Frontdoor (FTDR) risk factors, FY2025 10-K

Risks Related to Our Business

1. 01We may not successfully implement our business strategies, including achieving our growth objectives
2. 02Marketing efforts to increase home warranty and non-warranty sales through our real estate and DTC channels may not be successful or cost-effective
3. 03We depend on our first-year DTC acquisition and real estate channels for a significant percentage of our home warranty sales
4. 04We depend on our existing warranty customer base and strategic partners for a significant portion of our non‑warranty salesNew
5. 05We depend on our renewal channel for a substantial percentage of our home warranty sales
6. 06Our industry is highly competitive. Competition could reduce demand for our services and adversely affect our reputation, business, financial position, results of operations and cash flows
7. 07Our future success depends on our ability to attract, retain and maintain our network of third-party contractors and vendors and their performance
8. 08Increases in parts, appliance and home system prices and other operating costs could adversely impact our business, financial position, results of operations and cash flows
9. 09Changes to U.S. tariff and import/export regulations may increase the costs of parts, appliances and home systems and, in turn, adversely impact our business59% rewritten
10. 10We may not be able to attract and retain qualified key employees, which could adversely impact us and our business and inhibit our ability to operate and grow successfully
11. 11We are dependent on labor availability in our customer service operations
12. 12Our business process outsourcing initiatives increase our reliance on third-party vendors and may expose our business to harm upon the termination or disruption of our third-party vendor relationships
13. 13Weather, including the frequency and intensity of weather conditions, natural disasters and seasonality, as well as related environmental regulations, can affect the demand for our services, our ability to operate and our results of operations and cash flows
14. 14Laws and government regulations applicable to our business and lawsuits, enforcement actions and other claims by third parties or governmental authorities could increase our legal and regulatory expenses and impact our business, financial position, results of operations and cash flows23% rewritten
15. 15Disruptions or failures in our technology systems could create liability for us or limit our ability to effectively monitor, operate and control our operations and adversely impact our reputation, business, financial position, results of operations and cash flows
16. 16Failure to protect the security of personal information about our customers, associates or third parties could result in the interruption of our business operations, private litigation, reputational damage and costly penalties
17. 17Technological developments in artificial intelligence could disrupt our industry and subject us to increased competition, legal and regulatory risks and compliance costsNew
18. 18Future acquisitions or other strategic transactions could negatively affect our reputation, business, financial position, results of operations and cash flows
19. 19We may be required to recognize impairment charges on goodwill and intangible assets due to reasons including, among other things, adverse changes in the business climate, expected operating changes, and adverse actions or assessments by regulatorsNew
20. 20a current expectation that it is more likely than not that a reporting unit or intangible asset will be sold or otherwise disposed of
21. 21Success in our new home builder warranty business depends on our ability to underwrite risks accurately and to charge adequate prices to builder members, as well as our ability to effectively reinsure a large portion of those risks
22. 22We depend on the availability of reinsurance to manage a substantial portion of our potential loss exposure for our new home builder warranty business
23. 23Our business is subject to evolving corporate governance and public disclosure regulations and expectations that could expose us to numerous risks
24. 24The use of social media by us and other parties could result in damage to our reputation or otherwise adversely affect us
25. 25We may not be able to adequately protect our intellectual property and other proprietary rights that are material to our business
26. 26Third-party use of our trademarks as keywords in Internet search engine advertising programs may direct potential customers to competitors’ websites, which could harm our reputation and cause us to lose sales
27. 27Our operations outside the United States are subject to special risks that could adversely affect us

Risks Related to Our Acquisition of 2-10 Home Buyers Warranty

1. 28The acquisition may not achieve its intended results
2. 29greater than anticipated costs related to the integration of 2-10 HBW’s business and operations into ours
3. 30Notwithstanding the due diligence investigation that we performed in connection with our entry into the Purchase Agreement, 2-10 HBW may have liabilities, losses, or other exposures for which we do not have adequate insurance coverage, indemnification, or other protection

Risks Related to Our Common Stock

1. 31We do not currently pay any cash dividends on our common stock and, consequently, your ability to achieve a return on your investment will depend on appreciation in the price of our common stock23% rewritten
2. 32Provisions in our certificate of incorporation and bylaws and of applicable law may prevent or delay an acquisition of our company, which could decrease the trading price of our common stock

Risks Related to Our Indebtedness

1. 33We have significant indebtedness and may incur additional substantial indebtedness, which could adversely affect our financial health and our ability to obtain financing in the future, react to changes in our business and satisfy our obligations
2. 34As of December 31, 2025, we had $1,173 million of total consolidated long-term indebtedness, including the current portion of long-term debt, outstanding, which is all outstanding under our Term Loan Facilities. These amounts include the incremental borrowings used to finance a portion of the 2-10 HBW Acquisition
3. 35Increases in interest rates would increase the cost of servicing our indebtedness and could reduce our profitability42% rewritten
4. 36A lowering or withdrawal of the credit ratings, outlook or watch assigned to our indebtedness by rating agencies may increase our future borrowing costs and reduce our access to capital
5. 37The agreements and instruments governing our indebtedness contain restrictions and limitations that could significantly impact our ability to operate our business
6. 38enter into agreements restricting dividends or other distributions by our subsidiaries
7. 39Our ability to generate the significant amount of cash needed to pay interest and principal on our indebtedness and our ability to refinance all or a portion of our indebtedness or obtain additional financing depends on many factors beyond our control
8. 40Despite our indebtedness levels, we and our subsidiaries may be able to incur substantially more indebtedness. This could further exacerbate the risks associated with our significant indebtedness
9. 41We utilize derivative financial instruments to reduce our exposure to market risks from changes in interest rates on our variable-rate indebtedness and are exposed to risks related to counterparty credit worthiness or non-performance of these instruments