(FTDR) 2023 Q2 法說會逐字稿

Ladies and gentlemen, welcome to Frontdoor's Second Quarter 2023 Earnings Call. Today's call is being recorded and broadcast on the internet.

女士們、先生們，歡迎參加 Frontdoor 的 2023 年第二季度財報電話會議。今天的通話正在錄製並在互聯網上播放。

Beginning today's call with 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.

今天的電話會議由投資者關係副總裁兼財務主管馬特·戴維斯 (Matt Davis) 開始，他將介紹電話會議上的其他發言人。此時我們將開始今天的通話。請繼續，戴維斯先生。

Thank you, operator. Good morning, everyone. And thank you for joining Frontdoor's Second Quarter 2023 Earnings Conference Call. Joining me today are Frontdoor's Chairman and Chief Executive Officer Bill Cobb and Frontdoor's Chief Financial Officer, Jessica Ross.

謝謝你，接線員。大家，早安。感謝您參加 Frontdoor 2023 年第二季度收益電話會議。今天與我一起出席的有 Frontdoor 董事長兼首席執行官 Bill Cobb 和 Frontdoor 首席財務官 Jessica Ross。

The press release and slide presentation that will be used during today's call can be found on the investor relations section of Frontdoor's website, which is located at investors.frontdoorhome.com. There is also additional detail about our Frontdoor brands at frontdoor.com and our new mobile app that you can download in the app store and at Google Play.

今天電話會議中將使用的新聞稿和幻燈片演示可以在 Frontdoor 網站的投資者關係部分找到，該網站位於 Investors.frontdoorhome.com。 frontdoor.com 上還有有關我們 Frontdoor 品牌的更多詳細信息，以及您可以在應用商店和 Google Play 中下載的新移動應用程序。

As stated on Slide 3 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.

正如演示文稿幻燈片 3 中所述，我想提醒您，本次電話會議和網絡廣播可能包含前瞻性陳述。這些陳述受到各種風險和不確定性的影響，可能導致實際結果與今天討論的結果存在重大差異。這些風險因素在該公司向美國證券交易委員會提交的文件中進行了詳細解釋。請參閱我們提交的文件中的風險因素部分，以更詳細地討論我們的前瞻性陳述以及與此類陳述相關的風險和不確定性。

All forward-looking statements are made as of today, August 2, 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 and our press release and the appendix to the presentation in order to better assist you in understanding our financial performance.

所有前瞻性陳述均截至今天（8 月 2 日）作出，除非法律要求，否則公司不承擔更新任何前瞻性陳述的義務，無論是由於新信息、未來事件還是其他原因。我們還將在今天的電話會議中提及某些非公認會計準則財務指標。我們提供了這些術語的定義以及這些非公認會計原則財務指標與其最具可比性的公認會計原則財務指標的調節表以及我們的新聞稿和演示文稿的附錄，以便更好地幫助您了解我們的財務業績。

I will now turn the call over to Bill Cobb for opening comments. Bill.

我現在將把電話轉給比爾·科布徵求開場評論。賬單。

Thank you, Matt Davis, and good morning, everyone. Let me start by saying we had a great second quarter. I'm especially excited to see that many of the headwinds continue to turn in our favor, and this was especially true for the second quarter as everything seemed to fall our way. Jessica will cover our financial results in more detail, but let me hit the highlights.

謝謝你，馬特·戴維斯，大家早上好。首先我要說的是我們第二季度表現出色。我特別興奮地看到許多不利因素繼續對我們有利，第二季度尤其如此，因為一切似乎都朝著我們的方向發展。傑西卡將更詳細地介紹我們的財務業績，但讓我重點介紹一下重點。

In the second quarter, revenue increased 7%, gross profit increased 840 basis points to 52%. Adjusted EBITDA jumped 57% to $121 million. We repurchased $50 million of stock through July, and we are raising our full-year outlook for revenue, adjusted EBITDA and share repurchases. We have come a long way over the last year and I'm proud of how the team is executing across all functions.

第二季度營收增長7%，毛利潤增長840個基點至52%。調整後 EBITDA 躍升 57%，達到 1.21 億美元。截至 7 月份，我們回購了價值 5000 萬美元的股票，並提高了全年收入、調整後 EBITDA 和股票回購的預期。去年我們取得了長足的進步，我對團隊在所有職能部門的執行情況感到自豪。

Now turning to Slide 5, while it is encouraging to see our margins start to rebound, we still have work to do on driving revenue across our 2 growth engines, the Frontdoor and American Home Shield brands. To that point, I want to use this call to provide you with a mid-year update on the strategy we laid out at our Investor Day in March.

現在轉向幻燈片 5，雖然看到我們的利潤率開始反彈令人鼓舞，但我們仍然需要努力推動我們的兩個增長引擎（Frontdoor 和 American Home Shield 品牌）的收入。就這一點而言，我想利用這次電話會議向您提供我們在三月份投資者日制定的策略的年中最新情況。

First, I want to acknowledge that the Home Service Plan category has recently been in a state of the decline. We now estimate that there are about 5 million to 6 million active home service plans in the United States, but we know there is a lot more opportunity. We continue to target a total addressable market for American Home Shield at 13 million owner occupied homes. Based on our third-party research, we believe demand for the category was down somewhere around 10% in 2022, and we believe that the decline has accelerated through the first half of 2023. While it is disappointing for all of us that sell home service plans, we believe our overall category share has actually improved. The real challenge has been attracting new customers to our home warranty product and value proposition that has not substantially evolved over the years.

首先，我想承認家庭服務計劃類別最近處於下降狀態。我們現在估計美國大約有 500 萬到 600 萬個主動家庭服務計劃，但我們知道還有更多機會。我們繼續將 American Home Shield 的目標市場目標定為 1300 萬戶自住房屋。根據我們的第三方研究，我們認為2022 年對該類別的需求下降了10% 左右，並且我們認為到2023 年上半年下降速度會加快。雖然這對我們所有銷售家庭服務的人來說都是令人失望的計劃，我們相信我們的整體品類份額實際上有所提高。真正的挑戰是吸引新客戶使用我們的家庭保修產品和多年來沒有實質性發展的價值主張。

As a category leader, we are committed to updating our marketing and core consumer value proposition to attract new customers. Once they become a customer, they're highly likely to stay as shown in our strong second quarter retention rate.

作為品類領導者，我們致力於更新我們的營銷和核心消費者價值主張，以吸引新客戶。一旦他們成為客戶，他們就很有可能留下來，正如我們第二季度強勁的保留率所示。

Now turning to the Slide 6 and the renewals channel where our retention rates continue to perform well. Our overall retention rate increased 190 basis points year-over-year to 76.3%. This is especially strong when you consider our 11% realized price increase in 2023. While a large portion of this improvement is driven by a lower mix of real estate customers, we have also been doing some smart things on the execution front, better personalization of customer communications, enhancing our dynamic pricing model and continuing to improve service quality.

現在轉向幻燈片 6 和續訂渠道，我們的保留率繼續表現良好。我們的整體保留率同比增長 190 個基點，達到 76.3%。當您考慮到我們在2023 年實現的11% 的價格上漲時，這一點尤其強勁。雖然這種改善很大一部分是由房地產客戶組合減少推動的，但我們也在執行方面做了一些明智的事情，更好地個性化客戶溝通，增強我們的動態定價模型並持續提高服務質量。

One way we have improved our customer service is from our process improvements to optimize contractor capacity and maximize use of preferred contractors. This not only provides us with a lower cost of service, but it also results in a higher quality customer experience. During the second quarter, our deployment of preferred contractors increased to approximately 84% versus 82% a year ago. As a result of all these efforts, we are seeing clear progress. Customer 5-star ratings of contractors are now at a decade high with 1 star ratings at an all-time low.

我們改善客戶服務的方法之一是通過改進流程來優化承包商能力並最大限度地利用首選承包商。這不僅為我們提供了更低的服務成本，而且還帶來了更高質量的客戶體驗。第二季度，我們的首選承包商部署率從一年前的 82% 增加到約 84%。經過所有這些努力，我們看到了明顯的進展。客戶對承包商的 5 星級評級目前處於十年來的最高水平，而 1 星級評級則處於歷史最低水平。

Now, turning to Slide 7, in our real estate channels. The National Association of Realtors or NAR recently came out with housing market statistics for June. Existing home sales declined 23% during the first half of the year. This closely correlates with the decline we are seeing in our real estate channel, which is highly dependent on the overall real estate environment. Further, it was reported that only 14 homes out of a 1,000 change hands in the first half of the year, the lowest rate in a decade. Inventory remains tight at 3.1 months of supply, which contributed to driving median home prices up to $410,000.

現在，轉向我們的房地產頻道中的幻燈片 7。全國房地產經紀人協會（NAR）最近公佈了 6 月份的房地產市場統計數據。上半年成屋銷售下降 23%。這與我們房地產渠道的下滑密切相關，房地產渠道高度依賴於整體房地產環境。此外，據報導，今年上半年，1000套房屋中只有14套易手，這是十年來的最低水平。庫存仍然緊張，供應量僅夠 3.1 個月，這導致房價中位數上漲至 410,000 美元。

Prices are rising because there is more demand than supply, and we are seeing bidding wars come back in certain markets. In fact, some homeowners are reluctant to move because they have a substantially lower mortgage rate than the current market of nearly 7%. In short, the resurgence of a strong seller's market continues to delay the transition to a more balanced buyer-seller environment. While we believe that the housing market will eventually become more conducive for us to sell a home warranty, it is taking longer than we expected.

價格上漲是因為需求大於供應，而且我們看到某些市場重新出現競購戰。事實上，一些房主不願意搬家，因為他們的抵押貸款利率遠低於當前市場近 7% 的水平。簡而言之，強勁賣方市場的複蘇繼續推遲向更加平衡的買賣雙方環境的過渡。雖然我們相信房地產市場最終將變得更有利於我們銷售房屋保修，但所需時間比我們預期的要長。

Now moving to Slide 8. Last quarter, I discussed some of the challenges facing our DTC channel. This includes the impact of changing consumer behavior due to evolving macroeconomic conditions, higher price sensitivity for home service plans and reduced marketing spend. Let me be clear. Growing our DTC demand is our top focus as we head into the back half of this year.

現在轉到幻燈片 8。上個季度，我討論了我們 DTC 渠道面臨的一些挑戰。這包括由於不斷變化的宏觀經濟條件、對家庭服務計劃的更高的價格敏感性以及營銷支出的減少而導致的消費者行為變化的影響。讓我說清楚。進入今年下半年，增加 DTC 需求是我們的首要關注點。

To that end, we have several work streams to re-energize this channel. First, we are optimizing our discounting strategy. We have been testing into various discounts and I am pleased to report that we are seeing some positive results as our sales are coming in higher than our original plan. Second, we are increasing our marketing investment. Given that the Frontdoor brand has generated such substantial consumer awareness, we are now able to reallocate $20 million to the American Home Shield brand. When including the $10 million increase we made in the first quarter, total DTC marketing spend is up $30 million compared to our original plan. This means that we are now virtually flat on our DTC marketing investment on a year-over-year basis.

為此，我們有幾個工作流程來重新激活這個渠道。首先，我們正在優化折扣策略。我們一直在測試各種折扣，我很高興地報告，我們看到了一些積極的結果，因為我們的銷售額高於我們最初的計劃。二是加大營銷投入。鑑於 Frontdoor 品牌已經引起瞭如此廣泛的消費者認知，我們現在可以向 American Home Shield 品牌重新分配 2000 萬美元。如果算上第一季度增加的 1000 萬美元，DTC 營銷總支出比我們原來的計劃增加了 3000 萬美元。這意味著我們現在的 DTC 營銷投資與去年同期相比幾乎持平。

Now, longer-term, we know we need to update and enhance the AHS brand to reevaluate our core value proposition so that we can engage more consumers in new and compelling ways. This is exactly what Kathy Collins and her team are working on as we speak, to bring some of that Frontdoor brand marketing magic to American Home Shield. More to come here, which includes conducting extensive consumer and competitive research, evaluating product improvements, and finding ways to better connect our offerings with consumers.

現在，從長遠來看，我們知道我們需要更新和增強 AHS 品牌，以重新評估我們的核心價值主張，以便我們能夠以新的、引人注目的方式吸引更多消費者。這正是 Kathy Collins 和她的團隊正在努力的方向，將 Frontdoor 品牌的營銷魔力帶入 American Home Shield。這裡還有更多內容，包括進行廣泛的消費者和競爭研究、評估產品改進以及尋找更好地將我們的產品與消費者聯繫起來的方法。

Now let's turn to Slide 9 of the web deck, where I'll dive into more details on the Frontdoor brand strategy. Just a quick reminder that we previewed the Frontdoor brand at our Investor Day on March 2, we launched the brand on April 11. And then on June 6, we launched Frontdoor Premium. I want to start by highlighting our on-demand services, which totaled $20 million in the second quarter. This is higher than we first anticipated when we decided to pursue HVAC upgrades at the start of the year. As a reminder, an HVAC upgrade is when we partner with our preferred contractors and leverage our scale to sell new HVAC units to our existing members at a steep discount. We are now targeting approximately $45 million of revenue from our Frontdoor Pro on-demand home services in 2023.

現在讓我們轉向網絡平台的幻燈片 9，我將在其中深入探討 Frontdoor 品牌戰略的更多細節。簡單提醒一下，我們在 3 月 2 日的投資者日預覽了 Frontdoor 品牌，並於 4 月 11 日推出了該品牌。然後在 6 月 6 日，我們推出了 Frontdoor Premium。首先我想強調一下我們的按需服務，第二季度的總價值為 2000 萬美元。這比我們在年初決定進行暖通空調升級時最初預期的要高。提醒一下，暖通空調升級是指我們與首選承包商合作，並利用我們的規模以大幅折扣向現有會員銷售新的暖通空調設備。我們目前的目標是到 2023 年 Frontdoor Pro 按需家庭服務的收入約為 4500 萬美元。

Now I'd like to turn to the Frontdoor marketing campaign, which has been a tremendous success in driving consumer brand awareness. As of today, the app has been downloaded nearly 950,000 times, significantly exceeding our original expectations. Additionally, we have received consistently positive customer feedback, including rave reviews on the video chat with an expert feature and the easy-to-use app. In all my years around marketing, I have never seen awareness of a new brand take off like this and just 4 months after launching. Said another way, we drove a sizable level of awareness at a much lower price and in a much shorter time frame than originally planned.

現在我想談談 Frontdoor 營銷活動，該活動在提高消費者品牌知名度方面取得了巨大成功。截至今日，該應用的下載量已接近 95 萬次，大大超出了我們最初的預期。此外，我們還收到了一致的積極客戶反饋，包括對具有專家功能和易於使用的應用程序的視頻聊天的好評。在我從事營銷工作的這些年裡，我從來沒有見過一個新品牌在推出後僅 4 個月就獲得瞭如此大的知名度。換句話說，我們以比原計劃低得多的價格和更短的時間框架提高了相當大的認知度。

As a result, we are now able to reallocate that $20 million of marketing spend to help drive DTC sales within our American Home Shield brand. As I mentioned at our Investor Day, we want the flexibility to invest across both the Frontdoor and American Home Shield brands. This allows us to optimize where our marketing dollars are being invested, which is exactly what we are doing now. But let me be very candid with you. Despite extremely strong brand awareness, conversion to paid membership services has not been what we anticipated. We are working to address this by developing a robust strategy to monetize that high consumer awareness into paid services, and we look forward to sharing more about where we are going next quarter. We remain very bullish about the new Frontdoor brand. Our research shows there is significant untapped consumer demand. The number of downloads is a strong validation of the opportunity and now we just need to do a better job of unlocking the revenue potential.

因此，我們現在能夠重新分配 2000 萬美元的營銷支出，以幫助推動我們 American Home Shield 品牌內的 DTC 銷售。正如我在投資者日提到的，我們希望能夠靈活地投資 Frontdoor 和 American Home Shield 品牌。這使我們能夠優化營銷資金的投資方向，這正是我們現在正在做的事情。但讓我對你非常坦誠。儘管品牌知名度極高，但向付費會員服務的轉變並未達到我們的預期。我們正在努力通過制定強有力的戰略來解決這個問題，將消費者的高認知度轉化為付費服務，我們期待分享更多有關下季度我們的發展方向的信息。我們仍然非常看好新的 Frontdoor 品牌。我們的研究表明，還有大量尚未開發的消費者需求。下載量是對機會的有力驗證，現在我們只需要更好地釋放收入潛力。

Before I hand it over to Jessica, let me briefly summarize where we are. We had an exceptionally strong second quarter performance, and we are raising our full year outlook across the board. On the operational front, we are improving execution. The previous cost headwinds we saw last year have largely turned and we have had some extremely favorable trends driving gross margins higher. But to be clear, we still have much work to do. While consumer awareness at Frontdoor has been tremendous. We need to be better at converting app downloads into actual revenue. On the DTC front, we understand the challenges there as well and are deep into making significant improvements to get this channel back on track. This is our top focus in the back half of the year.

在我把它交給傑西卡之前，讓我簡要總結一下我們的情況。我們第二季度的業績異常強勁，我們正在全面提高全年預期。在運營方面，我們正在提高執行力。我們去年看到的成本逆風已基本扭轉，我們出現了一些極其有利的趨勢，推動毛利率上升。但需要明確的是，我們還有很多工作要做。 Frontdoor 的消費者意識非常強烈。我們需要更好地將應用程序下載轉化為實際收入。在 DTC 方面，我們也了解那裡面臨的挑戰，並正在深入進行重大改進，以使該渠道重回正軌。這是我們下半年的重點工作。

I will now turn the call over to Jessica to review our financial results. Jessica?

我現在將把電話轉給傑西卡，以審查我們的財務業績。傑西卡？

Thanks, Bill, and good morning, everyone. Before I get into the details, I want to highlight a few key points. As you heard from Bill, we had an extremely strong second quarter. The midpoint of our adjusted EBITDA outlook was $85 million, and actual results came in at $121 million. This difference was primarily driven by exceptionally favorable weather as well as higher-than-expected revenue and timing of SG&A. Additionally, we had several other items fall away that resulted in stronger financial performance than anticipated. It is also important to highlight that our full year outlook takes into account the recent hot weather trends and assumes higher customer incidence rates in the back half of the year.

謝謝比爾，大家早上好。在詳細介紹之前，我想強調幾個關鍵點。正如您從比爾那裡聽到的，我們的第二季度表現非常強勁。我們調整後的 EBITDA 前景中值為 8500 萬美元，實際結果為 1.21 億美元。這種差異主要是由於異常有利的天氣以及高於預期的收入和銷售管理費用時間安排造成的。此外，我們還取消了其他幾項項目，導致財務業績好於預期。同樣重要的是要強調，我們的全年展望考慮到了最近的炎熱天氣趨勢，並假設下半年的客戶發病率更高。

I will now dive into our second quarter financial results on Slide 10 of the web deck. Let's start at the top of our income statement. Our second quarter revenue increased 7% versus the prior year period to $523 million. This was driven by a 9% increase in price, which more than offset a 2% decline in volume.

我現在將在網絡平台的幻燈片 10 上深入探討我們第二季度的財務業績。讓我們從損益表的頂部開始。我們第二季度的收入比去年同期增長 7%，達到 5.23 億美元。這是由於價格上漲 9%，抵消了銷量下降 2% 的影響。

On Slide 11, second quarter revenue from our renewal channel increased 15% as a result of our prior pricing actions flowing through. Real estate revenue decreased 25% and DTC revenue decreased 11% as a result of lower volume. Other revenue increased 32%, driven by growth in our on-demand home services, primarily our HVAC upgrade program that Bill just mentioned.

在幻燈片 11 中，由於我們之前的定價行動，我們續訂渠道的第二季度收入增長了 15%。由於銷量下降，房地產收入下降了 25%，DTC 收入下降了 11%。其他收入增長了 32%，這得益於我們的按需家庭服務的增長，主要是比爾剛才提到的 HVAC 升級計劃。

Now let's turn to Slide 12. Gross profit for the quarter increased 28% to $270 million. Our gross profit margin increased 840 basis points to 52%. This improvement was driven by higher realized price, a lower number of service requests per customer, process improvement initiatives, and a moderation of inflation down to 9% from 25% in the second quarter of 2022. I want to specifically highlight the impact of weather, which provided a $17 million benefit in the second quarter. This was driven by a 23% decline in cooling degree days versus the prior year period to the lowest level in 10 years. We also saw a similar decline in our HVAC claims due to cooler than normal weather. As a result of this favorable weather as well as process improvement initiatives, the second quarter had the lowest number of service requests per customer in nearly 20 years.

現在讓我們轉向幻燈片 12。該季度的毛利潤增長 28%，達到 2.7 億美元。我們的毛利率增加了 840 個基點，達到 52%。這一改善的推動因素包括實現價格提高、每位客戶的服務請求數量減少、流程改進舉措以及 2022 年第二季度通脹率從 25% 降至 9%。我想特別強調天氣的影響，第二季度帶來了1700 萬美元的收益。這是由於降溫天數較上年同期下降 23%，降至 10 年來的最低水平。由於天氣比正常情況涼爽，我們的暖通空調索賠也出現了類似的下降。由於有利的天氣以及流程改進舉措，第二季度每個客戶的服務請求數量為近 20 年來最低。

On Slide 13, you'll see that our higher gross margin flowed through to net income, which more than doubled to $70 million, and adjusted EBITDA improved $44 million to $121 million.

在幻燈片 13 上，您會看到我們更高的毛利率轉化為淨利潤，增加了一倍多，達到 7000 萬美元，調整後的 EBITDA 提高了 4400 萬美元，達到 1.21 億美元。

Let's now move to the table on Slide 14, and I'll provide more context for the year-over-year improvement and second quarter adjusted EBITDA. Starting at the top, we had $42 million of favorable revenue conversion, primarily driven by our pricing initiatives, partly offset by the decline from lower volume. Contract claims costs decreased $18 million compared to the second quarter of 2022. This was comprised of the $17 million benefit from favorable weather, a favorable cost development difference of $11 million and the impact of process improvement initiatives. This favorability was partially offset by ongoing inflationary pressures of approximately 9%, which includes higher parts and equipment costs and increase in contract-related expenses as well as the impact of mix shift and regulatory changes.

現在讓我們轉到幻燈片 14 上的表格，我將提供有關同比改善和第二季度調整後 EBITDA 的更多背景信息。從頂部開始，我們獲得了 4200 萬美元的有利收入轉化，這主要是由我們的定價舉措推動的，但部分被銷量下降帶來的下降所抵消。與 2022 年第二季度相比，合同索賠成本減少了 1800 萬美元。這包括有利天氣帶來的 1700 萬美元收益、1100 萬美元的有利成本開發差異以及流程改進舉措的影響。這種優惠被約 9% 的持續通脹壓力所部分抵消，其中包括零件和設備成本上漲、合同相關費用增加以及組合轉變和監管變化的影響。

Sales and marketing costs increased $16 million in the second quarter, primarily related to the launch of the new Frontdoor brand. General and administrative costs increased $6 million, driven by investments in technology and increased labor costs and professional fees. Interest and net investment income increased $4 million as a result of rising interest rates on cash deposits. And finally, customer service costs decreased $3 million in the second quarter as a result of the lower number of service requests.

第二季度銷售和營銷成本增加了 1600 萬美元，主要與新 Frontdoor 品牌的推出有關。由於技術投資以及勞動力成本和專業費用的增加，一般和管理成本增加了 600 萬美元。由於現金存款利率上升，利息和淨投資收入增加了 400 萬美元。最後，由於服務請求數量減少，第二季度客戶服務成本減少了 300 萬美元。

Please now turn to Slide 15 for a review of our statement of cash flow. Net cash provided from operating activities was $112 million for the 6 months ended June 30 as a result of the factors I just mentioned. Net cash used for investing activities was $15 million for the first 6 months of the year and was primarily comprised of capital expenditures related to investments in technology. Net cash used for financing activities was $44 million through June and was comprised of share repurchases as well as scheduled debt payments. I would also like to mention that we repurchased approximately $16 million of stock in July, bringing the total amount of share repurchases in 2023 to $50 million.

現在請翻到幻燈片 15，回顧一下我們的現金流量表。由於我剛才提到的因素，截至 6 月 30 日的 6 個月經營活動提供的淨現金為 1.12 億美元。今年前 6 個月用於投資活動的淨現金為 1500 萬美元，主要包括與技術投資相關的資本支出。截至 6 月份，用於融資活動的淨現金為 4400 萬美元，包括股票回購和預定債務支付。我還想提一下，我們在 7 月份回購了約 1600 萬美元的股票，使 2023 年股票回購總額達到 5000 萬美元。

On Slide 16, you will see that our free cash flow was $96 million for the 6 months ended June 30. We ended the second quarter with $344 million in cash. This was comprised of $158 million of restricted net assets and unrestricted cash of $186 million. As a result of our strong first half performance, we are pleased to increase our full year share repurchase target to approximately $100 million.

在幻燈片 16 上，您將看到截至 6 月 30 日的 6 個月我們的自由現金流為 9600 萬美元。第二季度末我們的現金為 3.44 億美元。其中包括 1.58 億美元的限制性淨資產和 1.86 億美元的非限制性現金。由於我們上半年表現強勁，我們很高興將全年股票回購目標提高至約 1 億美元。

Now turning to Slide 17 and our third quarter and full year 2023 outlook. We expect our third quarter revenue to be between $500 million and $515 million. This reflects approximately 15% growth in the renewal channel, partially offset by a mid-20% decline in the real estate channel, adding roughly 15% decline in the DTC channel. Third quarter adjusted EBITDA is expected to range between $80 million and $90 million, an increase of 7% from the prior year period as a result of improving gross margins. This incorporates the impact of the recent hot weather in July and expectation that it will continue into August and then largely return to normal for the balance of the year. Our outlook also assumes customer service request patterns increase in the second half of the year.

現在轉向幻燈片 17 以及我們對 2023 年第三季度和全年的展望。我們預計第三季度收入將在 5 億至 5.15 億美元之間。這反映了續訂渠道約 15% 的增長，部分被房地產渠道中 20% 的下降以及 DTC 渠道約 15% 的下降所抵消。由於毛利率提高，第三季度調整後 EBITDA 預計在 8000 萬美元至 9000 萬美元之間，較上年同期增長 7%。這包括近期7月炎熱天氣的影響，並預計這種情況將持續到8月，然後在今年剩餘時間內基本恢復正常。我們的展望還假設客戶服務請求模式在今年下半年有所增加。

Now turning to our full year outlook. We are increasing our 2023 revenue range to $1.73 billion to $1.75 billion or a 5% increase over 2022. This anticipates a low double-digit increase in the renewal channel, a mid-20% decline in the real estate channel and a low double-digit revenue decline in the DTC channel. It also assumes other revenue will increase to approximately $60 million as a result of growing on-demand services. We continue to expect approximately 11% growth from higher price, which will more than offset a 6% decline from lower volume. We also expect a number of home service plans to decline in the mid-to-upper single digits in 2023.

現在轉向我們的全年展望。我們將2023 年的收入範圍提高到17.3 億美元至17.5 億美元，即比2022 年增長5%。這預計續訂渠道將出現低兩位數增長，房地產渠道將下降20%，而房地產渠道將出現低兩位數增長。 DTC 渠道的數字收入下降。它還假設由於按需服務的增長，其他收入將增加到約 6000 萬美元。我們繼續預計價格上漲將帶來約 11% 的增長，這將足以抵消銷量下降帶來的 6% 的下降。我們還預計 2023 年許多家庭服務計劃將出現中上個位數下降。

As a result, we continue to target ending the year with approximately 2 million home service plans, including about 500,000 new first year customers across the DTC and real estate channels. We increased our full year gross profit margin outlook to be between 45.5% and 47.5%. Let me be clear, gross margin was 49% in the first half of the year due to the exceptional favorability I mentioned earlier. The second half gross margin outlook is below the full year range, but remains consistent with the expectations we laid out at Investor Day. This also takes into account the recent hot weather trends and higher customer incidence rates in the back half of the year. This also assumes that inflation will average approximately 9% on a cost per service request basis, and the number of customer service requests will decline 9% to approximately 4.1 million.

因此，我們繼續以在年底推出約 200 萬個家庭服務計劃為目標，其中包括 DTC 和房地產渠道的約 500,000 名第一年新客戶。我們將全年毛利率預期上調至 45.5% 至 47.5% 之間。我要澄清的是，由於我之前提到的特殊優惠，上半年毛利率為 49%。下半年毛利率前景低於全年範圍，但仍與我們在投資者日制定的預期一致。這還考慮到了最近的炎熱天氣趨勢和下半年較高的顧客發病率。這還假設按每個服務請求的成本計算，通貨膨脹平均約為 9%，並且客戶服務請求的數量將下降 9%，至約 410 萬個。

We have seen cost improvements accelerate at the macro level for replacement units over the last several months. For example, the producer price index for HVAC declined to 7% in the second quarter from 25% in the prior year period. We are seeing similar declines in buying like-for-like products. However, our 2023 inflation rate is expected to be 9% when adding in contractor-related inflation, regulatory changes, and mix shift. Our full year SG&A target is between $575 million and $590 million. While the midpoint has not changed since last quarter, we are reallocating approximately $20 million from Frontdoor to the American Home Shield brand to drive DTC sales.

在過去的幾個月裡，我們看到更換設備的宏觀成本改善加速。例如，第二季度暖通空調生產者價格指數從去年同期的 25% 下降至 7%。我們發現同類產品的購買量也出現了類似的下降。然而，如果考慮到承包商相關的通脹、監管變化和組合轉變，我們 2023 年的通脹率預計為 9%。我們的全年 SG&A 目標在 5.75 億美元至 5.90 億美元之間。雖然中點自上季度以來沒有變化，但我們將大約 2000 萬美元從 Frontdoor 重新分配給 American Home Shield 品牌，以推動 DTC 銷售。

As a result, our target working marketing spend for the Frontdoor brand is now approximately $40 million. We spent approximately $25 million in the second quarter to launch the brand and expect the remainder to be spent in the third and fourth quarters. Based on these updated inputs, we are raising our full year adjusted EBITDA range by $40 million to be between $260 million and $280 million. This includes stock compensation expense of approximately $30 million and $15 million of interest income. And finally, we continue to project our full year capital expenditures to range between $35 million and $45 million and the annual effective tax rate to be approximately 26%.

因此，我們目前針對 Frontdoor 品牌的目標工作營銷支出約為 4000 萬美元。我們在第二季度花費了約 2500 萬美元來推出該品牌，預計剩餘部分將在第三和第四季度支出。根據這些更新的信息，我們將全年調整後 EBITDA 範圍提高 4000 萬美元，達到 2.6 億至 2.8 億美元之間。其中包括約 3000 萬美元的股票補償費用和 1500 萬美元的利息收入。最後，我們繼續預計全年資本支出在 3500 萬至 4500 萬美元之間，年度有效稅率約為 26%。

In conclusion, we delivered an extremely strong second quarter. We remain confident in our long-term business outlook, and we continue to build a strong foundation by progressing initiatives that invest in our brands, technology infrastructure, and productivity enhancements across the business.

總之，我們的第二季度業績非常強勁。我們對長期業務前景仍然充滿信心，並繼續通過推進投資於我們的品牌、技術基礎設施和提高整個業務生產力的舉措來打下堅實的基礎。

With that, I'll now turn the call back over to Bill for a few final comments before we go to Q&A.

現在，在我們進行問答之前，我將把電話轉回給比爾，徵求一些最後的意見。

Thanks, Jessica. One final thing. I would like to extend a warm welcome to Dr. Bala Ganesh, who just joined our Board and to Prakash Muppirala, who recently joined as Senior Vice President and Chief Technology Officer. Both of them will raise the bar on Frontdoor's ability to leverage technology and data and improve the customer and contractor experience.

謝謝，傑西卡。最後一件事。我謹向剛剛加入我們董事會的 Bala Ganesh 博士和最近加入我們擔任高級副總裁兼首席技術官的 Prakash Muppirala 表示熱烈歡迎。他們兩人都將提高 Frontdoor 利用技術和數據以及改善客戶和承包商體驗的能力。

So operator, let's now open the line for questions.

接線員，現在讓我們開始提問。

(Operator Instructions) Our first question comes from Brian Fitzgerald from Wells Fargo.

（操作員說明）我們的第一個問題來自富國銀行的 Brian Fitzgerald。

Congrats on the quarter. I just wanted to dig in on the Frontdoor app. You mentioned strong downloads with trouble converting users to paid plans. I'm just curious if you can share any color on how users are engaging in the app. Any sense for user retention of those free users? And then lastly, I wanted to double-click on that point around improving conversion to paid plans. What near-term levers do you have available to get users onto those plans?

恭喜本季度。我只是想深入了解 Frontdoor 應用程序。您提到了強大的下載量，但很難將用戶轉變為付費計劃。我只是好奇您是否可以分享有關用戶如何參與該應用程序的任何顏色。這些免費用戶的用戶保留有什麼意義嗎？最後，我想雙擊有關提高付費計劃轉化率的這一點。您有哪些近期手段可以讓用戶加入這些計劃？

So let me try to absorb all of that. So in terms of the app, what we're doing is, obviously, where we introduced the brand. The campaign has been very well received, the amount of downloads, et cetera. What has happened is that we are working hard. We have not been able to convert those app downloads into the revenue that we thought, which has caused us to take a look at a number of initiatives, including we just, this week, did a change to the registration flow that is showing early promise in terms of being able to quickly register and become part of the Frontdoor brand because it goes from registration and then obviously into the membership plans.

所以讓我嘗試吸收所有這些。因此，就應用程序而言，我們正在做的顯然是我們介紹品牌的地方。該活動反響非常好，下載量等等。所發生的事情是我們正在努力工作。我們無法將這些應用程序下載量轉化為我們認為的收入，這導致我們考慮了許多舉措，包括我們本周剛剛對註冊流程進行了更改，這顯示出早期的希望就能夠快速註冊並成為Frontdoor 品牌的一部分而言，因為它從註冊開始，然後顯然進入會員計劃。

Right now, we are working to figure out what's the best way between on-demand services and membership plans to monetize that. But like I say, the reason I'm so encouraged by this is not only the downloads, not only the activities of the campaign, but I want to give you a couple of, a few stats saying kind of the KPIs we're looking at. We do a tracking study that has been pretty consistent since we launched this. And I want to give you the latest numbers. So in this research, we only take account or take credit for anyone who responds extremely or wary and I'll talk about what the components are.

目前，我們正在努力找出按需服務和會員計劃之間貨幣化的最佳方式。但就像我說的，我對此如此鼓舞的原因不僅僅是下載量，不僅僅是活動的活動，而且我想給你一些統計數據，說明我們正在尋找的 KPI在。我們進行了一項跟踪研究，自從我們推出這項研究以來，該研究一直非常一致。我想給你最新的數字。因此，在這項研究中，我們只考慮或歸功於那些反應極端或謹慎的人，我將討論其中的組成部分。

So in terms of likability and this is where someone says they really like the brand, they're extremely or wary, brand average according to the research house that we're using across leading brands is about 70%, we're at 81%. When it comes to relevance, a brand that's relevant to you. The average for our brand is about 44%, we're at 65%. In terms of differentiating, this is something unique, something disruptive, et cetera. Average again, 45%, we're at 60%, plus there's over 80% interest in the concept, et cetera. So all the consumer variables and in my experience, this is going to translate into a real brand. The other thing is the user experience. And I don't know how many of you have used the video chat with an expert or whatever. We're getting extremely high marks at the ability of the experts to diagnose problems to, in many cases, aid the homeowner in terms of fixing it.

因此，就可愛度而言，這是有人說他們真的喜歡這個品牌，他們非常或謹慎，根據我們在領先品牌中使用的研究機構的數據，品牌平均值約為 70%，我們為 81% 。說到相關性，就是與您相關的品牌。我們品牌的平均比例約為 44%，我們是 65%。就差異化而言，這是獨特的、顛覆性的等等。再次平均，45%，我們是 60%，加上超過 80% 的人對這個概念感興趣，等等。因此，根據我的經驗，所有的消費者變量都將轉化為一個真正的品牌。另一件事是用戶體驗。我不知道你們中有多少人使用過與專家的視頻聊天或其他方式。我們在專家診斷問題、在許多情況下幫助房主解決問題的能力方面獲得了極高的評價。

So we're a little disappointed in terms of the revenue piece, but it's very early days. We're only 4 months into this, we only launched the premium product less than 2 months ago. So we're working right now to figure out what that magic is, if you will. We had a meeting with our Board last week. They are extremely supportive of this. And a lot of them have said, they've seen this in their careers, where you start out and there's such interest in the brand, it's just figuring out what the revenue model is. So we remain very bullish on this and more to come on this, as I mentioned, but I think there's a real (inaudible) there.

因此，我們對收入部分感到有點失望，但現在還處於早期階段。我們才推出 4 個月，不到 2 個月前我們才推出了優質產品。所以我們現在正在努力找出這個魔力是什麼，如果你願意的話。上週我們與董事會舉行了會議。他們對此非常支持。他們中的很多人都說過，他們在自己的職業生涯中已經看到了這一點，當你剛開始的時候，人們對這個品牌很感興趣，只是弄清楚收入模式是什麼。因此，正如我提到的，我們仍然非常看好這一點以及未來的更多發展，但我認為那裡有一個真實的（聽不清）。

Our next question comes from Cory Carpenter from JPMorgan.

我們的下一個問題來自摩根大通的科里·卡彭特。

This is [Danny Fred] on for Cory Carpenter. I just have 2 quick ones. In the DTC channel, is there anything in particular that you're seeing that kind of gives you the confidence to lean in heavier with the shift in the $20 million in marketing spend? And then secondly, on the 84% preferred contract usage in 2Q, are you able to expand on how much kind of more room you have there to move that higher?

我是科里·卡彭特的[丹尼·弗雷德]。我只有 2 個快速的。在 DTC 渠道中，有沒有什麼特別的事情可以讓您有信心在 2000 萬美元的營銷支出發生變化時加大投入？其次，關於第二季度 84% 的首選合同使用率，您是否能夠擴展一下您還有多少空間來提高這一水平？

Well, first of all, with the DTC, I think we've underinvested in the AHS brand to date. And we still think, and we are a big believer in the core value proposition of a warranty plan is still very appealing to consumers. If you look at what I was talking about with the real estate numbers, with people not moving, repairs and maintenance are not going to go away. So we still think that we have some tailwinds behind us. It's just a matter of us looking into how do we best appeal to people to get them over the line. This is a discretionary purchase with the price increases we've had to take. I think the entire industry has had to take. There's a little bit of sticker shock. So I think as this normalizes, we feel very confident in terms of how this can resonate and start to turn our unit count in the right direction.

嗯，首先，對於 DTC，我認為迄今為止我們對 AHS 品牌的投資不足。我們仍然認為，並且我們堅信保修計劃的核心價值主張仍然對消費者非常有吸引力。如果你看看我所說的房地產數據，人們不會搬家，維修和保養也不會消失。因此，我們仍然認為我們身後有一些順風車。這只是我們研究如何最好地吸引人們並讓他們越過界限的問題。這是一項酌情購買，我們不得不接受價格上漲。我認為整個行業都必須接受。有一點貼紙衝擊。因此，我認為隨著這種情況的正常化，我們對如何引起共鳴並開始將我們的單位數量轉向正確的方向感到非常有信心。

As far as contractor, is the 84% the limit? Of course, not. We don't think it is -- I don't think it will ever be 100%. With the work that we've done over the past 6 to 9 months with the contractor relations team, which has been terrific. We haven't set a specific goal. We wanted to see how things played out. That's something we'll work on in terms of what the stretch target will be. But certainly, I'm pleased with the 84%, but I don't think anyone with our contractor relations team is satisfied with that, and they want to continue to drive that higher.

對於承包商來說，84%是極限嗎？當然不是。我們認為不會——我認為它永遠不會是 100%。過去 6 到 9 個月我們與承包商關係團隊所做的工作非常出色。我們還沒有設定具體目標。我們想看看事情會如何發展。這就是我們將根據延伸目標進行的工作。當然，我對 84% 感到滿意，但我認為我們的承包商關係團隊中沒有人對此感到滿意，他們希望繼續推動這一比例更高。

I'd just add on to that. From a continuous improvement perspective, we move from the upper 70% range at the time of the spin to where we are now. And I think, as Bill shared, we've really been targeting that mid-to-80% range and we're there, but we can always improve. And I just want to kind of double down too that we are very excited about our preferred contractor strategy. Just as a reminder, these contractors are very special designation that we give across our system of contractors to both the best in terms of quality and cost efficiency, and they play a major role in both improving the member experience as well as improving our cost structure. So very excited about the results.

我只想補充一下。從持續改進的角度來看，我們從旋轉時的 70% 以上範圍發展到了現在的水平。我認為，正如 Bill 所說，我們確實瞄準了中到 80% 的範圍，而且我們已經實現了目標，但我們總是可以改進。我也想加倍努力，我們對我們首選的承包商策略感到非常興奮。提醒一下，這些承包商是非常特殊的名稱，我們在質量和成本效率方面都給予我們整個承包商系統最好的稱號，他們在改善會員體驗和改善我們的成本結構方面發揮著重要作用。對結果非常興奮。

Our next question comes from Justin Patterson from KeyBanc.

我們的下一個問題來自 KeyBanc 的 Justin Patterson。

This is Sergio on for Justin. Bill, I appreciate the color on increasing the investment in the DTC marketing, and I think you said it's flat now or expected to be flat versus a year ago. I was wondering how this strategy of the DTC brand, in particular, has evolved to increase the ROI on that investment versus a year ago. And then, Jessica, maybe one for you. Just how you're thinking about the weather impact as we hit into 3Q and the guide on, we've all seen the headlines of extreme heat starting in July. So just curious on how you're thinking about the weather impact there and potential increase in service requests due to warm weather.

這是賈斯汀的塞爾吉奧。 Bill，我很欣賞增加 DTC 營銷投資的色彩，我想你說過它現在持平或預計與一年前持平。我想知道 DTC 品牌的這一戰略是如何演變的，以提高投資的投資回報率（與一年前相比）。然後，傑西卡，也許有一個適合你。當我們進入第三季度和指南時，您如何看待天氣影響，我們都看到了從 7 月開始的極端高溫的頭條新聞。因此，我想知道您如何看待那裡的天氣影響以及由於天氣溫暖而導致的服務請求可能增加。

Yes, thanks, Sergio. In terms of the ROI, it's an interesting question, because you could argue that the ROI for the first half of the year was actually better because we had reduced spending. But it didn't translate into units. The thing with DTC units is it's not about the first year. It's not about that ROI return. It's about the LTV, the long-term value up against the cost of acquisition. And generally, we have seen over time that given our strength in the renewals area that we're able to renew people into the mid-to-high 70s. Normally that's about a 3x return. We don't see anything that has changed that. We just have to get more units, and we have to appeal to people in an avenue where, as I said earlier, the industry has been on a decline lately. I don't think it's going to be consistent or persistent. I think as we normalize pricing, as people come out of really inflation moderating, there's a need for this product. The value proposition has not declined. So that's why we're going to continue. We're going to invest more in the back half of the year and look to this as our #1 priority as we go forward.

是的，謝謝，塞爾吉奧。就投資回報率而言，這是一個有趣的問題，因為你可能會說上半年的投資回報率實際上更好，因為我們減少了支出。但它沒有轉換成單位。 DTC 單位的問題在於它與第一年無關。這與投資回報率無關。這是關於生命週期價值（LTV），即相對於收購成本的長期價值。總的來說，隨著時間的推移，我們發現，鑑於我們在續約領域的實力，我們能夠將人們續約到 70 歲以上。通常這大約是 3 倍的回報。我們沒有看到任何改變這一點的事情。我們只需要獲得更多的單位，並且我們必須吸引來自某個領域的人們，正如我之前所說，該行業最近一直在衰退。我認為這不會是一致或持久的。我認為，當我們使定價正常化時，當人們真正擺脫通脹放緩的影響時，就會需要這種產品。價值主張並沒有下降。這就是我們要繼續下去的原因。我們將在今年下半年進行更多投資，並將其視為我們前進的第一要務。

Now with regard to the weather impact, I'll turn it over to Jessica.

現在關於天氣的影響，我將把它交給傑西卡。

Yes, thanks, Bill; and thanks, Sergio. It's been interesting from an outlook perspective. As we're thinking about our full year outlook, it's kind of the tale of two halves, right? So the first half of the year was extremely favorable, as we shared, everything fell our way, and we landed at gross margins at about 49% for the first half. But to your point, as we sit here in August, we're all listening to the news, there's extremely hot weather across the United States, we don't expect that favorability to continue into the back half. So yes, that has kind of been absolutely baked into our outlook. It reflects hotter weather in July and continuing to August. And then as I shared earlier, I think we're going to get back to normal service request patterns in the back half of the year. I think originally, we were guiding to about 4.2% for the full year with the favorability in the front half. We're looking at about 4.1% for the full year in our outlook.

是的，謝謝，比爾；謝謝，塞爾吉奧。從前景的角度來看，這很有趣。當我們思考全年展望時，這是一個分為兩半的故事，對吧？因此，正如我們所分享的那樣，今年上半年非常有利，一切都按我們的意願進行，上半年我們的毛利率約為 49%。但就你的觀點而言，當我們八月坐在這裡時，我們都在聽新聞，美國各地天氣極其炎熱，我們預計這種好感度不會持續到下半年。所以，是的，這已經完全融入了我們的觀點。它反映了七月天氣炎熱並持續到八月。正如我之前分享的那樣，我認為我們將在今年下半年恢復正常的服務請求模式。我認為，在上半年的有利條件下，我們最初的全年指導價約為 4.2%。我們預計全年增長率約為 4.1%。

Our next question comes from Mark Hughes from Truist.

我們的下一個問題來自 Truist 的馬克·休斯 (Mark Hughes)。

Jessica, am I right in thinking that if somebody has an air conditioning issue, they call you up immediately. There wouldn't be any kind of lag in your ability to see what the claims trends are. Is that fair?

傑西卡，我的想法是否正確，如果有人遇到空調問題，他們會立即給您打電話。您查看索賠趨勢的能力不會有任何滯後。這公平嗎？

I'm not sure I fully understand your question, Mark.

我不確定我是否完全理解你的問題，馬克。

The question was just around the timing of when you get the claims notifications that with the extreme hot weather, if someone's air conditioner goes, I assume you'll get notified pretty quickly that there's a potential calling you?

問題就在於你何時收到索賠通知，在極端炎熱的天氣下，如果有人的空調壞了，我想你很快就會收到通知，可能有人打電話給你？

Are you kind of just talking just in terms of the claims development process? So you're absolutely right. We know absolutely real time, the number of members with service requests each day by trade. But we don't necessarily know the cost estimate until the claim is -- the whole transaction is finalized and the claim is closed, which can take 2 to 3 months. Is that kind of where you're going? And then how we can address that?

您只是在談論索賠開發流程嗎？所以你是完全正確的。我們絕對實時地了解每天按行業提出服務請求的會員數量。但在索賠完成之前，我們不一定知道成本估算——整個交易完成並且索賠結束，這可能需要 2 到 3 個月的時間。你要去的地方就是這樣嗎？那麼我們該如何解決這個問題呢？

Yes, just the timing.

是的，只是時機。

Yes.

是的。

Mark, what I would say also, and if this isn't answering the question, we can probe further on this. But one of the things that happens during a time like this is an increase in service requests obviously. So yes, we'd love to have our preferred contractors handle every call. But that's when we have to use other contractors, and that's where our costs are higher. We generally know what the preferred contractors are going to do. And that's what happens is we have to estimate the cost at the end of each quarter. So it's a little bit of a tricky formula as you try to blend the preferreds with the -- because we have to try to respond, especially when it comes to something like HVAC. We have to try to respond to our customers as quickly as we can. So that's another part of the equation that can get a little difficult as we try to forecast the cost.

馬克，我也想說的是，如果這不能回答問題，我們可以進一步探討這一點。但在這樣的時期發生的事情之一是服務請求明顯增加。所以，是的，我們希望讓我們首選的承包商處理每一個電話。但這就是我們必須使用其他承包商的時候，這就是我們的成本更高的地方。我們通常知道首選承包商會做什麼。這就是我們必須在每個季度末估算成本的情況。因此，當你試圖將首選與 - 因為我們必須嘗試做出回應時，這是一個有點棘手的公式，特別是當涉及到暖通空調這樣的東西時。我們必須盡快回复客戶。因此，當我們嘗試預測成本時，這就是等式的另一部分，這可能會變得有點困難。

Yes. It sounds like, though, that you've got pretty good line of sight at least in terms of frequency of claims, given the hot weather and that has informed your guidance.

是的。不過，考慮到天氣炎熱，至少在索賠頻率方面，您的視線似乎相當好，這已經為您的指導提供了信息。

Yes.

是的。

Yes. And Jessica, why don't you talk about how we true things up?

是的。傑西卡，你為什麼不談談我們如何解決問題呢？

Yes, no, that's just from a -- we have a very detailed process within my team. So every quarter, we are looking at both -- all of the data that we have in terms of actual service requests. We are looking at historical data on cost, current data on weather and performing an estimate each quarter. And I think as you've probably seen, then we typically have either a favorable or unfavorable adjustment at the quarter. So for example, we had about $4 million favorability from that true-up process that's really related to claims and transactions from Q4. So it's definitely something, like I said, I've got a very experienced team that is running the numbers on this regularly. And we've got a very detailed process to make sure that we're getting those estimates right at period end.

是的，不，這只是來自——我們的團隊內部有一個非常詳細的流程。因此，每個季度，我們都會查看這兩個方面——我們擁有的實際服務請求方面的所有數據。我們正在查看成本的歷史數據、天氣的當前數據並每個季度進行估算。我認為正如您可能已經看到的那樣，我們通常會在本季度進行有利或不利的調整。例如，我們從與第四季度的索賠和交易真正相關的調整流程中獲得了大約 400 萬美元的優惠。所以這絕對是一件事情，就像我說的，我有一個非常有經驗的團隊定期運行這方面的數據。我們有一個非常詳細的流程來確保我們在期末得到正確的估計。

Right. And then the I think your revenue recognition pattern, you tend to recognize more revenue in the summer months, Q2, Q3, to correspond with claims costs, so there's more matching there. Were there any updates to that pattern this quarter that were noteworthy?

正確的。然後，我認為您的收入確認模式，您傾向於在夏季第二季度、第三季度確認更多收入，以與索賠成本相對應，因此那裡有更多匹配。本季度該模式是否有任何值得注意的更新？

No, there's been no changes. And just to kind of remind our contracts with our customers are generally 12 months in duration. So regardless of whether the cash is received upfront, which, for example, in the real estate channel, the majority of that is or monthly over the contract period for DTC and renewals, we on a contract-by-contract basis, recognize 1/12 of the annual contract price each month. So then subsequently to your point, Mark, we shift the recognition of total revenue to match the expected seasonality of claims costs, which are higher in Q2 and Q3, which typically results in lower revenue in Q1 and Q4. So as you're thinking about also kind of the guidance that we've given, definitely take that into account in running the Q4 numbers.

不，沒有任何變化。謹此提醒一下，我們與客戶的合同期限通常為 12 個月。因此，無論是否預先收到現金（例如，在房地產渠道中，其中大部分是在 DTC 和續約合同期內每月收到的現金），我們在逐個合同的基礎上確認 1/每月12 年度合同價格。因此，馬克，接下來您的觀點是，我們改變了對總收入的確認，以匹配索賠成本的預期季節性，第二季度和第三季度的索賠成本較高，這通常會導致第一季度和第四季度的收入較低。因此，當您考慮我們給出的指導時，在計算第四季度的數據時一定要考慮到這一點。

But no change in that seasonal pattern to speak of in Q2?

但第二季度的季節性模式沒有變化嗎？

No.

不。

Our next question comes from Ian Zaffino from Oppenheimer.

我們的下一個問題來自奧本海默的伊恩·扎菲諾。

As far as the declines in service plans that you were mentioning, is that primarily in you think the real estate channel, the DTC channel, is it in the renewal channel? Basically, what is driving it or what area might be driving it, do you think? And then also, just on the inflation, it seems like we're kind of stuck at this 9%, but it does seem like inflation is coming down. So why still 9% or at least why not release in the back half of the year?

至於您提到的服務計劃的下降，您認為主要是房地產渠道、DTC 渠道還是續訂渠道？基本上，你認為是什麼在推動它，或者什麼領域可能在推動它？另外，就通脹而言，我們似乎陷入了 9% 的困境，但通脹似乎正在下降。那麼為什麼仍然是 9%，或者至少為什麼不在今年下半年發布呢？

So let me just make sure I understood, your first one, are you asking about the decline in service requests and where is it coming from by channel? Is that your question? Or did I misinterpret it?

因此，讓我確保我理解，您的第一個問題，您是否詢問服務請求的下降以及它來自渠道的來源？這是你的問題嗎？還是我誤解了它？

No, I think your initial opening -- yes, your initial opening comments were something to the tune of you're seeing an industry somewhat in decline. And you think it's temporary. But I'm asking you, but where is that decline most pronounced? Is it in real estate or just renewing it because of whatever?

不，我認為你最初的開場白——是的，你最初的開場白與你看到的一個行業在某種程度上衰退的調子是一致的。而你認為這只是暫時的。但我問你，這種下降最明顯的地方在哪裡？是房地產還是只是因為什麼原因更新？

It's more in real estate, but also in direct-to-consumer. So it is in those 2 areas that we are seeing the softness. As you see from our renewals, look, that's our renewals book that's been pretty consistent and improving.

它更多地涉及房地產領域，但也涉及直接面向消費者的領域。因此，正是在這兩個領域，我們看到了疲軟。正如您從我們的續訂中看到的那樣，我們的續訂書非常一致並且不斷改進。

Is that helpful?

有幫助嗎？

Yes. And then you want to take the second one?

是的。然後你想拿第二個嗎？

Yes, some inflation. So just as a reminder, our Frontdoor internal inflation is comprised of 3 main buckets, right? The contract-related costs, parts and equipment, and then the impact of regulatory changes and mix and from regulatory changes as things related to energy and efficiency on HVAC and plumbing. And so while we're seeing what the rest of the world is seeing in terms of lower inflation, when buying like-for-like products, like we talked about HVAC is at 7%, I think PPI for appliance is at 3%. When you add up those 3 components collectively, we're still sitting at that 9% rate, so which is what we're targeting for our full year outlook. And again, just getting to our internal process improvements, we're working hard on both the sourcing side, the contractor relations side to bring that down. But right now, we're holding with the initial inflation estimate that we gave at Investor Day.

是的，有一定的通貨膨脹。提醒一下，我們的 Frontdoor 內部充氣由 3 個主要桶組成，對嗎？與合同相關的成本、零件和設備，以及監管變化和組合的影響，以及監管變化對暖通空調和管道的能源和效率相關的影響。因此，雖然我們看到世界其他地區的通貨膨脹率較低，但在購買同類產品時，就像我們談到的 HVAC 為 7% 一樣，我認為家電的 PPI 為 3%。當你把這三個組成部分加在一起時，我們仍然保持在 9% 的水平，這就是我們全年展望的目標。再說一遍，在我們的內部流程改進方面，我們正在採購方面和承包商關係方面努力工作，以降低這種情況。但目前，我們維持在投資者日給出的初步通脹估計。

And if I could just sneak in one more. On the Frontdoor initiative, you've seen revenues now come in. Any sense of where margins might settle out or kind of what you're targeting as far as profitability of that business versus maybe the core AHS business?

如果我能再偷偷溜進去一次就好了。在 Frontdoor 計劃中，您現在已經看到了收入。您是否知道利潤可能會穩定在哪裡，或者就該業務相對於核心 AHS 業務的盈利能力而言，您的目標是什麼？

Yes, I think it's the right question. It's a little early to tell as we figure out the mix of this conversion to paid plans and the on-demand piece. So we don't answer on that. I don't think we have it at this point. We're still trying to sort through. It should be a positive impact. Obviously on-demand is a little bit different economics set and in many cases, is a really beneficial, especially like on HVAC upgrades in terms of the dollar amount as opposed to the margin itself. But we're still working through that, but we're conscious of the interest in that.

是的，我認為這是正確的問題。現在下結論還為時過早，因為我們正在弄清楚付費計劃和點播計劃的轉換組合。所以我們不對此做出回答。我認為我們目前還沒有這樣的能力。我們仍在努力整理。這應該是一個積極的影響。顯然，按需的經濟設置有點不同，並且在許多情況下，確實是有益的，特別是在暖通空調升級方面，就美元金額而言，而不是利潤本身。但我們仍在努力解決這個問題，但我們意識到對此的興趣。

Our next question comes from Eric Sheridan from Goldman Sachs.

我們的下一個問題來自高盛的埃里克·謝里丹。

I think the app download success you guys have had seems to be a direct beneficiary to the marketing shift you highlighted at the Analyst Day a couple of quarters ago. Can we talk a little bit about how the marketing approach of the company might evolve between elements of aiming towards brand building and driving app downloads into evolution into conversion and monetization and what that might mean in terms of both overall marketing spend and some of the targeting of where you spend those dollars as we look not only this year, but over the medium to long term?

我認為你們所取得的應用程序下載成功似乎是你們在幾個季度前的分析師日上強調的營銷轉變的直接受益者。我們能否談談公司的營銷方法如何在品牌建設和推動應用程序下載的要素之間演變為轉化和貨幣化，以及這對於整體營銷支出和一些目標可能意味著什麼不僅是今年，而且從中長期來看，您將這些錢花在哪裡？

Yes. I think we're very pleased, that's why we're reallocating money to American Home Shield with the awareness building campaign. We are going to shift our emphasis over time to the conversion aspect. So I don't really have a specific in terms of what those amounts are. But beyond what, as Jessica said, we'll spend roughly $15 million on Frontdoor. In the back half, some of that will be in a test mode as we work through some of these revenue model pieces. But an overall $40 million, we're not going to comment on '24 just yet because we haven't figured out our plan for that. So we'll see what the notion is, but the idea is that we're really pleased with the awareness building campaign. We're pleased with the receptivity to the concept. Now we've got to figure out how we're going to convert that into paid membership sales. Okay.

是的。我認為我們非常高興，這就是為什麼我們通過意識建設活動重新分配資金給美國家庭盾。隨著時間的推移，我們將把重點轉向轉換方面。所以我並沒有具體說明這些金額是多少。但除此之外，正如傑西卡所說，我們將在 Frontdoor 上花費大約 1500 萬美元。在後半部分，當我們研究其中一些收入模型時，其中一些將處於測試模式。但總共 4000 萬美元，我們暫時不會對 24 日發表評論，因為我們還沒有想出我們的計劃。所以我們會看看這個概念是什麼，但我們的想法是我們對意識建設活動非常滿意。我們對這個概念的接受程度感到滿意。現在我們必須弄清楚如何將其轉化為付費會員銷售。好的。

That is now the end of the Q&A session. And ladies and gentlemen, thank you again for joining Frontdoor's Second Quarter 2023 Earnings Call. Today's call has now concluded.

問答環節到此結束。女士們、先生們，再次感謝你們參加 Frontdoor 的 2023 年第二季度財報電話會議。今天的電話會議現已結束。