FTDR - Earnings call transcript Q3 2020

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Operator

Ladies and gentlemen, welcome to Frontdoor's Third 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, and he will introduce the other speakers on the call. At this time, we will begin today's call. Please go ahead, Mr. Davis.

Matt Davis

afternoon, XXXX thank Earnings Good Frontdoor's for operator. Quarter Third Conference you, everyone, you and joining Thank Call.

press Officer, Joining Executive me during which Investor Turcotte. today's Financial on be be Web site, Relations Officer, Chief slide The Brian the Rex Tibbens call is that today and Frontdoor's used are will release and Frontdoor's section found Frontdoor's presentation can Chief located@investors.frontdoorhome.com. of

of webcast which of X that to stated presentation, contain filings like to here These Slide are risk the you are the differ Risk and any such Factors forward-looking All risks are and actual events Please our today. As remind a section to forward-looking this related for call new law, company's factors to discussed with SEC. except to as result information, the uncertainties to explained statements, as statements I'd the undertakes filings of November in may discussion from statements. could forward-looking or statements no various statements. future on update a company detail those more of detailed in results refer the These materially obligation otherwise. as subject required and our cause today, the uncertainties, in forward-looking X, by and whether and risks statements made

We will also throughout non-GAAP financial call. reference certain today's measures

Rex performance. comparable comments. turn measures of to understanding and call financial to of Rex? I'll financial measures reconciliations most order presentation appendix definitions their opening these to and the in you terms better included these financial have now in over our GAAP the press the our for We to assist in release non-GAAP

Rex Tibbens

front public time, recently good a door. afternoon, second Since reshaping significant everyone. we that Thanks, company. our strides as celebrated in made Matt, and We year have standalone

revenue accelerating Despite continued pandemic, Proconnect is environment, deliver service on-demand offering. far by our new by team but progress and pricing extremely has the over, expanding our to the dynamic challenging growth, an transformation growing to with our extremely business from I'm our pleased date. external launching Our

and progress. that current and increased revenue marketing business Let's turn by strategy I'm quarter, working. report over growth quarter. to to investments growth to talked third Slide X is leaning now accelerate our direct-to-consumer we review into happy for this digital broadcast about our in media. Last XX% unit the We

even firmly reducing Additionally, This in our XXXX. we the from due in revenue our the election. are third digits of date, media effect result was is quarter the our from growth we quarter, that higher marketing fourth double direct-to-consumer halo to though continue a expect the investments and to efforts into cost to

Our we real expected performed stronger real this fundamentals. channel originally than estate better much quarter, estate

reported the XX% existing because record up home the prices home these drivers the strong mortgage suburbs, for National as resulted homes. We and third to NAR. lowest same of according The driving Association to in urban factors on inventory second to rates you. of centers These in move low and sales are the Families or are quarter seeing increased leaving Realtors, demand NAR, trends.

impact much transaction. a in home now less that sellers we because stronger rates, is This capture plan estate has our a benefit means strong going home channel impact for sales. tailwind we which on real sales as still result XXXX. negatively the capture strong are the This potential real plan estate industry's to potential into part have existing the market. service a to to As service of macro market, inclined Despite sellers compared for provide the the rate home a from

a is higher combined significant X% sales headwinds. challenging was estate external growth am XX% or or our are first retention Customer tremendous to home plans X% be third quarter. our expect to working retention now customer report the in top accomplishment Given that funnel XXXX. our the given real at the COVID-XX circumstances. to the growth service is This despite service year increase about drivers I just our mentioned, the of up plan we of direct-to-consumer also the now I pleased efforts and home than

our We to journey retention on continue near-term the environment could monitor range. the challenging rates will how move believe taking right XX% retention, steps the the we but we into impact our customer are to

product channel level to effort will pricing. where month. dynamic to market we the We historical the last phase believe those our in next previously pricing, the launched priced expand potential practice direct-to-consumer Now just turning of our out base due industry's to of this our state customer of

we our information, customer we'll algorithms. dynamic where tender history models request additional start to into the in pricing such adjust dynamic our expanded pricing planned Additionally, renewal service and as channel,

and We efficiency protecting an From for will to This allows gross inflation. for offset geographies. better customers. XX% are across now and real-time dynamic to use able base help customer to margins standpoint, update our price our cost pricing our prices of dual goals growing over adjustments it of increased balance

product, be is current manage capability more environment. external a than ever to the pricing critical allowing through dynamic us we nimble Our as

reminder, huge has optimize. plans. to a of and approximately XX% pay our that customers is As renew This pricing advantage recurring auto subscription-based a revenue are model helped auto dynamic

additional we request expect COVID-XX related by of increased our to costs cover service the end XXXX, fact In price. with to of most

will retention. a We through this deliver the way dynamic that impact overall increase to in minimizes pricing

view to renew service mentioned since their customers increase has in plan appliance resulted rate. the On service utilize at tend spend in As time customers the an levels as our primarily requests, elevated tailwinds hand, home. request long-term trade, higher a meaningfully COVID-XX in at more as I earlier, one we

causing expect elevated levels quarter. increase for in the XX% warranty, also of the demand pressures web home as higher requests drove term, the direct-to-consumer also service We searches in third

of of impacting appliance to results, level which other least end elevated service At the continue requests the we Brian are service year. expect to higher will shortly. near-term requests at On an hand, our through the point, this speak

for in are issues availability industry-wide to parts next not challenges our Frontdoor. we're unique through expect appliances to based these and year what early on mind, continue suppliers. we hearing from Additionally, Keep

issue We are not been has business. earlier point has industry through significantly swings these I'd able that the mitigate Demand production in the of last developed up navigating supply higher low has disruptions. over to appliance years, from operational team out the and been catch to types of availability. appliance muscle our our two wide

trade addressing are by in service we the the example, For taking appliance higher actions. following the request

single in with February real direct of channel XXXX. now, in channel XXXX. we'll consumer we targeting a First, increases our January, and overall estate finish are in increase digit renewal our mid price price with starting We're in

relationships, of provider impacting reevaluating access fastest service Second, the all and industry. deepening network. expanding relating increasing we This primarily are supply appliances, moving processes, speed our the our our parts supplier to and appliance of service acquisition expanding to improving those and includes

is source working. Our multi-vendor process still that higher challenging we macro XX% XXXX in in parts our times. Also, preferred despite business helps at deployment These strategy able as the mitigate contractor our improvements demand. are validate nearly are examples are these to our impact on two

to the have to model appliance of requests. impact you higher our yet seen not mitigate we trying those from actions service XXXX, For

struggle our and impact put, a This with at the improving full me trade. demand center particularly the also will to call service COVID-XX-related third-party issue we next we keep we down Normally for been request staffing demand. call frustrating customer in since the Higher We has made the our customer demand. scale decline appliance our our these previously good to This have really in levels. service acute level of as have little driven progress call the our year. levels challenges quarter, more Simply is service up in match in lower fourth of see operations overall centers actions a spinoff. than would

higher fourth year, in expense handle incremental the we number requests this to are improve and However, $X an customer investing experience. of service the service quarter during the million

Over the the by us the targeted of working our has been to to our service back months, end several year. last levels on get several initiatives team

optimize as around to begun in September staff We to October globe. the have improvements already and continue add see we and late

small still you for Streeem was our being Best businesses emerging help reality a are augment as Google has start-up been British Slide a featured on XXXX update which with recently to Streem's Traeger, CLEAResult. options adding committed innovative over Buy, service team including would XXXX. was to is time. when continuing I Lowe's, them and both brands, our acquired in Streeem, journey an late Streem's Gas by for customers year and building businesses, beginning great X. now on give platform leveraged by to product Apple we Finally, we operate self-service more and like a better.

our customizable easily and to which in time. Streem interaction commonly kits, this number SDKs, and the be limit upfront the the truck health business. by The and jobs an in technology first powerful do for of we cost increase as the environmental COVID-XX announced and We and the related carbon provide how improving release development completed recently in will cycle the to reduce drive of believe of we will business, emissions, use Streem that Additionally, their In of benefits. number Streem referred improve diagnostics, visit. environment can show plan to rolls face-to-face platform software can

to Streem their Looking focused to the business as a SDKs well to year, service on partnerships, plan experience grow be leveraging customers. on-demand our home ahead and service and next XXXX will utilizing Streem's richer offer to as

Now turning X. our to on-demand Slide on offering

now we on-demand on-demand Shield Just scale enhanced our to strength, Shield rebranded the Home brand American offering, days under the of will called Home leverage a awareness service American and few and offering. brand. trust ago, ProConnect ProConnect dramatically our

leverage our allow US. We This improve cities, of across effectively on-demand under the ProConnect. five search the existing synergies to Home traffic Shield XX ratings by to ProConnect extends areas metro overall to of for umbrella. most brand offering will marketing American and from also coverage our major maximize expanded part drafting will the which us being the

us suits and million unique into do plan believe home acquisition need we we a customers, of home customers better to also of that service who ProConnect X purchase service a example, cost let capture jobs might million for and still ahs.com prospective can upsell potentially have annual it service over some over can those the service. maintenance website low AHS generate needs. For their our It if repair. XX not will plan, home Many to plan customers home visitors on-demand we visitors and

We ProConnect will three market ways.

start investing search expand and will digital services through licensed we separately continue to demand We'll our over market in will other most look add markets. of new to First, services markets marketing of ahs.com/proconnect. our moat on by XXXX. XXXX and XX contractors and to This with appliance other in for

unique a home customers way to to by maintenance as on plan AHS while service upgrades. driving need, Second, services market existing such customers and may focusing services they we also are our HPSE services engage higher will for Main cross-selling retention.

to AHS Third, starting on we prospective two Web plan year, early site. the customers market next new

also provide services expanded move-in We preventative XXXX. maintenance and offering of repair, an will in

Our same. star on-demand north for the remains

We pricing approximately XX,XXX service and will affordable or convenience this with requests service for XXXX. will we in services, XXXX XXXX, select job piece upfront that requests XXX,XXX a done of pricing on point, same-day service in anticipate from guarantee in XXX,XXX and right. ProConnect offer the day scheduling service, be with At requests complete savings next in transparency mind will

this the million per In million, years. job earning to resilient powerful have million our over a add model. we and into $XX next annual we vary additional business expect an we and respectively $XX conclusion, estimated services, $XXX average of revenue three as revenue While translates

we a years. will have position, accelerate financial over revenue are strong We next the that today making trajectory investments several and our

double-digit and on we and growth growth revenue faster grow drive to sustainable and potential our are working, to businesses. full double-digit investments of unlocking growth. in to focused the expect deliver we pandemic, a emerging XXXX are business Our Despite the intend building revenue

challenging the organization to this more am our results that well, external are cover Brian? year. the I over who in becoming and navigating extremely Brian, our we are from stronger I'll a environment we turn detail. financial will learnings call Finally, confident now

Brian Turcotte

you, and afternoon, good Thank Rex, everyone.

If quarter X, to period million, year at and increased we Slide points the both look financial prior our to price and I'll Let's X% versus higher of review to realization. now prior approximately by our plan turn results. volume. third Revenue increased service by up X driven customer revenue and driven plans, improvement part in derived the customer was in home growth period from versus channels, of home number due price renewals initiatives improved retention renewed X% year service $XXX

as increased was by revenue year was up Rex realization. well the the growth service a home real direct-to-consumer home year decline period, on partially as price decline COVID-XX down X% year investments estate And number the period, driven impact mostly estate versus XX% prior First year in number first improved was US of the service improved plan, quarter, year first marketing in of part prior first mentioned in had second direct-to-consumer real revenue This reflecting year in the due adverse offset home by in the to the realization. versus reflecting existing sales price plan.

this Rex performed estate our channel stronger the mentioned, existing expected we compared in much originally quarter a second including As real real fundamentals, quarter. better estate strong decline than a significant with in on home sales rebound

about sales As through of the mentioned our and in months XX positive I real quarter. cycle or first take reported negative this impact any quarter, blunts last macroeconomic to factors year estate our results, either

period Gross third trends. million, income margin million, third $XX was prior versus year. our by driven of XX% cover $XX I'll versus equal to year the including claims on The year and adjusted that As approximately marketing at by end we conversion third $X profit somewhat incremental million the quarter, and at had $XXX a our Adjusted range. quarter million, of contributions lower million quarter was profit reported was period, versus prior price the X% year in XX% any versus the our million which XX%. the now approximately million $XX revenue million costs a increased COVID-XX the million macroeconomic of income will was net higher increased prior decline from decline period. investments, or the of Slide X. top, results in the EBITDA prior increase while during in and was a We higher Starting $XX to guidance estimate impacted negatively and million Net quarter the gross result, revenue $X $XX $XX lag $XX volume. favorable

well This increased higher of driven industry-wide in change as appliance the claims a primarily year the higher challenges. revenue, The trade service requests as increased were the and both the part in normal by Excluding trades of the increase contract versus driven million prior impact in by cost the period. from inflation. quarter appliance costs in costs plumbing $XX third availability appliance number and was higher

directed mentioned, and claims to I to higher On contract our sheltering quarter see million impact million of million the I weather increased a in partially earnings the As plumbing usage $XX we higher to requests $X approximately of costs and by number favorable The customers were expected. DXC are direct-to-consumer million claims costs Consistent due channel. prior in increased improvement $XX the process our primarily marketing and increase versus Sales acquisition on in $XX impact the was benefits. growth quarter increase we to response opportunistic COVID-XX projected of marketing or million the investment increase our customer count on costs in approximately our the at previous what DXC of period. call, to to the quarter. about million real $XX million call, claims home we of we'd projected to of at service more attractive estimate quarter $X third appliance third costs $XX This pandemic. toward in the during adverse was related an in COVID-XX, but $X our higher the year that earnings with channel related estate million costs had second than the offset increased second investments

The was a in in home reminder, those the significantly higher sales initiatives. second related As to requests replace each estate in have an quarter unfavorable until year a customer investments increase we on service service will units dropped quarter managing primarily of revenue number first our existing $X real retention and impact million costs lost units. when

As XXXX investment XX-month our the customer basis believe service trailing increased retention our through rate XX-month increase helped trailing in Rex we mentioned, XX% has a basis in to quarter. third on through a on

million prior points million a investment For full in to business increase as full and XXX home SG&A additional to as $XX our by percent $XX expense as versus emerging year. of investments Streem service we year basis XXXX, expect businesses revenue year of our our an plan in on-demand well

million of provided Please position. for due and nine we to $XX operating $X was period of Net payments. year for deliver cash million, from million during is in increase debt for due to This calculate cash to of However, cash which free from the provided nine million, activities we cash cash as year an increase $XXX in primarily as cash Free operating in $X a XX, activities prior compared the that versus to year prior technology. double-digit a cash the estimate activities the was period. growth September invest additions, used result the for in to period. ended now XX, the was ended primarily review decrease was months flow investing same property XXXX September to million, expenditures investments activities turn of net primarily was prior will million mostly year continue for the financing minus as in for an expenditures, in period. This comprised the the $XXX prior Net business Net required capital $XXX pandemic, XXXX used flow, XXXX. months capital support X cash Slide the XXXX. to we same our revenue higher and as actions our flow was

cash the flow XX%. adjusted EBITDA for nine conversion Our was September XXXX ended months free rate and XX,

at the requests to I $X totaled cash year remaining of reserve and higher first half full to EBITDA our flow end to the EBITDA We Cash that around flow cash quarter, net and state XX, regulatory restricted year conversion our to the conversion payments, free timing of $XXX our June the to XXXX typically while the million XX%. still previous service to rate cash rate mentioned adjusted third unrestricted. compared because $XXX related cash $XXX requirements, of adjusted Of be totaled free paid on to considered call, in required the cash total, million anticipate increase As earnings securities marketable million for specifically, taxes. be meet are assets a XXXX. million is

was the million which call undrawn the aforementioned quarter facility cash includes $XXX of viewed a our unrestricted as that of in an early available plus earnings liquidity the $XXX proven quarter be credit navigated On COVID-XX revolving at of available the $XXX advantage third Our first end statement million. to I generate significant we has be environment. we to through ability May, uncertain cash mentioned to and available our liquidity accurate. economic million, That

through As and while we our acquisition, cash continue the in during business the business adding both organically the to invest on-demand pandemic, to balance.

priorities forward, repaying strategic terms debt allocation pursuing in the investing organic As cash growth, cash and remain we look returning shareholders. our of for acquisitions, to same in

preliminary fourth December, our and an However, some considering change of and financial the could in outlook. to of period. quarter XXXX we for priority we the X% we regarding comments million million to conclude prepared or $XXX and and with increase plan my to expect our year to range forecast increase fourth results strive uses November our these $XXX Based ranking quarter opportunistic prior X% continue be on October value. now current shareholder versus cash revenue certainly all remarks as between to I'll

key the unfavorable and customers $XX million continued be estimated period. year real from million appliance direct-to-consumer at fourth million, outlook EBITDA assumptions: million $X $XX requests the closing, and additional previously as total an as requests of year and remain that a experience. service to be negatively third, and includes channel quarter, impacted flat impact cost versus of improve additional period; quarter period revenue continuing first, optimistic impacted investment incremental $XX the approximately approximately to to estimate range Of related expect prospects by service to between versus growth handle to in $XX also higher investments our ever renewal million to service estate about revenue attributed relatively million to mostly request we number of business, the first The an result year shelter the and our the the as to by long-term results third impact the We compared prior near-term while service to mentioned. continue three EBITDA In adjusted the year in customer higher I $X $XX the COVID-XX. increase In plumbing that prior fourth prior $XX investment, COVID-XX home; we million million the of in expense marketing in our is and COVID-XX. and service claims adjusted of quarter second,

plumbing I generate we fourth EBITDA and we adjusted $XX to the investment mentioned. primarily estimate appliance impact growth, be quarter, and For strong revenue these the due $XX approximately from incremental COVID-XX the increased and attractive continue the million to cash in on negative requests meaningful to million Despite to flows. margins service service challenges,

for and productive making efficient health the are We long-term business. investments of the

turn is and us position to advantage Our to have retention opportunities. now that, allows call open a Matt? the growing customer substantial over session. I'll the market Matt question-and-answer that liquidity increasing, to back of and With we take

Matt Davis

Thanks, Brian. the open questions. line for let's Operator,

Operator

The [Operator comes from from first Aaron Kessler Raymond James. Instructions] question

Aaron Kessler

couple subscribers driven revenues kind from versus are kind Maybe interested the XXXX of -- investments you be as think Also could ProConnect. current business. savings sense a just the think well. and get be for good more to and It'd AHS that about potential main of cost maybe should A on the ProConnect maybe with for you in just first, XXXX get of as new questions. organic traffic, then be change, we that

Rex Tibbens

site and change us ProConnect, of name major our drivers our AHS spend. was leverage able the for be for be able to marketing for go I continue really to So one think behind to Web to the

consider then cross that the customers think a to lot if and sell to really that of X.X ability the you traffic, to such drive we have ability today we million So XX organic million visitors.

to so already speak, for. that that's of a lot eyeball, we've So paid

want that's to -- really which we change the name. why So

But organic, that is laid how much comments, yet. next we going out we which years, in as see three the to how our we much just out. is But search? detail of growth laid terms significant do we're for through In have

Aaron Kessler

on costs. just the service maybe quickly And

think headwinds consumer you should shelter-at-home or kind some and from of COVID service pulling post talked costs. costs the service Is I higher last we quarter, about lasts think here? still the case that until potentially about of forward really continued

Rex Tibbens

In terms begins two about changes. continue certainly, our as if pricing talked of tremendous will haven't as seen earlier, that service to that lift tailwind. costs, renewals, shelter the to people business. at we just the change and net impact obviously, to home, thirds We But we just for made us pricing of our dynamic recently

through So contractors. we process we're to hope 'XX, for that out then work continuing and preparing wane start our that early impact impact and appliances pricing we in in laid changes for comments, earlier the to the the but plumbing with our

Operator

comes question from Blair. Ralph from Next Schackart William

Ralph Schackart

saw wanted quarter. during linearity of that a order sense you get magnitude Just to service of or the of sort of of request the sort

of starting are are far do increasing? Just pace to curious that a be you've of QX of on they or the seen kind slow, and Just to they they QX. steady, so sense, in what continue in sort

Rex Tibbens

Certainly, we're QX. busier if a in really you our Obviously, curve. about it's QX bell and in think business,

for overall kind of increased look to service simply costs the appliances. But request have at for starts for in service the amount because business is but QX off tail volume QX, you higher For of the it appliances. higher we when are

really other appliances. strictly the just to change parts business. It's So seeing we're of not a

Brian Turcotte

and end another my caught prepared million lay to don't QX. remarks, but $XX And which the appliances of of you same number if from I million plumbing from out in $XX claims cost know QX, I is the did

claims the So from linear QX QX. you fairly impact in is can on our being it and from see COVID-XX costs

Ralph Schackart

One I if could. more,

Just here call COVID. to but incremental taking forward this switching perhaps some thoughts overall the initiatives on customer in just you're give you're adding experience Any how perspective, doing other gears service strengthen could assuming side, service post-COVID going on that environment? us customer center agents,

Rex Tibbens

is our very getting We've appliance that quickly, demand the only around in rely actually think, benefits to not order to be phones teams centers in to silver guess, more we I through really Well, our moved It's replacements. cloud COVID-XX the services, status has also OEMs certainly, for answer for proposition we the value is long-term -- a check a and to increased us, services. specifically I certainly the big perspective lining the to of able their have that from our call on. struggle dark but

think we I we done that on see times, those tailwind side the of job as the But of lower so with And a to work kind of team's streamline times hopefully, customers. headcount pretty see of lot we'll it a quarter, OEMs well. next and reshifting to processes time. for year, to cycle phenomenal should as much we're much service And call bullish their this even our into going improved better and,

Operator

JPMorgan. from question from Carpenter Cory comes Next

Cory Carpenter

targets revenue on-demand. next just definitely years. for the the appreciate around few starting, Maybe I with commentary Rex,

to about you hoping the could to that to investments and be this of relative $XX of help needed of you're kind made the the year. how kind behind that, Just types especially level frame million million thinking level maybe $XX

Rex Tibbens

with terms that, it of I don't but be will find to not the in this year for in we're roughly prepared I you'll think a same guidance So as next see complete big year. give range Years incremental but increase we should look where from think two we line I next to year today. in roughly at are perspective. a three, be spend still and think need I

Cory Carpenter

successful Are seeing time. can. both? long some bit been then on I curious. with real coming I'm a follow-up, it's from of I estate, been And you a highest a direct-to-consumer have the just or the if expand you maybe think in And more that just that more On customer really just initiatives certainly retention? could retention, then

Rex Tibbens

team. help, I for think us, the has our retention biggest been

kind that wakes beginning retention cross-functional So guess about a off. who now. team And been certainly effort many up since of dedicated teams I thinking morning a and for of to ton every pay a kudos quarters retention it’s huge to

teams So can focused they're customers I the after that rate, wouldn't that direct-to-consumer. the very at focused making year mind say Keep estate customer retention the that it's renew so that cancellations, we in sure or on issues no very same two retain so there's and on year. specifically for real the having following

been change in those catalyst really so improvements process And retention. for have the the

Operator

Zaffino question from from Ian Next comes Oppenheimer.

Ian Zaffino

the think just Thanks. all will maybe guys the people through? how dynamic you your pricing? that environment hold as less it this, through? talk should maybe Can on a How have it get more to How little it bit shelter you to dynamic on back And ability in place. and side about in long gotten do pricing to take of about some pricing,

Rex Tibbens

one. that take I'll

already thing made the about is just The dynamic change. that. renewals, pricing For dynamic. we've great It's it's

days were those we in months a matter make of that to us. take used to versus able changes So

two as of begins, And each different as our keep in revenue, a see to price. it's that for customer. based renew, it begin So they'll on thirds mind folks

the hopefully, direct-to-consumer The So real by will should estate. And to February, of some see more. see in by will followed direct consumer be and be less, in estate terms rollout, will January next follow. real

increases renewals, the later you least mind, the So see it's for But should QX. customer at starting renews. than no in keep when all price

looking day. you down. in for a your allows full year But get So happens that flex second great up to terms question dynamic of I world, through in thing one, it's am post-COVID going flex pricing about to kind take of the forward the to what or that. to To

we've And market. a inelastic so think for pricing change as channels again but I is to the this it all certainly proven, fairly ability has

opportunity be to kind see some get still we time. once there'll we'll that price have So to I but of capture think to

Operator

comes The Ng Michael from next Goldman question Sachs. from

Michael Ng

double expand What's by? could digit pricing little revenue mid you Is it the Is driven XXXX. if the more growth some your that single wondering on it a better outlook your digit the to was Just bit really it I benefit for drivers revenue and confidence about? that level from would in love you Is retention? hear of ProConnect? about growth. spoke in acceleration in

Rex Tibbens

next The improvement We’re modest confident One, We'll double on that a about couple we inventory tight opportunities. We're growth bullish with really continue real a even aren't our we’ll work revenue of least in to direct-to-consumer from at though teams it as see relates estate think retention. our year. the aspects. finished. digit

not out to that. to we're XXs to after we're next the we stop going before, said As the until and we then plan figure going get

business from the opportunity all we fire cylinders. home core had I think on So plan really a service to perspective,

of double-digit both that to add You really to us emerging that's and Streem and businesses ProConnect deliver allows growth. that what

Michael Ng

giving appreciate to next weaker XXXX be should expected. detailed margins we claims costs, gross than the a can margins catches a normalize up should year? expect XXXX guidance probably gross more you but higher bit to make pricing of as gross up I little yet, normal for aren't Obviously, year margin are And But this year?

Brian Turcotte

years. is year full as for know, XX% two Street year this much our XX% and for than given forecast you not the is between past typical the to our that XX%, that which lower Yes, for we've target

really in to XX give in a for XX% a So would but position estimate to realistic to yet XX% we're gross that range XXXX not you next for margin probably year. be

Operator

from Next from Compass Gaudioso Point. Matt comes question

Matt Gaudioso

you there. could was Just I as Obviously, higher a in with channel. in to see wondering the nice Did if your come growth the this in channel on spend marketing it touch the line related increase on. spend. question to expected acceleration revenue the

I XXXX. your higher it you seeing XXXX real in that with wondering evolves there. line strength Thanks. came if the And in XXX into mentioned think expenses that know basis that the I I targets SG&A estate then we're strategy now? were heard Just how with points

Rex Tibbens

outperformed expectations. actually direct-to-consumer our For

plus saw XX% from and units perspective a increase digit we growth. double revenue So

it So performed well. thought we very

we'll -- to definitely, continue sleeve makes and up sense. I in some think it that other for the checks channel their but invest team and is XXXX as

over SG&A, In of that terms Brian. to I'll turn

Brian Turcotte

Yes.

I comments, my XXX growth the double see that forecasting digit we're year, And to drive you points it the year in was Matt. that's this for think initiatives. next mentioned revenue basis all why up I

big a it's a of and story, good profile regarding precise question your going So What it's part our growth was SG&A forward.

Matt Gaudioso

thought SG&A it The I points question heard for was up basis XXX was XXXX. around that I

that it, got XXXX. was for So

Operator

Youssef question Squali comes Next from Truist from Securities.

Youssef Squali

dynamic to growth pricing. nice Quick on just you for talk it's next Rex, And, double hear about question digits year.

have about enrolled You talking even dynamic been guys pricing before COVID. obviously

of can it thinking service pre that through greater versus is algo the availability part to guys percentage for COVID? of speak the just you still model get just SPs. if And and about pricing I of way maybe it filled the think old or Are how you dynamic customers. maybe pricing both the based was tweak then As on of based wondering inefficiency providers, usage requests higher secondarily, kind prices, now you SRs that maybe by service the on to get were preferred of risk

Rex Tibbens

Sure, perspective. your take percent-to-preferred We're doing very a Youssef. question We're well. first. from excited about actually that double I'll digit growth well as last

XX%, in it we're I I to contractors preferred preferred to mentioned all Percent to we think the range were comments, XX% it I preferred, prepared providers. believe same the comes relates in our over appliance. or as roughly of As as

we're lowest incredible get an out that's units. to the experienced request, our think cost and I still able to a thankfully, with that So contractors those to service testimony higher service even most team

As dynamic think pricing, to of to things relates couple it a about.

non-level, into was to look service able The that's those to almost other being at even history in XXXX. to for on and continuing factors really us for level. coming allow like first just subdivision the make dynamic to things models journey pricing price be -- models and We're to better that a a more will able

if So really each to kind able a our the to and still for refine really models data us continue different types that than rather adjust pricing be provide marching and for blanket we're will. strategy differentiated of to able allows changed, of to that you dynamic to price being hasn't pricing, customer

course allows resilient this come dynamic for but over build really the to that continue of will So things next very us I to year, think pricing those model us.

Youssef Squali

double part And mentioned in you that question, On think one I growth as you what gives rate. of Streem confidence Streem, last digit if may. I

ProConnect. break So out you did the

us maybe just -- kind you sense So could it. I know next early, help was contribute revenue I get of year. if since a of wondering Streem how general can but what you it's really mentioned

Rex Tibbens

Yes.

the year, just team of handful from a we thing comes great in and accounts, keep marquee hand One a of people early to late of in still -- team but company ProConnect. mind terms of and growth. some bought majority it have the was think a when last revenue innings the I we've since grown

but double, small it's forward very triple expect on certainly, growth, So pace. move a I to we as not if

I power get the revenue the as of of think we Streem So see out-years. further out you'll more in

Operator

Kevin from comes Credit question Next McVeigh from Suisse.

Kevin McVeigh

drove costs, don't what I elevated wonder, the guess. overall, I context sales to the just of I know, business up guess, particularly warranty given and the decision, side step I the within the marketing, guess, I

Just any that helpful. thoughts be on would

Rex Tibbens

think going simple. last COVID I is forever. decision the not to was

game that the invest and Last digital overall. invest quarter, so in to and were sure business continue tremendous lows. we'll want really the as to in rates And historic saw we in and long make opportunity we broadcast at

COVID-XX. we're get those? use We advantage pricing can of to some to that dynamic we take the begin did, not of from we forever, it to cost last COVID-XX dynamic expect don't to well. offset think why as pricing seeing that So allow pressures but will through us And say

a of and saw than rather revenue focus you accelerate attractive of if marketing our rates and some forward take So on pretty from to kind advantage opportunity a solely growth lean back off, cost will, we great and perspective.

for wouldn't renewals. is our we that's paid because, digit And revenue see decision if revenue two double thirds next the really making of that, for it's think So year I catalyst again, we that hadn't our growth off. done and

so you grow. we can faster the faster the the And can fill funnel,

Kevin McVeigh

cadence over any revenue? to expect we then kind I that? there And do guess, XX points the retention? sense then, of of sensitivity And is XXX basis on the any time, one the of So the to XX to retention is

Rex Tibbens

want you to Brian? take that, Do

Brian Turcotte

of to I'm an probably would let something $XX the of Rex, be less retention. than realistically add revenue. But don't point part on take I'll of just to say, $XX the million million $XX to first question. a more in that, you $XX I going on And probably million range retention theoretically, it's that of, going million know, of a annualized point basis, to

Rex Tibbens

differentiated how as kind a Kevin, of from think wake frankly, give to a change of XX of helps team for the that, the to for seen, fix every requires us lot continues better XX day you've how do We're of prepared been line retention. we for not do So a by the a about But very early faster offerings analysis. get game and, lead to utilization And example, time that service quarter. here. data lot we retention will always Streem of to we've to thinking process problems on customers better increase work we

those that the so into the to have get things are us things allow as we other going to to And that need on we are and work XXs. company a really

Operator

Next Fargo Robert comes question Coolbrith from Securities. from Wells

Robert Coolbrith

how finally, you or you the thoughts that education and for or more estate toward on you sort see real comments of on by Going then do real estate the think pays, the agent in over incremental seller anything on give do pays? questions your you're in market channel? can business adoption buyer the any of few tilt that time, maybe a buyer business pays, a on you AHS? back category dynamic seller's mix channel, into And now versus outreach your seeing pays COVID snapshot agent as of that Could us could going Then between to drives there. secondly, preference retention impact

Rex Tibbens

I So that buyer than for reasons the obvious certainly, we've seller the been leaning talked side in side about. more on

tight. in it of are real into focus that remain really kind we say haven't But estate really talked terms our work of to a working of channels. a safe out our -- in lot broken through that, we've specifics to or team buyer and about I done We terms lean partners, providers, will of all as rather. all as of And of how in remains those our inventory as

the the to we when of offer pandemic about effect As other seeing halo on able we agents I call, began. last I things to being offer the talked extreme, think are

be we'll top of So mind.

continue realty all drive We the top efforts XX firms. to kind joint together of across

offer us. definitely like things hazard help will that agents. beginning think help natural to to I So California, we've disclosures, In that, -- our

joint we're a but agent our 'XX. So partners with hopeful effort for very

Operator

from Justin comes question Patterson Keybank. Next from

Justin Patterson

fee pricing For the flat changes with start in do I X-month the these initial the about thought the ProConnect. refining and for from Can guarantee. products you markets were some know I'll five there first about XX talk example, both you and the learnings new how ones?

Rex Tibbens

hear Justin, your voice to Welcome you going new launch back. learnings. Certainly, there's great again. markets, to always be as

of dot to for the algorithms to that time, a this made really leaning umbrella really And into get really are about and AHS sense. pricing. fee tweaking the always of why biggest some CAC we is could their that learnings speak. us think are marketing us, the it's so sure making for thing, was until I we around we'll under the biggest we do And The distribution. flat drafting

our X.X costs. cross-sell will lot to of able billion So give existing who acquisition come site, million really people that the us to a to potentially be opportunity those lower had that XX opportunity. to now customers But our we

really So -- focusing can it's roll on those this things, cities that think we why begin to and to by we scale. out we're confident XX

of continue of your of tweaking is look terms And always going every element a to to be we kind we'll think at small month mind, guaranteed of those think savings. convenience, tweak In peace type but that I question, technology scale. I as we're piece-of-mind of things

Justin Patterson

my then that. And of of next kind uplevel question, some

that, acquisition of we and side. dynamic invest than acquisition more theoretically, past? that might about shown with you just How you rates on aggressive great customer customer LTV in lot the these the progress renewal and pricing. Since differently in it like are then scaling, seems As the did a think you the trends you've get refinements of on-demand positive

Rex Tibbens

and channels to things as different at So we're to cohorts, terms so give this as relates we it of rates, at folks LTV. are to looking us on, what at customer's in market coming opportunity so look it does an speak,

us really a may decision customer then than to to and to others. willing pinpoint continue we've couple right, opportunity of the and on you're spend this years that are advantageous that make hooked an a we're we'll to those more very all So But over markets be out much acquire gives things refine. how what last

just of things plans service HSP of market opportunity to as differently or three really market us single-focused think customers as to kind home on-demand allow these us We that on-demand So customer a bringing an power and that's together the not to business. having well. gives to

how will but definitely very So it's symbiotic change per relationship customer. value we a think long-term about

Operator

to conference turn over the are remarks. more queue. Tibbens session. closing This in any questions Rex concludes the our There no back I'd question-and-answer for to like

Rex Tibbens

you, Thank who all and to of investors you our participate on analysts, and call. thank today's operator,

of playing As the is game long call, shareholder I Frontdoor terms value. our first in increasing mentioned on

Our investments growth accelerate revenue to both long-term working. are and near-term

a a solid revenue outlined our plan more over the become businesses next significant also years. for much We growth for emerging driver us that will few

changing Finally, I environment Frontdoor team has could while not ever continued of to how be more new navigate proud the the embracing challenges.

organization have I soon. of and the pandemic. stronger, continued Frontdoor, We model we to you and a look speaking a resilient Thank nimble more business as result in a becoming your interest forward again you all are to again for

Operator

conference for now The has presentation. concluded. Thank you attending today’s

You may now disconnect.

Frontdoor (FTDR) 4 Nov 202020 Q3 Earnings call transcript