Thank you, operator. Good morning, everyone, and thank you for joining Frontdoor's First 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. Let me start by reminding you that we are coming off our Investor Day in early March, and there is a lot more detail about our company and our strategy in the Investor Day presentation, which we will be referring back to during today's call. 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's also additional detail about our new Frontdoor brand at frontdoor.com, and in our new mobile app that you can download in the App Store and on Google Play. 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. All forward-looking statements are made as of today, May 4, 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 the 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 will now turn the call over to Bill Cobb for opening comments. Bill?

Thanks, Matt, and good morning, everyone. Before we dive into the details of our first quarter earnings call, I want to discuss our full year 2023 outlook. While we had a strong first quarter, we will not be raising our full year 2023 outlook at this moment. It is not our standard practice to revise our outlook after just one quarter. It’s simply too early for that. As we approach our peak summer season, which usually brings in significantly higher claims, we must keep in mind that our first quarter financial results were influenced by favorable timing around SG&A expenses and weather conditions. On the revenue front, our go-to-market channels are still facing challenges, and it’s too early to evaluate the revenue profile of our new Frontdoor brand. Now, let’s move to Slide 4 of the presentation deck. I’m happy to share that we are making good progress on our strategic initiatives that we outlined at our Investor Day in March. As I mentioned, our first quarter results were significantly better than anticipated. We experienced gross margin expansion due to our previous pricing actions, cost pressures are easing, and our process improvement initiatives are starting to take effect. For example, our preferred contractor utilization saw a notable increase, rising 270 basis points to a 10-year high of 84% in the first quarter. We’re also continuing to source more parts and replacement equipment for our contractors, taking advantage of our larger size to purchase at considerable discounts. Furthermore, our direct-to-consumer demand is on the rise, which I will elaborate on shortly. In April, we introduced Frontdoor, our all-in-one app for home maintenance and repair. While it’s still early in the year, we are following through on our commitments and look forward to sustaining our progress throughout the rest of 2023. Now, let’s move to Slide 5, where I will discuss the new Frontdoor app launched in April. We detailed this new offering at our Investor Day. In short, we believe we have truly differentiated our offering with the video chat feature with an expert, which we believe will transform how homeowners maintain and repair their homes. Our team has supported this launch with an innovative and engaging marketing campaign, which you may have seen in our fun and compelling TV and digital advertisements. Our extensive marketing effort is also utilizing strategic collaborations, such as the opening week of Major League Baseball, Home & Garden TV, and NFL Draft week. Additionally, we have a program with Amazon that will place the Frontdoor brand on millions of doorsteps nationwide through our customized box design, slated for mid-summer. All these efforts are proving fruitful, as the app has been downloaded over 165,000 times since its launch three weeks ago. We look forward to providing more information in the next quarter. For now, we are very satisfied with the download pace. Let’s proceed to Slide 6, which offers a brief overview of our Frontdoor product lineup. Frontdoor Basic is a complimentary offering, allowing consumers to download the app for free and receive one complimentary video chat with an expert. The free product also provides rich content, including maintenance tips and repair videos. It serves as an excellent introduction to the product and encourages upgrades to our more comprehensive offering, Frontdoor Prime. Priced at $99 annually, Prime includes all features from the basic plan, plus members receive three video chats per year, access to heavily discounted HVAC systems with financing options, and special member pricing on home products and services. If you haven’t already, I recommend downloading the app to explore it for yourself. You can also visit frontdoor.com for more information. Now moving to Frontdoor Pro, which offers on-demand home services with a la carte pricing. This serves as our service delivery channel rather than a direct consumer offering and is available through both the Frontdoor and AHS brands. We are very optimistic about the potential growth of Frontdoor Pro, which could become one of the major revenue sources for the new brand. Specifically, our HVAC upgrade offering is exceeding revenue expectations so far this year. Turning to Slide 7, we will introduce the upcoming Frontdoor Premium product launching in June. Premium is our reimagined home service plan, designed to create a convenient one-stop shop for everything homeowners need to repair and maintain their homes. It’s an annual membership plan starting at $35 per month. Premium includes all the benefits of Frontdoor Pro, as well as Basic and Prime, covering the same systems and appliances currently offered under American Home Shield, with an additional option for HVAC coverage. Premium members can easily make service requests through the app. For a flat service fee of $100, we’ll fix the covered item, or the member will receive a payout of $500. For those who opt for HVAC coverage, the payout will be $1,000. This structure allows for a more digitally enhanced and transparent experience while enabling better cost predictions. Additionally, for premium members receiving a payout, we will assist them in replacing their system or appliance, which includes all previously mentioned Prime discounts. Now turning to Slide 8, I’d like to provide a business update on American Home Shield, starting with the DTC channel. It’s important to note that we have two growth engines and are equally focused on growing American Home Shield as much as launching the new Frontdoor brand. DTC has been a great growth platform for us, though it has faced challenges recently. We are intensifying our efforts to restore positive customer growth in this channel. Our team has been investigating the main factors behind the recent decline, identifying three primary issues affecting near-term demand. The first issue is pricing. Over the past year, we raised prices for our home service plans significantly due to inflation, aiming to restore our gross margins to historical levels. Analysis revealed that price had a substantial impact on our go-to-market channels, suggesting that new consumer categories might not be as inelastic in the current market environment. Conversely, we’ve been pleasantly surprised by stronger-than-expected elasticity in our renewal channel, with improved renewal rates. The second issue relates to inflation. Higher inflation has affected consumer sentiment and behavior and has also increased media costs, putting additional pressure on our marketing strategies. In light of these findings, we have adapted our discounting strategy. Since our Investor Day, we’ve explored new approaches to discounting and continue to test methods for better attracting new DTC members. While we are encouraged by these findings and some initial sales trends, we want to see more conclusive results before adjusting our full year DTC expectations. Additionally, we have taken steps to enhance our conversion rates, becoming more effective at converting the demand we generate through upgraded call center leadership and training. The third issue affecting near-term demand is related to DTC marketing expenditure. We initially reduced DTC marketing spend in our 2023 operating plan for AHS to improve overall efficiency. However, seeing better marketing effectiveness now, we have decided to increase our budget compared to our initial 2023 plan, and we will focus on continued optimization throughout the year. Those are the immediate actions we’re taking to address the decline in DTC sales. Looking ahead, we’ll continue to enhance branding and marketing, as well as the value proposition of American Home Shield, aiming to further differentiate and promote our products against the competition. We are also working on optimizing pricing and discounting as we refresh our value proposition for key consumer segments. Now moving to Slide 9 to discuss our real estate channel. The National Association of Realtors updated the adjusted annual rate of existing home sales for March to 4.4 million homes, marking a 22% decrease compared to the previous year. Inventory levels continue to remain low at only 2.6 months of supply, which is a significant factor delaying a shift to a more balanced buyer-seller market. Despite challenging market conditions, our sales team is focused on improving sales accountability using data and market-level dashboards. However, it remains a difficult market to sell home service plans. Now turning to Slide 10 to discuss our renewal channel. I previously noted that customer retention rates have come in better than we expected, despite an 11% targeted price increase in 2023. Retention rates increased 180 basis points to 75.9% in the first quarter. While the shift in channel mix is clearly contributing to this, our dynamic pricing strategies are delivering a price increase that continues to provide value to our existing customers. We’re also working on process improvements to encourage more renewals. In closing, we’ve made a strong start in 2023. We continue to expect our financial results to improve over 2022 as our previous pricing actions take effect, inflationary pressures moderate, and we expand our process improvements. As stated during our Investor Day, we now have two growth engines aimed at different consumer segments that will drive our business for years to come. I will now turn the call over to Jessica to discuss our financial results.

Thanks, Bill, and good morning, everyone. Please turn to Slide 11, and I'll take you through our first quarter 2023 financial results. Starting at the top of our income statement, where first quarter revenue increased 4% versus the prior year period to $367 million, driven by a 10% increase from price, which more than offset a 5% decline in volume. Now let's move to Slide 12, where I'll review our revenue by channel. First quarter revenue derived from customer renewals increased 13% versus the prior year period due to realization of pricing actions taken last year. First year real estate revenue decreased 28% versus the prior year period, reflecting a continued decline in the number of home service plans sold due to the strong sellers market. First year DTC revenue decreased 5% versus the prior year period due to the items Bill covered earlier. Now let's turn to Slide 13. Gross profit for the quarter increased $26 million to $170 million. This resulted in a 540-basis point increase in our gross profit margin to 46%. The gross profit improvement was primarily driven by higher realized price, a lower number of service requests driven by favorable weather as well as the moderation of inflationary cost pressures, as our cost per service request came in slightly better than expected at 7%. Our first quarter gross profit also reflects operational improvements we have made to the business such as increasing the percentage of jobs we assigned to our preferred contractors by 270 basis points to a 10-year high of 84%, as Bill mentioned earlier. Our management team continues to be focused on initiatives such as this to drive operational excellence and sustainable margin improvement for our shareholders. On Slide 14, you'll see that net income increased $20 million in the first quarter of 2023 to $22 million as a result of higher gross margins and favorable timing of SG&A expenses. Adjusted net income increased $20 million over the prior year period to $23 million. Adjusted EBITDA improved $29 million to $54 million. Let's move to the table on Slide 15, and I'll provide more context for the year-over-year improvement in first quarter adjusted EBITDA. Starting at the top, we had $22 million of favorable revenue conversion. Contract claims costs decreased $4 million in the first quarter, primarily driven by a lower number of service requests per member and $6 million of favorable development, slightly offset by inflationary cost pressures. Sales and marketing costs increased $3 million in the first quarter, primarily driven by efforts to grow the direct-to-consumer channel. Customer service costs decreased $2 million in the first quarter, driven by a lower number of service requests. And finally, interest and net investment income increased $3 million as a result of rising interest rates on cash deposits. In summary, our first quarter adjusted EBITDA was a record split between favorable gross margin and SG&A costs, as well as continued execution of process improvement. Please now turn to Slide 16 for a review of our first quarter cash flow. Net cash provided from operating activities was $60 million for the 3 months ended March 31, 2023, which is comprised of $34 million in earnings adjusted for noncash charges and $26 million in cash provided from working capital. Cash provided from working capital was primarily driven by seasonality as our first quarter can be an exceptionally strong cash generation period. Net cash used for investing activities was $8 million for the three months ended March 31, 2023 and was primarily comprised of capital expenditures related to investments in technology. Net cash used for financing activities was $7 million for the three months ended March 31, 2023 and was primarily comprised of debt payments. On Page 17, you will see that our free cash flow, calculated as net cash provided from operating activities, less property additions, was $52 million for the 3 months ended March 31, 2023. We are projecting approximately $100 million of free cash flow for the full year. We ended the first quarter with $337 million in cash. This was comprised of $150 million of restricted net assets and unrestricted cash of $187 million. I covered our capital allocation strategy in detail at our Investor Day in March. The main message I want to deliver on this call is that we have a solid financial position, our unrestricted cash is growing along with our confidence in the business, and it remains our intention to return approximately $80 million of cash to shareholders through our existing share repurchase program in 2023. Now turning to Slide 18. I'll conclude my prepared remarks with our current thoughts regarding the financial outlook for the second quarter and full year 2023. We expect our second quarter revenue to be within a range of $505 million to $520 million. This reflects a nearly 15% increase in the renewal channel, partially offset by a roughly 25% decline in the real estate channel and a low double-digit revenue decline in the DTC channel. Second quarter adjusted EBITDA is expected to range between $80 million and $90 million, an increase of $10 million from the prior year period as a result of higher gross margin. This outlook ultimately includes a meaningful increase in SG&A as we invest in the new Frontdoor brand that Bill spoke about earlier. Turning to our full year outlook. We are maintaining our revenue range of $1.7 billion to $1.74 billion. The full year assumptions include approximately 10% revenue growth in the renewal channel, a low double-digit revenue decline in the DTC channel, and a nearly 20% decrease in the real estate channel. We continue to expect approximately 11% growth from higher price, which will more than offset a 6% decline from lower volume. Note that we priced for higher inflation than what we are currently seeing in 2023. We also expect our home service plan member count to decline in the mid- to upper single digits in 2022. We slightly raised our full year gross profit margin outlook to be between 43.5% and 46%. This reflects the benefit of prior pricing actions flowing through and a moderation of inflation. This also assumes that inflation will average approximately 9% on a cost per service request basis. And the number of members service requests will be down in the mid-single-digit range to approximately 4.2 million. Additionally, we increased our full year SG&A target by $10 million from last quarter to now range between $570 million and $595 million. This increase is related to investments in marketing spend for American Home sales. However, we are working to improve our marketing efficiency, and our current outlook continues to reflect lower AHS marketing spend compared to the prior year. Our outlook assumes approximately $60 million of marketing spend associated with the launch of the new Frontdoor brand. Based on these updated inputs, we maintained our full year adjusted EBITDA range to be between $220 million and $240 million. This includes stock compensation expense of approximately $30 million and $12 million of interest income. We are carefully monitoring inflation, SG&A investments, weather, and other variables as we evaluate the back half of the year. And finally, we're projecting our full year capital expenditures to range between $35 million and $45 million and the annual effective tax rate to be approximately 26%. In conclusion, we delivered strong first quarter results as our pricing actions continue to flow through, cost pressures moderated and as we benefited from several favorable items related to timing. We remain confident in our long-term business outlook as we continue to invest in building a strong foundation towards the future. With that, I'll now turn the call back over to Matt for questions.

Thanks, Jessica. As a reminder, during the question-and-answer session, we encourage you to ask any questions that you may have, but please note that guidance is limited to the outlook we've provided. Operator, let's open the line for questions.

I have a question about the new brand and another regarding American Home Shield. For Frontdoor, could you discuss how consumers are interacting with the app, particularly those who have downloaded it? What features are attracting the most engagement? On the American Home Shield side, could you provide an update on the progress of consolidating your four brands under American Home Shield and what the next steps will be?

Thank you, Cory. I will address both of your questions, and Jessica can add anything else. Regarding engagement, our current goal is to launch a new brand, encouraging people to access it, download it, register, and try our video chat feature. While I won't dive into specific numbers, I can share that we've received extremely positive feedback about the user experience. The experts we've brought on board across various trades, including handymen, are enthusiastic and focused on the consumer, which has been reflected in their feedback. Having real experts within the company is transforming our corporate culture. I've participated in media interviews where reporters unanimously express that this kind of user experience has been long anticipated, and I believe we're on the right path with this approach. We will have more updates in the second quarter. As for the AHS consolidation and our associated brands, that's progressing smoothly. There's nothing significant to report right now. We are managing the consolidation of OneGuard and Landmark, and we will be integrating AHS into those markets, but this process will take some time due to our renewal products, which will extend over the next couple of years. Overall, I feel confident about how the team is executing.

I'm calling in for Mark today. And I was wondering if you could provide some more color around the Frontdoor Prime and more specifically, if we head into some sort of mild recession, what are your expectations for consumers' appetite for a subscription service?

Yes, I believe the appeal of the service is as I previously mentioned. When you upgrade from the basic plan, you receive three video chats, along with discounts on HVAC systems and available financing. We also offer special member pricing in addition to these video chats. I think this could be particularly advantageous during a recession, as for $99, you will have access to knowledgeable help for any repair issues you may encounter at home. We've had instances where customers called in after receiving estimates for new systems, and our experts have offered guidance on whether these estimates are reasonable. Additionally, our experts aim to resolve issues immediately rather than scheduling follow-up service calls. I believe that as more people engage with the app and our brand, they will recognize the high value of this offering. While we are all trying to understand the potential impacts of a recession, which is why we are cautious in our outlook, I am confident that this product will perform strongly in the future.

I think one of the other things I'd add there, though, one of the additional features is the discount on home services and products. And I think heading into a recession, consumers are looking for the best deal, which is another benefit of the Prime offering.

Also staying on the recession topic, if the Fed starts cutting rates in a lower rate environment, do you think that we'll see a boost in the real estate channel?

I would think so. As mortgage rates decrease, they are impacting the real estate market, and it's evident that this is the case. I believe this will provide a boost to the currently struggling macro environment of real estate. Therefore, I think your assumption is accurate.

I guess the question would really be, again, on the DTC side. Just I don't know if you gave us actually price versus volume in DTC, what you're expecting going forward. And I guess really the question is, is that I know DTC was taking a lot of price last year. Like, when do you think you hit that or bumped up against that elasticity? And given the elasticity, how are you actually thinking about your focus on, let's just say, price versus retention and what we should expect from there?

I’ll address the first part, Ian. As I mentioned earlier, we've been carefully examining this situation. It's been challenging for us. We had to increase prices due to the significant rise in costs we experienced last year. This is why we adjusted our discounting strategy and have been more proactive with it over the past six weeks. We are optimistic about the early sales trends, which we will discuss further in Q2. We're continuously testing and refining our approach. The company primarily focuses on renewals, where we put in our best efforts, and we need to keep attracting new members. I'm satisfied with what we've achieved, even with the price increases in our renewals effort. A noteworthy aspect not immediately visible in the numbers is the substantial work being carried out by our technology, digital, marketing, and product teams to improve renewal rates. I'm pleased with the execution and process improvements within the company. Renewals remain our top priority, but our performance depends on our ability to continually feed that pipeline.

And Ian, just on the details, directionally, we've given that the increase in revenue is going to be largely priced overall and the B2C channel, a low double-digit decline for the year.

But basically, I would imagine DTC would track similarly to kind of the overall numbers you were giving. Or would you basically maybe take less price and then have better volume?

Yes, that's...

Yes, I think that's part of what we're saying when we say we're pivoting our discounting strategy.

And then the other question would be on inflation. I guess you're still saying 9%. Is there a potential for you to come in better than that? Are you just trying to be conservative when you think about your cost pressures?

I believe that since I took over nearly a year ago, we've generally been prudent. We believe 9% is the appropriate figure given the circumstances. We experienced some favorable conditions, such as the weather, as Jessica mentioned. Although our Q1 results came in at 7%, we're confident that 9% is the right guidance to provide.

First, I wanted to revisit the remarks about video calls. It appears you're noticing positive initial outcomes in reducing service calls and increasing remote problem-solving. How much more potential do you believe exists for further enhancing that adoption and realizing the cost benefits? Secondly, regarding preferred contractors, you've achieved impressive progress, reaching a 10-year high. How much further do you think you can extend that, or is it mainly influenced by the current period's reduced service requests, which might have inflated that figure?

So first of all, regarding the video calls, we are just over three weeks in. The initial feedback is very encouraging, and we plan to keep developing this. It's a new concept; we've attracted some users who are questioning if there's a catch since it's free, but there isn't. It will take some time for this to become established. With the awareness we've created through our marketing campaign and the catchy song, we're making progress. Ultimately, the user experience is key, and this is where the value of the video chat with an expert comes in. I'm optimistic that as more people learn about this service, we are truly transforming home repair. It will take time to reach that point, but we are happy with the interest we've seen and I'm impressed with the experts and the user experience they provide. Jessica, would you like to discuss the preferred contractor aspect, or should I handle that?

Yes, I think just not preferred contractors. We're continuing just to be focused on executing on that initiative. Evan and team are doing an excellent job there, and we're going to continue to watch it that we're pleased with the results so far.

I believe that the decrease in service requests has positively contributed to our situation. Additionally, the improvements we've prioritized are strengthening the contractor relations team to further enhance that aspect. Overall, I see many factors aligning positively in this area.

I wanted to just follow up on Justin's questions maybe a little bit on the preferred contract network. Anything you could tell us about the favorability to gross margin from that? And then also the runway to continue growing at maybe specifically as you get into the busier part of the year. And then the last piece on the preferred contract network. I think you've said in the past, it's a bit of a balancing act there as you continue to feed other contractors to grow the preferred network but also maintain some flexibilities. Are you pushing up against any limits there in terms of that balancing act?

So I think just on your question on gross margin, we've given kind of a 1% change in our preferred contractor rate translates to about $5 million of profit. So that obviously, there is by contractor trade and geography.

I think regarding the contractor aspect, we've noticed that our efforts in raising awareness about Frontdoor are leading to an increase in inquiries from individuals interested in becoming contractors. As a result, we might unintentionally attract more qualified contractors to join us. I don't believe we're facing any limitations in contractor availability. This has been a positive development, although it's still early. I want to ensure we’ve addressed your questions, Brian.

Maybe a two parter, if I could, on marketing. I know we've talked a little bit about it on the call already. But is there any sort of visibility you've got now in terms of which partnerships or which channels around the new marketing efforts you're the most excited about or where we might see that you want to sort of amplify or push into certain channels or partnerships as you go through the year because the early reaction is maybe exceeding your expectations? And then second, can you just remind us a little bit how to think about marketing as we move through the year? Obviously, you're in this sort of brand building environment right now in the front half of the year. But how should we think about the cadence of marketing as we move through the year once you're beyond this initial push around the brand?

Your first question regarding the NFL Draft weekend, it was outstanding in terms of downloads. I want to commend Kathy Collins and her team for their efforts. With many people having downtime between draft announcements, it turned out to be an excellent weekend for us. We're very enthusiastic about the upcoming Amazon initiative launching in midsummer. We've partnered with Amazon to create branded boxes. While their logo and brand will still be featured, we will add a wrapper focused on Frontdoor, making it relatable as it arrives right at your doorstep. Our messaging about "opening the front door" has resonated well. Regarding our marketing strategy, we plan to increase our focus on premium offerings in about a month, aiming to draw more customers as we transition into the summer. This will play a significant role in our strategy. Additionally, as Jessica mentioned, we're set to increase AHS spending. We may have reduced it a bit too much, but we are seeing good efficiencies. We're adjusting our discounting strategy and will back it up with enhanced marketing, so I am optimistic about our direction.

What percentage of parts and equipment is Frontdoor sourcing now versus before the pandemic? And how much is that helping on the reduced sort of claims cost or inflation? Can you put any numbers behind that?

Yes, we're digging that number out for you right now, Jeff.

…second question.

Could you clarify what period the $6 million in favorable development for the quarter is related to? I was looking at the fourth quarter and saw it was $25 million, which seemed like a true-up for last year. So what period does the $6 million correspond to?

So on the contractor piece, I believe the number is we just exceeded 50%. Is that correct? Which is up from last year. We're less than that because supply was in such high demand. On the second question, I'll defer to Jessica on that.

We just don't break out the $6 million.

Thank you. At this time, we have no further questions. Ladies and gentlemen, thank you again for joining Frontdoor's First Quarter 2023 Earnings Call. Today's call is now concluded.