These terms and conditions govern your use of the website alphaminr.com and its related
services.
These Terms and Conditions (“Terms”) are a binding contract between you and Alphaminr,
(“Alphaminr”, “we”, “us” and “service”). You must agree to and accept the Terms. These Terms
include the provisions in this document as well as those in the Privacy Policy. These terms may
be modified at any time.
Subscription
Your subscription will be on a month to month basis and automatically renew every month. You may
terminate your subscription at any time through your account.
Fees
We will provide you with advance notice of any change in fees.
Usage
You represent that you are of legal age to form a binding contract. You are responsible for any
activity associated with your account. The account can be logged in at only one computer at a
time.
The Services are intended for your own individual use. You shall only use the Services in a
manner that complies with all laws. You may not use any automated software, spider or system to
scrape data from Alphaminr.
Limitation of Liability
Alphaminr is not a financial advisor and does not provide financial advice of any kind. The
service is provided “As is”. The materials and information accessible through the Service are
solely for informational purposes. While we strive to provide good information and data, we make
no guarantee or warranty as to its accuracy.
TO THE EXTENT PERMITTED BY APPLICABLE LAW, UNDER NO CIRCUMSTANCES SHALL ALPHAMINR BE LIABLE TO
YOU FOR DAMAGES OF ANY KIND, INCLUDING DAMAGES FOR INVESTMENT LOSSES, LOSS OF DATA, OR ACCURACY
OF DATA, OR FOR ANY AMOUNT, IN THE AGGREGATE, IN EXCESS OF THE GREATER OF (1) FIFTY DOLLARS OR
(2) THE AMOUNTS PAID BY YOU TO ALPHAMINR IN THE SIX MONTH PERIOD PRECEDING THIS APPLICABLE
CLAIM. SOME STATES DO NOT ALLOW THE EXCLUSION OR LIMITATION OF INCIDENTAL OR CONSEQUENTIAL OR
CERTAIN OTHER DAMAGES, SO THE ABOVE LIMITATION AND EXCLUSIONS MAY NOT APPLY TO YOU.
If any provision of these Terms is found to be invalid under any applicable law, such provision
shall not affect the validity or enforceability of the remaining provisions herein.
Privacy Policy
This privacy policy describes how we (“Alphaminr”) collect, use, share and protect your personal
information when we provide our service (“Service”). This Privacy Policy explains how
information is collected about you either directly or indirectly. By using our service, you
acknowledge the terms of this Privacy Notice. If you do not agree to the terms of this Privacy
Policy, please do not use our Service. You should contact us if you have questions about it. We
may modify this Privacy Policy periodically.
Personal Information
When you register for our Service, we collect information from you such as your name, email
address and credit card information.
Usage
Like many other websites we use “cookies”, which are small text files that are stored on your
computer or other device that record your preferences and actions, including how you use the
website. You can set your browser or device to refuse all cookies or to alert you when a cookie
is being sent. If you delete your cookies, if you opt-out from cookies, some Services may not
function properly. We collect information when you use our Service. This includes which pages
you visit.
Sharing of Personal Information
We use Google Analytics and we use Stripe for payment processing. We will not share the
information we collect with third parties for promotional purposes.
We may share personal information with law enforcement as required or permitted by law.
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
September 30,
2025
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number
001-38617
________________________________________________
Frontdoor, Inc.
(Exact name of registrant as specified in its charter)
Delaware
82-3871179
(State or other jurisdiction of incorporation or organization)
(IRS Employer Identification No.)
3400 Players Club Parkway
,
Memphis
,
Tennessee
38125
(Address of principal executive offices) (Zip Code)
901
-
701-5000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol
Name of Each Exchange on which Registered
Common stock, par value $0.01 per share
FTDR
The Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes
No
Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes
No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
No
As of October 31, 2025 there were
72,113,199
shares outstanding of the registrant’s common stock, par value $0.01 per share.
Frontdoor, Inc.
Quarterly Report on Form 10-Q
GLOSSARY OF TERMS AND SELECTED ABBREVIATIONS
In order to aid the reader, we have included certain defined terms and abbreviations used throughout this Quarterly Report on Form 10-Q as set forth below:
Term / Abbreviation
Definition
2024 Form 10-K
Frontdoor, Inc. Annual Report on Form 10-K for the year ended December 31, 2024
2-10 HBW
2-10 Holdco, Inc. and its subsidiaries
2-10 HBW Acquisition
Acquisition by Frontdoor, Inc. of all of the issued and outstanding common stock of 2-10 HBW completed on December 19, 2024
AOCI
Accumulated other comprehensive income or loss
ASC
FASB Accounting Standards Codification
ASU
FASB Accounting Standards Update
Credit Agreement
The agreement governing the Credit Facilities, as amended effective on December 19, 2024, by and among the company, certain of our subsidiaries, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent
Credit Facilities
The Term Loan Facilities together with the Revolving Credit Facility
Exchange Act
Securities Exchange Act of 1934, as amended
FASB
U.S. Financial Accounting Standards Board
Home Warranty
A home service contract, sometimes called a residential service contract, home warranty, home service plan or home protection contract, provides for the repair and/or replacement of certain home systems and appliances for breakdowns that occur as a result of normal wear and tear
HVAC
Heating, ventilation and air conditioning
IRS
U.S. Internal Revenue Service
NASDAQ
Nasdaq Global Select Market
Omnibus Plan
Frontdoor, Inc. 2018 Omnibus Incentive Plan
Purchase Agreement
Share Purchase Agreement dated June 3, 2024, by and among Frontdoor, Inc., 2-10 HBW Acquisition, L.P. and 2-10 HBW, pursuant to which Frontdoor acquired all of the issued and outstanding stock of 2-10 HBW
Revolving Credit Facility
$250 million revolving credit facility, as amended effective on December 19, 2024
SEC
U.S. Securities and Exchange Commission
Securities Act
Securities Act of 1933, as amended
Streem
Streem, LLC, our technology platform that uses augmented reality, computer vision and machine learning to provide services
Term Loan A
$418 million term loan A facility, which became effective on December 19, 2024
Term Loan B
$800 million term loan B facility, which became effective on December 19, 2024
Term Loan Facilities
The Term Loan A together with the Term Loan B
U.S. or United States
United States of America
U.S. GAAP
Accounting principles generally accepted in the United States of America
In this Quarterly Report on Form 10-Q, unless the context indicates otherwise, references to “Frontdoor,” “we,” “our,” “us,” and the “company” refer to Frontdoor, Inc. and all of its subsidiaries. Frontdoor is a Delaware corporation with its principal executive offices in Memphis, Tennessee.
We hold various service marks, trademarks and trade names, such as Frontdoor®, American Home Shield®, HSA™, OneGuard®, Landmark Home Warranty®, Streem®, 2-10 HBW®, and related logos and designs. Solely for convenience, the service marks, trademarks and trade names referred to in this Quarterly Report on Form 10-Q are presented without the SM, ®, and TM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these service marks, trademarks and trade names. All service marks, trademarks and trade names appearing in this Quarterly Report on Form 10-Q are the property of their respective owners.
Certain amounts presented in the tables in this report are subject to rounding adjustments and, as a result, the totals in such tables may not sum.
Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited)
(In millions, except per share data)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2025
2024
2025
2024
Revenue
$
618
$
540
$
1,660
$
1,461
Cost of services rendered
264
235
716
655
Gross Profit
353
306
944
806
Selling and administrative expenses
174
154
498
456
Depreciation and amortization expense
22
10
66
28
Restructuring charges
1
3
1
5
Interest expense
20
10
59
29
Interest and net investment income
(
6
)
(
5
)
(
16
)
(
15
)
Income before Income Taxes
142
134
336
303
Provision for income taxes
37
34
83
77
Net Income
$
106
$
100
$
253
$
226
Other Comprehensive Loss, Net of Income Taxes:
Unrealized loss on derivative instruments, net of income taxes
(
1
)
(
4
)
(
13
)
(
3
)
Total Other Comprehensive Loss, Net of Income Taxes
(
1
)
(
4
)
(
13
)
(
3
)
Comprehensive Income
$
105
$
97
$
240
$
223
Earnings per Share:
Basic
$
1.45
$
1.32
$
3.44
$
2.92
Diluted
$
1.42
$
1.30
$
3.38
$
2.90
Weighted-average Common Shares Outstanding:
Basic
72.8
76.2
73.6
77.4
Diluted
74.4
77.1
75.0
78.0
See the accompanying Notes to the Condensed Consolidated Financial Statements (Unaudited).
3
Frontdoor, Inc.
Condensed Consolidated Statements of Financial Position (Unaudited)
(In millions, except share data)
As of
September 30,
December 31,
2025
2024
Assets:
Current Assets:
Cash and cash equivalents
$
563
$
421
Marketable securities
—
15
Receivables, less allowance of $
4
and $
4
, respectively
10
10
Prepaid expenses and other current assets
39
42
Contract assets
77
—
Assets held for sale
5
—
Total Current Assets
695
488
Other Assets:
Property and equipment, net
59
73
Goodwill
971
967
Intangible assets, net
400
448
Operating lease right-of-use assets
7
8
Long-term marketable securities
—
38
Deferred reinsurance
68
65
Deferred customer acquisition costs
13
11
Other assets
15
11
Total Assets
$
2,227
$
2,107
Liabilities and Shareholders' Equity:
Current Liabilities:
Accounts payable
$
104
$
71
Accrued liabilities:
Payroll and related expenses
36
44
Home warranty claims
71
74
Income taxes payable
36
1
Other
31
28
Deferred revenue
94
123
Current portion of long-term debt
29
29
Total Current Liabilities
401
369
Long-Term Debt
1,151
1,170
Other Long-Term Liabilities:
Deferred tax liabilities, net
52
49
Operating lease liabilities
18
20
Unearned insurance premium
238
233
Long-term deferred revenue
20
12
Other long-term liabilities
32
16
Total Other Long-Term Liabilities
360
329
Commitments and Contingencies (Note 8)
Shareholders' Equity:
Common stock, $
0.01
par value;
2,000,000,000
shares authorized;
88,389,769
shares issued and
72,433,160
shares outstanding as of September 30, 2025 and
87,434,468
shares issued and
75,314,243
shares outstanding as of December 31, 2024
1
1
Additional paid-in capital
184
152
Retained earnings
784
530
Accumulated other comprehensive loss
(
14
)
—
Less treasury stock, at cost;
15,956,609
shares as of September 30, 2025 and
12,120,225
shares as of December 31, 2024
(
639
)
(
444
)
Total Shareholders' Equity
316
239
Total Liabilities and Shareholders' Equity
$
2,227
$
2,107
See the accompanying Notes to the Condensed Consolidated Financial Statements (Unaudited).
4
Frontdoor, Inc.
Condensed Consolidated Statement of Changes in Equity (Unaudited)
(In millions)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2025
2024
2025
2024
Common Stock:
Balance at beginning of period
$
1
$
1
$
1
$
1
Balance at end of period
1
1
1
1
Additional Paid-in Capital:
Balance at beginning of period
167
127
152
117
Stock-based compensation expense
8
6
25
20
Exercise of stock options
10
6
15
7
Issuance of common stock related to ESPP
—
—
1
—
Taxes paid related to net share settlement of equity awards
—
—
(
9
)
(
6
)
Balance at end of period
184
139
184
139
Retained Earnings:
Balance at beginning of period
678
422
530
296
Net income
106
100
253
226
Balance at end of period
784
522
784
522
Accumulated Other Comprehensive (Loss) Income:
Balance at beginning of period
(
13
)
6
—
6
Other comprehensive loss, net of tax
(
1
)
(
4
)
(
13
)
(
3
)
Balance at end of period
(
14
)
2
(
14
)
2
Treasury Stock:
Balance at beginning of period
(
580
)
(
341
)
(
444
)
(
283
)
Repurchase of common stock
(
60
)
(
62
)
(
195
)
(
120
)
Balance at end of period
(
639
)
(
403
)
(
639
)
(
403
)
Total Shareholders' Equity
$
316
$
261
$
316
$
261
See the accompanying Notes to the Condensed Consolidated Financial Statements (Unaudited).
5
Frontdoor, Inc.
Condensed Consolidated Statements of Cash
Flows (Unaudited)
(In millions)
Nine Months Ended
September 30,
2025
2024
Cash and Cash Equivalents at Beginning of Period
$
421
$
325
Cash Flows from Operating Activities:
Net Income
253
226
Adjustments to reconcile net income to net cash provided from operating activities:
Depreciation and amortization expense
66
28
Deferred income tax benefit
10
—
Stock-based compensation expense
25
20
Other
1
2
Changes in:
Prepaid expenses and other current assets
(
79
)
(
74
)
Deferred reinsurance
(
4
)
—
Deferred customer acquisition costs
(
2
)
—
Accounts payable
33
14
Deferred revenue
(
21
)
(
12
)
Accrued liabilities
(
12
)
(
10
)
Deferred insurance premiums
7
—
Current income taxes
37
18
Net Cash Provided from Operating Activities
315
212
Cash Flows from Investing Activities:
Purchases of property and equipment
(
20
)
(
31
)
Business acquisitions, net of cash acquired
3
—
Purchases of available-for-sale securities
(
6
)
—
Sales and maturities of available-for-sale securities
60
—
Net Cash Provided from (Used for) Investing Activities
37
(
31
)
Cash Flows from Financing Activities:
Repayments of debt
(
22
)
(
13
)
Repurchases of common stock
(
195
)
(
120
)
Other financing activities
7
2
Net Cash Used for Financing Activities
(
210
)
(
131
)
Cash Increase During the Period
142
50
Cash and Cash Equivalents at End of Period
$
563
$
375
See the accompanying Notes to the Condensed Consolidated Financial Statements (Unaudited).
6
Frontdoor, Inc.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
Note 1. Description of Business
Frontdoor is the leading provider of home warranties and new home structural warranties in the United States, as measured by revenue, and operates primarily under the American Home Shield and 2-10 HBW brands. Our customizable home warranties help customers protect and maintain their homes, typically their most valuable asset, from costly and unplanned breakdowns of essential home systems and appliances. Our home warranty customers usually subscribe to an annual service plan agreement that covers the repair or replacement of major components of up to
29
home systems and appliances, including electrical, plumbing, HVAC systems, water heaters, refrigerators, dishwashers and ranges/ovens/cooktops, as well as optional coverages for electronics, pools, spas and pumps. Our new home structural warranty business provides value to home builders and owners of new homes by providing coverage, including insurance-backed coverage for workmanship, systems and/or structural failures, as well as other post-construction services. We also offer non-warranty home services via our website and app to our home warranty customers directly and others through partnerships and our subscription-based Frontdoor app. As of
September 30, 2025
, we had approximately
2.1
million
active home warranties across all brands in the United States.
Note 2. Significant Accounting Policies
Our significant accounting policies are described in Note 2 to the audited consolidated financial statements included in our 2024 Form 10-K. There have been no material changes to our significant accounting policies during the nine months ended September 30, 2025.
Real Estate Held for Sale
We classify long-lived assets to be sold as held for sale in the period in which all required criteria are met. We initially measure a long-lived asset that is classified as held for sale at the lower of its carrying value or fair value less any costs to sell. Any loss resulting from this measurement is recognized in the period in which the held-for-sale criteria are met. Conversely, gains are not recognized on the sale of a long-lived asset until the date of sale. Upon determining a long-lived asset meets the criteria to be classified as held for sale, we cease depreciation and report such long-lived assets, if material, as Assets held for sale on the accompanying condensed consolidated statements of financial position.
On September 4, 2025, we listed 2-10 HBW's corporate office in Aurora, Colorado for sale. We determined that the related assets met the criteria to be classified as held for sale as of September 30, 2025.
Basis of Presentation
We recommend that the accompanying condensed consolidated financial statements be read in conjunction with the audited consolidated financial statements and the notes thereto included in our 2024 Form 10-K. The accompanying condensed consolidated financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary for the fair presentation of our financial position, results of operations and cash flows for the interim periods presented. The results of operations for any interim period are not necessarily indicative of the results that might be achieved for the respective full year.
Newly Issued Accounting Standards
In 2023, the FASB issued ASU 2023-09
, Income Taxes (Topic 740),
which improves income tax disclosures. We plan to adopt this guidance prospectively in our Annual Report on Form 10-K for the year ending December 31, 2025. The adoption of this standard will expand our annual income tax disclosures, including enhanced transparency in the effective tax rate reconciliation and disaggregation of income taxes paid. The adoption is not expected to have a material impact on the consolidated financial statements.
In 2024, the FASB issued ASU 2024-03,
Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40),
which requires disclosure, in the notes to the financial statements, of specified information about certain costs and expenses on an annual and interim basis. This guidance is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted, and the guidance can be applied either prospectively or retrospectively. We are currently evaluating the impact of this ASU on our enhanced disclosures.
In 2025, the FASB issued ASU 2025-06,
Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40)
, which modernizes the accounting guidance for the costs to develop software for internal use. This guidance is effective for annual periods beginning after December 15, 2027. Early adoption is permitted and the guidance can be applied on a prospective basis, a modified basis for in-process projects or on a retrospective basis. We are currently evaluating the impact of this ASU on our
consolidated financial statements.
7
Note 3. Revenue
The majority of our revenue is generated from home warranty contracts entered into with our customers. Home warranty contracts are typically
one year
in duration. We derive substantially all of our revenue from customers in the United States.
We disaggregate revenue from contracts with customers into major customer acquisition channels. We determined that disaggregating revenue into these categories depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. Revenue by major customer acquisition channel for our home warranties and other revenue is as follows:
Three Months Ended
Nine Months Ended
September 30,
September 30,
(In millions)
2025
(2)
2024
2025
(2)
2024
Renewals
$
461
$
422
$
1,255
$
1,141
Real estate
(1)
43
36
114
99
Direct-to-consumer
(1)
54
49
143
135
Other
59
34
148
86
Total
$
618
$
540
$
1,660
$
1,461
(1)
First-year revenue only.
(2)
For the three and
nine months ended September 30, 2025
, includes $
52
million and $
149
million as a result of the 2-10 HBW Acquisition on December 19, 2024.
Our home warranty contracts have one primary performance obligation, which is to provide for the repair or replacement of essential home systems and appliances, as applicable pursuant to the contracts' terms and conditions. We recognize revenue at the agreed upon contractual amount over time using the input method in proportion to the costs expected to be incurred in performing services under the contracts. Those costs bear a direct relationship to the fulfillment of our obligations under the contracts and are representative of the relative fair value of the services provided to the customer. As the costs to fulfill the obligations of the home warranties are incurred on an other-than-straight-line basis, we utilize historical evidence to estimate the expected claims expense and related timing of such costs and make a corresponding adjustment each period to the timing of our related revenue recognition. This adjustment to the straight-line revenue creates a contract asset or contract liability, as described under the heading “Contract Assets and Liabilities” below. We regularly review our estimates of claims costs and adjust these estimates when appropriate.
Renewals
Revenue from customer renewals of home warranty contracts, which were previously initiated in the real estate or direct-to-consumer channel, are classified as renewal revenue above. Renewals relate to consecutive contract periods and take place at the end of the first year of a real estate or direct-to-consumer home warranty contract and continue to be categorized in our renewal channel thereafter. Customer payments for renewals are primarily received in installments over the new contract period.
Real estate
Real estate home warranties are sold through annual contracts that occur in connection with a real estate sale. These plans are typically paid in full at closing on the real estate transaction. First-year revenue from the real estate channel is classified as real estate above. Upon renewal of the contract, which is often exercised by the customer, the future revenue derived from home warranties sold in this channel is classified as renewal revenue as described above.
Direct-to-consumer
Direct-to-consumer home warranties are sold through annual contracts that occur in response to our marketing efforts. Customer payments for direct-to-consumer sales are primarily received in installments over the contract period. First-year revenue from the direct-to-consumer channel is classified as direct-to-consumer above. At the option of the customer, upon renewal of the contract, the future revenue derived from home warranties sold in this channel is classified as renewal revenue as described above.
Other
Other revenue primarily includes revenue generated by non-warranty home services, including the New HVAC and Moen programs, and new home structural warranties.
8
Deferred Customer Acquisition Costs
We capitalize the incremental costs of obtaining a home warranty contract with a customer and recognize the related expense using the input method in proportion to the costs expected to be incurred in performing services under the contract, over the expected customer relationship period. Deferred customer acquisition costs were $
13
million and $
11
million as of
September 30, 2025 and December 31, 2024, respectively. Amortization of deferred customer acquisition costs was $
4
million and $
3
million for the three months ended
September 30,
2025 and 2024, respectively, and $
9
million and $
10
million for the
nine months ended September 30, 2025 and 2024
, respectively. There were
no
impairment losses related to these capitalized costs during the
nine months ended September 30, 2025 and 2024.
Deferred Policy Acquisition Costs
We capitalize certain costs related to the issuance of insurance policies, net of ceding commission income from reinsurers, under the new home warranty program as deferred policy acquisition costs and amortize these costs over the term of the underlying pattern of insurance risk. Ceding commission amounts, which represent a recovery of policy acquisition costs, are treated as a reduction of deferred policy acquisition costs. We anticipate that all deferred policy acquisition costs will be recoverable. Deferred policy acquisition costs were $
3
million and less than $
1
million as of
September 30, 2025
and December 31, 2024, respectively. Amortization of deferred policy acquisition costs were less than $
1
million for each of the three and
nine months ended September 30, 2025
. There was
no
amortization of deferred policy acquisition costs for the three and nine months ended
September 30, 2024. Deferred policy acquisition costs are recorded in Other assets on the accompanying condensed consolidated statement of financial position.
Receivables, Less Allowance
We record a receivable due from customers once we have an unconditional right to invoice and receive payment in the future related to the services provided. An allowance is recorded based on amounts anticipated to be collected. Contracts for home warranties may be invoiced upfront or monthly in straight-line installment payments over the contract period. The payment terms are determined prior to the execution of the contract.
Contract Assets and Liabilities
Contract assets arise when we recognize revenue for our home warranty contracts prior to a customer being invoiced. These timing differences are created when the recognition of revenue in proportion to the costs expected to be incurred in performing the services under the contract are accelerated as compared to the recognition of revenue on a straight-line basis over the contract period. Contract assets were $
77
million as of September 30, 2025
. There were
no
contract assets as of December 31, 2024.
Our contract liabilities consist of deferred revenue which is recognized when cash payments are received in advance of the performance of services, including when the amounts are refundable. Amounts are recognized as revenue in proportion to the costs expected to be incurred in performing services under our contracts.
A summary of the changes in deferred revenue, including the long-term portion, for the
nine months ended September 30, 2025 is as follows:
(In millions)
Balance as of December 31, 2024
$
135
Deferral of revenue
316
Recognition of deferred revenue
(
337
)
Balance as of September 30, 2025
$
114
There was approximately $
15
million and $
125
million of revenue recognized during the three and
nine months ended September 30, 2025, respectively, that was included in the deferred revenue balance as of December 31, 2024.
Unearned Insurance Premium
New home structural warranty revenue is recognized over the term of the underlying pattern of insurance risk in proportion to the costs expected to be incurred in performing services under the contract. Amounts not earned and recognized to date are recognized as unearned insurance premium on the accompanying condensed consolidated statement of financial position.
9
Deferred Reinsurance
In the normal course of business, we seek to reduce our loss exposure in the new home warranty program by reinsuring certain levels of risk with reinsurers. Premiums ceded are recognized within revenue over the term of underlying pattern of insurance risk, and the unexpired portion of reinsurance is deferred and recognized as deferred reinsurance on the accompanying condensed consolidated statement of financial position.
Note 4. Goodwill and Intangible Assets
Goodwill and indefinite-lived intangible assets are not amortized and are subject to assessment for impairment on an annual basis, or more frequently if circumstances indicate a potential impairment. We perform our annual assessment for impairment on October 1 of every year.
The balance of goodwill was $
971
million and $
967
million as of
September 30, 2025
and December 31, 2024, respectively. There were
no
goodwill impairment charges during the
nine months ended September 30, 2025 and 2024. The increase in goodwill during the nine months ended September 30, 2025 was driven by updates to purchase accounting valuations, offset, in part, by the reduction in the 2-10 HBW Acquisition purchase price as a result of the working capital true up provisions in the purchase agreement.
The following table provides a summary of the components of our intangible assets:
As of September 30, 2025
As of December 31, 2024
Accumulated
Accumulated
(In millions)
Gross
Amortization
Net
Gross
Amortization
Net
Trade names
(1)
$
141
$
—
$
141
$
141
$
—
$
141
Value of business acquired
148
(
23
)
125
148
(
1
)
147
Home warranty customer relationships
208
(
177
)
32
214
(
173
)
41
Builder relationships
71
(
5
)
66
73
—
72
Developed technology
35
(
25
)
11
35
(
19
)
16
Other
60
(
34
)
25
63
(
32
)
31
Total
$
663
$
(
263
)
$
400
$
673
$
(
225
)
$
448
(1)
Not subject to amortization.
Amortization expense was $
13
million and $
1
million for the
three months ended September 30, 2025 and 2024, respectively, and $
38
million and $
2
million for the
nine months ended September 30, 2025 and 2024
, respectively. There were
no
intangible asset impairment charges during the nine months ended
September 30,
2025 and 2024.
Note 5. Leases
We have operating leases for our corporate headquarters located in Memphis, Tennessee, a collaboration center located in Scottsdale, Arizona and an administrative center in Pune, India. We also continue to lease certain office space in other geographies, which we have, as indicated below, either exited or subleased. Our leases have remaining lease terms ranging from
two years
to
9 years
, some of which include options to extend the leases for up to
five years
.
The weighted-average remaining lease term and weighted-average discount rate related to our operating leases are as follows:
As of
September 30,
December 31,
2025
2024
Weighted-average remaining lease term (years)
8
9
Weighted-average discount rate
6.5
%
6.5
%
We recognized operating lease expense of less than $
1
million for each of the
three months ended September 30, 2025 and 2024
and $
1
million for each of the
nine months ended September 30, 2025 and 2024. These expenses are included in selling and administrative expenses in the accompanying condensed consolidated statements of operations and comprehensive income.
10
Supplemental statement of financial position information related to our operating lease liabilities is as follows:
As of
September 30,
December 31,
(In millions)
2025
2024
Other accrued liabilities
$
2
$
2
Operating lease liabilities
18
20
Total operating lease liabilities
$
21
$
22
Supplemental cash flow information related to our operating leases is as follows:
Nine Months Ended
September 30,
(In millions)
2025
2024
Cash paid on operating lease liabilities
(1)
$
2
$
3
Right-of-use assets obtained in exchange for lease obligations
—
7
(1)
Amount is presented net of cash provided from sublease income.
In conjunction with the operating leases of our corporate headquarters located in Memphis, Tennessee, and our collaboration center located in Scottsdale, Arizona, we recognized $
2
million in tenant improvement allowances as of February 29, 2024, which is a non-cash investing activity.
The following table presents the maturities of our operating lease liabilities as of
September 30, 2025:
(In millions)
2025 (remainder)
(1)
1
2026
(1)
3
2027
(1)
3
2028
3
2029
3
Thereafter
13
Total future lease payments
(1)
25
Less imputed interest
(
6
)
Total operating lease liabilities
(1)
$
19
(1)
Amount is presented net of future sublease income totaling $
2
million, which relates to the remainder of the year ending December 31, 2025 and the year ending December 31, 2027.
Note 6. Income Taxes
We are subject to taxation in the United States, various states and foreign jurisdictions. Substantially all of our income before income taxes for the nine months ended September 30, 2025 and 2024 was generated in the United States.
We compute interim period income taxes by applying an anticipated annual effective tax rate to our year-to-date income or loss from operations before income taxes, except for significant unusual or infrequently occurring items. As a result, our estimated tax rate is adjusted each quarter. The effective tax rate on income before income taxes was
25.8
percent and
25.1
percent for the three months ended September 30, 2025 and 2024
, respectively, and
24.6
percent and
25.3
percent for the nine months ended September 30, 2025 and 2024, respectively. The increase in the effective tax rate for the three months ended September 30, 2025 was primarily due to state income taxes. The decrease in the effective tax rate for the nine months ended September 30, 2025 was primarily due to changes in share-based compensation and acquisition-related transaction costs, offset, in part, by state income taxes and a reduction in tax credits.
On July 4, 2025, the One Big Beautiful Bill Act (the “Bill”) was enacted in the U.S. The Bill includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. Key provisions of the Bill, including restoration of 100% bonus depreciation and revised treatment of domestic research and development costs, have a material impact on our deferred tax balances and projected taxable income for the year ending December 31, 2025. As a result, we recorded a material increase in our deferred tax liability and a corresponding decrease in our current tax liability during the interim period. In addition, these provisions are expected to materially reduce our cash tax payments in the current year. The Bill does not materially impact our effective tax rate.
11
Note 7. Acquisitions
O
n
December 19, 2024
, we completed the acquisition of all of the issued and outstanding common stock of 2-10 HBW pursuant to a purchase agreement dated June 3, 2024 for aggregate cash consideration of $
585
million, subject to certain customary adjustments based on, among other things, the amount of cash, debt, transaction expenses, working capital and regulatory capital in the business of 2-10 HBW as of the closing of the transaction. 2-10 HBW is a leading provider of new home structural warranties that provide home builders insurance-backed coverage and/or administrative services for workmanship, systems and/or structural failures. 2-10 HBW is also a provider of home warranties.
Total consideration as of
September 30, 2025, is as follows:
(In millions)
Cash consideration paid
$
432
Payment of 2-10 HBW indebtedness
157
Payment of 2-10 HBW transaction costs
15
Total purchase price consideration
604
Less: Acquired 2-10 HBW cash
(
24
)
Total purchase price consideration, net of cash acquired
$
580
A summary of the consideration paid and the amounts of identified assets acquired and liabilities assumed at the acquisition date, as determined based on management's preliminary assessment of the acquisition date fair value, is as follows:
(In millions)
Cash and cash equivalents
$
24
Marketable securities
15
Receivables
4
Prepaid expenses and other current assets
8
Property and equipment, net
6
Goodwill
469
Intangible assets
298
Long-term marketable securities
39
Deferred reinsurance
64
Other assets
9
Accounts payable
(
1
)
Accrued liabilities:
Payroll and related expenses
(
8
)
Home warranty claims
(
7
)
Other
(
6
)
Deferred revenue
(
29
)
Deferred tax liabilities, net
(
23
)
Unearned insurance premium
(
232
)
Long-term deferred revenue
(
12
)
Other long-term liabilities
(
13
)
Total consideration paid
$
604
As of September 30, 2025, the purchase price allocation for this acquisition has not been finalized. In particular, we are still evaluating the allocation of the purchase price to the identifiable assets acquired and liabilities assumed. As we finalize the fair value of assets acquired and liabilities assumed, additional purchase price adjustments may be recorded during the measurement period in 2025.
During the nine months ended September 30, 2025
, we made measurement period adjustments to reflect facts and circumstances in existence as of the acquisition date. These adjustments included updates to purchase accounting valuations and a $
3
million reduction in the 2-10 HBW Acquisition purchase price as a result of the working capital true up provisions in the purchase agreement. The impact of these adjustments was a $
5
million increase in goodwill, an $
11
million decrease in intangible assets, and a $
2
million decrease in deferred tax liabilities, net.
12
In conjunction with the 2-10 HBW Acquisition, we recognized acquisition-related costs of $
2
million and $
3
million during the
three months ended September 30, 2025 and 2024
, respectively, and $
6
million and $
9
million during the
nine months ended September 30, 2025 and 2024, respectively. These charges represent direct third-party costs, including legal, accounting and financial advisory fees, as well as post-acquisition systems integration costs, and are included in selling and administrative expenses in the accompanying condensed consolidated statements of operations and comprehensive income.
Unaudited pro forma revenue for the three and nine months ended September 30, 2024
as if the 2-10 HBW Acquisition occurred as of January 1, 2024 was $
590
million and $
1,607
million, respectively.
Note 8. Commitments and Contingencies
Accruals for home warranty claims are made using internal actuarial projections, which are based on current claims and historical claims experience. Accruals are established based on estimates of the ultimate cost to settle claims. Home warranty claims take approximately
three months
to settle, on average, and substantially all claims are settled within
six months
of incurrence. The amount of time required to settle a claim can vary based on a number of factors, including whether a replacement is ultimately required. In addition to our estimates, we engage a third-party actuary to perform an accrual analysis utilizing generally accepted actuarial methods that incorporate cumulative historical claims experience and information provided by us. We regularly review our estimates of claims costs along with the third-party analysis and adjust our estimates when appropriate. We believe that utilizing actuarial methods in our estimation process to account for these liabilities provides a consistent and effective way to measure these judgmental accruals.
Unpaid losses and loss adjustment reserves represent the estimated ultimate cost of settling all new home structural warranty claims and includes the estimated costs of claims incurred but not reported as of the balance sheet date. The reserve is based upon the facts of each case and our experience with similar cases. The establishment of appropriate reserves is an inherently uncertain and complex process. Reserve estimates are primarily derived using an actuarial estimation process in which historical loss patterns are applied to actual paid losses and reported losses (paid losses plus individual case reserves established by claim adjusters) to create an estimate of how losses are likely to develop over time. We regularly review our estimates of unpaid losses and adjust our estimates when appropriate. We report our unpaid losses and loss adjustment reserves gross of the amounts related to unpaid losses recoverable from reinsurers and net of amounts ceded to reinsurers. Unpaid losses and loss adjustment reserves are recorded in Other long-term liabilities on the accompanying condensed consolidated statement of financial position.
We have certain liabilities with respect to existing or potential claims, lawsuits and other proceedings. We accrue for these liabilities when it is probable that future costs will be incurred and such costs can be reasonably estimated. Any resulting adjustments, which could be material, are recorded in the period the adjustments are identified.
Due to the nature of our business activities, we are also at times subject to pending and threatened legal and regulatory actions that arise out of the ordinary course of business. In the opinion of management, based in part upon advice of legal counsel, the disposition of any such matters is not expected, individually or in the aggregate, to have a material adverse effect on our business, financial position, results of operations or cash flows. However, the results of legal actions cannot be predicted with certainty. Therefore, it is possible that our business, financial position, results of operations or cash flows could be materially adversely affected in any particular period by the unfavorable resolution of one or more legal actions.
Note 9. Stock-Based Compensation
We recognized stock-based compensation expense of $
8
million ($
6
million, net of tax) and $
6
million ($
5
million, net of tax) for the three months ended
September 30, 2025
and 2024, respectively, and $
25
million ($
18
million, net of tax) and $
20
million ($
17
million, net of tax) for the
nine months ended September 30, 2025 and 2024, respectively. These charges are included in selling and administrative expenses in the accompanying condensed consolidated statements of operations and comprehensive income.
13
A summary of awards granted under the Omnibus Plan during the
nine months ended September 30, 2025 is as follows:
Weighted-
Weighted-
Weighted-
Number of
Average
Average
Average
Awards
Exercise
Grant Date
Vesting
Granted
Price
Fair Value
Period
Stock options
684,378
38.03
16.70
4.0
Restricted stock units
801,143
38.77
3.0
Performance shares
(1)
199,989
39.75
3.0
(1)
The information related to performance shares above assumes
100
% of the performance condition, which is based on revenue and Adjusted EBITDA targets, is met. The ultimate number of performance shares that may be earned depends on the achievement of this performance condition
.
As of September 30, 2025, there was $
54
million of total unrecognized compensation cost, net of estimated forfeitures, related to unvested stock options, performance options, restricted stock units (“RSUs”) and performance shares. These costs are expected to be recognized over a weighted-average period of
2.25
years.
Note 10. Long-Term Debt
Long-term debt is summarized in the following table:
As of
September 30,
December 31,
(In millions)
2025
2024
Term Loan A maturing in 2029
(1)
$
397
$
412
Term Loan B maturing in 2031
(2)
783
788
Revolving Credit Facility maturing in 2029
—
—
Total debt
1,180
1,199
Less current portion
(
29
)
(
29
)
Total long-term debt
$
1,151
$
1,170
(1)
Term Loan A is presented net of unamortized debt issuance costs of $
5
million and $
6
million as of
September 30, 2025
and December 31, 2024, respectively.
(2)
Term Loan B is presented net of unamortized debt issuance costs of $
9
million and $
10
million as of
September 30, 2025
and December 31, 2024, respectively, and unamortized discount of $
2
million as of
September 30, 2025
and December 31, 2024.
As of September 30, 2025
, we had $
2
million of letters of credit outstanding under the Revolving Credit Facility, and the available borrowing capacity under the Revolving Credit Facility was $
248
million. As of
September 30, 2025, we were in compliance with the covenants under the Credit Agreement.
Scheduled Debt Payments
The following table presents future scheduled debt payments as of
September 30, 2025:
(In millions)
2025 (remainder)
$
7
2026
29
2027
29
2028
29
2029
342
Thereafter
760
Total future scheduled debt payments
1,196
Less unamortized debt issuance costs
(
14
)
Less unamortized discount
(
2
)
Total debt
$
1,180
14
Note 11. Segments
We operate as
one
operating and reportable segment, primarily under the American Home Shield brand. The majority of our revenue is generated from home warranty contracts entered into with our customers. The accounting policies applied to our
one
operating and reportable segment are described in Note 2 to the audited consolidated financial statements included in our 2024 Form 10-K.
Our chief operating decision maker (“CODM”), who is our
Chief Executive Officer
, regularly evaluates financial information, primarily revenue, net income and other measures, on a consolidated basis in deciding how to allocate resources and in assessing performance.
Additionally, consolidated revenue is one key component of our incentive compensation program.
Information for our
one
operating and reportable segment is as follows:
Three Months Ended
Nine Months Ended
September 30,
September 30,
(In millions)
2025
2024
2025
2024
Revenue
$
618
$
540
$
1,660
$
1,461
Cost of services rendered
264
235
716
655
Sales and marketing costs
83
80
232
231
Customer service costs
31
27
89
79
General and administrative costs
60
48
177
147
Other segment items
(1)
74
51
193
123
Net Income
$
106
$
100
$
253
$
226
(1)
Other segment items include depreciation and amortization expense, restructuring charges, interest expense, interest and net investment income, and provision for income taxes.
As of
September 30,
December 31,
2025
2024
Total Assets
$
2,227
$
2,107
Note 12. Supplemental Cash Flow Information
Supplemental information relating to our accompanying condensed consolidated statements of cash flows is as follows:
Nine Months Ended
September 30,
(In millions)
2025
2024
Cash paid for (received from):
Interest expense
$
56
$
28
Interest income
(
16
)
(
15
)
Income tax payments, net of refunds
36
59
15
Note 13. Cash and Marketable Securities
Cash, money market funds and certificates of deposits with maturities of three months or less when purchased are included in Cash and cash equivalents on the accompanying condensed consolidated statements of financial position. As of September 30, 2025
and December 31, 2024, the amortized cost of our short- and long-term investments was less than $
1
million and $
53
million, respectively, and the estimated fair value of these investments was less than $
1
million and $
53
million, respectively. As of
September 30, 2025
, short- and long-term marketable securities primarily consisted of certificates of deposit. There were
no
unrealized losses which had been in a loss position for more than one year as of
September 30, 2025.
Gains and losses on sales of investments, as determined on a specific identification basis, are included in investment income in the period they are realized. We periodically review our portfolio of investments to determine whether there has been an other-than-temporary decline in the value of the investments from factors such as deterioration in the financial condition of the issuer or the market(s) in which the issuer competes. During the three months ended September 30, 2025
, there were less than $
1
million each in proceeds from sales of securities, maturities, gross realized gains and gross realized losses resulting from sales of available-for-sale securities. During the
nine months ended September 30, 2025
, there were $
48
million in proceeds from sales of securities, $
12
million in maturities and less than $
1
million each in gross realized gains and gross realized losses resulting from sales of available-for-sale securities. During the three months and
nine months ended September 30, 2024
, there were
no
proceeds, maturities, gross realized gains and gross realized losses resulting from sales of available-for-sale securities. There were
no
impairment charges due to other-than-temporary declines in the value of certain investments for the
nine months ended September 30, 2025 and 2024
.
Note 14. Comprehensive Income (Loss)
Comprehensive income (loss) consists of net income (loss), unrealized gains (losses) on derivative instruments and unrealized gains (losses) on marketable securities. We disclose comprehensive income (loss) in the accompanying condensed consolidated statements of operations and comprehensive income and condensed consolidated statements of changes in equity.
A summary of the changes in AOCI is as follows:
Balance at December 31, 2024
$
—
Other comprehensive loss before reclassifications:
Pre-tax amount
(
14
)
Tax provision
(
4
)
After-tax amount
(
11
)
Amounts reclassified from AOCI
(1)
(
3
)
Total other comprehensive loss
(
13
)
Balance at September 30, 2025
$
(
14
)
(1)
Amounts are net of income taxes. See the table below on reclassifications out of AOCI for additional information.
A summary of reclassifications out of AOCI is as follows:
Nine Months Ended
September 30,
(In millions)
2025
2024
Gain on interest rate swap contracts
(1)
$
3
$
6
Impact of income taxes
(2)
(
1
)
(
1
)
Total reclassifications during the period
$
3
$
5
(1)
Included in interest expense in the accompanying condensed consolidated statements of operations and comprehensive income.
(2)
Included in provision for income taxes in the accompanying consolidated statements of operations and comprehensive income.
16
Note 15. Derivative Financial Instruments
We currently use a derivative financial instrument to manage risks associated with changes in interest rates by hedging the interest payments on a portion of our variable rate debt through the use of interest rate swap contracts. We do not hold or issue derivative financial instruments for trading or speculative purposes. In designating derivative financial instruments as hedging instruments under accounting standards for derivative instruments, we formally document the relationship between the hedging instrument and the hedged item, as well as the risk management objective and strategy for the use of the hedging instrument. This documentation includes linking the derivatives to forecasted transactions. We assess at the time a derivative contract is entered into, and at least quarterly thereafter, whether the derivative item is effective in offsetting the projected cash flows of the associated forecasted transaction.
Our interest rate swap contracts are classified as cash flow hedges, and, as such, are recorded in the accompanying condensed consolidated statements of financial position on an individual basis as either an asset or liability at fair value, with changes in fair value recorded in AOCI. Cash flows related to the interest rate swap contracts are classified as operating activities in the accompanying condensed consolidated statements of cash flows.
The effective portion of the gain or loss on our interest rate swap contracts are recorded in AOCI. These amounts are reclassified into earnings in the same period or periods during which the hedged forecasted debt interest settlement affects earnings. See Note 14 to the accompanying condensed consolidated financial statements for the effective portion of the gain or loss on derivative instruments recorded in AOCI and for the amounts reclassified out of AOCI and into earnings during the periods presented. As the underlying forecasted transactions occur during the next 12 months, we estimate the unrealized hedging loss in AOCI expected to be recognized in earnings is $
3
million, net of tax, as of
September 30, 2025. The amounts ultimately reclassified into earnings during the next 12 months will be determined based on the actual interest rates in effect at the time the positions are settled, and as a result, they could differ materially from our estimate noted above.
Note 16. Fair Value Measurements
We estimate fair value at a price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the principal market for the asset or liability. The valuation techniques require inputs that we categorize into a three-level hierarchy, from highest to lowest level of observable inputs, as follows: unadjusted quoted prices for identical assets or liabilities in active markets ("Level 1"); direct or indirect observable inputs, including quoted prices or other market data, for similar assets or liabilities in active markets or identical assets or liabilities in less active markets ("Level 2"); and unobservable inputs that require significant judgment for which there is little or no market data ("Level 3"). When multiple input levels are required for a valuation, we categorize the entire fair value measurement according to the lowest level of input that is significant to the measurement, even though we may have also utilized significant inputs that are more readily observable.
The period-end carrying amounts of cash and cash equivalents, receivables, accounts payable and accrued liabilities approximate their fair values due to the short-term maturities of these financial instruments. The period-end carrying amounts of short- and long-term marketable securities also approximate fair value and primarily consisted of available-for-sale debt securities. Unrealized gains and losses are reported net of tax as a component of AOCI in the accompanying condensed consolidated statements of financial position. Any unrealized losses where the decline in value is other than temporary are reported in interest and net investment income in the accompanying condensed consolidated statements of operations and comprehensive income. There were no other-than-temporary declines in value for the periods ended September 30, 2025 and December 31, 2024. As of September 30, 2025
and December 31, 2024, the carrying amounts of our total debt were $
1,180
million and $
1,199
million, respectively, and the estimated fair values were $
1,198
million and $
1,211
million, respectively. The fair value of our debt was estimated based on available market prices for the same or similar instruments that are considered significant other observable inputs (Level 2) within the fair value hierarchy and was based on information available to us as of the respective period-end dates.
We determine the fair value of our interest rate swap contracts using a forward interest rate curve obtained from a third-party market data provider. The fair value of each contract is the sum of the expected future settlements between the contract counterparties, discounted to present value. The expected future settlements are determined by comparing the contract interest rates to the expected forward interest rate as of each settlement date and applying the difference between these two rates to the notional amounts of debt in the interest rate swap contracts.
We did not change our valuation techniques for measuring the fair value of any financial assets and liabilities during the nine months ended September 30, 2025
. Transfers between hierarchy levels, if any, are recognized at the end of the reporting period. There were
no
transfers between hierarchy levels during the
nine months ended September 30, 2025.
17
The carrying amount and estimated fair value of our financial instruments that are recorded at fair value on a recurring basis for the periods presented are as follows:
Estimated Fair Value Measurements
Quoted
Significant
Prices
Other
Significant
in Active
Observable
Unobservable
Carrying
Markets
Inputs
Inputs
(In millions)
Value
(Level 1)
(Level 2)
(Level 3)
As of September 30, 2025:
Other accrued liabilities
$
4
$
—
$
4
$
—
Other long-term liabilities
15
—
15
—
Total liabilities
$
19
$
—
$
19
$
—
As of December 31, 2024:
Marketable securities
$
15
$
6
$
9
$
—
Other assets
3
—
3
—
Long-term marketable securities
38
2
36
—
Total assets
$
56
$
8
$
48
$
—
Other long-term liabilities
$
3
$
—
$
3
$
—
Total liabilities
$
3
$
—
$
3
$
—
Note 17. Share Repurchase Program
On July 26, 2024, our Board of Directors approved a new share repurchase authorization of up to $
650
million of our common stock over the
three-year
period from September 4, 2024 through September 4, 2027. Purchases under this repurchase program may be made from time to time by the company in the open market at prevailing market prices (including through Rule 10b5-1 Plans), in privately negotiated transactions, or through any combination of these methods, through September 4, 2027. The actual timing, number, manner and value of any shares repurchased will depend on several factors, including the market price of the company’s stock, general market and economic conditions, the company’s liquidity requirements, applicable legal requirements and other business considerations. The repurchase program does not obligate us to acquire any number of shares in any specific period or at all and may be suspended or discontinued at any time at our discretion.
As of September 30, 2025, we had repurchased a total of
4,545,461
outstanding shares at an aggregate cost of $
234
million under this program, which is included in treasury stock on the accompanying condensed consolidated statements of financial position.
On September 3, 2024, our previous repurchase authorization of up to $
400
million expired. We repurchased a total of
11,319,091
shares at an aggregate cost of $
400
million under this previous program, which is included in treasury stock on the accompanying condensed consolidated statements of financial position.
A summary of repurchases of outstanding shares is as follows:
Three Months Ended
Nine Months Ended
September 30,
September 30,
(In millions, except per share data)
2025
2024
2025
2024
Number of shares purchased
981,639
1,475,797
3,836,384
3,236,272
Average price paid per share
(1)
$
60.31
$
41.33
$
50.41
$
36.62
Cost of shares purchased
(1)
$
59
$
61
$
193
$
119
(1)
The average price paid per share and the cost of shares purchased are calculated on a trade date basis and exclude associated commissions and taxes of $
1
million for each of the three months ended
September 30, 2025
and 2024, and $
2
million and $
1
million for the
nine months ended September 30, 2025 and 2024
, respectively.
18
Note 18. Earnings Per Share
Basic earnings per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during the period, increased to include the number of shares of common stock that would have been outstanding had potentially dilutive shares of common stock been issued. The dilutive effect of stock options, performance options, RSUs, performance shares and deferred share equivalents are reflected in diluted earnings per share by applying the treasury stock method.
A summary of the calculations of our basic and diluted earnings per share is as follows:
Three Months Ended
Nine Months Ended
September 30,
September 30,
(In millions, except per share data)
2025
2024
2025
2024
Net Income
$
106
$
100
$
253
$
226
Weighted-average common shares outstanding:
72.8
76.2
73.6
77.4
Effect of dilutive securities:
RSUs
(1)
0.9
0.8
0.7
0.5
Stock options
(2)
0.5
0.2
0.3
0.1
Performance options
(3)
0.3
—
0.3
—
Weighted-average common shares outstanding - assuming dilution:
74.4
77.1
75.0
78.0
Basic earnings per share
$
1.45
$
1.32
$
3.44
$
2.92
Diluted earnings per share
$
1.42
$
1.30
$
3.38
$
2.90
(1)
RSUs of
14,266
shares and
2,706
shares for the three months ended
September 30, 2025 and 2024, respectively, and
347,719
shares and
461,600
shares for the nine months ended September 30, 2025 and 2024
, respectively, were not included in the diluted earnings per share calculation because their effect would have been anti-dilutive.
(2)
Stock options to purchase
538,962
shares for the three months ended September 30, 2024 and
539,832
shares and
1,015,848
shares for the nine months ended September 30, 2025 and 2024, respectively, were not included in the diluted earnings per share calculation because their effect would have been anti-dilutive.
There were
no
anti-dilutive shares of stock options for the
three months ended September 30, 2025
.
(3)
Performance options to purchase
191,348
shares for the nine months ended September 30, 2024 were not included in the diluted earnings per share calculation because their effect would have been anti-dilutive. There were
no
anti-dilutive shares of performance options for the
three months ended September 30, 2025 and 2024 and the nine months ended September 30, 2025
.
This Quarterly Report on Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, regarding business strategies, market potential, future financial performance, the 2-10 HBW Acquisition and other matters. The words “believe,” “expect,” “estimate,” “could,” “should,” “intend,” “may,” “plan,” “seek,” “anticipate,” “project,” “will,” “shall,” “would,” “aim,” and similar expressions, among others, generally identify “forward-looking statements,” which speak only as of the date the statements were made. The matters discussed in these forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those projected, anticipated or implied in the forward-looking statements. Where, in any forward-looking statement, an expectation or belief as to future results or events is expressed, such expectation or belief is based on the current plans and expectations of our management and expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will result or be achieved or accomplished. Whether any such forward-looking statements are in fact achieved will depend on future events, some of which are beyond our control.
You should read this Quarterly Report on Form 10-Q completely and with the understanding that actual future results may be materially different from expectations. All forward-looking statements made in this report are qualified by these cautionary statements. These forward-looking statements are made only as of the date of this report, and we do not undertake any obligation, other than as may be required by law, to update or revise any forward-looking or cautionary statements to reflect changes in assumptions, the occurrence of events, unanticipated or otherwise, and changes in future operating results over time or otherwise. For a discussion of other important factors that could cause our results to differ materially from those expressed in, or implied by, the forward-looking statements included in this report, you should refer to the risks and uncertainties detailed from time to time in our periodic reports filed with the SEC, including the risk factors discussed in Part I, Item 1A. “Risk Factors” in our 2024 Form 10-K.
SUMMARY OF MATERIAL RISKS
Factors, risks, trends and uncertainties that make an investment in us speculative or risky and that could cause actual results or events to differ materially from those anticipated in our forward-looking statements include the matters described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in this report as well as Item 1A. Risk Factors in our 2024 Form 10-K filed with the SEC, in addition to the following other factors, risks, trends and uncertainties:
•
changes in macroeconomic conditions, including inflation, tariffs and global supply chain challenges and changing interest rates, especially as they may affect existing or new home sales, consumer confidence, labor availability or our costs;
•
our ability to successfully implement our business strategies;
•
the ability of our marketing efforts to be successful and cost-effective;
•
our dependence on our first-year direct-to-consumer and real estate acquisition channels and our renewal channel;
•
changes in the source and intensity of competition in our market, including risks related to the development, deployment and use of artificial intelligence in our business and industry;
•
our ability to attract, retain and maintain positive relations with third-party contractors and vendors;
•
increases in parts, appliance and home system prices, and other operating costs;
•
changes in U.S. tariffs or import/export regulations;
•
our ability to attract and retain qualified key employees and labor availability in our customer service operations;
•
our dependence on third-party vendors, including business process outsourcers, and third-party component suppliers;
•
cybersecurity breaches, disruptions or failures in our technology systems;
•
our ability to protect the security of personal information about our customers;
•
compliance with, or violation of, laws and regulations, including consumer protection laws, or lawsuits or other claims by third parties, increasing our legal and regulatory expenses;
•
weather, including adverse conditions, Acts of God and seasonality, along with related regulations;
•
our ability to underwrite risks accurately and to charge adequate prices to builder members, as well as our ability to effectively re-insure a large portion of those risks;
•
the availability of reinsurance to manage a substantial portion of our potential loss exposure for our new home structural warranty business;
•
evolving corporate governance and disclosure regulations and expectations;
20
•
our ability to protect our intellectual property and other material proprietary rights;
•
negative reputational and financial impacts resulting from acquisitions or strategic transactions;
•
a requirement to recognize impairment charges;
•
third-party use of our trademarks as search engine keywords to direct our potential customers to their own websites;
•
inappropriate use of social media by us or other parties to harm our reputation;
•
special risks applicable to operations outside the United States by us or our business process outsource providers;
•
risks related to the 2-10 HBW Acquisition, including the risk that the 2-10 HBW Acquisition may not achieve its intended results;
•
any liabilities, losses, or other exposures for which we do not have adequate insurance coverage, indemnification, or other protection;
•
increase in our indebtedness as a result of financing the 2-10 HBW Acquisition;
•
a return on investment in our common stock is dependent on appreciation in the price;
•
inclusion in our certificate of incorporation a forum selection clause that could discourage an acquisition of our company or litigation against us and our directors and officers;
•
the effects of our significant indebtedness, our ability to incur additional debt and the limitations contained in the agreements governing such indebtedness;
•
increases in interest rates increasing the cost of servicing our indebtedness and counterparty credit risk due to instruments designed to minimize exposure to market risks;
•
increased borrowing costs due to lowering or withdrawal of the credit ratings, outlook or watch assigned to us or our Credit Facilities;
•
our ability to generate the significant amount of cash needed to fund our operations and service our debt obligations; and
•
other factors described in this report and from time to time in documents that we file with the SEC.
Available Information
Our corporate website address is www.frontdoorhome.com. We use our website as a channel of distribution for company information. We will make available free of charge on the Investor section of our website our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act. We also make available through our corporate website other reports filed with or furnished to the SEC under the Exchange Act, including our proxy statements and reports filed by officers and directors under Section 16(a) of the Exchange Act, as well as our Code of Conduct and Financial Code of Ethics. Financial and other material information regarding Frontdoor is routinely posted on our website and is readily accessible. We do not intend for information contained on our website to be part of this Quarterly Report on Form 10-Q.
21
ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following information should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q, the audited consolidated financial statements and related notes thereto included in our 2024 Form 10-K and with the information under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2024 Form 10-K. The cautionary statements discussed in “Cautionary Statement Concerning Forward-Looking Statements” and elsewhere in this report should be read as applying to all forward-looking statements wherever they appear in this report. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include those factors discussed below and elsewhere in this report, particularly in “Cautionary Statement Concerning Forward-Looking Statements” as well as the risk factors discussed in Part I, Item 1A. “Risk Factors” in our 2024 Form 10-K.
Overview
Frontdoor is the leading provider of home warranties and new home structural warranties in the United States, as measured by revenue, and operates primarily under the American Home Shield and 2-10 HBW brands. Our customizable home warranties help customers protect and maintain their homes, typically their most valuable asset, from costly and unplanned breakdowns of essential home systems and appliances. Our home warranty customers usually subscribe to an annual service plan agreement that covers the repair or replacement of major components of up to 29 home systems and appliances, including electrical, plumbing, HVAC systems, water heaters, refrigerators, dishwashers and ranges/ovens/cooktops, as well as optional coverages for electronics, pools, spas and pumps. Our new home structural warranty business provides value to home builders and owners of new homes by providing coverage, including insurance-backed coverage for workmanship, systems and/or structural failures, as well as other post-construction services. We also offer non-warranty home services via our website and app to our home warranty customers directly and others through partnerships and our subscription-based Frontdoor app. As of September 30, 2025, we had approximately 2.1 million active home warranties across all brands in the United States.
For the three months ended September 30, 2025 and 2024, we generated revenue, net income and Adjusted EBITDA of $618 million, $106 million and $195 million, respectively, and $540 million, $100 million and $165 million, respectively. For the nine months ended September 30, 2025 and 2024, we generated revenue, net income and Adjusted EBITDA of $1,660 million, $253 million and $494 million, respectively, and $1,461 million, $226 million and $394 million, respectively. For a reconciliation of net income to Adjusted EBITDA, see “—Results of Operations—Adjusted EBITDA.”
For the nine months ended September 30, 2025, our total operating revenue included 76 percent of revenue derived from existing customer renewals, while seven percent and nine percent were derived from new home warranty sales made in conjunction with existing home real estate transactions and direct-to-consumer sales, respectively, and nine percent was derived from other revenue channels. For the nine months ended September 30, 2024, our total operating revenue included 78 percent of revenue derived from existing customer renewals, while seven percent and nine percent were derived from new home warranty sales made in conjunction with existing home real estate transactions and direct-to-consumer sales, respectively, and six percent was derived from other revenue channels.
Key Factors and Trends Affecting Our Results of Operations
Macroeconomic Conditions
Current macroeconomic conditions, including inflation, U.S. tariffs, high interest rates, the challenging real estate market, and ongoing global geopolitical issues, may affect existing home sales, consumer sentiment, prices of goods and services or labor availability. These conditions may reduce demand for our services, increase our costs or otherwise adversely impact our business. While these macroeconomic conditions generally impact the United States as a whole, we believe our nationwide presence limits the impact on us of unfavorable economic conditions in any particular region of the United States.
22
Our financial condition and results of operations for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024 continued to be adversely impacted by the following:
•
Challenging real estate market conditions, driven by a decline in the number of existing home sales, continue to constrain demand for home warranties.
•
Consumer sentiment declined as a result of a broad range of current macroeconomic conditions, including pressure on consumer prices and high interest rates. We believe this environment continues to impact demand for home warranties.
•
Inflation continues to impact our labor, parts and equipment costs.
The ultimate implications of the current macroeconomic conditions on our results of operations and overall financial performance remain uncertain. It remains difficult to predict the overall continuing impact these conditions will have on our business as they may reduce demand for our services, increase our costs or otherwise adversely impact our business.
Seasonality
Our business is subject to seasonal fluctuations, which drive variations in our revenue, net income and Adjusted EBITDA for interim periods. Seasonal fluctuations are primarily driven by a higher number of HVAC work orders with respect to our home warranty business in the summer months. In 2024, 21 percent, 29 percent, 29 percent and 21 percent of our revenue, 14 percent, 39 percent, 43 percent and four percent of our net income, and 16 percent, 36 percent, 37 percent and 11 percent of our Adjusted EBITDA was recognized in the first, second, third and fourth quarters, respectively.
Effect of Weather Conditions
The demand for our services, particularly in our home warranty business, and our results of operations, are affected by weather conditions. Extreme temperatures, typically in the winter and summer months, can lead to an increase in home warranty service requests related to home systems, particularly HVAC systems, resulting in higher costs and lower profitability, while mild temperatures in the winter or summer months can lead to lower home systems claim frequency, resulting in lower costs and higher profitability. For example, favorable weather trends in the first nine months of 2025 as compared to the first nine months of 2024 resulted in a lower number of home warranty service requests per customer in the HVAC trade, which favorably impacted contract claims costs.
While weather variations as described above may affect our business, major weather events and other similar Acts of God, or natural disasters such as hurricanes, tornadoes, typhoons, wildfires or earthquakes, typically do not increase our obligations to provide service. Generally, repairs associated with such isolated events are addressed by homeowners’ and other forms of insurance, as opposed to the home warranties that we offer.
Tariff and Import/Export Regulations
Changes in U.S. tariff and import/export regulations have impacted and may continue to impact the costs of parts, appliances and home systems. Import duties or restrictions on components and raw materials that are imposed, or the perception that they could occur, may materially and adversely affect our business by increasing our costs. For example, rising costs due to blanket tariffs on imported steel and aluminum, or blanket tariffs on goods from countries that are key suppliers of replacement parts for appliances and home systems, have increased and may continue to increase the costs of our parts, appliances and home systems. Recently, the United States has proposed, and in some cases has imposed, significant increases to tariffs on goods imported into the U.S., including from countries where we have sourced replacement parts for appliances and home systems covered by our home warranties. We cannot predict how or what tariffs will be imposed or what retaliatory measures other countries may take in response to tariffs proposed or imposed by the U.S. There is uncertainty as to further actions that may be taken by the U.S. with respect to U.S. trade policy, including with respect to the proposed tariffs. Further tariffs or countermeasures may increase our costs, decrease our margins or reduce the competitiveness of our products and services.
23
Competition
We compete in the U.S. home warranty category and the broader U.S. home services industry. The home warranty category is highly competitive. While we have a broad range of competitors in each locality and region, we are one of the few companies that provide home warranties nationwide. The broader U.S. home services industry is also highly competitive. We compete against businesses providing non-warranty home services directly and those offering leads to contractors seeking to provide non-warranty home services. The principal methods of competition, and by which we differentiate ourselves from our competitors, are quality and speed of service, contract offerings, brand awareness and reputation, customer satisfaction, pricing and promotions, contractor network and referrals. We believe our nationwide network of qualified professional contractor firms, in combination with our large base of contracted customers, differentiate us from other platforms in the home services industry.
Our new home structural warranty business faces competition from other providers of new home structural warranties and builders that self-insure.
Acquisition Activity
We anticipate that the highly fragmented nature of the home services industry will continue to create strategic opportunities for acquisitions. Historically, we have used acquisitions to grow our customer base in high-growth geographies, and we intend to continue to do so. Most recently, we acquired 2-10 HBW, which provides us more home warranty customers and increased revenue, in addition to opportunities for a new sales channel and a more diversified business portfolio. We have also used acquisitions to enhance our technological capabilities and geographic presence. We may also explore opportunities to make strategic acquisitions that will expand our service offering in the broader home services industry, such as new home structural warranties acquired as part of 2-10 HBW. See “— 2-10 HBW Acquisition” for additional information related to the acquisition.
Non-GAAP Financial Measures
To supplement our results presented in accordance with U.S. GAAP, we have disclosed non-GAAP financial measures that exclude or adjust certain items. We present within this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section the non-GAAP financial measures of Adjusted EBITDA and Free Cash Flow. See “—Results of Operations—Adjusted EBITDA” for a reconciliation of net income to Adjusted EBITDA and “—Liquidity and Capital Resources—Free Cash Flow” for a reconciliation of net cash provided from operating activities to Free Cash Flow, as well as “Key Business Metrics” for further discussion of Adjusted EBITDA and Free Cash Flow. Management uses Adjusted EBITDA and Adjusted EBITDA margin to facilitate operating performance comparisons from period to period, and Adjusted EBITDA is also a component of our incentive compensation program. We believe these non-GAAP financial measures provide investors, analysts and other interested parties useful information to evaluate our business performance as they facilitate company-to-company operating performance comparisons. Management believes Free Cash Flow is useful as a supplemental measure of our liquidity. Management uses Free Cash Flow to facilitate company-to-company cash flow comparisons, which may vary from company to company for reasons unrelated to operating performance. While we believe these non-GAAP financial measures are useful in evaluating our business, they should be considered as supplemental in nature and are not meant to be considered in isolation or as a substitute for the related financial information prepared in accordance with U.S. GAAP. In addition, these non-GAAP financial measures may not be the same as similarly entitled measures reported by other companies, limiting their usefulness as comparative measures.
Key Business Metrics
We focus on a variety of indicators and key operating and financial metrics to monitor the financial condition and performance of the continuing operations of our business. These metrics include:
•
revenue,
•
operating expenses,
•
gross profit,
•
gross profit margin,
•
net income,
•
earnings per share,
•
Adjusted EBITDA,
•
Adjusted EBITDA margin,
•
net cash provided from operating activities,
24
•
Free Cash Flow,
•
number of home warranties, and
•
customer retention rate.
Revenue.
The majority of our revenue is generated from home warranty contracts entered into with our customers. Home warranty contracts are typically one year in duration. We recognize revenue at the agreed upon contractual amount over time using the input method in proportion to the costs expected to be incurred in performing services under the contracts. Our revenue is primarily a function of the volume and pricing of the services provided to our customers, as well as the mix of services provided. Our revenue volume is impacted by new home warranty sales, customer retention and acquisitions. We derive substantially all of our revenue from customers in the United States.
Operating Expenses.
In addition to changes in our revenue, our operating results are affected by, among other things, the level of our operating expenses. Our operating expenses primarily include contract claims costs and expenses associated with sales and marketing, customer service and general corporate overhead. A number of our operating expenses are subject to inflationary pressures, such as: salaries and wages, employee benefits and healthcare; contractor costs; parts, appliances and home systems costs; tariffs; insurance premiums; and various regulatory compliance costs.
Gross Profit and Gross Profit Margin.
The presentation of gross profit and gross profit margin provides measures of performance which are primarily a function of the revenue drivers discussed above and contract claims costs drivers, primarily contractor costs and parts, appliances and home systems costs. Gross profit is computed by deducting cost of services rendered from revenue. Gross profit margin is computed as gross profit as a percentage of revenue.
Net Income and Earnings Per Share
.
The presentation of net income and basic and diluted earnings per share provides measures of performance which are useful for investors, analysts and other interested parties in company-to-company operating performance comparisons. Basic earnings per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during the period, increased to include the number of shares of common stock that would have been outstanding had potentially dilutive shares of common stock been issued. The dilutive effect, if any, of non-qualified stock options, performance options (which are stock options that become exercisable upon the achievement, in whole or in part, of the applicable performance goals, pursuant to the terms of the Omnibus Plan and the award agreement), RSUs, performance shares (which are contractual rights to receive a share of our common stock (or the cash equivalent thereof) upon the achievement, in whole or in part, of the applicable performance goals, pursuant to the terms of the Omnibus Plan and the award agreement) and deferred share equivalents are reflected in diluted earnings per share by applying the treasury stock method.
Adjusted EBITDA and Adjusted EBITDA Margin.
We evaluate our operating and financial performance primarily based on Adjusted EBITDA, which is a financial measure not calculated in accordance with U.S. GAAP. We define Adjusted EBITDA as net income before: depreciation and amortization expense; goodwill and intangibles impairment; restructuring charges; acquisition-related costs; provision for income taxes; non-cash stock-based compensation expense; interest expense; loss on extinguishment of debt; and other non-operating expenses. We define “Adjusted EBITDA margin” as Adjusted EBITDA divided by revenue. We believe Adjusted EBITDA and Adjusted EBITDA margin are useful for investors, analysts and other interested parties as they facilitate company-to-company operating performance comparisons by excluding potential differences caused by variations in capital structures, taxation, the age and book depreciation of facilities and equipment, restructuring and acquisition initiatives and equity-based, long-term incentive plans.
Net Cash Provided from Operating Activities and Free Cash Flow.
We focus on measures designed to monitor cash flow, including net cash provided from operating activities and Free Cash Flow. Free Cash Flow is a financial measure that is not calculated in accordance with U.S. GAAP and represents net cash provided from operating activities less property additions.
Number of Home Warranties and Customer Retention Rate.
We report on our number of home warranties and customer retention rate as measurements of our operating performance. These measurements are presented on a rolling 12-month basis in order to avoid seasonal anomalies. The number of home warranties is representative of our recurring home warranty customer base and is measured as the number of customers with active contracts as of the respective period-end date. Our customer retention rate is calculated as the ratio of the number of end-of-period home warranty contracts to the sum of the number of beginning-of-period home warranty contracts and the number of new home warranty sales and acquired accounts during the respective period.
Critical Accounting Policies and Estimates
Our critical accounting policies and estimates are described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2024 Form 10-K. There have been no material changes to our critical accounting policies during the nine months ended September 30, 2025.
25
Results of Operations
Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024
% of Revenue
Three Months Ended
Increase
Three Months Ended
September 30,
(Decrease)
September 30,
(In millions)
2025
2024
%
2025
2024
Revenue
$
618
$
540
14
%
100
%
100
%
Cost of services rendered
264
235
13
43
43
Gross Profit
353
306
16
57
57
Selling and administrative expenses
174
154
13
28
29
Depreciation and amortization expense
22
10
125
4
2
Restructuring charges
1
3
(77
)
—
1
Interest expense
20
10
108
3
2
Interest and net investment income
(6
)
(5
)
12
(1
)
(1
)
Income before Income Taxes
142
134
6
23
25
Provision for income taxes
37
34
9
6
6
Net Income
$
106
$
100
5
%
17
%
19
%
Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024
% of Revenue
Nine Months Ended
Increase
Nine Months Ended
September 30,
(Decrease)
September 30,
(In millions)
2025
2024
%
2025
2024
Revenue
$
1,660
$
1,461
14
%
100
%
100
%
Cost of services rendered
716
655
9
43
45
Gross Profit
944
806
17
57
55
Selling and administrative expenses
498
456
9
30
31
Depreciation and amortization expense
66
28
138
4
2
Restructuring charges
1
5
(74
)
—
—
Interest expense
59
29
102
4
2
Interest and net investment income
(16
)
(15
)
7
(1
)
(1
)
Income before Income Taxes
336
303
11
20
21
Provision for income taxes
83
77
8
5
5
Net Income
$
253
$
226
12
%
15
%
15
%
Revenue
We reported revenue of $618 million and $540 million for the three months ended September 30, 2025 and 2024, respectively, and $1,660 million and $1,461 million for the nine months ended September 30, 2025 and 2024, respectively. The following tables provide a summary of our revenue by major customer acquisition channel for our home warranties and other revenue:
Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024
Three Months Ended
September 30,
Increase (Decrease)
(In millions)
2025
(2)
2024
$
%
Renewals
$
461
$
422
$
40
9
%
Real estate
(1)
43
36
8
21
Direct-to-consumer
(1)
54
49
5
11
Other
59
34
25
73
Total
$
618
$
540
$
77
14
%
(1)
First-year revenue only.
(2)
For the three months ended September 30, 2025, includes approximately $52 million as a result of the 2-10 HBW Acquisition on December 19, 2024.
26
Revenue increased 14 percent for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. The increase in renewal revenue reflects improved price realization resulting from our prior pricing actions and the impact of the 2-10 HBW Acquisition, offset, in part, by a decline in the number of renewed home warranties. The increase in real estate revenue reflects the impact of the 2-10 HBW Acquisition. The increase in direct-to-consumer revenue reflects an increase in the number of direct-to-consumer home warranties and the impact of the 2-10 HBW Acquisition, offset, in part, by lower price realization resulting from our discounting efforts to drive incremental sales. The increase in other revenue was primarily driven by the impact of new home structural warranties from the 2-10 HBW Acquisition and growth in non-warranty home services.
Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024
Nine Months Ended
September 30,
Increase (Decrease)
(In millions)
2025
(2)
2024
$
%
Renewals
$
1,255
$
1,141
$
114
10
%
Real estate
(1)
114
99
15
15
Direct-to-consumer
(1)
143
135
8
6
Other
148
86
63
73
Total
$
1,660
$
1,461
$
200
14
%
(1)
First-year revenue only.
(2)
For the nine months ended September 30, 2025, includes approximately $149 million as a result of the 2-10 HBW Acquisition on December 19, 2024.
Revenue increased 14 percent for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The increase in renewal revenue reflects improved price realization resulting from our prior pricing actions and the impact of the 2-10 HBW Acquisition, offset, in part, by a decline in the number of renewed home warranties. The increase in real estate revenue reflects the impact of the 2-10 HBW Acquisition, offset, in part, by the challenging real estate macro environment. The increase in direct-to-consumer revenue reflects the impact of the 2-10 HBW Acquisition and an increase in the number of direct-to-consumer home warranties, offset, in part, by lower price realization resulting from our discounting efforts to drive incremental sales. The increase in other revenue was primarily driven by the impact of new home structural warranties from the 2-10 HBW Acquisition and growth in non-warranty home services.
The following table provides a summary of the number of home warranties, reduction in number of home warranties and customer retention rate:
As of
September 30,
(In millions)
2025
(1)
2024
Number of home warranties
2.11
1.95
Growth (reduction) in number of home warranties
8
%
(4
)
%
Customer retention rate
79.4
%
77.7
%
(1)
As of September 30, 2025, excluding the 2-10 HBW home warranties acquired on December 19, 2024, the number of home warranties was 1.9 million, the reduction in home warranties was one percent and the customer retention rate was 78.1 percent.
The growth in the number of home warranties as of September 30, 2025 was primarily driven by the 2-10 HBW acquisition, offset, in part, by the challenging real estate macro environment and decline in number of renewed home warranties.
Cost of Services Rendered
We reported cost of services rendered of $264 million and $235 million for the three months ended September 30, 2025 and 2024, respectively, and $716 million and $655 million for the nine months ended September 30, 2025 and 2024, respectively. The following tables provide a summary of the changes in cost of services rendered:
Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024
(In millions)
Three Months Ended September 30, 2024
$
235
Impact of change in revenue
30
Three Months Ended September 30, 2025
$
264
27
The increase in contract claims costs primarily reflects inflationary cost pressures, offset, in part, by a lower number of service requests per customer, primarily driven by a favorable weather impact of $6 million. Additionally, contract claims costs reflects a $5 million favorable adjustment in the third quarter of 2025 related to the development of prior period claims, compared to a $3 million favorable adjustment in the third quarter of 2024.
Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024
(In millions)
Nine Months Ended September 30, 2024
$
655
Impact of change in revenue
70
Contract claims costs
(7
)
Other
(1
)
Nine Months Ended September 30, 2025
$
716
The decrease in contract claims costs primarily reflects continued process improvement initiatives, a lower number of service requests per customer, primarily driven by a favorable weather impact of $7 million and higher trade service fees, offset, in part, by inflationary cost pressures. Additionally, contract claims costs reflects an $8 million favorable adjustment in the first nine months of 2025 related to the development of prior period claims, compared to a $4 million favorable adjustment in the first nine months of 2024.
Selling and Administrative Expenses
We reported selling and administrative expenses of $174 million and $154 million for the three months ended September 30, 2025 and 2024, respectively, and $498 million and $456 million for the nine months ended September 30, 2025 and 2024, respectively. The following table provides a summary of the components of selling and administrative expenses:
Three Months Ended
Nine Months Ended
September 30,
September 30,
(In millions)
2025
2024
2025
2024
Sales and marketing costs
$
83
$
80
$
232
$
231
Customer service costs
31
27
89
79
General and administrative costs
60
48
177
147
Total
$
174
$
154
$
498
$
456
The following tables provide a summary of the changes in selling and administrative expenses:
Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024
(In millions)
Three Months Ended September 30, 2024
$
154
Sales and marketing costs
4
Customer service costs
4
Stock-based compensation expense
2
Acquisition-related costs
(1
)
Other general and administrative costs
11
Three Months Ended September 30, 2025
$
174
Sales and marketing costs increased due to the 2-10 HBW Acquisition. Customer service costs increased primarily due to the 2-10 HBW acquisition and growth in non-warranty home services. Acquisition-related costs are driven by the 2-10 HBW Acquisition and represent direct third-party costs, including legal, accounting and financial advisory fees, as well as post-acquisition systems integration costs. Other general and administrative costs increased primarily due to increased personnel and technology costs from the 2-10 HBW acquisition.
Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024
28
(In millions)
Nine Months Ended September 30, 2024
$
456
Sales and marketing costs
1
Customer service costs
11
Stock-based compensation expense
5
Acquisition-related costs
(3
)
Other general and administrative costs
29
Nine Months Ended September 30, 2025
$
498
Sales and marketing costs increased due to the 2-10 HBW Acquisition. Customer service costs increased primarily due to the 2-10 HBW acquisition and growth in non-warranty home services. Acquisition-related costs are driven by the 2-10 HBW Acquisition and represent direct third-party costs, including legal, accounting and financial advisory fees, as well as post-acquisition systems integration costs. Other general and administrative costs increased primarily due to increased personnel and technology costs from the 2-10 HBW acquisition.
Depreciation and Amortization Expense
Depreciation expense was $9 million for each of the three months ended September 30, 2025 and 2024, and $28 million and $26 million for the nine months ended September 30, 2025 and 2024, respectively. Amortization expense was $13 million and $1 million for the three months ended September 30, 2025 and 2024, respectively, and $38 million and $2 million for the nine months ended September 30, 2025 and 2024, respectively, with the increase primarily driven by the amortization of intangible assets acquired as part of the 2-10 HBW Acquisition.
Restructuring Charges
Restructuring charges were less than $1 million and $3 million for the three months ended September 30, 2025 and 2024, respectively, and $1 million and $5 million for the nine months ended September 30, 2025 and 2024, respectively. For the nine months ended September 30, 2024, restructuring charges include $4 million of severance costs and $1 million of expenses related to the exit of certain operating leases.
Interest Expense
Interest expense was $20 million and $10 million for the three months ended September 30, 2025 and 2024, respectively, and $59 million and $29 million for the nine months ended September 30, 2025 and 2024, respectively, with the increase driven by the higher debt balance as compared to prior year as a result of financing the 2-10 HBW Acquisition.
Interest and Net Investment Income
Interest and net investment income was $6 million and $5 million for the three months ended September 30, 2025 and 2024, respectively, and $16 million and $15 million for the nine months ended September 30, 2025 and 2024, respectively.
Provision for Income Taxes
The effective tax rate on income before income taxes was 25.8 percent and 25.1 percent for the three months ended September 30, 2025 and 2024, respectively, and 24.6 percent and 25.3 percent for the nine months ended September 30, 2025 and 2024, respectively. The increase in the effective tax rate for the three months ended September 30, 2025 was primarily due to state income taxes. The decrease in the effective tax rate for the nine months ended September 30, 2025 was primarily due to was primarily due to changes in share-based compensation and acquisition-related transaction costs, offset, in part, by state income taxes and a reduction in tax credits.
Net Income
Net income was $106 million and $100 million for the three months ended September 30, 2025 and 2024, respectively, and $253 million and $226 million for the nine months ended September 30, 2025 and 2024, respectively.
29
Adjusted EBITDA
Adjusted EBITDA was $195 million and $165 million for the three months ended September 30, 2025 and 2024, respectively, and $494 million and $394 million for the nine months ended September 30, 2025 and 2024, respectively.
Summary of Changes in Net Income and Adjusted EBITDA
The following tables provide a summary of the changes in net income and Adjusted EBITDA:
Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024
(In millions)
Net Income
Adjusted EBITDA
Three Months Ended September 30, 2024
$
100
$
165
Impact of change in revenue
47
47
Sales and marketing costs
(4
)
(4
)
Customer service costs
(4
)
(4
)
Stock-based compensation expense
(2
)
—
Acquisition-related costs
1
—
Other general and administrative costs
(11
)
(11
)
Depreciation and amortization expense
(12
)
—
Restructuring charges
3
—
Interest expense
(10
)
—
Interest and net investment income
1
1
Provision for income taxes
(3
)
—
Three Months Ended September 30, 2025
$
106
$
195
The impact of change in revenue was primarily driven by improved price realization and the impact of the 2-10 HBW Acquisition, offset, in part, by a decline in the number of renewed home warranties. For more information on changes in net income or Adjusted EBITDA, see discussion of individual line items above.
Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024
(In millions)
Net Income
Adjusted EBITDA
Nine Months Ended September 30, 2024
$
226
$
394
Impact of change in revenue
130
130
Contract claims costs
7
7
Sales and marketing costs
(1
)
(1
)
Customer service costs
(11
)
(11
)
Stock-based compensation expense
(5
)
—
Acquisition-related costs
3
—
Other general and administrative costs
(29
)
(29
)
Depreciation and amortization expense
(38
)
—
Restructuring charges
3
—
Interest expense
(30
)
—
Interest and net investment income
1
2
Provision for income taxes
(6
)
—
Other
1
1
Nine Months Ended September 30, 2025
$
253
$
494
The impact of change in revenue was primarily driven by improved price realization and the impact of the 2-10 HBW Acquisition, offset, in part, by the challenging real estate macro environment and a decline in the number of renewed home warranties. For more information on changes in net income or Adjusted EBITDA, see discussion of individual line items above.
30
Reconciliation of Net Income to Adjusted EBITDA
A reconciliation of Net Income to Adjusted EBITDA is as follows:
Three Months Ended
Nine Months Ended
September 30,
September 30,
(In millions)
2025
2024
2025
2024
Net Income
$
106
$
100
$
253
$
226
Depreciation and amortization expense
22
10
66
28
Restructuring charges
(1)
1
3
1
5
Acquisition-related costs
(1)
2
3
6
9
Provision for income taxes
37
34
83
77
Non-cash stock-based compensation expense
(2)
8
6
25
20
Interest expense
20
10
59
29
Other non-operating expenses
(1)
—
—
1
—
Adjusted EBITDA
$
195
$
165
$
494
$
394
(1)
We exclude restructuring charges, acquisition-related costs and other non-operating expenses from Adjusted EBITDA because we believe they do not reflect our ongoing operations and because we believe doing so is useful to investors in aiding period-to-period comparability.
(2)
We exclude non-cash stock-based compensation expense from Adjusted EBITDA because it is a non-cash expense and because it is not used by management to assess ongoing operational performance. We believe excluding this expense from Adjusted EBITDA is useful to investors in aiding period-to-period comparability.
Liquidity and Capital Resources
Liquidity
A substantial portion of our liquidity needs are due to debt service requirements on our indebtedness. The Credit Agreement contains covenants that limit or restrict our ability, including the ability of certain of our subsidiaries, to incur additional indebtedness, repurchase debt, incur liens, sell assets, make certain payments (including dividends) and enter into transactions with affiliates. As of September 30, 2025, we were in compliance with the covenants under the Credit Agreement. We do not believe current macroeconomic conditions will affect our ongoing ability to meet our debt covenants.
Cash and cash equivalents totaled $563 million and $421 million as of September 30, 2025 and December 31, 2024, respectively, and short- and long-term marketable securities totaled less than $1 million and $53 million as of September 30, 2025 and December 31, 2024, respectively. Our cash and cash equivalents and short- and long-term marketable securities include balances associated with regulatory requirements in our business. See “—Limitations on Distributions and Dividends by Subsidiaries.” As of September 30, 2025 and December 31, 2024, the total net assets subject to these third-party restrictions were $178 million and $184 million, respectively. As of September 30, 2025, there was $2 million of letters of credit outstanding under our $250 million Revolving Credit Facility, and the available borrowing capacity under the Revolving Credit Facility was $248 million. The letters of credit are posted in lieu of cash to satisfy regulatory requirements in certain states in which we operate. We currently believe that cash generated from operations, our cash on hand and available borrowing capacity under the Revolving Credit Facility as of September 30, 2025 will provide us with sufficient liquidity to meet our obligations in the short- and long-term.
We closely monitor the performance of our investment portfolio, primarily cash deposits and short- and long-term marketable securities. We regularly review applicable statutory reserve requirements to which our regulated entities may be subject and any changes to such requirements. These reviews may result in identifying current reserve levels above or below minimum statutory reserve requirements, in which case we may adjust our reserves. The reviews may also identify opportunities to satisfy certain regulatory reserve requirements through alternate financial vehicles.
We have a diversified investment strategy for our cash investments and give priority to the major financial institutions that serve as lenders under the Credit Agreement. Generally, our cash deposits may be redeemed on demand and are maintained with major financial institutions with solid credit ratings, although our holdings exceed insured limits in substantially all of our accounts.
We may, from time to time, issue new debt, repurchase or otherwise retire or extend our debt and/or take other steps to reduce our debt or otherwise improve our financial position, gross and net leverage, results of operations or cash flows. These actions may include new debt issuance, open market debt repurchases, negotiated repurchases, other retirements of outstanding debt and/or opportunistic refinancing of debt. The amount of debt that may be issued, repurchased or otherwise retired or refinanced, if any, and the price of such issuances, repurchases, retirements or refinancings will depend on market conditions, trading levels of our debt, our cash position, compliance with debt covenants and other considerations.
31
Share Repurchase Program
On July 26, 2024, our Board of Directors approved a new share repurchase authorization of up to $650 million of our common stock over the three-year period from September 4, 2024 through September 4, 2027. Purchases under this repurchase program may be made from time to time by the company in the open market at prevailing market prices (including through Rule 10b5-1 Plans), in privately negotiated transactions, or through any combination of these methods, through September 4, 2027. The actual timing, number, manner and value of any shares repurchased will depend on several factors, including the market price of the company’s stock, general market and economic conditions, the company’s liquidity requirements, applicable legal requirements and other business considerations. The repurchase program does not obligate us to acquire any number of shares in any specific period or at all and may be suspended or discontinued at any time at our discretion. As of September 30, 2025, we repurchased a total of 4,545,461 outstanding shares at an aggregate cost of $234 million under this program, which is included in treasury stock on the condensed consolidated statements of financial position included in Part I, Item 1 of this Quarterly Report on Form 10-Q. As of September 30, 2025, we had $416 million remaining available for future repurchases under this program. We expect to fund future share repurchases from net cash provided from operating activities.
Limitations on Distributions and Dividends by Subsidiaries
We depend on our subsidiaries to distribute funds to us so that we may pay obligations and expenses, including satisfying obligations with respect to indebtedness. The ability of our subsidiaries to make distributions and dividends to us depends on their operating results, cash requirements, financial condition and general business conditions, as well as restrictions under the laws of our subsidiaries’ jurisdictions.
Our subsidiaries are permitted under the terms of the Credit Agreement and other indebtedness to incur additional indebtedness that may restrict or prohibit the making of distributions, the payment of dividends or the making of loans by such subsidiaries to us.
Furthermore, there are regulatory restrictions on the ability of certain of our subsidiaries to transfer funds to us. The payments of ordinary and extraordinary dividends by certain of our subsidiaries (through which we conduct our business) are subject to significant regulatory restrictions under the laws and regulations of the states in which they operate. Among other things, such laws and regulations require certain subsidiaries to maintain minimum capital and net worth requirements and may limit the amount of ordinary and extraordinary dividends and other payments that these subsidiaries can pay to us. None of our subsidiaries are obligated to make funds available to us through the payment of dividends.
Cash Flows
Cash flows from operating, investing and financing activities, as reflected in the condensed consolidated statements of cash flows included in Part I, Item 1 of this Quarterly Report on Form 10-Q are summarized in the following table:
Nine Months Ended
September 30,
(In millions)
2025
2024
Net cash provided from (used for):
Operating activities
$
315
$
212
Investing activities
37
(31
)
Financing activities
(210
)
(131
)
Cash increase during the period
$
142
$
50
Operating Activities
Net cash provided from operating activities was $315 million and $212 million for the nine months ended September 30, 2025 and 2024, respectively.
Net cash provided from operating activities for the nine months ended September 30, 2025 comprised $355 million in earnings adjusted for non-cash charges, offset, in part, by $40 million in cash used primarily for working capital.
Net cash provided from operating activities for the nine months ended September 30, 2024 comprised $276 million in
earnings adjusted for non-cash charges, offset, in part, by $64 million in cash used for working capital. Cash used for working capital was primarily driven by seasonality, payments of accrued bonuses and a decline in the number of first-year real estate home warranties, which are typically paid for upfront at the time of closing on the home sale.
32
Investing Activities
Net cash provided from investing activities was $37 million for the nine months ended September 30, 2025 as compared to net cash used for investing activities of $31 million for the nine months ended September 30, 2024.
For the nine months ended September 30, 2025, cash provided from sales and maturities of available-for-sale securities was $60 million, purchases of available-for-sale securities was $6 million, and there was $3 million in cash provided from the finalization of the 2-10 HBW Acquisition purchase price. Capital expenditures were $20 million for nine months ended September 30, 2025 and included recurring capital needs and technology projects. We expect capital expenditures for the full year 2025 relating to committed, recurring capital needs and the continuation of investments in information systems and productivity enhancing technology to be approximately $30 million. We have no additional material capital commitments at this time.
For the nine months ended September 30, 2024, capital expenditures were $31 million and included recurring capital needs and technology projects.
Financing Activities
Net cash used for financing activities was $210 million and $131 million for the nine months ended September 30, 2025 and 2024, respectively.
For the nine months ended September 30, 2025, we made scheduled principal payments of debt of $22 million and purchased outstanding shares of our common stock at an aggregate cost of $195 million. Repurchases of common stock included associated commissions and taxes of $2 million.
For the nine months ended September 30, 2024, we made scheduled principal payments of debt of $13 million and purchased
outstanding shares of our common stock at an aggregate cost of $120 million. Repurchases of common stock included associated
commissions and taxes of $1 million.
Free Cash Flow
The following table reconciles net cash provided from operating activities, which we consider to be the most directly comparable U.S. GAAP measure, to Free Cash Flow using data derived from the condensed consolidated statements of cash flows in Part 1, Item 1 of this Quarterly Report on Form 10-Q:
Nine Months Ended
September 30,
(In millions)
2025
2024
Net cash provided from operating activities
$
315
$
212
Property additions
(20
)
(31
)
Free Cash Flow
$
296
$
181
Contractual Obligations
Our 2024 Form 10-K includes disclosures of our contractual obligations and commitments as of December 31, 2024. We continue to make the contractually required payments associated with these commitments. There are no significant additions to our obligations and commitments since those reported in the 2024 Form 10-K.
33
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to the impact of interest rate changes and manage this exposure through the use of variable-rate and fixed-rate debt and by utilizing an interest rate swap. There have been no material changes to the market risk associated with debt obligations and other significant instruments from the risks described in Part II, Item 7A in our 2024 Form 10-K.
ITEM 4.
CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated (pursuant to Rule 13a-15(b) of the Exchange Act) the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) as of September 30, 2025. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2025.
Changes in Internal Control over Financial Reporting
There were no changes to our internal control over financial reporting, as defined in Rule 13a-15(f) and Rule 15d-15(f) under the Exchange Act, during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Consistent with guidance issued by the SEC that an assessment of internal control over financial reporting of a recently acquired business may be omitted from management’s evaluation of disclosure controls and procedures, management is excluding an assessment of such internal controls for 2-10 HBW from its evaluation of the effectiveness of our disclosure controls and procedures. 2-10 HBW was acquired by the company on December 19, 2024, and represented approximately 42% of the company’s consolidated total assets and 9% of its consolidated total revenues, as of and for the quarter ended September 30, 2025.
PART II.
OTHER INFORMATION
ITEM 1.
LEGAL PROCEEDINGS
The information required with respect to this Part II, Item 1 can be found under Note 8 to the condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
ITEM 1A. RISK FACTORS
For information regarding factors that could affect our business, financial condition or results of operations, see the risk factors discussed in Part I, Item 1A. “Risk Factors” in our 2024 Form 10-K. There have been no material changes to the risk factors disclosed in our 2024 Form 10-K during the nine months ended September 30, 2025. The risks described in our 2024 Form 10-K are not the only risks we face. Additional risks and uncertainties not currently known to us or those we currently view to be immaterial could also materially and adversely affect our business, financial condition or results of operations.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer Purchases of Equity Securities
On July 26, 2024, our Board of Directors approved a new share repurchase authorization of up to $650 million of our common stock over the three-year period from September 4, 2024 through September 4, 2027. We may make purchases under this repurchase program from time to time in the open market at prevailing market prices (including through a Rule 10b5-1 Plan), in privately negotiated transactions, or through any combination of these methods. The actual timing, number, manner and value of any shares repurchased will depend on several factors, including the market price of our stock, general market and economic conditions, our liquidity requirements, applicable legal requirements and other business considerations. We are not obligated to acquire any number of shares in any specific period or at all, and we may suspend or discontinue our share repurchase program at any time at our discretion. As of September 30, 2025, we repurchased a total of 4,545,461 outstanding shares at an aggregate cost of $234 million, and we had $416 million remaining available for future repurchase under this program.
34
Period
Total number
of shares
purchased
Average price
paid per share
(1)
Total number
of shares
purchased as
part of publicly
announced
plans or
programs
Maximum dollar
value of shares
that may yet
be purchased
under the plans
or programs
(in millions)
Jul. 1, 2025 through Jul. 31, 2025
269,604
$
58.46
269,604
$
459
Aug. 1, 2025 through Aug. 31, 2025
430,167
58.12
430,167
434
Sep. 1, 2025 through Sep. 30, 2025
281,868
65.42
281,868
416
Total
981,639
$
60.31
981,639
$
416
(1)
The average price paid per share is calculated on a trade date basis and excludes associated commissions and taxes.
See Liquidity and Capital Resources – Liquidity in Part I, Item 2 of this Quarterly Report on Form 10-Q for more information.
ITEM 5. OTHER INFORMATION
Rule 10b5-1 Trading Arrangements
During the three months ended September 30, 2025, two of our officers adopted a “Rule 10b5-1 trading arrangement,” as defined in Item 408(c) of Regulation S-K, each of which is intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act.
William C. Cobb
, our
Chief Executive Officer and Chairman of the Board of Directors
, adopted a
Rule 10b5-1
sales plan on
August 7, 2025
. Such trading plan provides for an aggregate sale of up to
191,036
shares of the Company’s Common Stock that Mr. Cobb has an option to purchase. Mr. Cobb’s trading plan provides for sales from
November 7, 2025 to
August 7, 2026
, subject to early termination if all transactions under the trading plan are completed or upon certain specified events set forth therein.
Jessica P. Ross
, our
Senior Vice President and Chief Financial Officer
, adopted a
Rule 10b5-1
sales plan on
August 15, 2025
. Such trading plan pro
vides for an aggregate sale of (a) up to the lesser of
15,000
shares or $750,000 worth of the Company’s Common Stock that Ms. Ross owns, and (b) up to
40,869
shares of the Company’s Common Stock that Ms. Ross has an option to purchase. Ms. Ross’s trading plan provides for sales from
November 17, 2025 to
June 5, 2026
, subject to early termination if all transactions under the trading plan are completed or upon certain specified events set forth therein. Both Mr. Cobb and Ms. Ross are expected to continue to satisfy the Company’s Stock Ownership Guidelines following the sale of the maximum number of shares and options contemplated under their trading plans.
During the three months ended September 30, 2025
none
of the Company’s other directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K).
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents.
104*
Cover page formatted as Inline XBRL and included in Exhibit 101.
* Filed herewith.
** Furnished herewith.
The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by Frontdoor in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.
36
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
(We are using algorithms to extract and display detailed data. This is a hard problem and we are working continuously to classify data in an accurate and useful manner.)
