of as obligation as law, undertakes a today, company events statements November statements as result any X, required All update forward-looking to revise publicly otherwise. except are the made information, and

press on non-GAAP these in available We financial our have as website. definitions measures our performance. call, press appendix the included most financial throughout We've of to better release we presentation comparable to the GAAP to these in included our release understanding terms presentation in well our also of the non-GAAP financial in measures measures will today's order as and and reconciliations certain financial the reference you assist

statements assets liabilities us. and revenues, to include financial Our directly all costs, attributable

to XXXX, our allocations occurred periods which of behalf. prior certain statements include for October ServiceMaster incurred our X, spinoff, costs on the Additionally, from financial on

will For available our shown those I'll items a Rex through to discuss XXXX agenda outlook. on He objectives financial speak will and strategic our Brian then full our provide quarter along details following lead Slide performance. regard with X. the summarizing in our financial then results, by third for on provide presentation statements XXXX business follow website, and off third update more year our the will XXXX. update and quarter will to our walk

then will the questions. for open line We up

Rex over for the to turn now comments. Rex? call I'll opening

Rex Tibbens

morning Thanks, Matt, good and everyone.

quarterly our Slide quarter, with cover I'm financial on will our start summary shown in performance this X. which detail later. Let's Overall, more with very pleased Brian

of points that more and on will the strategic our speak anniversary what items last company me the Two on the of X. XXXX I I'll page. has be proud be the not when this objectives. launched on which over our of highlights review highlight celebrated pricing. end year could October offering, dynamic a quarter into the went the in year. few were I a one our of year, public Let now third recent on-demand efforts by We both more biggest as team introduction accomplished this of these the

channels. Slide X, provide Let’s an customer move and business our update to of where our three I'll on speak each now to acquisition

the over some our let accomplishments those, on of touch I review Before first last year. me

and we improve been we've an to several laid of on our out promises. delivered XXXX. October since Last mentioned, year, have a we business those plan independent I As company aspects public of

Some the for obsession our the in and soon to high disrupting evolution market allow and out on industry; home year the the of include pricing nimble better than launch day. let great and culture dynamic $XXX of services hassle larger this be company created customers; we’ll doing things highlights new more of and developed billion of embraced as focus will less technology offering ownership, and a the team taking us performing that every to serve flexible re-stetting a and on-demand the customer vision year's a home; build and

have improving achieved margins, also profitability overall these our gross We initiatives and profile. while financial

our focusing expanding focus organization's to cost on on from reductions are Our now growth. also priorities transitioning

drive processes, growth. our delivering top-line We continuously While the is and the additional to we reinvest business. now reductions we'll our are main now initiatives long-term profitable to believe improve cost work toward time strive in to directed

us and Our XXXX I'm today offerings. business on-demand that increase has opportunity to strong service an technology confident in marketing, on focus trajectory right performance put beyond. the sales, provided and the in to invest our investment in will our

Now, let's We're through channel, direct-to-consumer where be investments. marketing increase total more marketing. performance amount are only to accelerating dollar marketing first our spend, move our we the of also we're efficient to going to year not trying

to to team new The use help our sales. We're example, percent field this form to In firms. broker real estate growth. our with maximize and shift marketing. as the more possible real technology team estate customer brokerage team as we is of sales focused increasing improving as and digital also more year increase to deploy see on our drive major advertising continue relationships quickly behavior new we the For efficiently, ramping engagement these partnerships is a expand our of favorably channel, of spending mix first continue to

existing existing shows sales the and help growth viewpoint, macro It that a to home interest X% Association rates still data appears will a a of nearly tailwind to From in rate we quarter. market. National home Realtors stabilizing the are in third from sales lower provide believe the that

not pace with we're change. estate our real channel, the making some satisfied of we're While progress in

to given additional we estate, recognize is in revenue. real than impact growth. time have evaluated in feel the year of drive an expected year we're performance to Investing our result, the more direct-to-consumer due we it's towards in a more way this As rather this strategies lean to Also, customer to next channel channel.

Turning indicated our our on my tiger quarter this second a is trailing channel, renewals, to we blended for rate why XX-month to priority That's largest call, that customer it the our had potential teams. improving renewal which did to earnings the quarter top down retention XX%, round on basis.

a the and customers. of investigating we retaining job believe several been last this trend: the root plan order reverse better do that to we we over identified We've in drivers to First, address causes quarter can

and back optimized. not to end, second, technology don't that several renew. easier; been to systems saving customers have gaps efforts, been process top as on the reason we've customers improve We retention were that moving has changes make end making identified our the while To teams deploying identified

last this, over practices months customers the are implemented we've retain To new who address several moving. to

the plan. they value the to taking For plant now or underlying the have try existing new on the example, retention, third, place we home; we the processes customer as improving to home actions proposition service additional for keep such when quickly in improve move place and are

an independent in of Year journey public company. experience X are customer We as our

lead higher customers' While problems we levels progress, focus should over great retention unrelenting on are to making time. our

We continue the a focal make this to key for company. area

time. everyone we reminding by recognize section a this X/XX at close that revenue me Let

these it'll up we time actions these believe many in making are we great progress our on fronts, take before of financials. While show

update Now where give please XXXX quick I'll X, turn strategic to Slide a on objectives. our

first objective strategic experience. Our customer is enhancing the

of a mentioned, on we I front. have initiatives lot this As

both our completed summer just year peak from managed we – better and have availability much perspective. We response and season, call contract this the center period than last we

we last on year. much such our fall are scale than some new relatively Additionally, as out rolling system larger heating tune-ups a services,

services to services markets, limited to repair, continue cleaning test in to we to continue gutter add new We test our as platform. as look such and services roof new new

execute We improving the customer around launch of long-term also experience, to the eventual self-service including continue opportunities. initiatives

price pleased end team our of our customers. pricing Our second way announce is October. dynamic for deliver to renewals the to fundamentally strategic to objective I'm the that at we launched successfully cross-functional alter

objective, our business and done The has job our to executing improving on processes. costs turning Now a cost-reduction great containing third our team initiatives.

center process a procurement customer will next deliver self-service better leverage and utilizing focused for to maximizing We which target are on our experience. now the improvement, around

Now which moving people. where To back the to call live our our Good giving by is celebrated objective, our work fourth communities we to through Day. commemorate and program one-year we we anniversary, outreach an

of contribute community am of our team's a Our notable in associates to and talent to their brought proud super more to than the enthusiasm October. goods early XX organizations variety time causes. I

across the very make quality continued encouraged them also decisions ownership to the empowering by among by I address we and our employees talent have of opportunities. We remain to move quickly to organization. promote

become initiatives we on engagement development our new drive to we enhancing focus people established more As our company, around a more through house rules. will

objective XXXX. fifth for our Technology is strategic

on technology in These remains Our the customer-facing by as and year delivering currently as include deploying the initiatives initiatives. moving end pricing October. The well dynamic focused was on to the upgrading are of our track. team cloud that launched infrastructure

technology continuing to scale enable investments and us technology to Phoenix. Memphis locations organization will continue more also We These in allow and invest campus, scale our growth our time efficiently to over while more Denver nimble. to be our in entire

coming for which another sixth layer we will On-demand on-demand organization, strategic objective over represents to the launch believe the years. expect our in scale We fourth growth quarter. of our

will are enhance and believe to uncertainty advocacy with and we to Our the our initial It this for repairs leverage home where services single-incidence commitment reduce that today. focus service on will our larger delivery, replacements. in market. quality. they Throughout, These knowledge empower launch historical appliance them reflects launch offerings the will transparency, customers data and meeting offerings price

and contractors, forward quarter. our deliver first is that the sharing operational technology of network look closer this approach We move business offerings step we our as our value. this a in with to on the an long-term believe customer platform we and launching will investments, more Coupled to ongoing

our we conclude, service view in growth increasing through to first, in on organic focus business two plan on-demand. To while We our a continue we growth. dynamic launching legacy improve businesses; operations, home through driving lenses: and our are time our as second, growth very

launching We less and are have our in our improving built, profits operations. core while also business in a than on-demand year,

see the period entering can we business be grow now evolution long-term where business same more out and strategy growth. in drive making a We are in where our responsibly. beyond, investments playing the the We XXXX to we'll of

extremely team are what our and has shareholders steps future very all last accomplished customers. and of taking proud necessary When company think where that we this of and I our optimistic about the I'm business our I believe customers, the the stakeholders. year, our delight to our products advance remain about for we were develop

detail. more And year, I'll now our turn our cover who the updated, call over quarter full discuss Brian in Brian? will financial to outlook. XXXX third XXXX results

Brian Turcotte

turn review Thanks, I'll Slide Good financial and quarter. the morning. Rex. to results Please X from briefly the key

Revenue the volume higher consists the driven points points quarter and a plan revenue per of increased increase price price prior of growth over increased home of million higher year service three period. X% number by to primarily an components plans. average in The four and $XXX versus of this

As revenue we mentioned of XXXX growth expected late to volume composition increases from early and earnings price the year-over-year shift previous XXXX. on calls, due we this implemented in price higher-than-normal to

in our over realization. home three to and from derived was price plans service year growth channels, primarily of customer period revenue prior up due at the customer Looking acquisition improved renewals XX% number

increased decline service versus up plans year improved price due growth new increased realization quarter. XX% real the home in as direct-to-consumer was marketing. more was Gross increased third prior investments dollars the revenue $XXX is profit a And down than revenue margin First-year by X% prior sales. XXX new to X% period mostly in to first-year period driven offset to the estate million basis in XX%. by versus points in profit the Gross year

claims conversion, our driven execution $XX the lower $XX had last a business seasonally and of improvements quarter. million the The was period or increase weather of on spin-off impact was million increase in incidents mild from driven a claims lower by and Net that favorable higher XX% impact for charges. in quarter process was higher $X million costs million year. same revenue favorable by the than This $XX income

income in increase increase favorability expenses, million $X expense increase $X prior an in a interest tax and million and expense million year. This more versus a administrative than offset $XX in selling

increase million was EBITDA million year XX%versus $XXX by Third quarter or the driven of up profit. prior adjusted the period gross $XX primarily in

of had favorable on I’ll now price from $XX through third of change million million you bridge EBITDA million $X volume. we walk quarter to from XXXX. Starting on revenue favorable shows X, third which Slide drivers the from left, XXXX $XX the quarter adjusted conversion, the of including million and

a contract the $XX The net adjustment XXXX million costs a to to includes We related claims quarter Continuing primarily in breakdown items. right, period. XXXX of the a $X development and million related adverse prior both year had million adjustments of cost claims of impact net the number on unfavorable the of cost lower than favorable of to related were million development, the favorable prior of claims. claims in and $X including to a quarter favorable quarter third $X third development adjustment lower

other slightly initiatives incidence. from inflation aforementioned We mild on $X weather favorable related a and by benefit our tariff-related cost-reduction had were a this $X benefit $X seasonally to offset improvement million items and of million the claims million impact process quarter. and favorable costs of The

and due primarily home plan increased customer planned unit channel direct-to-consumer costs the investments in incremental Now the marketing turning service customer experience. improve to to bridge. to drive Sales, million and to growth back $X the service

Next, million decrease higher of we interest insurance-related offset expense $X income. million costs. primarily costs incentive $X finally, we other had and $X compensation general in other of had and And investment administrative $X items higher $X expenses, of in partially favorable of million $X and higher primarily of personnel consisting costs, million million by higher million

million $XX was for securities. activities cash XXXX. compared XXXX, in was months higher position XXXX. from of to $X in our million of marketable cash first over Net primarily year our decline flow This same in by $XXX due in increase million Please a flows the to to used period. and to cash to and $XX the period compared nine X to for earnings now sales investing million related driven activities cash Net prior compared of purchases review million $XXX primarily a for XXXX operating Slide provided was turn cash the

technology $XX Additionally, used $XX was period, to which expenditures included capital for was compared cash to related decreased prior to year activities $XX million financing spin-off million compared by million in the Net costs. million $X our net while X. that year ServiceMaster off October driven the debt driven ceased in in XXXX. activity transfers activity post-spin by was to higher payments, then Current XXXX on parent primarily significantly

$XXX period a spin-off due was Free as XX% operating cash in cash or calculate EBITDA year. was the million This by minus partially higher CapEx, expense. activities from adjusted compared property offset we flow, which same additions charges net provided million last lower to to cash higher increase $XXX interest and primarily

adjusted very December a a We continue be to conversion, project XX, that our will the full with year in flow range. free increase and within cash XXXX from marketable quarter of $XXX million XX% XX% $XXX of EBITDA ended and securities, XXXX. third strong XXXX to cash We million

states. in restricted Of net regulatory that were to total, million be remain the $XXX to of assets compliance requirements certain considered with

times improved net X.X clearly net of financial a As in balances, to the attractive is times a result the to spin-off third quarter. leverage trailing our of on basis of a profile X.X XX-month the debt cash This and reduction EBITDA Frontdoor. our nearly adjusted growth the our at from increasing and and demonstrates adjusted leverage strong ratio EBITDA end growth

our Turning XX. to year project We and full I’ll billion Slide between year outlook. $X.XX range full $X.XX updated XXXX revenue billion. now to cover

real due mainly revenue lower in the channel. our original towards estate in lower the range the growth end to still range, of While of impact guidance, we of move the the

of year. seasonal increase forecasting incidents first gross favorable on claims claims We At and in weather months of milder between now point, incidents this impact we’re our the and the be during expect margin well on XX%. the as full nine a the normal efforts cost-reduction as weather year fourth XX% to reflects quarter. process-improvement This impact

is anticipated EBITDA adjusted to million year $XXX $XXX Full range now between and million.

quarter. our Moving to the at weather fourth outlook the fourth outlook in a EBITDA end of is of adjusted implies provided million. production the $XX range claims previously and higher This incidence quarter the midpoint reflects normal

reflects and and marketing, XXXX due in other customer levels also timing our of investments in drive the It technology, growth administrative beyond. increase our an to selling costs expenses corporate sales, service, staffing to in and

we’re for approximately our mentioned of As quarter, to year full administrative last XXXX. selling expenses be million $XXX and estimating that

table, call be the our to to primarily is now investment. timing is XX%. annual our And finally remain projected spending the $XX down $XX Moving technology range center million million full rate year CapEx due of full capital tax to year and expected to the effective approximately

Matt open Matt? answer-session. With to that, the I'll to over call question-and now back turn the

Matt Davis

Brian. Thanks

release in question-and-answer provided limited is outlook the you encourage but reminder presentation. session, have, questions As we the note to ask please you press our we a to during and that may guidance the any webcast

our on providing any be next not any until metrics comments working are questions. line let's plan Operator, for year. open We early will and financial call operating the XXXX on our

Operator

open floor now please for Thank go first question questions. coming Our Patterson is is you. of [Operator The Instructions] James, Justin from ahead. Raymond

Justin Patterson

Both Great, thank you And you there and takes should the On you you is could update be quarter said much. us in XXXX, about fourth the around how know of about investment in but should weather that about? thinking was puts just tailwind, very last included beyond side talk least wouldn't year I unique Since and, we we very – weather thinking any this guidance? be are much demand, terms how scaling unique on a a was product year very within guidance. at demand headwind.

Thanks. and be takes So the what should forward? thinking puts about on are we the going weather

Brian Turcotte

Yes.

spend demand what was? Justin fourth question your in on question target the regarding Brian much that first how your we is Is quarter.

Justin Patterson

Correct.

Brian Turcotte

that than the as it's XX% had probably And It’s you. different. we what a – told as is but far not roughly more of about CapEx, dramatically little OpEx

full OpEx, $XX originally of right, said $X had year. $X we CapEx million million, million As

linear, towards So heavily perhaps. QX more weighted fairly it's

Justin Patterson

guidance, us just remind you treat weather how that? with normally within Got respect on to you can it. And

Brian Turcotte

Well, in forecasting we're of we QX and at had looking $X we – normal million weather. QX, when favorability we're look

So a normal incident rate.

Justin Patterson

Thank Okay. you.

Operator

you. Thank

of ahead. coming is Sachs. question Ng Please next Michael go Our Goldman from

Michael Ng

good you talk morning. little bit, expected. saw rollout? And during XXXX? little on to we retention to down the for on, expedited have we the somewhat revenue some the on-demand, a the you you it's Thank little the and expect what earlier and benefit pressured investments your renewals DTC the Thanks about just second, real just what rates, about two that confidence Could bit having you. that little you pressure Hey, coming the then a could just on launching retention just I led in rate growth a bit pilot of to talk short bit in should little question. which than a made a just you program estate could led talk bit, in slowing revenue guys more have can a the reaccelerate, when just appreciating

Rex Tibbens

Yes, it's Rex.

launch around service and In new on-demand, and market, excited pretty the incidence the replacements, offering in kind got lean around the terms of in single of geography insight. levels in gives so the transparency to and appliance an opportunity us to we really signals we're to, provide narrowing repairs of,

the to So leverage we cost I price. opportunity our mean, transparency have give data around to customers

and to that. We're launch starting city. in still we'll determine trying we're So world, the likely, in more appliance one

more budget forward we weeks commentary yet We landed launch. but our the on to in coming as haven't XXXX look

things. In on of the question a terms – we're of your different retention, couple very around around focused

the just with is help teams the keep customer we service mentioned, case, that new home home they've our so to place to service ensure biggest also moving, the but either that the plan moving don't purchased. in have to the lose on them we home the use existing we around now plan As retention that moving opportunity is

our this had something those all One thing And a going out until We've call how that that we improving, well, process always revenue obviously, will the obviously, as time. at improve on. though XXXX. might or think we time. collect Even that some process is centers, focused the estate we of time, see quarter, we we that one-twelfth we be point some I payments to of cycle around would then around gaps help that improved gaps recognize we're because not things also back – real retention half over think [ph]

So focused for for, very consumer. that's direct we're why the well, on heavier investment

Michael Ng

Rex. Great. Thank you,

Operator

you. Thank

question Youssef next is from SunTrust of Squali Please Robinson coming Our ahead. go Humphrey.

Youssef Squali

that you so thank on-demand platform, more just out the I for us. little the couple, just a Hi, can for have going to questions. taking back you flesh

going market, talked impact you the trying that are shared your about short-term to that we the you what think the have P&L? through understand of the as I background about secondly, with all aggressive And on Rex, market over quarters just the Just, how what's you In think community pursuing be next strategy? in potential will opportunity go-to-market words, a be? couple other to is growth.

the have You in over million $XXX bank.

very to now X.X is Your as times, net debt-leverage, down which Brian said comfortable. about is

to, trying XXXX your Just reaccelerate guys the investments understand down you. on. potentially doubling either been have appetite your of, on Thank or for appetite in kind you M&A to some that growth

Rex Tibbens

but I on very business long-term perspective. rather we're focused why quarter-to-quarter mean, a growth, manage [Indiscernible] not we’re from the trying that's and to

from looking either accelerate business always may propel business that core for or help inorganic our well. on-demand the opportunities, We’re as technology helping

optimize XXXX. appliances. I’m your ready to in not home. around These and are point of we’re the so expect will, to for specifics I’m of but go have as repair at in home with always question single-incidence to terms city of analysts, who scaling we this talk we’re just aren’t things a continue In the covers not launching launching, of plan year, around said, can or And are replacement we if on detail, the we’re end I a of it going who and you a you variety a to lot can expand XXXX, phone service get, the – your yet. people then lot we on-demand in and about solutions,

market on to we what I by the So doing on, kind so I grow the companies appreciates scale and the – we it’s market it take approved clear, in XXXX comment XXXX that. plan of, Board think that it. responsibly, yet who don’t have can’t does to But

of that’s on weeks, the couple tuned you can next in – give we So more on-demand. stay detail

Youssef Squali

Rex. great. Awesome, Thanks,

Operator

you. Thank

from next Oppenheimer. of Our is Ian ahead. Zaffino question coming Please go

Mark Zhang

on Hey, Thanks for guys. for Ian. This Mark morning. question. our taking is Good

So just so quick Rex, on – another one sorry, just on-demand.

you initiative, market going a sense could plan much the have addressable of details, game you I a market can maybe into look maybe like and and is? of guys the you’ve that better the What opportunity the, single too what’s what the give timeline sort what Now not but instances, mentioned sense know just of, but ultimate is? on that?

Rex Tibbens

We feel in skilled our really value is the trades.

XXXX another looks repair billion if subset if very and yet. then large of to the continue is But in a And haven’t our half $XXX The what that the certainly, around you we’ll – approved market kind replacement. HVAC, for is market, TAM. electric. the and can’t So that Again, trades, of, just of broader billion. I yet, the give so plumbing take focus you, it’s on appliances, opportunity you $XXX got take by like still Board I plan XXXX core

goal our to your But And take the home. so start. that’s where we’ll of ultimate out is hassle

So ultimately, our want to expand we customers value. see where

Mark Zhang

guys. Okay. Thank you, Terrific.

Rex Tibbens

you. Thank

Operator

Thank you.

is William Ralph ahead. from of Please Schackart Our next question go coming Blair.

Ralph Schackart

Good top priority for drivers. if improving could. on retention call, some the Rex, talked about and questions you morning. Two you as identified you I

of, or with maybe, out to? channel some some control do that versus the are your Just at within have you in how factors of the the sort you that there control drivers closing looking that headwind much your real under in macro you’re think of initiatives, new or continue will estate of general, do

year new just, just, footing. And of, increasing broadly contemplating existing versus base on kind the of then is more as call, for of, obviously, talked next that products? the contemplated, How initiative second, much you the marketing kind on spend business, the strong broadly for in on-demand about is Thanks.

Rex Tibbens

sure. Yes,

from, of, in what’s So kind control. our

at there’s of as a HSOA [ph]. up our think we you last about quarter, things certainly, in look When talked we signed lot estate, real control. I

still We’re that. ramping

more work So to fruits, that lot service two lot XXXX. so both we ourselves of that making top our bear providing been account a a the who around the value and There’s We’ve churn tools of expect the we’re of home of that, agents in executives. done will understand plans. within with in aligning sure QX industry

And year the a perspective, think, just then improvement. clearly, around really cost exactly – we leaned retention into we’re doing as last what time this from retention. I That’s

So moving training of around improving anticipate a although we we’re perspective. it a to, work retention new identified. processes our for is We’ve center that the gaps instituted from of rounded doing some we’ve down sales call like lot process

fix cleaning any continuing from side a see And look can plan. of, gaps, kind value of that our home for value to so We’re just, that finding just we lot then general as the perspective did customers ways the service of proposition things house we technology. on process through we’re in a cost-improvement

couple to it So is I’m will bullish that down, it for round for quarters of as retention a quarters something take it that of just to round it took a up. couple

bullish to what but on I’m address – doing So retention. we’re very

Ralph Schackart

the may then year. or for next on-demand And question not on marketing offering may spend, relate to that the

Rex Tibbens

Yes. Yes, apologies.

had to we're drive to the we in our we a decision growth. business made shifting the process we're not – So improvements, XXXX we’ve invest QX in – The since for a for of this QX, and really long some term, managing more quarter-to-quarter. quarter, beat

So marketing this quarter, we are a more for perspective. investing from growth

as This in service quarter a as from well a technology. retention where we've made is perspective also investments

because is had feel our beat, resources use good of to we So we to growth. drive like this

than But spent little time. approval roughly terms $XX grow invest in yet our more Board But billion-plus think we I can plan. spend. well. marketing will really on-demand, XXXX plan depends business to our prudent, our it's on-demand. we million It core we to we on XXXX, Certainly, as in that $X.X and haven't we to that. But got business continue take as have we it In be from year again, this of a this relates going to over

Ralph Schackart

Great. Thanks, Rex.

Operator

you. Thank

Our is go of Chris Gamaitoni next Please question Compass Point. ahead.

Chris Gamaitoni

unit Good the what morning, Rex. was just trying in get related volume was it comp, channel. kind unique? follow-up point I'm I – there to was like improve but you in wanted I seeking you competition are? the to Thanks just the real lower us you're attaching estate my call. prices fix on negative drove kind to process to of, to future. not of figure else business? the that problem out, for to Could what that improvements in taking the Or it, something you're year-over-year

Rex Tibbens

of – working shift have certainly we're from had brokerage challenging We couple a Well, iBuyers the we We've and had as the our well. with firms. larger of Top – saw XX years partners; are been in all larger we've we iBuyers. coming,

that's of our pressures those – some definitely affected So have business.

it I for don't service the as it I plans, as view a consolidation industry. within view competition and more competition home So

Chris Gamaitoni

right. All

So should call it, your win are that new starting focus you're mean that take of, to on the share? I digital to entrants to partners new increase going

Rex Tibbens

with partners market. Yes. into entrants the we'll work We've that, and been continue already new well doing to our as as

So is growth. our goal

so weren't This attaching larger had, to some performing who we growth. year, well. players partners And our I we as ourselves just of we're that can who had help drive those just think,

the our rapidly HSOA, we're trying why better that's so at the to to and have of we volume. change mix signed mix, And manage we've ability

Chris Gamaitoni

I growth annualized should and the out, be line? previously revenue, to your said in still at is you as laid on top that an as EBITDA term the first we longer penalty there range of On just targets expect a then are a you what All kind X/XX or right. accelerate growth, think realize should going And and you we of, investment focus time. obviously, comes think basis, you

Rex Tibbens

for accordingly. flex is get goal our to from said in we've perspective. XXXX an XX% Certainly, could that, gross XXXX, of, EBITDA margins to back we kind Well,

not on budget, looking think we We but focused to because anything XXXX improved for if they've we a decisions haven't I'm to or plan take growth, like We're have that. but made will. XX% responsible the margins growth, those you

Chris Gamaitoni

All right. Thank so you much.

Operator

Thank you.

question is Suisse. go next Please Our from Kevin Credit ahead. McVeigh coming of

Kevin McVeigh

should versus in any contractors offering case-by-case QX, kind about percent Great, of preferred it thanks. terms what think Rex, specific? way to be, is non-preferred or on-demand there in of the of, is

Rex Tibbens

those will In be terms offering mean, on-demand I itself, of preferred? the folks

Kevin McVeigh

Yes.

For I what you're modeling, guess.

Rex Tibbens

contractors. best think be I I will mean, our the certainly, majority for Yes. starting out, preferred

lead source of not our best with why supply. So

but supply Frontdoor on thing business, the as sitting skilled pretty is that – we'll the So trade. great about a grow in – we're position we good the

help both think leverage to on-demand I to deliver network preferred So our contractors as we'll well. and continue

Kevin McVeigh

sensitivity moves it. of the guess, much basis a like of if you Got you XXX mean perspective? you how remind think how And points much I to? the can get And of that that bring free just, XX%, retention, from guess, where what us revenue then then the – you or I can rather? just, is could XX% And back

Brian Turcotte

about $XX X of retention Yes. is basis million. improvement point

Kevin McVeigh

of guess, – And the disconnects many for are I same, moves? Brian, how the just then

Brian Turcotte

catch didn’t that. I sorry, I’m

Kevin McVeigh

it of How that? the many said you – people that What is of percentage What one drivers is retention was percentage the bigger right? of moving, of that? it

Brian Turcotte

driver. It's our biggest

fix different all but we'll pareto out We causes, the see we a haven't gains broken moving, the if on think we I expect. that

Kevin McVeigh

you. Thank Okay.

Rex Tibbens

Thank you.

Operator

you. Thank

coming Fitzgerald Please Our Wells from go of is next Fargo. question Brian ahead.

Brian Fitzgerald

bit tariffs by Process of, a in were benefit guys. Two improvements quarter us, net last the for a of Thanks bit. quick offset ones upon touch quarter. kind versus

Just – as might through pricing to do respect in should XXXX. there's expect margin to look gross there think primary more with you are play wondering And we improvement? there a and to how do done QX process Thanks. you into then improvement Or can driver out that XXXX? we of

Rex Tibbens

Yes.

So for guidance. the kind of, QX, into all, it's baked

improvement. we we're QX to speak, we're last to some of lap the But year. where so improvements a quarter, cost is given think starting from haven't although focused on – we up, on I growth,

the levers have just XXXX, leverage something X% down service, below from long-term our structural left a taking both be and self in a move would we from of still procurement perspective little fixes terms more much us revenue biggest frankly, are, customer-service and to we as technology So in to two that lower.

So longer-term of but big those initiatives are also big, spend. pools

So pretty confident XXXX in process that to together can programs some will improvements. drive continue those we put

Brian Fitzgerald

Got it. Thank you, Rex.

Rex Tibbens

you. Thank

Operator

you. Thank

JPMorgan. is question Carpenter next Cory coming from Our of ahead. go Please

Cory Carpenter

than view lap year to from taking flip your has And growth? Rex, what Thanks. accomplishments on been enter line of? some are proud two what side, one you as anniversary, maybe And remarks execution the as then efficiencies now biggest why do most of you in cost for And risk? questions. you're more right year to two, second, on expected? shift the the Thanks time challenging top then some the what you you this as to one the focus is but touched prepared

Rex Tibbens

this call. Well, time, beaten. resetting was guidance, certainly, it at different call and very this if last We're you we've perspective, think we, about at year time, a that an from least OpEx from

ensuring high-functioning led we I – great, process drive this a later, I'm think of, about the So very can that proud you cross improvements, great of focused the which as company cost very sustained things think inputs we to on year But savings. much is very, are most a team. and the

phenomenal We of be proud year, the have have and and one men Frontdoor an – women can't done more things them. of in I incredible

terms just we of retention In double home. off not our the taking elements the think growth? shareholder to process the We're is to out – can time put continue to grow. growth now drive take making we've we going We're down now in that so the going why to I value. so that focus improvements of and half foundational eye on on and to of place continue

So risk, a of we just – biggest year, the have as what's old. your we're executional in – terms question last – around think year it's I

We from no so of value derive us, means And that always the we hard is that need still work. the we're overnight. and have the ahead and do to suddenly prioritizing company we that by work work transformed

growth always both Achilles in to in of promises. those focus as our focused be look being deliver and We're growth very challenge demand. up So of core on for on at we heel will our the business

Cory Carpenter

you. thank Okay,

Operator

like Rex I to you. comments. closing over At the for to would time, turn floor this Tibbens Thank back

Rex Tibbens

thank and our our operator, third all today. great on who call we you offering. participated of we'll wrap a you, launch on-demand and soon had launched Thank up, our analysts pricing, To to quarter. dynamic We

to in much in These are business is our why services customer XXXX new position investing is evolution be our will and beyond. expand driving to service the the company, more us significant still growth we overall initiatives. and growth do our This to milestones and the core these of to our in experience to on advancing into new have business and initiatives. continue While grow we pursue now believe time actions

look for XXXX forward to again earnings next speaking year. out February your guidance you Thank on we'll in and with call you our everyone. lay our interest when next for we Thanks, Frontdoor, objectives financial and

Operator

Ladies participation. and for gentlemen, This your thank concludes today's teleconference. you

You a lines have the webcast may off time, this and wonderful disconnect at or your day. log

Frontdoor (FTDR) 5 Nov 192019 Q3 Earnings call transcript