FTDR - Earnings call transcript Q1 2022

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Operator

Ladies and gentlemen, welcome to Frontdoor’s First Quarter 2022 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 first conference you, everyone you and joining Thank call.

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

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

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

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

Rex Tibbens

Frontdoor delivered the long-term our on despite two external quarter good cost and market headwinds. Today, revenue challenges, near-term and another real growth strong opportunity. focus we discussion Matt to estate inflation plan our Thanks, in afternoon continuing macroeconomic of everyone.

what we target laid business rest Beyond is out of the generally quarter. our these last with on challenges,

Slide the to X, provide where an are update will macroeconomic addressing overall challenging we business we Turning environment. and how

to will since inflation. rates faster home in Brian First, are Inflation at this is level services highest in short, economy. moving in with urgency space detail, we the than the topic address but the U.S. XXXX. inflation are more accelerating rising address overall rising

result, a are than for. as accelerate home. seeing priced higher during they anticipated the Contractors In we redoubling cost our are help contractors and As owning time. response, our support are experiencing we we address record service of to faster costs this than efforts inflation extraordinary country us the we resolve and customers across a rising and hassle

in first business topic and drivers estate innovative be We real a levels. decline the our result contractor of nature to continues address inventory real the estate working our find normal to business a service key of is and and and remain with of controlling operations. year real from unprecedented will controllable. on driving near-term near-term strong these macro low inflation sales market with impacted cost. are extremely This not our improving the estate our in shortly. improve this is ways Separately, I times, our by a historically but cost focusing to is network focused intrinsic customer pressure comes in on We Much this home intentionally reduce to sellers in channel as

and in many generate flow. mitigating that challenges, Brazilian this control to it cash factors, continue grow we our is scale our term. near strong work remain external of the Despite While business to environment beyond model the ability and demonstrates on in these the them revenue

growth We able building future foundation are opportunity believe community ahead drive success. and in in a us order customer strong our contractor develop cutting back, continue performance. to continue while tremendous for initiatives to our are propel strategic investing our we of others long-term a While to we and experience have

estate real X. provide outlook to the of our year the Slide sell service in real previous February, to approximately in full our turning did as XXXX. same underperforming we channel When In we channel on in Now number expectations. short, we our has real been estate channel expected plans estate the home

the However, transaction. to plan of or low Realtors levels National the a NAR that There home statistics significant a including period it the are in difficult inventory levels remains on increasingly to days in was market than declined the three this seen according service leverage down extremely prior and sell when days has seller NAR, market believe remain we from from trend, less highlight year pandemic. before and this the to XX days XX in of March Association half

metric homes, inventory. was of is months reported a is XXX,XXX of the market X approximately only end unsold well at March second which The of of This to below of around inventory NAR X months X supply. or normal

reported shrink is our to since to individual home are sales, to year increase the the that approximately inventory XX% March. more NAR purchase a a sell impacting metric from service inclined being ability naturally to these buy percentage prior our themselves dramatic plans third up the plan. significant percentage not homes was product of by is in purchased of are and purchasers levels been cash service factor investor This contributing has XX% the buyers which likely The This reflecting they period. available in investors,

real first, market DTC following in estate pressure, decline our in from lower channel As channel to now on our channel to to to offset revenues investing we be expecting of of the are and or impact renewal estate this we more significantly help direct-to-consumer sales. external In real response some environment, continue XXXX. the a actions: our result channel focused

strategy our We are to partnership over expanding also our time. revenue diversify help

we real share Within channel partners. largest expand our aggressively are to looking estate the channel, real with estate our

the recently in real and the better channel our Good, most channel, a none last products real fix products they year position comparable home plans launched our actions have markets, in sales We estate channel we are Better, completing of us new real we key products we’ve will clear, are and launched realignment DXC comprehensive on in overnight. market. these estate we focus offered, To will our our Best ever to geographic be help strategic the our organization estate believe service

However, improvements we we become macro believe and that factors footprint this channel business continue the our rebuild and to will hold. demand as is core home favorable market plan more our take service to over time our

X objectives changed our have that of since XXXX, for top I Now by call. a start turning to Slide you our not our and review reminding objectives will last

deeper in and through progressing the with Starting to quarter. of of part priorities we did well how dive into on Let’s We our these DXC the of XXXX. are remain this after where early now late revenue improvements we target continues providing some double-digit growth making perform team XXXX. as channel,

stabilized still from hold we marketing team our to XXXX. The that expect true. platform comments year, last last Our quarter and late continue through

conversion operating spending, funnel to the are continue to all Our we expected make optimize changes and and media platform. minor as footprint

and outreach process. the and it to make the touch your center renewal For easier time example, coverage we our by and leverage home to service net e-commerce renewal our In platform number year. broader technology call customer continues improve is training working this with renew our points, team channel, the of a are last well, media catching to We’ve plan. increased staffing improved

fact, where platform. can through our your we are new In you feature a upgrade launching plan just online

services. it’s maintenance is offering of of both around more and customer lot provides coverage the believe more potential early, Platinum we While base still there which upgrading a to our inclusive

still are to looking We customer improve in retention XXXX. overall

impact an continue However, about estate will our count. to the customer response, sales initiatives decline in higher have In real these I’ve on spoken pricing total progress and we previously.

focus, and as easier leveraging Streem with service for to make us experience to to us are walk digital-first and We improve such to our working customers their the in for interact by technology it shoes.

to new a a offering easily adoption. feature launch began drive click-to-call to more customers just we example, customer that call better Streem allows For

allowing options, contractors more We’re digital by to delivery our more also pricing. service on optimize utilizing progress committed by for to experience self-service continuing preferred dynamic and further the

automated improved have capabilities are the interactions self-service our of account customer now or and initial system. Over processing years, our through phone my than more few last half we

this As even think app better. we we later self-service our can make roll out capabilities our year, we customer

is will reasons and home and to leave inflation in rates the improving strongly real external on macroeconomic you drivers despite this key the Frontdoor we our our profitably near-term the long-term believe conditions. environment three focusing in our controlling We accelerating Frontdoor: facing the estate to vision I beyond services. home are challenges control, of some focused that and first, services on current of the pandemic that business with around out macro While remain controllable. transforming the hassle we space taking business continue believe grow of

and call, in in to times, stated expect company our public I As our majority yet we last the profitable deliver we life continue of growth. uncertain

for larger complete on-demand need is services, a who I more that you to exactly customers financial provide on and to traditional Last, to audience. into we for and build digital and thus a hassles to through for to holistic much to a do. disruption. opportunity the much more in not to our a to our current those bundle and maintenance transform now and antiquated review knowledge We has a Brian? into a what we offerings plans scale delightful service Second, set industry Brian have believe plan, of inefficient may model way. home that’s transformation home the not we an solve will are digital-first ripe only but to reaching and grow plan uniquely service your turn products continue allows home call new services over massive we transform results. industry the positioned that strongly This banks

Brian Turcotte

turn Please our quarter Rex and to afternoon results. XXXX and good X review financial first Thanks, will Slide everyone. I

increased and home mix First of priced prior million the higher result quarter products our higher a in period plan $XXX business. pricing to revenue X% shift as service XXXX to year versus a

channels, Looking price number prior and quarter at plans. a First home plan home to service revenue was due up customer derived growth renewals improved versus the renewed service our in year realization of XX% from

in continuation service XX% estate inventory by down decline had year, number continued low challenging realization. was of improved sellers market than this channel the in this service in versus levels the projected by part price the the extremely plans driven First plans The prior home in number U.S. in higher home across revenue was channel, decline the year part the in home due of reflecting to of real offset the we

revenue year was First year products. channel price mix higher-priced to improved realization a versus shift direct-to-consumer the prior DXC up or XX% to and due

continued quarter First channel prior due million in $X to the solid and primarily growth increased year, Streem. revenue ProConnect other over reported our at

of year. lower the expense. Streem declined in interest Gross EBITDA profit million was first higher ProConnect Adjusted investments should and income ramp $X million was $XX $X profit year XX%. XXXX year was prior for and as increased than the profit period. period million over $X Adjusted than prior more in over and and in balance revenue the to quarter sales, million technology, our lower $X marketing million and period gross personnel versus the gross million. the lower prior costs continue quarter quarter income $X year million or of the well as Net X% $XX first offset net up decreased first as and declined to in to million, First the the quarter margin respectively $XXX

top, X in EBITDA. favorable Let’s Slide of plumbing year for challenges. versus partly on move and conversion million context quarter the had Starting and was costs industry-wide trends $XX increase period. primarily we provide appliance, adjusted increased The in million of equipment the service accelerating year-over-year lower of requests offset a benefits. in contracted revenue to availability improvement Contract first was first and to XXXX fuel inflationary period. costs well year claims rising parts the the versus as trades prior process by $XX number I’ll prior the table labor the and as in quarter decline at and due the HVAC including continued This the

versus to increased due first $X a primarily the from million to Additionally, administrative quarter general related development primarily period and higher increased quarter include costs claims of costs quarter quarter in the $X prior first costs in million finally, the for the claims related the the of year and increased marketing prior fees, of unfavorable adjustment investments channel fourth contract XXXX. million technology professional Sales in first XXXX And to investments the costs. ProConnect. $X personnel and increased and period, in DTC adverse

cost effects year-over-year cost I experiencing, last the the mitigation the on higher based the costs. assume increase was our strategies. X, claims appropriate year, Slide to a to am that Turning trends parts business detail we and going high now and labor, Based more single-digit on cost ongoing experienced significant on equipment inflation we’re claims contracted exiting we on

in acceleration of than our quarter we have our changes first inflation There year-over-year last cost resulted have However, since that several a been greater call the earnings actual inflationary rate anticipated. was originally cost pressure in mid-teens.

consumer index for March. macroeconomic rising have impacted in environment. equipment inflation shutdowns all and the U.S. price resulted availability chain the China factors in that First, supply rate These overall we X.X% war creating in the seen global inflation inflation COVID-related in at future. supply have third, could has has cost XXXX Ukraine the the the especially overseas impact second, And in prices fuel logistics to increase impacted increasing foreseeable production highest an with issues and global have parts and since contributed challenges that uncertainty; chain by the

it’s important inflation to services rate. space out that rising cost point of home the ahead well in However, this is

parts are equipment example, now costs rates higher we well our as rate along service fuel, costs. as and as For rising seeing higher double-digit labor request the contractors pass at inflation

level While influence and costs, parts of ability same when an own purchases we our direct parts of supply equipment. have and don’t they have equipment, contractor own visibility their our and we especially visibility to into great that

result a and actions. of we current are global number through chain supply challenges environment, a addressing rising As inflation of the aggressively

that increases delivered be increase an single-digit we round and through First, to XXXX and in implementing targeting the are impact. of dynamic price unit will another overall minimize pricing now price sales upper

to inflationary to pressure. continues increase that time and to testing priced, price customers mostly inelastic cover show Our expect be to price our are able we over the our

preferred implementing Second, of automating jobs such efforts adoption percent improvements are our process our recruiting the and contractors, broader assigned as a technology to increasing redoubling we host of with processes. of driving our and contractors,

$X equipment to of The efforts cash Slide activities Third, working position cash And for charges we quarter working broadening XXXX assets ended provided operating $XX driven months flow, XX, reduction provided was in by from $XXX to unrestricted totaled for turn cash of Net was $XX and the cash and for X March additions, SG&A the by XX, was and for year. for review the $XX cash parts year. property investing totaled flow net and comprised Please calculated compared fourth, are cash prior continuing minus we’re Frontdoor-sourced Net quarter activities operating of the business. X capital cash March used comprised $XX million and $XX was the expand driven Restricted seasonality. from supply expenditures. million $XXX was primarily for We Free compared cost months our XXXX, taking across provided chain to used was by actions for now million XX cash million our first contractors. ended million a with financing prior ended million. cash. share primarily from the to activities capital million, XXXX, for million of primarily $XX in $XX the XXXX first activities cash and non-cash for $XX adjusted million used from million cash earnings as capital. for technology-related was million provided net Net repurchases.

Slide available solid facility, cash revolving the share of for remains years million filings. repurchase $XXX available return combined of through now $XXX we shareholders next credit I’ll cash, current capacity prepared our to as quarter It my detailed with strategic excess a to unrestricted in few of updated the XXXX other the us our but provides remarks the public program million. our majority or with year over acquisition conclude Our the thoughts intention on for a full with program, our outlook considerations under pause financial position our regarding liquidity our could certainly and second XX. provided

offset a a $XXX decline prior quarter XXXX to increase which direct-to-consumer $XXX million, second channel We and within channel XX% expect to period, renewal nearly the range in revenue partly real revenue. an estate our by in be year reflects revenue versus million of

adjusted year range trends. million, inflationary below $XX accelerating $XX is the expected of cost from million quarter period prior the to Second EBITDA significantly a as and is result which

and Turning range and XXXX the accounts full basis, a the channel, is primarily billion. to customer by home On decline DTC growth within product for shift real digits. single-digit growth in growth renewal revenue to to plan price historically in driven the channel in of mid-XX% revenue our our related revenue mid-single low be of due to the now to in of estate channel consolidated growth year products, be this real projected continued level higher inventory. in a comprised our an price home core billion a revenue upper business outlook, a updated assumptions to double-digit estate market $X.XX challenging sellers full include low and realization, mix year is extremely to channel decrease higher-priced expectations expected the to $X.XX The in service higher revenue revenue

Additionally, is in emerging expected originally by businesses, real between count weakness and about to $XX decline ProConnect to and million reach sales. projected. $XX $XX XXXX, to driven as be In first customer revenue the now primarily to is our expected Streem still in is revenue year estate regard slightly million targeted million

pressures, gross are pricing in offset projected second and be by of the is improvement cost and half the Our partly year. higher profit efforts have XX% between to to primarily impact driven full expected of acceleration XXXX year by the greater inflationary margin a XX%, process and

and of we remains of increase some will rate The improve should down margin note the to of half increases request first versus service core remain expected as in percentage home same, for our year pressure inflationary a drive we plan service is in low-teens the to while be the year. prior from of inflation per requests lap the the to of that approximately half XXXX, number slightly second business cost gross that to is is expected our year flat cost long-term XXXX. target the elevated the I while For in then the actual which anticipate service late XX%.

the every with and Our can navigate macroeconomic we we to it’s the to you action provide mitigate as best goal take volatile impact. real-time – there is a data environment inflationary

We XXXX The XXXX million decrease million. to $XX million range mentioned to targeting these $XXX SG&A year our expense from are between earlier. SG&A relates guidance on actions to Based range challenging conclusion, inputs, full In year $XXX the very executing initiatives. business and now our I full and previous internal million. macroeconomic primarily $XXX reduction expected set and updated best we adjusted is by our manage $XXX the are controlling doing of to between this controllable EBITDA million through conditions

confident continues Despite be remain estate geopolitical question-and-answer this With us performance actions Matt? I’ll back real delivering our to call these impacted for a continue that turn over will by that, open navigate on we to Matt we’re pandemic-driven business foundation period. to building challenging outlook, and aggressive pressures on challenging near-term help While a we an long-term inflationary of set and future. pressures, near-term our historically the strong the through in invest the to market, and on cost focused session.

Matt Davis

Thanks, Brian.

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

Operator

your you question. Jeff your [Operator line open from will to Blair. question if William with of line like be Jeff, now, Instructions] from Schmitt you, would first Matt. is the Thank Our proceed

Jeff Schmitt

then high why just type curious this? inflation are think Hi, XX% for I was same to pain. afternoon, targeting I’m is lower the you mid-teens guess, of price price because, environment everyone. sort that kind competitors the going but of you’re increases competitive? not too your push I the Or to XX% of say just combat single-digit through And Did in cost market increases? would good claims

why the get front? more aggressive So I guess, not pricing on

Rex Tibbens

of things. we that’s where be. of we in thought this last Rex. A couple inflation is call, was a because mid-single-digit about our increase kind One, price to of kind going Yes, talked

And so round as Brian mentioned, price kind increases. now another of we’re of targeting

things, over think impact between do you’d mentioned, think time, that as that, Brian I those of to add believe two the I inflation. begins So mitigate to Brian, I that?

Brian Turcotte

inflation the be be to Yes. through clear, half full year end the basis of first year. the And And rate will just low in mid-teens the year on then a teens.

a bit year. off of as half pressure in it lap So second the the last from some trails we

Jeff Schmitt

Okay. any growth seeing included What’s options. Platinum some And said a all? the you I at which there are there? progress on plans. maintenance new business of of, kind What – the is I The the question of you And of that? think type maintenance guess, ProConnect cannibalization

Rex Tibbens

No.

Platinum, customers we’re both seeing maintenance of coverage plan for services. well the So actually home as as service blend like that something

services, higher cannibalizes mix we our than And longer-term. think great And so it We for we maintenance we’re of retention originally actually sign. a is always don’t that Platinum think seeing customers tool which for, a great ProConnect a at had forecasted is actually all.

Jeff Schmitt

for Okay, answers. thank the you

Operator

Thanks, Jeff.

Our your of is Oppenheimer. is line Ian Zaffino next Please open. from question now proceed. Ian,

Ian Zaffino

Thank much. you Great. Hi. very

there you better of you could of price take to or you’re get On some anything form now? other than Thanks. surcharges do increases offset immediately inflation able the more some – is side, have that right the to thought you can about pricing do pricing maybe to

Rex Tibbens

it’s Rex. explored. it’s we’ve something Hi, Certainly,

kind well cost kind our as dynamic just I look usage code. immediate approach I we’ve our you if we to models data things of But we opportunity sell increases an group think is lot pricing, science the pricing, zip at that since worked within have to with an taken for an surcharge, of not think pricing there as A remind to both contract, we’ve is the of will. annual the a through

revenue in in deciles those therefore, So at, risk looked service time. surgical at twelfth mind the been terms are we we’ve things I annual, prices. think, of Keep how raising contracts recognize that between a we pretty, the and we’re our

improvement. time, we plays So over going the not that’s think but it’s immediate be this to out that why

Ian Zaffino

similar And you a there that. fits more? it Okay. to inflation higher help Thanks. million the ProConnect think might just that than be kind take Maybe taking on just If of to the side, your with an trying guidance. then cover us $XX to of opportunity of follow-up, I’m increases in price case, are And understand that’s Is how there? that?

Rex Tibbens

Sure.

So certainly, that for a there I within potential think some the but opportunity, also areas, currently areas – ProConnect. it’s the we’re is building

started services. part So with just both to appliances. that’s plumbing is the into a reminder, price, I as somewhat there that and a Certainly, it’s up. appliances and take an we you’re we opportunity small maintenance building roll also as think there nascent, is in maybe opportunity electrical But but more

So help. $XX of I sure target going us not think million. it beyond our to take it’s will I’m revenue

Ian Zaffino

much. Okay, thanks very

Operator

Truist is of line next question Our Squali Securities. the of from Youssef

Youssef, open. proceed. is your lien now Please

Youssef Squali

Thank Great. you.

quick on two questions So for me. pricing. One, still

take good Thank think you’re you time marketing time not about because come price ROAs to still much channel that single assumption that, how of price price And the for it, So year hoped that going the second, your to assuming maybe channel that back talk back, some – as over for you’re it’s Does to expense you. you Arguably, as growth the little call have versus versus double-digit marketing the can low are increase be is or at inflation? it, institute recapture bit able the mid-teens in sustained the high you from DTC marketing was you low inflation call within maybe going seeing teens a on I in tool in maybe your to assumption hitting the DTC. increase, pulled efficiency your about digits. acceptable a efficiency as in you that ROAs? you through

Rex Tibbens

Yes, and Brian, question, pricing sure. direct-to-consumer ask of lap I’d kind the comment on year next. into I’ll how this take will you our to

consumer, the late team that’s right, last challenges last the as behind year, couple faced direct but for So quarter, of you’re we’ve us. reported a

certainly, still are great a more We’re seeing expensive. things –

We and worked our and has marketing. team over platform the optimized think conversion both digital e-commerce other efficiency. We’ve I areas. our spread on

expect perform of those think we’re on why actions of But it the remainder towards price this we look but But the mix so shoots have year. somewhat taken still the will year. direct-to-consumer seeing some half the year bullish the growth we’ve green and double-digit of first, continue definitely to these that’s And forward providing things to and we well, that back are and for we in units still second year. we’re last as

Brian Turcotte

And your price increases you reclaiming gross pricing cost these you’ve gross and recovery months time. upfront or Youssef, Rex a margin roll over to and to And takes question as get about and revenue takes margin, just the got It it then the profit right? said, time, few some then recognize out. monthly the you so

it long-term, estate future service etcetera. we were will a to of margins not dynamic be to us home about But forecast to but for into you plan get year, this margin. able it’s the certainly XX% gross pricing think on as So quickly gross get more rebound, benefit. as we will for get going back happen as dependent year, how next to And lever that real be XX% saw we great from our pricing business, of XX% to

back to time some So anyway, take to gross get to. to it’s story long to we need going short get margins to the

Youssef Squali

Okay. clarification. your Thanks for

Operator

now from Aaron, is our Thank And Please your next Aaron line proceed. James. you. Kessler of Raymond open. question is

Aaron Kessler

Thank Great. you.

I I as well? well you DXC in parts Just the your talk can then to between seeing – about channel. clarify, of as you and the in Maybe inflation talked you’re you. mix just maybe if as specific estimates a kind acquisition And first, think think the between couple of about kind kind just mid-teens. of – maybe labor costs you to What’s rough kind of customer of costs Thank questions.

Rex Tibbens

Sure.

Brian take ask on and I’ll comment costs. So direct-to-consumer to inflationary

that slightly higher prices perspective. but will an with that mind increases LTV of headroom to if more and in we’re seeing also give you So CACs, us for certainly, from direct-to-consumer product, changes mix helps keep more our actually

have we shoots executing well. year the nothing transitioned changed us. pressures – profile, certainly are last provide So, but in mix team that our in-house that think there, seeing programs to we is some to green platform inflationary I We e-commerce out Since very ordinary. our continues for and some of brought

So, as pretty we spread our we our and confident direct in marketing still across digital, broadcast, are plan. mail

Brian Turcotte

it’s Brian. I again, am Hi was sorry? What inflation question Aaron, your

Aaron Kessler

Thank you. Yes.

of inflation. mid-teens kind You mentioned overall

and Just having mix between a the have of remainder, the good up, kind should may sense? parts, labor you costs we about mentioned is think curious, or cost is of I have were XX%, parts labor how think if kind about you

Brian Turcotte

technicians. we that shows that they are mid to digits that the are our And parts what of which they a have look is for high. XX% their labor that to paying probably probably costs data high-single at facing with at the rate inflation, seen their inflation The hitting very when are they it are equipment, like is – Yes. XX% contractors looks and

with more we purchasing XX% due to our facing are like leverage. buy what We

So, they than that’s fuel ago high. XX% pretty their a are fuel, trucks. for think paying about for And more today year

lot that that’s what our more it’s today. helpful? like contractors Is So, there from a But purchase, facing is we of inflation XX%.

Aaron Kessler

it. Got

Okay. Thank you.

Operator

you. Thank

KeyBanc. Our Patterson Justin is question next of from with the line

your now Please proceed. line Justin, is open.

Justin Patterson

potential just let timeline capabilities. macro go you. about to customer around wanted self-service time? comments to margins think bear the should the the over power the talk fruit benefit I then afternoon. service, off, good pricing and And improving these and could the back phase business? investing Rex, as investments Thank to you about how and you more that you normalize, rates, Thank of improving some that Great. about start both into Can conditions to retention we for to that have

Rex Tibbens

has kind perspective, to get team has work Hi in Justin, really we improved. traction think I self-service are know definitely think from of – a terms kudos And been I ongoing been work. we this this since lot Account I My of see an has started. don’t ongoing feature of a our that a starting

automated Our improved. systems have phone

still you early we think have means. resolve wanted that through someone I never, on, you that time digital to last and was any to I to believe talk issue be should the So, I said and able

customers walk that do approach through can the in self-service think simply we a to from to customer And so out Streem, feature with all things click call a resolving that now issue Those that we lower your make perspective. starting byproduct agent what is, also is that a And problems continues digitally. for to experience think We they that as app digital-first of our roll in understand strengthen online, starting can better. the later the year, that is bring shoes where of and the cost. your are kind are you

problem a And seen of should then help these drive costs. have from could time – those different delightful things over be we to think industry. perspective, our that because of things bring a we combination the should more are very retention so approach and than And us solving retention experience a lot the service a in it down the

support help factors should only, but experience, combination think so which not provide also delightful those we then a And into costs will better improve of forward, retention. dovetail our going customer more

Justin Patterson

Thank you.

Rex Tibbens

You bet.

Operator

line is from Fargo. the Wells And Brian, our of next your line is now open. coming Brian Fitzgerald question from

Brian Fitzgerald

guys. of questions. Thanks A couple

does DXC you in saw in what the I’m customers strength and the us trying trajectory drivers premium there? assess there, many talked in performance nice rates you trends Can are tangent the volume maintenance. kind and to momentum coverage is of What conversion what’s includes the tease any what’s the the in upgrading penetration there. the the there? of – and like, that of pricing then the if quarter? kind the to opportunity the rates what you channel give about out could there, versus Wondering And had you quarter. Rex, You

Rex Tibbens

Sure.

So, first year. latter of you have year, the by driven units see the part come a the primarily you least perspective, price on and towards direct-to-consumer will and mix at half expect then you the from in should of

out to Platinum a the test and additional for realize us, of but the kind it in break relates but tune us coming for customers well. products, up, way of we As kind our our on things as kind with not is just maintenance into of services months rely moment enjoy be well. Platinum rolling having And service also Platinum maintenance we that fix as an primary will HVAC

least of numbers. our at comment I if what terms don’t on mixed certainly, thought. we than I mix Brian, we performing but know publicly think a we have have But you mix. knowledge, think in said is I given could So, we in don’t perspective, But from penetration, better Platinum my outlined don’t

Brian Turcotte

Rex. time, at this Not

Brian Fitzgerald

Okay. Thank I it. appreciate you, guys.

Operator

Carpenter line Please next now from Thank of question your Cory, you. And Cory line open. is our is the from JPMorgan. go ahead.

Cory Carpenter

Hi. then, to Thank due with wanted hoping Rex that confirm gaining the losing competitive you. sounds a more in think Thank talk estate could seeing the just in you. what just change you to for Do bit. the market I direct-to-consumer like It the But the Rex, estate guide more in you are And you you channel. revenue you. around and share or or any broadly completely are is Brian, real broadly? environment real

Rex Tibbens

absolutely. Yes,

real And think marketing higher troubling was inventory as been for your even estate, investor more be of then summation think would correct. the is takes to. us we traditional we more continues go about buyer thing home For challenging away down. Certainly, I percentage both the buyers, it’s which from who to inventory

relates it as are make renewables controllables direct-to-consumer, the both really I So, can and to focused and two headway. areas think direct-to-consumer we we think controlling on that are I where

a direct-to-consumer, And our conversions optimized then renewal spend certainly, dynamic have we so diversified pretty well. And looking perspective, pricing. have from we

but are estate help from of are have continue comment terms share, speak, losing doing. But Good, what we Better, we But of share, from that’s can’t kind at And one look in in folks will historically, We actually us. other hopeful share, so on that there. And I a from weakness as we real not to our products the competitive perspective. then any a sure. smaller, inflationary certainly, certainly portion we analysis overall, our I has share least the we with of macroeconomic inventory a think and of for we losing much weakness not But suggest lot just perspective, are a a in at from see pie, don’t perform, continue pie to signs to estate that we gotten launched perspective strategy. that our real change lower – our of Best and are

So, we control. will to areas. those we can I profitable deliver we focusing continue And on on growth still things are the think

Brian Turcotte

correct. was assumption Your

renewals of just February call. decline. XX% going Our outlook over for BXC decline the is real the changed from only from to mid-XX% really estate same rev was We the and

were So, correct. you

Cory Carpenter

Brian. Thanks Okay.

Brian Turcotte

Sure.

Operator

of And now Sachs. proceed. Goldman our final Please your line open. question is today Eric Eric, comes Sheridan from

Eric Sheridan

for already. things Thanks seeing, back Slide I any and are without churn and impact raise about you a want the a to first in. balance to ability over next come quarters. headwinds framing to follow-ups the squeezing from mitigating to get can you In how were sort X you me right, the aggressively about that out and talk interval ask price maybe couple your that standpoint few causing just ensure confidence of you looking talked of

as the much. the can in the you us a by contractor see that from processes, plays chain, goes quarters monitor the bit the go you On of can could how that on a which duration then how give the of improvement detail second supply more again we into what And of couple as improving Thanks the that over that can your progress color we little expanding so outside point out give quarters. on more us we little bit and next in duration on ahead? results and

Rex Tibbens

Sure.

Again, pricing closely. So, our segment deciles. that by from we very a on and basis, customers [indiscernible] perspective, something at look them we is this have we watch we a dynamic

around is deciles. by even to where those raise are pretty pretty, customers prices, in we deciles. like so have an one robust that that I each because them even we think, of each we as that a that we premium using the And those We higher have coverage. elasticity whether more in And increases do it’s is And pricing haven’t one for level or the an what us seen norm think of seen by risk, willing are any with our models of charge changes opportunity to pay we higher those of and given. have there customers level deciles our than they the usage

our So, any we seen to changes haven’t models.

will, retention We you if deciles. haven’t we a from perspective those each seen for one of backlash, from expect any what

am I and think the you to want working be And for So, well will the us. handle. one, I other can them, to take continue sorry, of it if –actually seems inflation questions, Brian, you very to I on then both

Brian Turcotte

Yes.

I the second improvements Is the that contractors. improves and cost process right, think was with one improving Eric? about

Eric Sheridan

Yes.

that a just mitigation contractor out the we about playing the improving supply putting we you processes of whatever ahead, be so start see so on in in standpoint, should chain, from we and quarters Just understand to from – can thinking duration how expanding Thanks. that? are benefits the place impacts

Brian Turcotte

please jump Rex, Right. and Yes, in.

lower mix improving quick mean our from a improvements push preferred going Regarding more the costs the the sudden. can is percent the our guess request I I to we of the low-XX% process to of that’s percent referred, are service historic, contractors, pretty be. our impact,

is a that take And – to just that the It’s of control level. quick. I pretty job that’s think So, great amount team they of it’s that today. doing the time raise

mentioned, be But year should than go did as chain, regarding we XX% parts for paying round ago. supply equipment and that of contractors And we more to we a as XX%, are our more able I So, see we today to to are forward. paying XX% X% numbers.

us can shift and So, save gross gross to to sourcing margin. profit and money going our is we from anything theirs help

So, else well. have fairly to anything Rex, again, them. as you to us like to purchase just We that would be them get quick add? could allow to for

Rex Tibbens

I to on will have better cost, contractors. much seem add preferred on to the our two things. One volume a because manage is handle help able they us being handle. They

percent or preferred. think our been there on will, certainly a so the optimizing preferred. increase selection that’s And because I network for then so continue increase will is, so we some kind second help algorithms work the contractors that can to of do why that some the work has And that our you expensive if of it’s are of important contract, lot more preferred, we than percent

contractors. this as what big for is in parts where as us terms about unlock a mitigator So, well we versus definitely Brian cost spoke source a our or of

Operator

Great. all And for questions it that is today. our

So, I hand would closing Rex for to remarks. to any Tibbens back like

Rex Tibbens

our are challenges you. estate key control, in improving the remain some Thank that focusing the In controllable. near-term our around accelerating the focused controlling beyond we drivers macro while environment and real absolutely facing external closing, really inflation of on business Frontdoor rates on is

this So, earnings look time and again thank talking to you in afternoon, to for your we call. you our next forward

Operator

again Frontdoor’s you call. for first quarter XXXX now thank gentlemen is earnings call and concluded. joining Ladies Today’s

Frontdoor (FTDR) 9 May 222022 Q1 Earnings call transcript