FTDR - Earnings call transcript Q1 2020

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Operator

Ladies and gentlemen, welcome to the frontdoor’s First Quarter 2020 Earnings Call. Today’s call is being recorded and broadcast on the Internet. Beginning today’s call is Matt Davis, Vice President of Investor Relations and Treasurer. He will introduce the other speakers on the call. At this time, we will begin today’s call. Mr. ahead, go Please Davis.

Matt Davis

Good first and call. quarter operator. participating you in frontdoor’s XXXX morning, you, thank everyone for Thank earnings conference

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

that located The be today’s at on Investor investors.frontdoorhome.com. used found frontdoor’s of will Relations press be slide section can website, during and the release presentation call which is

with forward-looking to statements. on actual SEC. As from statements which webcast of remind like you in These today. the X I’d and uncertainties that discussed factors Slide those to stated may results subject are detail presentation, contain These are and filings materially various explained call this the the in here risk to risks differ cause could company’s

as in required whether forward-looking the as and throughout statements, undertakes uncertainties risks as are events information, financial of of for Factors new to certain more also a Risk All to result or non-GAAP forward-looking by discussion and of future obligation and May Please call. refer statements. reference our statements the company except measures We statements any such our filings forward-looking X, a may update made today, law, today’s to section related the otherwise. no detailed

in terms our release better press to We performance. financial have to these and comparable financial understanding in order measures included in the definitions these and presentation non-GAAP of the most reconciliations financial of assist measures to our GAAP appendix you the

bear or of if happens this call. Finally, occur. audio apologize that in us we and advance this call Please any during remarks issues the Q&A remotely our working for might during portion are all with

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

Rex Tibbens

everyone. and good Matt Thanks, morning

much field, to heroes pharmacies, on more. my unprecedented care them so jump our behalf for express and frontline I going in of would contractors responders during want helped and they for provide essential America grocery appreciation all keep entire the and like myself thank in do stores, nation and home business We They through sacrifices. service frontdoor true services their the that deep to team, have our gratitude health I first time serving today. the those results, what and this are those extend our Before to into

will President I’ve started I HSA CMO, truly this Home Turning insightful We our especially former both am beat now of and certain from of more proud strong American General am mountains, had Vice business, our execution asked a nimble business. the strategy the new moved and I in frontdoor Shield organization. on year, relied and early to developed and actions a did the to Raj excited Earlier operational us we team’s brands. emerging and and Raj’s as largest our a our Senior counsel and focuses our stronger from increased take on role being since he I a of I to have miss this not first COVID-XX. decisive result crisis of that operationally. I’m in in response ingenuity we financial Manager focus perspective. quarter, a on as Midha, and

Jason companies of City. expertise and technology, especially marketing Jason our in of has as most Marshall to team. We re-imagine across brands our the we are has him served on deep digital we and growth SolarWinds as as company and all innovation excited we a roles Jason Porch.com, leadership as recently Party digital Chief from the facets and to perspective. organization, driving have such at other look March, Officer. several In forward Marketing hired CMO held Jason and and

March at contractors Finally, the we deployment technology our partners to our of cost to and accelerated orders, place no stream in in them. of in light real COVID-XX shelter estate

customers seeing unique we these to of times. contractors are Streem be is present in We and experience already services already beginning know, during teach home. enabling remote homeowners help but always having to alike, the benefits to doesn’t good mean the a

X, detail about to more want the response taken go COVID-XX has to Slide crisis. actions the Turning into I in frontdoor to

about have few normal quite team a Two been operations of have being journey customers. the of our great for customers We job the in and all our I’m rules in owners. around on house proud maintaining they revolve incredibly last the months. frontdoor obsessing and done

is up certainly those to living team rules. Our

our services X,XXX working service. are including was by week environment, while deemed whom our call and system essential safely been contractors, COVID-XX all employees to business us their allows center important Our from to completed a keep homeowners. many successful same contractor providing emerged, have When transition owners, the and small new moved This contact of force technology, a our product to our brute This moved undertaking state protect priority home teams, local repairs governments. a to time. was without March. transitioning little work approximately to in not over of cloud-based X quickly at We continuity I of team to response. formed and could and Working a customer team able centers, the associates our clock, We and company and to business our massive more virtualize proud cross-functional our first the the families. lead efforts. around their the our was crisis to a was It a through any disruptions be service of only and was

anticipate and this time. are full employees successful as we asset. operate At our be don’t frontdoor, a To our need at most important layoffs we at company, to any our capacity employees

our remotely. are to across hire great recruit and talent In business fact, continuing we

we and estate time, emerge during real agent partnerships this We our will leaning this are together. and from stronger into contractor

available our information future. estate keep contractors to we of earlier, services continue communications to service federal prescreen transform frontdoor mentioned the our provide ensure Streem how real for free communities the that in customers of leading distancing I as to government As they it customers work rollout essential state active to to of we with local, and expedited clients behalf charge and now and includes need will and on our and preferred resources contractor interact conversations. technology, during our and and partners making how the calls they on categorized network safe. to customers, manage with This contractors remain customer advocate social and with

Nearly We to essential and accepting XXX,XXX of the distribution customers. operating, home necessary contractors masks also performing services still production lack for secured for contractors jobs PPE all our are our who our equipment.

concerns due online. some of fact, that COVID-XX In are to back remove themselves from service coming these contractors

in crisis. chain Our COVID-XX supply light materially has not impacted of been

to in appliances about systems. appliance and age XX average replacement for sufficient parts had the a system access parts and The are have or already stock. years, and necessary generally We repair is

source U.S. also replacement water of systems in and We conditioners from as production such and many hot have Mexico. heaters companies the our air that

have significant this production our supply chain impact single impacted, business any see to facilities the our replacements of don’t some time. and source at While or been parts don’t we any and

While supply a chain is remains carefully the fluid, daily on our situation monitoring team our and the supply basis. situation position

our furnish services Finally, to home essential we continue to customers.

normal COVID-XX safe with established service questions, a providing additional have maintain and are request address hot operations. us and made to them to line which separate a is has allowed when information We

incidents Although April changes prior request was not any see year. significant we in service below customer behavior do claims in March,

concerns, some avoid to due to requests service a that reduction investigating mild driving was was this their or weather are customers it contractor postpone home. having We enter COVID-XX to

We’re sheltering also looking customers this claims whether into later could impact home at year.

result HVAC, that will For of certain in systems, an such believe example, we as usage severity claims. of increased don’t appreciable [indiscernible] currently

know, the consistently you As developments COVID-XX changing. are around

in developments business to the respond impact. nimbly real-time to continue to will We mitigate

I on will XXXX normally where to provide objectives. an now our X, I turn Slide would update

we focus navigating appropriate through it this uncertain was However, how I in are this on environment, felt more to time.

looking is real we revenue our At mitigate closely are from impact to channel, we are year we this COVID-XX. watching within First, the where exposure environment. the believe main estate macroeconomic the time, first

have impact will industry will on half will service below that but quarter We to This be plans XXXX recover home sold the the XXXX begin through year. reports the this clearly anticipate in have of our then materially channel. back an adverse seen second of

as to we months expect also service the uptick in home it delayed take once couple We expect meaningful market before reboots a of sales. can a see would plan effect a

sales service plans home our group market. Given leveraging estate backdrop, deepening of is estate in real real and structure broker share new the team our this sold increase our to partnerships

our are service believe We plans. also which estate of technology using to our streaming encouraged agents by houses, to real sales could more lead show virtually we

our well portion financial further and our drive In Finally, and for channel. of a in we channel lever estate new crisis XXXX, continues April real to launched We believe Leaning direct-to-consumer remain DTC demand campaign during the work today. originally XXXX is solid. to that a a our reboot for to into us reallocate channel, will marketing efforts. we advertising for us the as earmarked dollars expect direct-to-consumer this we the in worked marketing

broadcast they already well as you’ve have up by our been look encourage If on showing ads seen TV, them online prime time new you to received I consumers.

decline sharp and advertising remains rates, especially greatly areas a broadcast. we’re response, seen fallen In have strong. increasing in in have We conversion prices where in spend

increases viewership our marketing from and seen home decline improve. costs advertising we efficiency staying have As consumers more,

the DTC As well, a next provide some you as better channel our which could recall, retention for perspective tailwinds performs from may much year.

during customer time. the seeing strong We are also renewals remain

first the April. we retention As seen was through quarter, extend that at in have XX% our rate trend overall steady

satisfaction Our our in centers. retention. these improving gaps offset cross-functional of reducing still customer experience a COVID-XX continue will teams predict impact objectives set early and cycle It in efforts and to call potential of is to product, improve the XXXX. if Efforts include on customer progress too addressing to wide-ranging resulting time, our process make ratings

leverage of some our service the customers that are a entered model are back. our enhanced smaller home liquidity business It cash times into flow. protection experiencing home However, substantial positive that we uncertainty of and strengths balance do pulling allows staying to a that convenience of that service are are others with understand during improving this push our us economic plan uncertainty and believe proposition period sheet, issues. resilient budget with forward when more. strong value We and and business generates exiting market businesses We

seem We technology to growth the in as business Streem, advantage take look further service a be home to increase we contracting, of such as and continue eyes opportunities. are trajectory. companies multiples technology tuck-in Both to acquisitions keeping our as well so as our services to home way plan at

we advance process are improvements. to our Next, continuing

to continuing a we employees that other on ways improve. home moved environment, we’re Now work have from focus to to

very that excited will about we allow the contact improve new a and for better example, cloud-based For experience center are productivity. system

continue this allows efficient goals to execute aggressive new be build to list an continue to that and and have teams reduction. teams technology more our Our nimble, efficiency technology and cost higher prioritized to year our goals a on of operations with for us

Finally, accelerating we initiatives. are strategic

COVID-XX, Given contact for our in and working we of have accelerated to assist several deployment XXXX, center system the cloud-based of with initiatives remote reprioritized a world. the our stream

We due to into two are by services have our Candu but well. pushed advancing projects. technology COVID-XX resources been into rollout of as Candu, other other a providing related out trades the pulled has or essential expansion quarter still being

refocus to our We to and of These pivot organization’s done across just we need things as not few decline examples a the have are are to quarter. for technology work seen get able objectives teams of quickly. a our in teams We just our demand. some simpleness

successfully business operations. is take a stronger level uncertainty decisive allowed us our entered a a proud strength, quick these only company. uniquely I that period challenges. event make team’s as and this will us navigate we from business I’m effort consistent of the of this to conclusion, position In to incredibly actions believe maintain and adept of to of

our call detail. will turn more over now cover in will Brian, I Brian? financial who results the to

Brian Turcotte

good you, Thank Rex morning. and

review home we for If initiatives. prior the period year driven turn versus points due revenue look first a service million, customer realization approximately up X the part overall versus as plans year our period versus XX% higher and derived the three the in first points channels, renewals XXXX strong price X of and $XXX the results growth period. now customer to was and Slide in quarter improvement retention to Let’s improved will at to volume. revenue increased We to prior of had from from number quarter of I the financial prior our price X due by X% key increased year

price was up in revenue growth up plans, estate realization, part improved first period, marketing investments First number in year direct-to-consumer the versus was year period, home estate improved year in real the mostly direct-to-consumer prior by X% prior service a versus price year and by revenue in the the home first offset number And of X% reflecting decline year reflecting plans. driven realization. first of service increased real year

that EBITDA over first they particular are we will and of the real the XX% revenue quarters early period would prior in worked our million. the I first increased prior blunts X% $XXX remind increase in period adjusted $XX like versus our quarter. first versus This revenue owed quarter of relatively Bad by evenly the prior XXX income amounts to million, recognize margin while into contracts. the everyone increased to year-over-year did to our basis until a points material year year the relatively any the annual customers. XX%. estate reported impact year the Net a course related base. debt increased million, missed gross in impacting to experience any quarter somewhat was we period $XX remained macroeconomic versus our Thus, in the lag flat our flat while profit at business not profit as trends Gross in sales year impact

now $X $XX X. million Slide revenue of we $XX quarter million versus at on conversion Starting from will and top, period, increased the adjusted year including million volume. XXXX price from had walk first EBITDA favorable higher in you the of I prior first the bridge through quarter the

systems an of impact This costs Excluding of by weather higher requests in revenue, partly offset in by The the and and increase a a the contract million, year initiatives. to inflation impact in consist of repairs. change the of repairs benefits $X relatively of part underlying was the from versus low primarily normal of due offset approximately parts, cost by reduction quarter number cost the process cost favorable labor, higher driven service improvements appliance flat the prior of due to claims period. XXXX first were

home $X Sales primarily growth, increase the direct-to-consumer incremental million marketing and spend marketing primarily $X sales costs drive increased driven was service the cost by the prior customer year in to by The versus million period mostly plan service in channel. due driven and to of the and the costs, first versus finally, higher customer mainly year increase expenses technology of million personnel $X we improve in personnel. administrative primarily retention. consisting investments higher had experience quarter to And general prior period,

million and $XX provided for quarter by a to of activities review cash million, cash cash $X in year position. period activities driven Free operating $XX quarter, cash $X minus used transactions. was million comprised debt Net operating of XX% $X was a year which cash cash $X working a financing quarter period, increase turn now prior Net X our required marketable investing first million, higher increase higher primarily flow year increase from to was versus increase period in in Please Slide was million from prior earnings primarily prior the from the an million working first EBITDA. payments. and due higher needs. as million for in used from cash of a for year capital period. the additions, cash property decrease $X due for securities the was and adjusted needs This flow versus decrease a in prior $X the activities XXXX, to of for cash decline net than the calculate versus primarily an Net provided our cash activities million we capital first required the primarily flow,

requirements $XXX available end $XX marketable state of compared to million the were Cash unrestricted business meet net million while December XX, first XXXX. required totaled and million, to that the any to at increase assets and million for restricted use securities total, a was $XXX purpose. Of $XXX remaining the regulatory quarter,

the aforementioned million. including the $XXX at facility revolving the liquidity end an $XXX million, cash of was of $XXX million Our first unrestricted available quarter un-drawn plus available credit of

be during to our these We reserves to and organically our extreme inorganically, environment. invest to in build the a for as times, foreseeable many to have view and needs. the meeting we to this advantage ability and future both less we measures taking liquidity cash cash uncertain that available economic liquid business, navigate our generate uncertain while through significant companies Unlike cash are continue opportunity

we service the to full year quarter enough year cash first of example, of debt in For generated our $XX approximately this cover million. nearly

leverage there’s The from has and is at Those our our good ratio to have that worth regard is point structure, and spin-off ratio, a you our testament each leverage In of since ServiceMaster a that initially since in X.X recent target followed achievement strength capital X.Xx. to to was noting. adjusted X our first XXXX that the to leverage divided was quarter XXXX, model. and X.Xx. our our every recall will debt the net of of drop of remarkable frontdoor October EBITDA, news by the within quarter continued well most business end the This our spin-off, X.Xx

my I will between in expect on April $XXX prior quarter our million in range second preliminary to our the regarding June, XXXX May current million we comments results, $XXX financial conclude our revenue prepared $XXX forecast and now outlook. remarks for period. our and year some Based with compared million to

Despite our to growth impact impact for real of negative projected the the the for and year-over-year COVID-XX through, We lower the real This $XXX first $XXX also early of range EBITDA and driven impact year positive channel, $XX quarter. second resale beginning million year service projected direct-to-consumer model expect estate to estate plan U.S. channels on we unfavorable outlook million home adjusted sales assumes continue million renewal between sales and period. by second home on in our the existing prior quarter. to to the market home compared flow in

change and to home We existing will these conditions. sale any macroeconomic monitor and continue this subsequent to impact

we this In year. plan our overall the successful outlook, of amortized the when we will impact positive revenue see direct-to-consumer results page outlook August. XXXX report year previously. outlook early the the position to and to macroeconomic the the in related economy revenue have the of revenue our trends, financial into the some we the channel primarily, early, to year-over-year year, pressure taking generally portion mentioned, X/XX full in renewal full of slowdown from back a and around crisis, growth providing any time real marketing the and general to direct-to-consumer we similar our Because quarter missed service sales that reallocate drive we I year. growth In as COVID-XX year estate on model lag base XXXX due recognized our our and withdrawn second back during continue home to half to for uncertainty real full a second expect note but our on reevaluate the our half we Please a a channels our in on time, used at plan the at mentioned And dollars originally regard earmarked playbook the financial will additional to in of estate to during Rex channel. quarter as

reminder, revenue annual the and business channels. approximately in XXXX customer direct-to-consumer grew and X% by and X% efforts As our focusing its a driving service plan home respectively, on XXXX, renewal

that revenue had to the I to deliver efficiencies are built would into cost and customer-facing in plan. we to key COVID-XX, taking impact actions our like to we expense the reviewing reduce non original areas XXXX costs potential closing, operating closely In all of and also unfavorable stress response

further new put plans critical pull and reduced employee significantly and our example, needed. those other travel notice. have And and hires the levers relocations For positions business, hold to drive on most we entertainment have we to until if a needed can for we

crisis. in even to remain these adjustments, we In business to home before as XXXX today just our grow our during Even we single-digit are and extremely term, well-positioned remain economic We on prospects times pandemic. volatility we we we with outlook strength distress, leverage of to are continue still growth sales. during simply near growth adjustments the projecting bullish low the our frontdoor, business. stronger about the these revenue achieved our the the long-term existing some as making the financial were financial based annual At than of in

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

Matt Davis

Thanks, Brian.

open quarter As that line our a reminder, to you release. press during have any questions the outlook note limited may please encourage you the the question-and-answer but for second to is that we Operator, guidance questions. in we ask provided session, let’s

Operator

is [Operator ahead. Ng Michael go question coming Sachs. of Instructions] first from Goldman Please Our

Michael Ng

Great. everyone doing I very for the question. much two. hope is I you, Thank have well. just

much. is whether to trade of little is and or Could one you on then the quarter secondly, think given the expectations not first we Candu to and decision first estate over sales affected? real by think $XX about that those a year investments talked about from expansion U.S. expansion about how perspective, about appropriate could bit The through a about it? your appreciating geographic still will you impacted two. market, just very technology or million estate XXXX, there when million time? Rex, current talk you for Candu. And impacts And is way should revenue $XX the talk most you delaying for the Thank a will real flow be

Rex Tibbens

as I you’re doing hope well. Michael, well

times, little can to did quarter In It’s a or simply technology teams Candu, a We quarter. a – X you our terms like we’ve that I the week. during company. help these of pulled two, it but imagine more in over probably just said virtualize

make that took to or that – to slight are month talking maybe from X two. our mainstream are about we of I a not everyone but opportunities here, understands a some sure So – certainly want want don’t it’s it’s away talking months I about we delay.

change real quarter and great Actually, or So haven’t Candu. to seen demand is maybe team a two with strong. little execute, seeing continues we’re demand. we The any a

trade, it’s a again, of folks of getting expanding a think which just I delay. back the the slight with line it’s kind technology matter So in

planned. increased the We seeing In level demand moment. week, had in cities now. think Every terms we’re we of X geographic that’s at right of kind kind we’re like expansion, the of

think I for Candu. are all systems So go

be, flow And as to because X/XX up, well. have QX, leaning it revenue keep some year simply and time, for can covered we slowing the lag revenue Again, see you, see just don’t going in the for $XX as for I not into mind, recognized plans still we as we’re the an Brian slight why sales million And COVID-XX in you in there’s a question I in or as we total pick before operational as yet. of out just it, thing see be at existing real going – impact about but track that a Right of go well. see a our will terms home, delay listings safe much we buy comments think real as of of estate, estate. buy your kind But That’s then terms Candu. strategic definitely certainly his the a $XX million consider, well, of home to then this that Brian to we between mentioned see say to hard don’t be there’s in one total this investment, believe as of on That around to from the you rest we from perspective, now, when that I we’re when will technology it’s will close. when changing slowly just lag the obviously, will you That increase you direct-to-consumer. kind a it’s from a to really be a year. well, know tell begin will In it’s then you watching to that delay because closely. quarter-on-quarter.

that XX%. have at great We’re a steady good perspective rates from renewal opportunities really and seeing really some our marketing remained happy then

Michael Ng

much the very appreciated. color. much Great. Thank you Rex for

Operator

you. Thank

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

Cory Carpenter

for well. questions. as the for Two me Thanks everyone well. is Hope

still maybe Just a Rex, April And maybe to your type Streem, early, dollars could hear as reception to that now new secondly, of Jason strategy from then you direct-to-consumer, adoption particular? you. channel, as and curious And it’s partners? more bit talk on what Thank longer you’re seeing with CMO, marketing in play around early you in this additions real role that about in reallocate providers maybe seeing your customer And what could term? service you’re on marketing and year? estate while

Rex Tibbens

from Cory. to great. Yes. Okay, Good hear you,

perspective, virtual Streem, So to estate showings from of both real contractors in well this Streem provide been our realtors rollout received the agents. Both for we’ve allows as a environment. accelerated well really have as

really them For contractors, to they’ve inside what and help the allows the technology that into issue to having really home the homeowner. leaned our and this see without be is that

been, both those I So think, very well of received. have

to And apologize. Streem still continue on our together – partnerships be better Streem the – what very team, and crisis. financial team one type our of really I that working of and think certainly, We the Streem about bullish one But acquisitions loving and probably thing. has is I this of been putting during this

was your having here. first I’m senior question? moment What think a I

Cory Carpenter

on your there this more in maybe Oh, yes, – consumer year? marketing, direct strategy just more

Rex Tibbens

sorry. yes, Yes,

direct-to-consumer in. companies we’re from perspective, actively leaning other as So a pulled back, have

really can had segments. the brings to imagine So it rolling a for marketing especially segments down efficiency, That us. the affordable broadcast we’re of more incredible out we broadcast the that pulled serendipitously, seeing – an cost I you in same make of new the time. ads. amount mean, ad of campaign some out This at

a of digital perspective, pressure marketing advantage digital perspective. taking – from less much television expensive So ads from seeing less we’re a

leaned we’re we’ve from especially great April. in seeing traction, in So really that, and

And so consumer. bullish I’m direct pretty we’re not on –

Operator

cover that does your all questions? Sir,

Cory Carpenter

Yes. Thank you.

Operator

Okay, you. thank

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

Chris Gamaitoni

follow-up question. wanted everyone. that to morning, Good on last I

For less, marketing? and your direct-to-consumer maybe in been or penetration wondering if – it where kind are – strategically, I Just you’re you’re that fill about think spin-off you graph? of direct-to-consumer marketing, the and focusing you back Or has is thinking more are trying working smile strong? to markets you’re focused it how to where is the on strategically, that very you’re historically capacity targeting, state markets

Rex Tibbens

and Good Yes morning. yes.

So we well as strategy. have both a a national strategy local as

national. of perspective, they’ll marketing a have focus Jason But be from just broadcast to smile So a into team perspective, not to in geo-targeted to the certainly, that more from target it’s have – more want areas able be on really tend states. But advertising moving digging digital our been the and on. we kind and to

traction good early COVID-XX. seeing in to We’re other the places in – U.S. prior

a kind the been outside to want smile team even And able we where really we strong then the more position. to in So states. obviously, growth the with lean have drive of has

So perspective. from both locally, we’re nationally and DTC a focused

Chris Gamaitoni

at to the you one or how process target? market, who – specific focus ones you what’s do on And identify a versus asking decision-making target, don’t? if geo asking versus to you markets look to Not find

Rex Tibbens

Well, do So to want supply they good first a be don’t position, obviously, terms that do target look ensuring relations we to our supply great position. team, really our thing I behind might in a contractor areas have want a of from contract perspective. at job is we Kudos to where you right?

So have we do where where we drive more can we supply than work together, looking and anything. at

a well. to where have geo local from more broadcast So you that’s that’s there, areas you’ll obviously, or perspective, think strategy. you perspective, – X efficiency want a target from as just track And then

target. there’s kind data of behind science some So where we

Chris Gamaitoni

Where of loyalty? how your or is business? current from both and the channels, on have color then doing there about that of kind monetization synergistics regarding we think think future benefits, through better just the And What differences that potential it? out rolling How you contractors about realtors? whether it’s is? I additional do how is process? additional in opportunity you expansion do for marketing in Any you opportunity What your Streem, the situation think thought to Okay. the conceptualize are

Rex Tibbens

provided come potential contractors Then of with is a free for realtors During realty this. to we there of our both the and as relationships certainly, either deeper we brokers. crisis, out charge

of monetize at provide realty There’s the an maybe I perspective, this for this potential from all looking we’re opportunity is for thinking that different behind them other contractor beyond business, who certainly, a through. some was to From as could revenue something Streem we wanted a already asked, what model our of are we’re channels There of so big as through use we something their be So a have it service of for that. a all free. from we for to those a they peers. And top level opportunity perspective. things Streem a working that’s is to there mean see lot two contractors. ways the people is preferred can they pretty This third-party real during outreach offer value expansion Again, phenomenal. the I that well. is crisis there

So focused think team those very The that monetize well. that that’s to area. how opportunities much making about sure in as we

Chris Gamaitoni

you Alright. Perfect. so much. Thank

Rex Tibbens

Yes.

Operator

Thank you.

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

Ralph Schackart

I if on you Two, in the prepared Rex, morning. bit please. good remarks. a touched could, this Hi,

think Just in terms I outside you crisis. that emerge said of – frontdoor will stronger the

on you’re and Just a could points great. And on metrics, about Brian thinking you crisis more that. some then financial us you curious be would business that couple color also performed of shared in maybe how little the if ‘XX. how give A bit the –

claims that customer and then? Just behavior versus curious then this how observing both the ‘XX now at you are COVID point, Thank you. from to compares

Rex Tibbens

Yes.

since kind applying will us have far outpace have And than saw and problems. million I impact unemployed, journey ‘XX. greater and kind make that we ‘XX think growth that This with I people the pandemic, both data the you seen XX the of to of ‘XX really the inputs I and to we that on that technology running and in decisions ‘XX, launched or far So and of – be out think on with opportunity think we’ve ‘XX. a sound definitely in spun certainly are – company October have we company

speaks of really that to the model. business the So resilience

always things lean channel of COVID-XX, do opportunity have One we have softness the but from you said one that not the are the of level if thinking clearly, to into that has is channels. softness, we other

are So, offset efficiency completely real the the in marketing estate, in channel, the we while that seeing seeing may not in we growth pressure are seeing are it direct-to-consumer we channel.

a seeing then someone well with full purchases value our we speaks opportunity positioned convenience are really now and if They considering I you the how protection and that it And strong not sheet. a that a service also stable we plan are I We renewal pretty rates, – are that is are think and budget more seeing that around will. think we proposition two and reasons opportunity. discretionary are advantage value balance taking product. spend the to of customers

could opportunities – to there new have even is there acquisitions stronger. us the potentially see to we be in opportunities out market tuck-in come So

his Brian think XXXX. I of are just as prepared October in this on business mentioned bullish we just So getting remarks, just I’m as I started. in as And was

Operator

you. Thank

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

Kevin McVeigh

the cycle was it hope – Brian, a GSC, that cycles the trajectory Rex or give it Streem you thoughts the like that I as as of you term? sense housing-led. business we allow business? ability And navigate is think you. sounds and safe. think us you to in on leverage transitions that GSC and stay all takes Thank the this puts the just to kind you and better the than of about about Any then can efficiently medium did recognizing the of things like more and kind just And any business, two it obviously near Great. this

Rex Tibbens

Yes.

data your contractor them out to offering of the then explain to our of direct-to-consumer renewal estate tools that reaching and in crisis, think real I both – to how to versus the And channels when drive today as your in lot of times a resiliency level and different, how renewals and operate. of are force, you’re we’re where is their both terms ‘XX revenue. we Certainly, company I we the different our obviously and ‘XX, and life So before, comes our to just it certainly, mentioned in very better. make two-thirds decisions of you’re we partners

send a XXX,XXX sending their for term. of that things PPE do – pay out they to also been longer out or contractors One things masks we’ve the process done those – can and our so of has That dividends job.

‘XX. building meaningful before, resilient allow I said stream – for only pandemic And to and be even will ‘XX like certainly think what the in ‘XX in ‘XX. like I absolutely not future. we us revenue I will more us overshadow All things Candu revenue in saw and Streem, streams a become but think those this incremental we’re than we were

Kevin McVeigh

Would the core ability Streem is leverage the or to of kind on non-prime of the and that primarily prime contractors? be kind that the contractors

Rex Tibbens

one more time? hard Kevin, you. it’s to hear you Can repeat

Kevin McVeigh

Sorry about that.

contractor Streem, of non? that spectrum? For be your kind entire more across focused, Or new would opposed the would be it prime as to contractors

Rex Tibbens

because into think by changer – in we to longer-term, of with could support, any terms terms virtualize you and certainly I our game be you go contractors deepest or – a wrong. what’s go certainly, it’s it’s contractor. relationship how leveraged – The game see of immediately a always and Well, virtualize But we the preferred roll Streem, not with changer immediately them. in have start someone’s home how truck to having a

You a understand, data begin so and you person can the chat with tech. that video right really place the and start show capture and that to right right that the when part, have up, explore you

Streem. So just we’re getting started with

Kevin McVeigh

one, year little or reengage then it you visibility areas see the need the full before to helpful. guidance? of on and in in That’s the potentially that year sounds want then could to quarter to reengage outlook? QX you kind bit guidance particular full kind the full And Are just see there so. would any kind I next more you What one you quick appreciate like a of reengage would on year of

Rex Tibbens

America will will sure of get we XX Yes. that worse. that doesn’t a employed, be, to I people want it to moment. million goes light back switch be make mean, certainly, with work, Two, kind this as when

certain than think just depends all, just are Clearly, of as months unlock of which I to between the tons a real will a moving than and others. cities perspective, are in are I been because school months on sooner look like mean, back. at. regions cycles, comes And we that need well. fast lot have from families how uncertainty other times, that So definitely obviously, the those estate better disrupted it schools summer

So August as I if into for unknowns there’s a the guidance we those think lot of to frame, provide move the be year. we’ll more known become ready And unknowns. time

Kevin McVeigh

you. Thank Super.

Rex Tibbens

Yes thank you.

Operator

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

Brian Fitzgerald

clarification being the free Thanks guys. around it bit other sorry, continue calls you’re And it then, a contractor one, to extending for Or about and just last conversation, situation? all spreading Streem, just service kind quick does I’m into for want just with bit then COVID to slower follow-up contracts? and develop for One prioritize work than roll say long? during ones, normal? to curious how Is the do to did type to network? a you kind couple more preferred are into roll then your contract view And And of that around And of in this you a are geographies in up the space? licensing able shift now That’s the with level now the there of of are or sets macro clarification. a as your a volumes in apparent to tool potentially a previous you more than fragmentation networks, of that ever opportunities before dislocation? we’re one

Rex Tibbens

Sure.

days. teams, that. want the point, partners. XX teams, of terms in those But to kind your crisis, contractor brokerage be free want Streem, out whether we’re from our We’ll real working offering to or angles. We profit the monetize of contractor for So to that and figure after helpful don’t how during firms it to both estate we

our the of contractors, take definitely, terms to approach preferred very we a In how network. contractor dispatch algorithmic we

of seeing, We obviously, Obviously, we can’t number to contractors. keep network. be over a sure busy. them We’re want the XXX% that higher it preferred make

little is have although think, I this working through good we’re the well very One been continue we think thing a still that in lighter we how it’s busy. will to will jobs, but a at to algorithm So April, crisis. very, look I very I dispatch and say of that,

right essential been an key wave in very busy. across – certainly And We’re California, a service. there’s now, Arizona, we’ve

or that terms assume to look our propel home down multiples whether come opportunities. and at to big and I continue work We’ll for tuck-in a issue faster. And opportunities. having as and Candu strategy tuck-ins core roll strength hasn’t service for technology from really position will us of allow been And that’s will up opportunities plan we’re this business last, of coming strong a Certainly, our then in company a balance So both not sheet. us. from

We will continue things. those to look at

there don’t and sheet So may there – out will there have who be a there. assume balance stronger an we opportunity we are be that companies

answers that hopefully, So three your questions.

Brian Fitzgerald

appreciate I Rex. Thanks, Yes. it.

Rex Tibbens

you. thank Yes,

Operator

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

Youssef Squali

guys. Great. Thank well. I for me guess you you, are And Two all questions. as I hope well.

you can at a I type around you something, your But areas of were about You X.X, of outcomes, April as just if from the very tech country? claim availability on home shelter How because had it’s a you’re tuck-in acquisition? wanted this then, of you to a just very of risk Brian can you kind presence the that the And incidents being spike in in claims at geographic in kind speak sheltering expansion? a below assets strong balance which, Brian’s would gross the in in year, I high The said at in obviously, leverage, acquisitions to certain first of in maybe of post-COVID, nice a Rex, if way, others of effect buy have in two you throughout you the basically, on, is country, versus And particularly just weather guess, let kind standpoint, have margin. standpoint. enablement versus look speak position at a obviously, think environment related, to right terms sheet about And potential maybe earlier. – maybe of home maybe prepared pursuing financial obviously, strong your to or versus not remarks debt M&A, to technology your a second, speak said prior I the really, by to in question balance situation? spike follow-up quite incidents if really would different seeing sheet. the impact, congrats

Rex Tibbens

good Yes, Youssef. your to voice, hear

would M&A. other value is certainly, There approach we that I culture are the the all giving synergy are will have one a – from in remind I obviously might But I calculated sure one the to might think make take a have and things we pass lot from Two, just perspective. the you want to me asset. But it not first – take we of of market. out questions. a a last – to the I away get think we very, to to

players comes it regional home to or regional both. are there really there not our of Certainly, scale. technology, from when that look a at out we service tuck-in lot So plan a either is

kind there But provide that from are of is price there think obviously, some up. that might we vision areas, I there be the ones some our focus – technology help that technology not makes a to go perspective, of we kind out value. prepared is may that and think on there smaller do can what the propel call,

So we do see technology opportunities space. in the

plan home where opportunistic in being there’s space. the opportunity service We’re

for had to year, I In terms close go, this our that’s two think to – the down high of we sure. of those be how now we we’re really goal two, we’ll let leverage down conversations. we and haven’t – out Xx Certainly, stand came almost

So if assumptions. I haven’t or higher, number but found acquisition would we can an it’s what de-leverage challenge know we those that very quickly. four the is, don’t right

think four all it. I So raise two have sorry, we really can I to And things, to have very going we think what? through above just then de-lever those to would, have think, were we – and some obviously, We eyebrows other questions but quickly. through, am your

Youssef Squali

incidents trying just what’s claim said just coming in to you a Yes. home at prepared future post-COVID? impact how it spike if your around look My particularly, in maybe out and something quarters, incident other was to in – with there claims is remarks, in around question April at sheltering weather below figure

Rex Tibbens

is April for us. month shoulder a of kind Yes.

of wasn’t probably of are down want on was holding don’t analysis out think just it a the while little is other impacts? in they what I like house. weather a concern slightly. what you of, was kind and there and some more major people So there Certainly, needs decline. It kind your was back

to someone are faucet equipment that in put proper wearing come like little it’s service, certainly something something have leaky to and protective for conditioning if water maybe hot then a provide that air need think to willing you you sustain life, essential it’s to heating while. or a are I and you willing the certainly if off

mix it’s that suspect folks sheltering expecting of the who I’m two, of place. wave a but been claims I have tidal in So a from not

I up will think there our not but peak – the hotter wave. am a demand big normal in I expecting coming certainly we have months,

down think in maybe shoulder small I a impact was are it month. a April weather due probably to place. slightly, who and But is people sheltering to

pushes have and it you weather into favorable a So April of May. lot will times, in

think I would So I material point nothing out.

Youssef Squali

Okay. Thanks Rex.

Rex Tibbens

you. Yes thank

Operator

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

Rex Tibbens

our Thank to you on you, operator and participated our today. who thank analysts all call

environment as of entire uncertainty. adjustments our while was I COVID-XX, work would incredibly an remains working result seamlessly well making for truly home during company feat. It from transition again levels. maintaining are our positioned frontdoor hard like amazing of We a our and thank service team to this to a to period

strong in liquidity allow result a model, a this you. nimble you and I during more that all Thank have business become soon. crunch. stronger safe your as that seeing will this substantial to again and of person you look We to forward of a hope a resilient and stay all time, and workforce families us unprecedented

Operator

Ladies your thank for and gentlemen, participation. you

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

Frontdoor (FTDR) 11 May 202020 Q1 Earnings call transcript