stockrowWhat it does
Frontdoor provides home warranties, new home builder warranties and related services in the United States. Its brands include American Home Shield, HSA, OneGuard, Landmark and 2-10 HBW. Bill Cobb is chairman and chief executive.
A home warranty is a service agreement covering certain repairs or replacements when household systems or appliances break down, generally from normal wear and tear. Frontdoor customers usually subscribe to an annual plan. Depending on the plan, coverage can include electrical and plumbing systems, heating and air conditioning, water heaters and appliances, with optional coverage for items such as pools and spas. Customers request service through Frontdoor, which uses independent contractors to carry out repairs.
The company also sells services outside warranty coverage. These include access to discounted replacement HVAC systems, installation of water shut-off devices, maintenance and virtual help with home repairs. Its Virtual Experts service can use video to diagnose an issue and, in some cases, guide a homeowner through a repair without an in-home visit.
Through 2-10 HBW, Frontdoor provides warranties and support services to new home builders and homeowners. Builder-backed and insurance-backed options can cover workmanship, home distribution systems and structural components. Builders can also use its services to manage homeowner requests and administer claims.
How it makes money
Frontdoor earns revenue from home warranty plans sold to new customers and from existing customers who renew. It also earns revenue from non-warranty services and new home builder warranties. Its home warranty plans are usually annual agreements, although many customers pay monthly through auto-pay.
Existing customer renewals generated $1.6 billion, or 75.8% of revenue, in FY2025. Frontdoor acquires new home warranty customers through direct marketing and through real estate brokers and agents who market plans to home buyers and sellers. Customers who renew become part of the renewal channel. In 2025, the renewal rate was 74 percent after the first contract year for direct-to-consumer customers and 29 percent for real estate customers; customers already in the renewal channel renewed at a rate of 81 percent.
Frontdoor uses dynamic pricing in its renewal and direct-to-consumer channels, adjusting plan prices for factors such as local contractor network strength and home characteristics. It also uses promotional pricing to acquire customers. Frontdoor reported that members who joined through promotional offers continued to renew at higher rates than members acquired without discounts.
Non-warranty offerings include HVAC upgrades and other home services. Frontdoor prices new HVAC systems essentially state by state because costs vary by location. The builder warranty business offers both coverage and administrative services; most of its revenue comes from repeat builder partners or builders with multi-year agreements.
Frontdoor generated $2,093 million in revenue for the year ended December 31, 2025; third-quarter 2026 revenue was $655 million.
| Product or service | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| Renewals | $1.6 billion | 75.8% | 10.4% |
| Non-Warranty and Other | $193.0 million | 9.22% | 66.4% |
| Direct-To-Consumer | $172.0 million | 8.22% | 3.61% |
| Real Estate | $141.0 million | 6.74% | 12.8% |
Customers and how it sells
Home warranty customers are predominantly owners of single-family homes. Frontdoor had approximately 2.1 million active home warranties across its brands in the United States as of December 31, 2025, and its business was not reliant on any single home warranty customer. Its builder warranty business had approximately 19,000 builder customers at that date; no builder represented more than five percent of that business’s revenue.
The company reaches homeowners directly through advertising, marketing partnerships, its customer service team and its e-commerce platform. In the real estate channel, it works with brokers and agents who market plans to home buyers and sellers. Regional and inside sales teams develop relationships with new home builders, including through industry associations and realtors.
Home warranty customers are acquired through the direct-to-consumer and real estate channels in the continental United States. A significant percentage of revenue is concentrated in the western and southern United States, including California, Florida and Texas. Builder warranty revenue is distributed across the United States, including southern states.
In the third quarter of 2026, Frontdoor reported approximately 330,000 direct-to-consumer members and approximately 220,000 first-year real estate members. The renewal channel ended the quarter with approximately 1.6 million members.
Suppliers and costs
Frontdoor relies on independent contractors rather than its own technicians to perform home warranty work. Its nationwide network includes approximately 17,000 contractor firms across a range of trades. Frontdoor checks qualifications, licensing and insurance, and monitors performance using customer feedback. Preferred contractors completed 84 percent of its home warranty service requests in 2025; no contractor accounted for more than five percent of its cost of services rendered that year.
The company also depends on a limited number of suppliers for parts, appliances and home systems. Direct supplier spending, excluding purchases made by contractors, represented approximately 22 percent of cost of services rendered in 2025. Six national suppliers each accounted for more than five percent of supplier spending.
Labor, parts and equipment are cost inputs. Extreme temperatures can increase HVAC service requests and claims costs, while milder weather can reduce them. Frontdoor reported that unfavorable weather affected third-quarter 2026 gross margin by $9 million. The company uses purchasing volume and its contractor network in delivering services, and it has stated that its model requires limited capital expenditures.
- Revenue$2.1B
- Cost of revenue−$936.0M
- Selling, general and administrative−$669.0M
- Other operating costs−$150.0M
- Operating income$338.0M
Competitive position
Frontdoor competes in home warranties and the broader home services industry. It faces local and regional warranty providers, businesses that provide non-warranty services directly, and businesses that sell leads to contractors. Its builder warranty business also competes with other warranty providers and builders that self-insure. No competing companies are named in the available company evidence.
Competition includes service quality and speed, plan offerings, reputation, pricing, promotions, contractor networks and referrals. Frontdoor states that it is one of the few companies offering home warranties nationwide. It has a nationwide contractor network and a large base of contracted customers, and it uses its purchasing volume for parts, appliances and home systems. Its customer and contractor platforms support service requests, communications and account management.
Our reading: The nationwide network and purchasing volume are meaningful potential advantages because they help Frontdoor deliver services across markets and obtain supplies at scale, although service quality still depends on independent firms. Our reading: Renewals and auto-pay support customer continuity, but customers can choose not to renew and the company operates in a highly competitive category. Our reading: Brands and technology can assist acquisition and service delivery, but the evidence does not establish how difficult either would be for competitors to replicate.
Growth opportunities
Frontdoor intends to grow its home warranty customer base through marketing, product choices, retention programs and improvements to the customer experience. It also plans to expand its contractor network and invest in digital tools for customers, contractors and commercial partners. The company estimates annual U.S. home services revenue at over $500 billion and annual home warranty category revenue at over $4 billion. It sees increased penetration of home services as a long-term opportunity.
Non-warranty services give Frontdoor a way to sell additional work to existing members and reach homeowners who do not have a warranty. Its offerings include HVAC upgrades, maintenance and installation of water shut-off devices. Frontdoor expects approximately $175 million of HVAC upgrade revenue in 2026. It has also said it is looking to expand the upgrade program into appliances.
The 2-10 HBW business gives Frontdoor relationships with builders and owners of new homes. Frontdoor intends to use those relationships to introduce its home warranty plans and non-warranty services. It may also pursue acquisitions that expand its services or capabilities.
In the third quarter of 2026, total ending home warranty member count grew 1%. Frontdoor expects approximately 1% total member growth for 2026, while expecting real estate channel ending member count to be flat by year-end because of near-term housing market headwinds.
- $1.6BFY2021
- $1.7BFY2022
- $1.8BFY2023
- $1.8BFY2024
- $2.1BFY2025
- $2.2BFY2026 guidance
Structural risks
- Housing and consumer demand: Inflation, interest rates and challenging real estate conditions can affect home sales, consumer sentiment and demand for warranties. Frontdoor expects near-term pressure in its real estate channel after housing conditions deteriorated during the third quarter of 2026.
- Weather and claims costs: Extreme winter or summer temperatures can increase service requests, particularly for HVAC systems, raising costs and reducing profitability. Quarterly results vary with seasonality and weather.
- Contractors and supplies: Frontdoor depends on independent contractors and a limited number of suppliers. Inflation, tariffs and supply chain challenges can increase the cost of labor, parts and equipment or affect availability.
- Builder warranty integration: The 2-10 HBW acquisition may not achieve its intended results. Risks include higher integration costs, disruption to relationships and difficulty realizing cross-selling opportunities.
- Debt: Frontdoor has significant indebtedness. Debt service uses cash, variable-rate borrowing creates interest-rate exposure, and credit agreement covenants restrict certain actions, including additional borrowing and some payments.
- Regulation: Federal, state and local rules govern areas including warranties, insurance, consumer protection, marketing and privacy. Noncompliance can lead to fines, loss of licenses, legal proceedings or restrictions on the business.
Bottom line
Our reading
Our reading: Frontdoor is a recurring home warranty business built around renewal relationships and an independent contractor network, with builder warranties and non-warranty services providing additional ways to reach customers. Its exposure lies in maintaining service quality and renewals while managing weather-driven claims, supply costs and housing-market pressure. The builder business and HVAC upgrades add opportunities, but also require successful execution and integration.