Frontdoor, Inc.

Ladies and gentlemen, welcome to Front Door's first quarter 2021 earnings call. Today's call is being recorded and broadcast on the internet. Beginning today's call is Matt Davis, Vice President of Investor Relations and Treasurer, and he will introduce the other speakers on the call. At this time, we'll begin today's call. Please go ahead, Mr. Davis.

Thank you, operator. Good afternoon, everyone, and thank you for joining Front Door's first quarter 2021 earnings conference call. Joining me today are Front Door's chief executive officer, Rex Tiddens, and Front Door's chief financial officer, Brian Turcott. The press release and slide presentation that will be used during today's call can be found on the investor relations section of Front Door's website, which is located at investors.frontdoorhome.com. As stated on slide two of the presentation, I'd like to remind you that this call and webcast may contain forward-looking statements. These statements are subject to various risks and uncertainties, which could cause actual results to differ materially from those discussed here today. These risk factors are explained in detail in the company's filings with the SEC. Please refer to the risk factors section in our filings for a more detailed discussion of our forward-looking statements and the risks and uncertainties related to such statements. All forward-looking statements are made as of today, May 6, and, except as required by law, the company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise. We will also reference certain non-GAAP financial measures throughout today's call. We have included definitions of these terms and reconciliations of these non-GAAP financial measures to their most comparable GAAP financial measures in our press release and the appendix to the presentation in order to better assist you in understanding our financial performance. I'll now turn the call over to Rex for opening comments. Rex?

Thanks, Matt, and good afternoon, everyone. We're off to a fast start in 2021 as we continue executing our strategic plan for the year. In the first quarter, we achieved our highest quarterly revenue growth since the spinoff, with year-over-year revenue growing from 8% in Q4 to 12% in Q1, A 50% increase in the revenue growth rate quarter to quarter. We expect to achieve sustained overall annual double-digit revenue growth going forward. Now turning to slide four, I'll provide a quick update on our 2021 objectives. Let me start with the drivers of our double-digit revenue growth. I am very pleased with our first-year direct consumer, or DTC, channel growth of 16%, which validates the marketing investments and conversion funnel improvements we made over the last several quarters. We also successfully completed the nationwide rollout of our new B2C product redesign in April and have seen a strong response to our new premium product, Shield Platinum. This new product line, coupled with our ability to dynamically price, should continue to provide revenue tailwinds for us in 2021 and beyond. As it relates to our first year real estate channel, the macroeconomic backdrop remains mixed. On one hand, the National Association of Realtors reported existing home sales increased 15% in the first quarter, with median price increasing a record 17% in March. On the other hand, home inventory remains extremely tight. While we generally benefit from the higher number of real estate transactions, The lower inventory creates a seller's market where the seller is less inclined to provide a home service plan as part of the transaction. As discussed on our last call, our team has been refocusing our real estate broker partner's efforts to market more to the buyer in the sales transaction, and we've been seeing some real progress as a result of this initiative. Additionally, we experienced some temporary slowness from the February winter storms in certain key markets such as Texas. But we still expect those homes to close and to capture those customers. Home service plan growth is expected to accelerate over the year. While we are monitoring what might happen to consumer behavior as the economy starts to open up more, we believe we are well positioned for the future. Our second objective for 2021 is to advance our automation initiatives. Our North Star remains focused on proactively innovating our processes through automation that will drive improvements in a customer and contractor experience. These efforts are targeted at reducing cycle times, improving customer retention, reducing costs, and give us more line of sight for potential service issues and the opportunity to intervene before they become a customer problem. In the first quarter, we completed the appliance purchasing portal, launched a new contractor portal, and further enhanced the use of streamed video calls in our core home service plan operations. While there's much more I want to accomplish on this front, I am pleased with the effort our team has made on advancing multiple projects at the same time. We generally remain on track or ahead of schedule. In fact, we are already receiving positive feedback from our customers and contractors on how we interact with them. This is a multi-year journey as we are truly redefining our business and the industry. Our third objective is to expand our customer retention initiatives. In the first quarter, we saw some near-term pressure on renewals as a result of COVID-19, which was twofold. First, the industry-wide appliance equipment and parts availability issues resulted in longer cycle times. Second, we had suboptimal customer service levels in our customer care centers during the peak of the pandemic in 2020 that may impact our renewal rates this year. We've made great strides in customer retention in 2020, and I expect customer retention to improve over the remainder of 2021 as we continue to focus in this area. As I've stated in the past, We can achieve much greater retention rates through our ongoing digital transformation, and our teams won't stop until we reach our goals. Our fourth objective is to execute our growth strategies for both ProConnect and Stream. ProConnect is off to a good start this year, with a larger component of their growth still coming in the back half of the year. The team has been deepening our contractor capacity, introducing core trade into new markets, and improving our marketing efforts. We've also begun to cross-market ProConnect services to our existing home service plan customers, and we will ramp those efforts over the next several months. Our current home service plan customers have enjoyed the convenience of signing up for additional maintenance services, such as pre-season HVAC maintenance checks. These types of services are a good tool for reminding customers of the value proposition we bring outside of their traditional home service contract. We are still on target for updating the American Home Shield website to be able to cross-market pro-connect to our 30 million annual visitors to that site. The internal rollout of STREAM's augmented reality service is going very well. We are now focused on accelerating contractor and customer adoption rates through strong support from marketing and product management to drive awareness. Our goal is to continue to ramp the number of service requests that utilize STREAM to not only enhance the customer experience by reducing the cycle time, but also to improve our contractor interactions and reduce costs. We also remain excited about the environmental benefits of using Stream to reduce the number of contractor truckloads need to complete a service request. In summary, we're off to a great start for the year and our business continues to perform extremely well. I'm excited by our revenue growth and plans for the remainder of the year. We remain extremely positive on the long-term fundamentals for all of our businesses as a result of strong execution. However, we are still early in 2021, and there's a lot more work to do if we continue to execute against an aggressive set of goals. I will now turn the call over to Brian. Brian?