Frontdoor’s (NASDAQ:FTDR) Q1 Sales Beat Estimates, Stock Jumps 16.3%

FTDR Cover Image — Frontdoor’s (NASDAQ:FTDR) Q1 Sales Beat Estimates, Stock Jumps 16.3%

Petr Huřťák

Thu, May 1, 2025, 8:07 AM 5 min read

Home warranty company Frontdoor (NASDAQ:FTDR) announced better-than-expected revenue in Q1 CY2025, with sales up 12.7% year on year to $426 million. Guidance for next quarter’s revenue was better than expected at $602.5 million at the midpoint, 1.7% above analysts’ estimates. Its non-GAAP profit of $0.64 per share was 69.5% above analysts’ consensus estimates.

Is now the time to buy Frontdoor? Find out in our full research report.

Frontdoor (FTDR) Q1 CY2025 Highlights:

Revenue: $426 million vs analyst estimates of $417.2 million (12.7% year-on-year growth, 2.1% beat)
Adjusted EPS: $0.64 vs analyst estimates of $0.38 (69.5% beat)
Adjusted EBITDA: $100 million vs analyst estimates of $76.22 million (23.5% margin, 31.2% beat)
The company slightly lifted its revenue guidance for the full year to $2.04 billion at the midpoint from $2.02 billion
EBITDA guidance for the full year is $510 million at the midpoint, above analyst estimates of $461.5 million
Operating Margin: 35.4%, up from 13.5% in the same quarter last year
Free Cash Flow Margin: 27.5%, up from 19.3% in the same quarter last year
Market Capitalization: $3.04 billion

“We are off to a great start in 2025 and are pleased to increase our full-year outlook across the board," said Chairman and Chief Executive Officer Bill Cobb.

Company Overview

Established in 2018 as a spin-off from ServiceMaster Global Holdings, Frontdoor (NASDAQ:FTDR) is a provider of home warranty and service plans.

Sales Growth

A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Regrettably, Frontdoor’s sales grew at a sluggish 6.4% compounded annual growth rate over the last five years. This fell short of our benchmark for the consumer discretionary sector and is a tough starting point for our analysis.

Long-term growth is the most important, but within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends and consumer preferences. Frontdoor’s annualized revenue growth of 6.2% over the last two years aligns with its five-year trend, suggesting its demand was consistently weak.

This quarter, Frontdoor reported year-on-year revenue growth of 12.7%, and its $426 million of revenue exceeded Wall Street’s estimates by 2.1%. Company management is currently guiding for a 11.2% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 8.3% over the next 12 months. While this projection indicates its newer products and services will fuel better top-line performance, it is still below the sector average.

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Operating Margin

Frontdoor’s operating margin has been trending up over the last 12 months and averaged 19.1% over the last two years. On top of that, its profitability was top-notch for a consumer discretionary business, showing it’s an well-run company with an efficient cost structure.

In Q1, Frontdoor generated an operating profit margin of 35.4%, up 22 percentage points year on year. This increase was a welcome development and shows it was more efficient.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Frontdoor’s EPS grew at a solid 13.2% compounded annual growth rate over the last five years, higher than its 6.4% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Frontdoor Trailing 12-Month EPS (Non-GAAP)

In Q1, Frontdoor reported EPS at $0.64, up from $0.44 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Frontdoor’s full-year EPS of $3.57 to shrink by 14.4%.

Key Takeaways from Frontdoor’s Q1 Results

This was a beat and raise quarter. We were impressed that the company raised full-year revenue guidance and also by Frontdoor’s optimistic EBITDA guidance for next quarter, which blew past analysts’ expectations. We were also excited its EPS outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this was a good print with some key areas of upside. The stock traded up 16.3% to $47.78 immediately after reporting.

Sure, Frontdoor had a solid quarter, but if we look at the bigger picture, is this stock a buy? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.

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