2023 Investor Day presentation. My name's Matt Davis. I'm the Vice President of Investor Relations and Treasurer for Frontdoor. We are about to get started. Before we begin, I wanted to cover off on a few items. First, Frontdoor's fourth quarter and full year 2022 earnings press release, as well as our 10-K was released yesterday after market close. The Investor Day slides that we use during today's presentation can be found on the investor relations section of Frontdoor's website, which is located at investors.frontdoorhome.com. As stated in the presentation and on the screens behind me, I'd like to remind you that this Investor Day presentation 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 these 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, March second, and except as required by law, the company undertakes no obligation to update any forward-looking statements, whether a result of new information, future events, or otherwise. We will also reference certain non-GAAP financial measures throughout today's presentation. We have included definitions of these terms and reconciliations of the non-GAAP financial measures to their most comparable GAAP financial measures in the appendix to today's presentation in order to better assist you in understanding our financial performance. Finally, I would like to remind all investors how to best reach Frontdoor if you have any questions, or if you would like to set up a phone call with us after this Investor Day. We ask that you reach out to the investor relations department, which is myself and State McKinney. The best way to do that is through our email, IR@frontdoorhome.com. You can also call us at 901-701-5199. Thank you again for joining us today. The presentation will begin now. Good morning, everybody. Thank you for being here and for those of you joining us on the webcast. My leadership team and I will be sharing a lot today. I'll get to the agenda and our pre-presenters in a bit, first I wanna share a few key points. As you know, I became the CEO in June of last year. Having been chairman, I knew the potential in the home service plan category and this company's ability to leverage our scale, innovation, and market leadership to take the business to new heights. There were a few things that we needed to address early on, we have taken decisive actions to get us into a better position. First, we brought in new leaders with the right skills to take this company forward. Kathy Collins joined in June as our Chief Marketing Officer. Kathy was my CMO when I led H&R Block, and she is an expert marketer who can help take us to new levels. Jess Fields also joined last June as our Chief Sales Officer, and brings a wealth of knowledge and experience in the real estate channel. Jessica Ross joined in December as our Chief Financial Officer. She has an impressive background and deep financial experience coming most recently from Salesforce. She will be a key player in our ongoing transformation efforts. Finally, I brought in another former co-colleague, Kerri Jones, in December as our Chief People Officer. Kerri brings great operational experience, and Frontdoor will benefit immensely from her leadership. Second, we needed to respond to the extraordinary conditions caused by high inflation and our decline in gross margin. We had to raise price a total of three times last year. In fact, our price at the end of 2022 was 14% higher than the end of 2021. Due to the lag in how we capture realized revenue, and Raj Midha will explain this later, we expect these 2022 pricing actions will improve our gross margins this year. Third, we improved execution within American Home Shield, our core home service plan business. This included consolidating all of marketing under Kathy and all of sales under Jess. We operate as one go-to-market company. We have also improved our various processes to drive efficiencies and save money, and we have aggressively focused on managing the rapid acceleration of inflationary cost pressure. You'll hear more about inflation later from Evan Iverson, who leads contractor relations. Fourth, as you heard on our Q3 earnings call, we significantly reduced our SG&A spend by completing a comprehensive review of our SG&A expenses that included a 7% workforce reduction, which was primarily outside of the revenue-generating and service-related areas. These actions are working as we reduced our 2022 SG&A by more than $40 million from our original outlook. Finally, among the major actions we have taken over the past 9 months, we have made a lot of progress on advancing our business transformation initiatives. I challenged our team to reimagine how home service plans can work better to appeal to and serve more consumers. This will be a major part of today's presentation, with the ultimate goal to bring more members into our business. We have a lot more to cover today, but if I had to boil it down to a few key takeaways, it would be this. First, at almost $1.7 billion in annual revenue, we have a strong and steady core business in the American Home Shield brand. Second, Frontdoor, Inc. remains our parent company, but we are launching a new Frontdoor brand with a new and unique digital service offering and customer experience. Third, we have very compelling reasons for you to invest in our stock and to believe we are taking the right foundational actions today that will lead to faster revenue and adjusted EBITDA growth in the future. Let's step back for a second. Many of you are already familiar with Frontdoor, but some of you may not be. Let me give you a quick reminder of who we are and where we are going. We are the leading provider of home service plans in the United States. We have about 2 million members who are serviced by a network of about 15,000 contractors. These contractors perform about 4 million jobs annually. We invented the home service plan category, commonly known as home warranty, in 1971, giving us over 50 years of experience, learnings, and continuous evolution of our products, which all remain highly relevant to what consumers want today. Today, Frontdoor, Inc is a holding company with four brands, American Home Shield, HSA, OneGuard, and Landmark, and two technology platforms, Streem and ProConnect. Our approach now is to evolve the capabilities of Streem and ProConnect into our core business. Now we look like this. Two brands, American Home Shield, focused on our core home service plans, and Frontdoor, a new brand focused on digital home service membership. To repeat, one company with two brands, which will give us two distinct growth engines. Let me now walk you through our vision for this new offering. First and foremost, the Frontdoor brand is a new business model founded on a digital home services membership that we are launching in April. The Frontdoor brand is new consumer segments that will target new audiences, and the Frontdoor brand is new consumers that will broaden our member base in a significant way. One of the more important aspects of the Frontdoor brand is that it's digitally focused on providing customer service as opposed to over the phone. This will enable us to provide a more modern approach to how we serve and interact with our members. The Frontdoor brand is an app, not a company with an app, but a brand that is an app with video that uses our Streem technology to enable members to talk live with our own experts to diagnose and solve problems with their home appliances and systems. The Frontdoor brand is new revenue streams. We have a compelling app and experience that will appeal to new and more consumer segments that will increase our growth rates. What does this all mean for Frontdoor, Inc. going forward? We believe it boils down to a compelling investment thesis based on four primary factors. A, one of the foundations for our investment thesis is that we have a substantial market opportunity. We are redefining our approach within the total addressable market to be more focused on tapping into new consumers, where we can provide a meaningful value proposition today, not at some distant point in the future. You will hear more from Kathy Collins about what the consumer research shows. Our new approach will enable us to get more members through expansion into new consumer segments. B, as a category leader, we are the leading provider of home service plans in the U.S. We provide nationwide coverage in the continental United States for both members and contractors. We have significant economies of scale from being the largest in the category. C, as I mentioned earlier, we now have multiple growth engines going to market through two brands. D, we have a bright financial outlook. There are emerging positive signs for our business, such as moderating inflation rates. Additionally, the pricing actions we took last year will start to flow through our reported revenue in a more meaningful way this year. As I mentioned, we are executing better. All combined, we believe we offer a compelling investment thesis with substantial upside for years to come. Now we're ready to proceed with the rest of this morning's presentation. We've broken it up into 4 distinct sections. Part 1 is going to focus on our core business, American Home Shield. There are several parts to the American Home Shield story. One thing we wanna address right off the bat is inflation. You'll be hearing first from Evan Iverson, our Vice President of Contractor Relations, to address inflation and our preferred contractor program. You'll then hear from Jess Fields, our Chief Sales Officer. Jess will address another big topic early, the irrational real estate market and its impact on home service plan sales. Jess will also discuss the actions we are taking to gain share in the real estate channel over time. Rounding out the discussion on American Home Shield, Raj Midha, our SVP and general manager, will be sharing information about the growth opportunity within the home service plan category, the advantages of American Home Shield, our pricing actions, and specifics on the direct-to-consumer and renewals channels. After Raj, we will transition to part two, which will be all about our new Frontdoor brand. The presenter for part two will be our Chief Marketing Officer, Kathy Collins. Kathy will give you the high-level readout on a very interesting segmentation study we conducted a few months ago that revealed great opportunities to serve new and larger segments of consumers. Kathy will then walk you through the Frontdoor brand business model and the product lineup, as well as the omni-channel marketing campaign we are going to execute to get the Frontdoor brand in front of millions of consumers. Part three will be all about our financials. Our new CFO, Jessica Ross, will take us through the fourth quarter and full year 2022 financial performance. She will also be discussing our capital allocation strategy and then conclude with our outlook for 2023 and 2025. The final part four, will be the opportunity for you to ask questions of all of today's presenters. With that, I will now turn the floor over to Evan Iverson. Thanks, Bill, and good morning, everyone. As Bill just mentioned, my name is Evan Iverson, and I'm the Vice President of Contractor Relations. My job is finding the balance that keeps our contractors excited to bring their scarce resource, their technicians' time to Frontdoor and exceed our standards for cost and quality. While 2022 was certainly a challenge, it is a pleasure to be with you today, in part because our actions on inflation are starting to work, and we can see the results. Let's get started. Bill mentioned it already. I will start by tackling one of the most difficult challenges that our business has ever faced. It goes without saying that last year was an extremely challenging macroeconomic environment. You already know that we saw inflation hit 8%, the highest since 1982, that it would be difficult to start this conversation anywhere else. While CPI is a data point for the broader economy, inflation was more pronounced within home services. Appliance manufacturer year-over-year inflation was about 12%, and in HVAC, about 22%. These inflation challenges we're seeing across trades and parts and equipment as well. In this environment, Frontdoor made changes that exacerbated inflation as we launched our new ShieldPlatinum product, which has both a higher price point and a higher cost of service. Hindsight is 20/20. Nevertheless, it added to the generational challenge of inflation with this decision. A sound strategy overall to improve customer experience, with the timing of externalities, it made cost control an exceptionally tough putt. Net, our overall cost per service request increased approximately 16% in 2022, which drove a $137 million increase to contract claims cost. I hope you can appreciate that we were not expecting last year to play out the way it did, and our focus for the entirety of the year was getting ahead of inflation. We are taking aggressive action across all of Frontdoor to reduce the impact of rapidly rising inflation on our financial results. Let me walk you through our actions, starting with cost control and planning improvement. We have stood up manual reviews of our high-cost jobs from non-preferred contractors. This puts additional scrutiny on our highest-cost jobs from our highest-cost providers. We have changed the incentives and performance management systems for our field managers to put an increased focus on clawing back inflation wherever possible for both us and our members. We have changed our approach to our annual budgeting process with contractors, all to push back on the impact of inflation throughout our business. These actions are not just within my team of contractor relations. We've taken action both on pricing and coverage to manage the margin impact of our new products. Every member of the leadership team has taken an active role in reducing the impact of inflation. The next lever is geographic optimization. As I will detail later in the presentation, our contractor model thrives on scale and aggregating volume with our best contractors. In our smaller markets where there's less volume to leverage, we are revisiting our approach to marketing, pricing, and operations. This has been a cross-functional effort to fight inflation. Our model leverages scale with suppliers as well as contractors. Our supply management team has secured purchasing contracts for 2023 with committed pricing to hold the line on further inflation and achieve reductions in some circumstances. Overall, conditions are beginning to move back in our favor. While the actions I've detailed are not dependent on improving conditions, it's a pleasant surprise to have the headwinds ease. The consumer pricing index has decreased four consecutive months, and is forecasted to continue to improve in 2023. Across trades, both wholesalers and manufacturers, we have reduced year-over-year inflation in the second half of the year, with values breaking back into the high single digits in the fourth quarter in some trades. The combined impact of these actions across Frontdoor is that we expect 2023 inflation to fall to 9%, which would be down about seven percentage points year-over-year. While our work fighting inflation is far from over, this conversation is fundamentally different today than had we met last spring or summer, and you have my commitment and that of my team to continue the fight. Shifting gears slightly, as I'd mentioned in the inflation context, several of the actions are designed to leverage the strengths of our preferred contractor program. I'd like to take a few moments to walk you through some of the key points of this program. As it is the foundation of how we deliver both cost control and quality service. Preferred contractor is a designation within our systems of contractors with the best cost and quality performance within a specific market. The field manager for that market incents the process based on their assessment of the contractor, recent performance, and the overall relationship. These contractors are significantly more likely to stay with Frontdoor year-over-year. Our model is built on aggregating volume with our preferred contractors. Our focus is not on the quantity of contractors, but rather the quality. On average, preferred contractors handle over 10 times the volume of non-preferred contractors on an annual basis. What makes us unique is not the absolute number of contractors overall, but the subset of deeply integrated preferred contractors that handle more volume, stay longer, and deliver better outcomes for our members and AHS. The feedback from preferred contractors that drives them to stay with AHS year-over-year is that 95% plan to maintain or expand their relationship with Frontdoor, and 75% are capturing additional retail through us. This makes us a unique hybrid model. Our contractors see reliable paid work directly from us and have a lead gen opportunity to capture additional revenue for their business. We continue to innovate to make it easier to work with us. Today, we have about 15,000 contractors. Of these, about 4,000 are preferred. What's amazing is that these preferred contractors, about a quarter of our network, perform over 80% of the jobs. Preempting a potential question from those of you that have been tracking these numbers over the years, our preferred base continues to grow, a critical point to note given the importance of preferreds to our model. Yes, the overall number is down. The majority of contractor attrition in 2022 was driven by my team as we took aggressive action on inflation. Our preferred contractors also provide a lower cost per service. In fact, the average cost per claim is approximately 45% lower than our non-preferred contractors. This cost savings is not a zero-sum game with hard trade-offs between cost and quality. Preferred contractors provide faster service, better quality, and higher member retention. In short, when a preferred contractor goes out on a job, our costs go down, and it is more likely that that member remains a member. That is a powerful combination. To wrap it all up, we're optimistic about the future. I've covered a lot of ground over the last few minutes, and it boils down to these key factors. We are targeting our areas of greatest cost exposure. We are working cross-functionally on coverage and geography, and we are leveraging our scale. Thank you for your time today, and I'll now turn it over to Jess to talk about what we're doing in the real estate channel. Thank you, Evan, for that awesome overview of our contractor relations side of the business. Good morning, everyone. I am Jess Fields, Vice President and Chief Sales Officer at Frontdoor. Today, I'm going to talk to you about three items. First, I'm going to review the macroeconomic impact on the real estate market. Second, how those challenges and a tight sellers market have impacted the home service plan category over the last few years. Third, what actions we are taking to gain share over time in this sector with the American Home Shield brand. I know that as investors, you are probably aware of how wild the real estate channel has been over the last few years. I'll hit the highlights on how irrational the real estate dynamics have been. Let's start with a quick history of existing home sales from the National Association of REALTORS, or NAR. While the average number of existing home sales since 2005 has been slightly over 5 million, you can see that we've been riding above that average for the last five years. The short exception was a decline at the beginning of COVID in the first half of 2020. After a brief drop, demand for homes surged in the back half of 2020 and 2021 as homeowners looked for more space or a second home during quarantine. The high demand, low inventory market, combined with a low interest rate, contributed even more to a buyer's frenzy. Let's look at the impact of the increase in buyer demand that had on the supply of homes. The number of days a home stayed on the market decreased significantly. As you can see here, the median days on market fell dramatically from 50 days in 2019 to 21 days in 2022, or less than half of the time it took to sell a home pre-COVID. During this fast-moving market, we saw real estate agents and their clients skip the traditional steps in the home buying and selling process, including attachment of a home service plan. The transaction was happening so fast in the midst of buyer competition. This was further exacerbated by historically low inventory. Additionally, another critical dynamic I'll share is the number of offers per property, which grew from an average of 2.2 offers in 2019 to an average of 4.2 offers in 2021. We're now starting to see some normalization as the average fell to 3.5 in 2022. As a result, we saw significant reduction in home service plans sold as a part of the real estate transaction. Moving from 1.5 units sold in 2018 down to 900,000 units sold to home buyers and sellers across all home service companies in the U.S. This represented a decline from 28% attachment rate in 2018 to a 16% attachment rate in 2022. While our real estate units sold also declined from nearly 500,000 units in 2018 to less than 300,000 units in 2022, we were able to maintain our category share of home plans sold in the real estate channel at an estimated 32%. In other words, we were able to maintain our share of the home service plans sold in the real estate channel, although we saw significant reduction in overall category units due to the strong sellers market. Moving into 2023, we have seen the dynamics of the past few years shift dramatically. As we look at existing home sales from November of 2022 through the end of January, we're seeing a significant slowdown in real estate activity. We saw the annual run rate of home sales slip just above 4 million homes sold per year. Remember, the average since 2005 is over 5 million. We're also seeing the balance of power between buyers and sellers return to some sense of normalcy as the number of offers per home continued to decline to 2.5 in January 2023, which is a positive trend for home service plan companies as buyers regain negotiating power. We are working to empower agents to protect their clients by insisting on a home service plan with the purchase of a home. Why is that so important? We know that 1 in 4 new homeowners use their home service plan in the first 60 days after move-in. Let's turn to our estimates for the real estate channel moving forward. NAR is expecting to see about 4 million homes sold in 2023, a nearly 20% decline from 2022. We are estimating that there will be roughly 675 home service plans, excuse me, 675,000 home service plans attached to real estate transactions this year, or an increase in the capture rate to 17%. American Home Shield plans to acquire about 215,000 new real estate members this year, or about 32% of the category sales, as we maintain market capture and prepare for strong growth in 2024. In short, we are expecting 2023 to be a year where we maintain share as we see the category come back to life and the attachment rate improve. What is the definition of winning in an irrational real estate market? We define it as growing our share of home service plans sold over time. Let me now go deeper into this area. Let's start where we see the real estate dynamics return to our favor. While this is a quick summary of the macro trends I just covered, they are an important reminder that inventory levels are continuing to improve, the buyer is regaining negotiating power, and we expect them to be in a much better position to ask for a home service plan at the seller's cost. The speed of the transaction, which is returning to normal, enables us to have more time to work with agents to attach a home service plan at closing. How do we leverage the current market dynamics to capture more share over time? I've been at Frontdoor now for nine months, and my team and I have increased the focus on building a world-class sales organization. I have really upgraded my leadership team by bringing in top sales talent. We have increased the focus on a strong and accountable sales culture, we've done a lot to improve our processes and our sales methodology with over 150 field sales agents. I recently huddled our entire sales leadership team at our headquarters in Memphis, I assure you, they are extremely experienced, focused, bought in, and ready to sell in 2023. The most important thing to remember is that real estate is a people business, one of the keys to building strong, trusting relationships with all levels of real estate organizations, from the agent up to the office manager and the broker owner, is to ensure that our partners understand the value that we bring to the closing table and throughout the homeownership journey. The relationships that we continue to build and foster will help American Home Shield to gain category share over time. As you can see from industry thought leader and a member of Frontdoor's Real Estate Advisory Council, Steve Faith. He says, "We care deeply about making sure that our consumers receive best-in-class customer service." That's exactly what American Home Shield is in the industry, the best in class. This is a great example of how our partnerships can work with these high-volume real estate agents and really drive our sales. In fact, we have a tremendous foundation of relationships in the real estate channel, doing meaningful business with 10 out of the 10 largest real estate brokerages in the country. We have aligned our top talent with these organizations, and we have also developed specific goals and tactics for each of these large relationships to help grow in 2023 and beyond. Let me emphasize, from the very top levels of real estate companies to the front line real estate agents, we are connecting in meaningful ways with our partners. As you can see, I'm very excited about American Home Shield as we launch new agent services and training, and we look to offer new Frontdoor products, some of which will be piloted and launched this year in 2023. In conclusion, and based on what I've shared this morning, we have an exciting and strong outlook for the real estate channel ahead. Being the leading provider of home service plans, building a world-class sales organization geared for real estate and planning to launch unprecedented innovation for real estate agents is setting up a very strong platform to grow and gain share in the real estate channel. Thank you very much for your time today, and I will now turn the floor over to Raj. Thank you, Jess. Great job covering the real estate channel. Good morning, everyone. It's great to be back here on the same stage where I presented during our spin-off and see our investors once again. I'm gonna build on what Evan and Jess shared and talk about our American Home Shield business. You heard Bill talk about Frontdoor having two growth engines, and American Home Shield has been and will remain a massive opportunity to continue to grow our revenue and our profits. I've broken it out into 5 distinct parts. I'll start out with the opportunity we see in the larger home service plan category and then move into American Home Shield's piece of the pie. Then I'll discuss the impact of our recent pricing actions and what we're doing in the direct-to-consumer and renewals channels. Part 1 is an overview of the home service plan category. This is a great category to be in. It is large and growing category, and it delivers tremendous value to homeowners. There's been a steady growth of home service plans over the years, despite challenges in the real estate market. In 2012, the overall category was at 3 million plans, and it's projected to grow to 6 million plans in 2023. We believe there's a lot more room to run, and in the long run, the category has the potential to more than double to 13 million. There are strong drivers of the category's expansion. Home service plans have a compelling consumer value proposition. In addition, there is a large and diverse pool of consumers for whom a home service plan makes perfect sense. When you look at how consumer behaviors are changing, there are also favorable macro and demographic trends. More and more consumers want convenient outsourced solutions for home repair and maintenance. With more people working from home, they place even more importance in investing in and protecting their most valuable asset. We offer a compelling consumer value proposition, let me now walk you quickly through what that is. Owning a home can be expensive, unfortunately, many homeowners don't have money set aside to deal with those expensive repairs and replacements. First and foremost, the home service plan provides protection against the high cost of home repairs and replacements. Our plans cover up to 23 home systems and appliances that consumers use every day. It also provides convenience. A homeowner doesn't need to keep a list of qualified, fully vetted contractors or spend time looking at online reviews. American Home Shield has about 4,000 preferred contractors ready to solve home service problems. Many home service companies simply refer you to a contractor. American Home Shield is different. We get the job done, we stand behind our work, for some reason, if it wasn't fixed right the first time, we go back and do it to standard. Home systems and appliances will inevitably break down over time due to normal wear and tear. When those inevitable but unexpected breakdowns occur, having a home service plan means you're prepared and you have a plan. That's what provides our members peace of mind. Home service plans aren't just for lower-income or cash-strapped homeowners. They appeal to multiple ranges in age and income. Almost 40% of our members are 45 and younger, and about 40% have a household income over $100,000. Now let's take a look at the advantages of American Home Shield and what separates us from others in the category. We are the leading provider of home service plans in the U.S. We are 3 x as large as our nearest competitor. We generate over 40% of all home service plan revenue in the category. The scale advantage creates a virtuous flywheel. When we have a large number of members in a local market, those members create a large pool of service requests that we will pay to get completed. This allows us to negotiate volume discounts with local contractors who value that work. Those discounts lead to higher gross margins that we can use to invest for growth and acquire more members. The cycle repeats itself. That opportunity to increase local scale is very large. This heat map shows our penetration of homeowners across the country. While we do business all over the country, our business is heavily concentrated in the Southwest, Southeast, and Mid-Atlantic. Even in our best states, our penetration is relatively low. California, Texas, Florida, and Arizona are four of our highest volume states, but even in those areas, penetration ranges from 2%-4%. The main point is that we have an opportunity to increase penetration in these areas and also in areas where we are not well-represented, such as the Northeast and Midwest. Let's take a deeper look at American Home Shield. American Home Shield is a business with a very attractive recurring revenue model. American Home Shield has two primary channels to acquire new members. Jess already covered the first-year real estate channel, and I'm gonna review the first-year direct-to-consumer channel. The value of both of these channels is to feed our large renewals book of business. Investments we have made in acquiring and keeping members mean that 75% of our revenue, home service plan revenue, comes from renewing members, providing us with a large base of predictable revenue. When you add it all up, American Home Shield is at a retention rate of between 74% and 76% over the past five years. This stable and consistent member retention rate leads to predictable revenue for the business. You heard Evan previously talk about actions we have taken in response to rapidly rising inflation, and the most immediate and significant has been our pricing actions, which I'm gonna cover in part 3. You may be asking yourself, "Why is it taking us this long for our prices to catch up with our costs?" Let me explain. It starts with the 12-month contracts. From the day we decide on a price change, we must wait 12 months to change the price in every contract. Then those price increases take 12 months to be realized on our P&L. There are additional lead times with our renewal members, as we provide two to three months notice before we raise their prices. With that as the backdrop, it's probably best for you to think about our price changes as a 24-month cycle. There are a number of actions we have taken to increase our prices to the point where we believe we have covered substantially all of the inflationary cost pressures, which will flow through our financial statements over time. Renewals and D2C price increases are already complete, and we have another round of price increases in the real estate channel by the end of the first quarter of this year. We expect this will be all of the price increases we need to take for the balance of 2023. However, we will monitor the situation closely and adjust if necessary. As these pricing actions flow through our P&L, we will see about an 11% realized price increase in 2023. This is mainly from pricing actions taken in 2022. As I mentioned, we are closely monitoring to see if any additional adjustments are needed, and we are leveraging our dynamic pricing and A/B testing capabilities to optimize our pricing decisions. One of the other tools at our disposal to manage gross margin and member retention is our trade service fees, or TSFs. A reminder, trade service fees are charged when a member makes a service request. This is an offset to our contract cost, which is shown as cost of goods sold on our income statement. In addition to increasing prices, we've been strategically increasing trade service fees. We'll continue that process in 2023. We have raised the default go-to-market trade service fee to $125. We are migrating existing members to higher TSF plans. We have raised TSFs for our real estate products as well. We feel confident in the trajectory of our margins. Now, in part 4, I wanna talk about one of our key growth drivers, our direct-to-consumer channel. The D2C channel is a membership marketing business. This membership marketing model has been the growth engine for American Home Shield over the past decade. If you look at the D2C channel, inclusive of the renewals that it generates, this part of our business has grown at 11% CAGR over the past 10 years. The reason for this growth is that the long-term economics of this business are very strong. First-year renewal rates come in at 74%, which is more than twice the renewal rate in the real estate channel. The margin on renewals is very high at approximately 50%. This means that the lifetime value we generate acquiring a member is approximately 3 x the acquisition cost. Now let's talk about how we go to market with American Home Shield in the D2C channel. We have a four-pronged approach. We offer comprehensive coverage with products to meet different budgets. We have an intense focus on digital commerce. We invest heavily in direct-to-consumer education, and we're always thinking about how we can set up the renewal, which is our ultimate goal. American Home Shield has a good better, best product lineup to meet different member budgets. ShieldSilver covers the major home systems like air conditioning, plumbing, and has an average price of $34 a month. ShieldGold also covers home appliances, including kitchen and laundry appliances, at $49 a month. ShieldPlatinum has additional coverage enhancements, including roof leak repair at $74 a month. We've invested to become more sophisticated in our digital customer acquisition capabilities. Half of our first-year D2C units were sold online in 2022. We are building deeper capabilities in online commerce, including digital payment types, personalized shopping experiences, and dynamic pricing. We also have a comprehensive multi-channel approach to acquiring direct-to-consumer members. Our biggest channel is digital, which at 65% was the largest portion of the AHS media buy in 2022. Other channels include broadcast, direct mail, affiliates, and remarketing. Recently, our direct-to-consumer channel has not been performing to our expectations. We've increased investments but haven't brought in as many new members as we expected. We think there are opportunities for us to get more efficient and drive a higher return on our investment. In 2023, we are resetting the baseline for AHS marketing. In addition, consumers have become more discount sensitive, and we have seen the landscape shift as competitors have become more aggressive with price promotions. We are optimizing our promotional strategies to maximize the impact of our advertising dollars. We're also getting more sophisticated with our use of data to make sure we're targeting the right customers at the right time through the right channels. Kathy will tell you about our recent segmentation research. Those learnings have already resulted in refreshed marketing to drive more demand. I'd now like to show you some of the new creative for American Home Shield, which is already in market. Your dinner party was a hit. Your dishwasher took a hit. Your teen is giving laundry a try. Your dryer left you hung out to dry. Date night with the crush. Ugh, your toilet won't flush. Luckily, American Home Shield is there to fix or replace covered appliances and home systems to help you stay on course and budget. Protect what you don't expect. Visit ahs.com and get a free quote today. As I said, our goal in acquiring members is to set up the renewal. Now let's move to our final section, the renewals channel for American Home Shield. Retention rate improvements are a very long lever in our business. A 1% increase in retention rate equates to about $20 million in additional revenue. Because of this, we are intensely focused on managing this part of our business. Renewals is an engagement business. It's all about building a long-term relationship with a member. Our approach starts with member onboarding and engagement to start the relationship on the right foot. We focus on driving monthly auto-pay plans to make it easy for members to pay and renew. We leverage personalized multi-channel communications, the bottom line is that we provide a valuable service that our members use. Let's dig into each of these a little more. For our approach to onboarding engagement, we are investing in welcome calls and onboarding. We are driving members to MyAccount and digital self-service tools, and we are developing and offering discounted maintenance services that can be used outside of a break/fix situation. An example of this is the HVAC tune-up service, which has become very popular with our members. Last year, we performed over 100,000 tune-ups, which helped us engage members and helped prevent future breakdowns. Across our entire business, about 82% of our members are on a monthly auto-pay program. The balance of 18% are mostly members who came in through the real estate channel. If you look at our direct-to-consumer channel, 95% of our members are on an auto-pay plan. We are focusing more on personalization in our communications to members. We have multiple channels to engage with members before, during, and after the renewal. These channels include email, SMS, phone, direct mail, and MyAccount, and leverage our knowledge about the member to inform touch points, messaging, discounts, and more. Across all channels, D2C, renewals, real estate, our members use their coverage an average of 2 times a year. It's a valuable service that our members use, using the product is what drives our high retention rates. American Home Shield is positioned for growth. We expect to end 2023 with about 2 million members and to grow from there. We anticipate the real estate channel will stabilize later this year and then begin growing. We believe our optimization efforts in the direct-to-consumer channel will have the desired effect. The same goes for our continuous efforts to improve renewals, especially in the real estate channel. Finally, we are the clear leading provider in a category with strong growth potential. We have a very attractive recurring revenue model. Our pricing actions are being realized and will improve margins. These factors, coupled with our effective customer acquisition and renewals, set us on a better path for the future. Thank you for your time and attention this morning. I will now turn the stage over to Kathy Collins. Thank you, Raj. It is great to be here with all of you today. These are the topics that I will be covering, but let me start by saying I am really proud of the work that's been done to date, and especially excited to share more with you today about Frontdoor brand. We identified a need in the marketplace, and we are going after it. Let's take a step back and review how we got here. Starting with how big is the opportunity? Let's define our total addressable market as the entire home improvement, repair, and maintenance market. The TAM is around $500 billion. This includes everything from plumbing and electrical repairs to roofing, remodeling, carpentry, inspections, and even lawn care. Stripping out the sectors in which Frontdoor is not currently focused, our TAM is about $100 billion. Our focus areas are HVAC, electrical, plumbing, and appliances. The American Home Shield brand has offered traditional home service plans for over 50 years. Although competitors have created new business models in recent years, the majority have followed American Home Shield with the same business model, all going after the same target consumer. In fact, meaningful differentiation simply has not existed in this category. Bottom line, in the traditional home service plan market, there is very little differentiation. A sea of sameness. This image represents a July 2022 Google search. The logos, the color palettes, the names very centered around red, white, and blue, and words that represent security, shield, home guard, protect. What American Home Shield launched all those years ago has been copied for decades. It's not only the brands and the iconography that are the same. We believe that all of these businesses have been targeting the same segment of homeowners. It is our contention that the industry has been focused on the same audience, just 15% of the total homeowner market. While there are 128 million households in the U.S., 85 million of those are owner-occupied, and the traditional home service plan companies are basically all going after the same segment, the nearly 13 million homeowners who find relevance and appeal in traditional home service plans. That 15% of the viable market represents a limited audience. Our point of view is that is how the industry has thought about this opportunity until now. At Frontdoor, we wanted to find a way to leverage our strengths and better meet the needs of homeowners outside the current industry-wide target segment. We first needed a deeper understanding of the consumer, so we conducted a consumer segmentation study. This robust study included homeowners representative of the total population, 21 to 65 years old, and was very much focused on attitudes and behaviors associated with the home. Once the study was executed and the analysis was completed, six segments emerged from the data. Interestingly, all 6 were similar in size, ranging from 14%-20% of the total market. From those 6 distinct segments, we landed on four that emerged as key audiences for both American Home Shield and Frontdoor. I'm going to share a little bit about how those segments were derived and how they cluster together, and what differentiates homeowners on issues around their homes. First, two key differentiators drove this segmentation. Let me show how that is represented on this graph. On the horizontal axis, you see two extremes around how willing consumers are to spend money on things like home repairs and maintenance. On the left side, we have budget protection. On the opposite end, we have money to spend. This axis is not about wealth or household income, but rather the willingness to spend on those home services. We also saw the homeowners who fall closer to the right side of the spectrum are more likely to be proactive when it comes to home maintenance. On the vertical axis, we have a spectrum based on willingness to delegate the work tied to home ownership. At the top, we have willing delegators. On the other extreme, more reluctant delegators, those who are more likely to take on those home-related tasks themselves. Now let's take a look at our four key segments. Starting with American Home Shield, the brand that we've built to about 2 million members. Our American Home Shield segment, which we have named Proud Protectors, is the sweet spot for our brand value proposition. For these consumers, home is the center of their lives. It's where the family gathers. They are struggling to keep it all together. They find home ownership stressful and budget protection is important. They are eager for help to find a nice balance between saving the money by doing it themselves and acknowledging when they can't do it themselves. The Proud Protectors account for around 13 million households. Let's talk about the new brand, Frontdoor. We have identified three segments, all of which we have dug deep to understand who represent a pool of homeowners with unmet needs around home services. While they find ways to get by, they are looking for a better alternative to traditional home service plans. Let's look at these three segments. The first is what we are calling Confident Outsourcers. These homeowners are self-reliant in every way. They tend to be young and status-seeking. About 70% of them are in their first houses, and they are knowledgeable but busy. They subscribe to every service-oriented app, and they consider themselves service junkies. With money to spend, they will delegate because they just have too much going on. The group is very optimistic, and they embrace home ownership. They just don't stress about getting the work done, and they put a lot of trust in home professionals. Next, we have our self-reliant skeptics. As the name suggests, they are less likely to delegate home repairs and maintenance. They are capable, and they appreciate expert help. The problem is trust doesn't come easy for this group. A large majority of them claim that finding a home repair professional who is reliable is difficult, and they want to know that any experts that they bring into their homes have been fully vetted and are highly reliable. They are conscientious homeowners who take great pride in their homes. This segment is also highly savvy when it comes to digital apps and technology. Finally, we have our box checkers. I'd rather be fishing sums it up nicely. They are more overwhelmed by homeownership. They find it challenging and one big endless to-do list. They would rather be doing other things and welcome help. They will rely more heavily on experts than our self-reliant skeptics. Most of those box checkers agree that home repairs are best left to professionals. That gives you a feel for the segments who we believe make up a new opportunity for Frontdoor. The good news is this: the opportunity is there, and it is significantly larger than we knew. We are looking at these three new Frontdoor segments as one large target audience, the solution seekers, who make up almost half of all homeowners. We have a massive opportunity of 55 million homeowners. Not only do we have our American Home Shield target segment of 13 million households, now we know there are 42 million households of solution seekers looking for something different. We are well-suited to go after this opportunity. Out of this segmentation work and the ensuing research, we began a journey to reinvent how we serve members and ultimately reinvent the category we invented. That opportunity is to meet the needs of more people with unique and relevant solutions. Based on our expertise and our understanding of consumer attitudes and behaviors, we have spent the last nine months crafting the components of this new solution. This is all about better meeting homeowner needs. That means tapping into our network of contractors, leveraging our Streem technology and partnering with key players in real estate and home services to give homeowners exactly what they're looking for. Today, we are proud to share the outcome of those efforts with all of you. The key to our success is solving their most aggravating home-related issues, and homeowners within these segments are very clear as to what those are. Problem one, the endless home repair to-do list. Broken garage doors, a funny noise from the fridge, a leaky faucet. Some things urgent, some can wait. Triage has become a way of life. Problem 2, they truly want to get smarter about their homes, but there's just so much to learn. It can be overwhelming and to some impossible. Problem 3, Google, YouTube, Yelp, Angi, and even a know-it-all relative can help, but those options can suck time and effort. Generic answers, sponsored posts, untrustworthy recommendations, they all need project management and due diligence. As one participant in our research said, "I know a lot, but I also know when I'm in too deep." They're looking for a better solution. Introducing Frontdoor, the brand, the app for all things home, which will deliver a native iOS and Android mobile app experience for all members. Frontdoor enables virtual sessions with one of our vetted experts in real time, the handyman on your phone. It gives members access to our large nationwide network of reliable and vetted repair and maintenance experts. Frontdoor provides digital content, home maintenance tips and checklists for homeowners, and it offers member discounts on products and services, including HVAC systems and appliances. Let me provide a connection to a contractor to help complete the work if necessary. We may be able to solve the problem through the video chat. If not, we will lead the consumer to a contractor. Naturally, our hope is to monetize those consumers by upgrading them to Prime or our next generation offer, which I will discuss in a minute. Moving to Prime. Prime also lives within the app, so is available nationwide. The membership fee is $99 per year with a value proposition for someone who wants a go-to handyman partner. With Prime, members receive the great content contained in the free app, plus access to discounts through a group of partners, including retailers and complimentary services. Prime members receive three expert video chats per year. Again, these experts have been pre-screened to be experienced craftsmen and women. That goes a long way with these target segments. If needed, our member can be connected to a vetted Frontdoor contractor in case of any necessary repair. Next, we have Frontdoor Pro. This is the next evolution of ProConnect. It is a service delivery product that offers several on-demand services. That includes appliance repair, maintenance such as HVAC tuneup and carpet cleaning, and the opportunity to improve your home through a discounted price on a brand new HVAC system. Frontdoor Pro uses à la carte pricing and will develop a more robust collection of services over time. Frontdoor Basic, Frontdoor Prime, and Frontdoor Pro will launch in mid-April. Looking further out, in June, we will announce the next evolution of the Frontdoor brand. This product will be our reinvention of the traditional home service plan. It offers an annual membership plan, new features for homeowners, and streamlined processes for both members and contractors. We will share more details in June. Across the entire lineup, consumer input drove our product development, and one feature stood out above all the rest, video chat with an expert. We believe this is a game changer for consumers. The video chat with an expert really resonated with them in our research. It's what they want most. Imagine the ability to virtually pipe an expert into your home through your phone to talk to that trained professional in real time and come away with a solve to your problem. The video chat with an expert is powered by our Streem technology. That technology allows a homeowner to connect with that vetted expert within minutes. The solution may be anything from walking them through the fix to connecting them with a pro to do that repair in their home. An important part of our differentiation is that Frontdoor experts will close the loop with the member on the next steps or the solution. They will not be left hanging. Our specialized experts will lead them through the process. We believe that video chat with an expert is a game changer for the category too. It is disruptive. No one else in the category can do this at national scale. It's innovative, using our proven Streem technology. It's transformative because it's going to change how people manage maintenance and repair in their homes. Now that I've talked you through the process, let's watch a short video so you can see the app in action. Say hello to the new Frontdoor app. We're changing the game in home repair and maintenance and making it easier than ever for homeowners to get expert help by giving them more control, more choices, and more convenience. Frontdoor is the one-stop app for home repair and maintenance. Now, homeowners have a partner right at their fingertips when things go wrong, so there are no more meltdowns when the freezer no longer freezes. The game changer is the ability to video chat with an expert, thanks to our patented Streem technology. By expert, we mean an actual real live human being, like Garrett here. We have experts in every major trade, from plumbing, electrical, HVAC, and appliance repair to handyman and maintenance pros. Just touch the video chat button, answer a few simple questions, and we connect users with an expert right over the phone. The video chat feature allows the expert to see exactly what the homeowner sees. No more trying to explain the thingamajiggy in the back of the dishwasher. Thanks to Frontdoor, many issues can be resolved over video chat, or we'll help you find a pro. The app also includes features like an easy-to-navigate dashboard, tips for home maintenance, plus discounts on services and products for members. Because no two homeowners are the same, we have membership options to match everyone. Need a little help? We have a plan for that. Need a lot of help? We have a plan for that too. It's time for a new way to manage home repair and maintenance. It's time to open the Frontdoor. Consumers love this feature. We had the opportunity to talk to customers within our three Frontdoor segments and hear just what they thought about this new solution. The first consumer quote compares this feature to telehealth. "I think it's innovative. It's like telehealth for your home." The second quote touches on taking the hassle out of the process with, "That's awesome. It takes out the initial consultation that you generally would have to get with a home repair." Finally, the last quote from one of those self-reliant skeptics appreciates that we have done the research for them, saying, "The fact that it's with someone who's vetted is a big win." Let me tell you a little bit about these vetted experts. The, these guys, these men and women are a highly curated bank of experts. These are not independent contractors. They are employees of Frontdoor, and we have spent a lot of time and energy to find just the right people to fill this role. They are leaders and experts in their fields. Many of them are former business owners who come with an innate sense of customer service. They have also received formal training from Frontdoor on member relations, and they are available for video consultation seven days a week. We've hired these experts for coverage in plumbing and electrical, appliances, and HVAC. These are highly skilled and tenured specialists averaging about 15 years of experience, with a number of them achieving master designations in their respective fields. Their onboarding and member experience training is complete. We will continue to add experts as the brand and business grow, as they will be so critical to our success. Now let's move away from the business model and talk about the brand strategy. This is our basic launch schedule. In late March, the initial phase of our marketing, we will begin to introduce the Frontdoor brand to consumers. In mid-April, we will launch Frontdoor Basic, Frontdoor Prime, and Frontdoor Pro. In June, we will announce the offering that will reinvent the home service plan category. How are we going to tell consumers about this new brand and the benefits we're bringing to the category? We're going to open the Frontdoor. When you open the Frontdoor, you get a one-stop app for all things home repair. An app that can answer any question or triage any problem. A smart place to start. You get telehealth for the home. The heart of this app is the video chat feature. It's what people are most excited about and something our competitors don't offer at national scale. You get access to real live virtual experts, not a call center, but true subject matter experts with three important roles. First, to show you whether or how you can do it yourself. Second, to help triage the situation. Third, to point you in the direction of the right vetted pro. When you open the Frontdoor, you also get the invigorating sensation that is getting it all done, the elation of getting it done, the feeling that I just cleared something off my plate. How are we bringing it to life? Let me give you a couple of highlights from our marketing plan. For the launch of Frontdoor, we have partnered with some large national properties, brands, and networks to connect with that solution seeker segment that I introduced to you. Major League Baseball and the NFL are two properties with whom we will have national sponsorships and advertising coverage, and both of those index high with our audience. We will have a major presence with HGTV as well, and specifically their smart home giveaway sweepstakes. Hulu and HBO Max will provide integration and advertising opportunities, as will Amazon. Aside from those unique tentpole events and opportunities, we will have a steady presence across the most prominent networks and platforms with a heavy focus on digital channels. These logos represent many of those channels, but this is not an exhaustive list. Again, these were selected based on our target audience media habits. We will meet them where they are. The last thing I will share with you today is just a peek at our ad campaign. I think what you will see here is that this does not fit into that sea of sameness, but instead stands out and invites consumers to open the Frontdoor to a better experience. We call this one Toilet. I think you'll see why. Your chain's off. We can fix it now. You're done. Done. We fixed this toilet. We fixed this toilet on video. Okay. I'm not going to show you the entire ad or the campaign today, but I'm so excited for you to see the campaign come to life over the next couple of months. At this time, I would like to turn it over to Jessica Ross, who will share with you our financial overview of the business. Thank you all. Thank you, Kathy. Good morning, everyone. Wasn't that quite the toilet teaser? I hope you all are as excited as we are about the launch of our new Frontdoor brand. We believe it will be a real game changer for home services. My name is Jessica Ross, and I'm the Chief Financial Officer at Frontdoor. I've been at the company for just over two months now, and I'm incredibly inspired by Frontdoor's vision for the future of home services. In fact, our vision is one of the main reasons I joined Frontdoor, and I look forward to leveraging my experience building and scaling companies as we grow our share of the home services category and increase value for our shareholders. I also look forward to getting to know each of you better. I'm excited to meet with our investors in person and build relationships through an open dialogue with you over the next several months. Today, we're hit on our fourth quarter and full year financial results, our capital allocation strategy, and our 2023 and 2025 outlook. Before we jump into our 2022 results, I want to spend a moment sharing what attracted me to Frontdoor and why I'm so excited about the opportunity ahead of us, which is really grounded in our strong financial profile. This company has an amazing ability to generate cash through all market conditions, and it's a strong financial foundation that we're leveraging to launch the new Frontdoor brand and to drive future growth. I'll share a few slides on this topic, but many of you already know that we've consistently delivered solid revenue growth, that we have a capital-light business model, and that this business continues to produce strong margins and cash flows, even through one of the most challenging macroeconomic environments we've ever experienced. For those of you that might be newer to our story, let me share a few highlights with you. As you can see here, Frontdoor increased revenue by approximately $300 million over the 4-year period ending 2021. This is a 20% increase in revenue, and this trend began well before our spin-off in 2018. In addition to our consistent revenue growth, we've also experienced strong levels of adjusted EBITDA that grew from approximately $240 million in 2018 to $300 million in 2021. During this timeframe, our adjusted EBITDA margin averaged 19.5%. While 2022 yielded slightly different results, we remain extremely optimistic about the opportunities that lie ahead of us. Our strong adjusted EBITDA provides us with a meaningful level of free cash flow every year. This is a true strength of our business. It allows us the flexibility to deploy cash back into the business to accelerate our growth prospects, while at the same time return cash to shareholders through share buybacks. One of the metrics we look at is the percentage of free cash flow to adjusted EBITDA, which averaged 60% over this period. In short, our revenue growth combined with our strong levels of cash flow also appeals to many of you, our investors. It is this virtuous cycle enabled by our business model that allows us to launch our new Frontdoor brand in a way that balances investing in growth while delivering a high level of profitability. Let's now move to our fourth quarter results. While I'll walk through the data in detail, let me share the punchline up front. Our fourth quarter financial performance was substantially better than we expected as inflation continues to moderate. I'll hit the highlights for Q4 as many of the trends are similar to the full year, where I'll go into more detail. As a reminder, you should reference our earnings release and 10-K that were released yesterday for more details. Let's start with revenue. Overall, fourth quarter 2022 revenue was $339 million, in line with the prior year period. We had a 9% increase in revenue from price that was offset by a 9% decline in revenue from lower volume as our member count fell. Let's take a more detailed look into the revenue mix from our three home service plan channels. First, fourth quarter revenue from our renewals increased 8% versus the prior year period due to improved price realization. Second, our real estate revenue decreased 32% versus the prior year period. This trend is consistent with previous quarters and reflects a continued decline in home service plan volume within our real estate channel caused by the challenging sellers market. Third, DTC revenue decreased 1% versus the prior year period as the decline in volume more than offset higher pricing. Raj explained these drivers earlier, as well as the actions we are taking to improve DTC performance going forward. Now turning to our gross profit, which was $145 million in the fourth quarter. Our gross profit margin of 43% was significantly better than we had forecast and was also higher than the prior period. Evan previously discussed the impact of inflation and how those trends have begun to moderate. With that, our cost per service request increased 13% in the fourth quarter, slightly better than we expected, which excludes the impact of favorable claims development. As a result of these factors, fourth quarter net income was $8 million and adjusted EBITDA was $33 million, both slightly higher than the prior year period. Now, I'll walk you through the changes to our fourth quarter adjusted EBITDA. There are two items that I want to highlight on this slide. First, we had $4 million of favorable revenue conversion in the fourth quarter versus the prior year period. Second, contract claims costs increased $1 million in the fourth quarter versus the prior year period, primarily driven by inflationary cost pressures, including higher contracted related expenses and parts and equipment costs. In the fourth quarter, contract claims costs include a $25 million adjustment related to the favorable development of prior period claims. This reflects both a moderation of inflationary trends as well as management efforts to reduce costs across our business over the last several months. For those of you new to our story, we know the number of member service requests every day. What we don't know is the final cost to complete the job. Thus, our finance team, along with third-party actuaries, estimate our costs at the end of each quarter. In periods of substantial change, like what we experienced in 2022, we have times where our prior estimates get trued up to actual results, and we have either unfavorable or favorable development, such as what we experienced this quarter. Let's now transition to our full year financial results. Again, you heard the headline through our other speakers. Our 2022 results were significantly impacted by the historically challenging macroeconomic environment as a result of the rapid acceleration in inflation and lower real estate sales. As you can see, our full year 2022 revenue increased 4% versus the prior year to $1.66 billion. Higher pricing and the migration to higher priced products drove a 6% increase in revenue that offset a 2% revenue decline from lower volume. Looking at our home service plan channels, full year revenue derived from member renewals was up 9% versus prior year to $1.2 billion due to improved price realization and growth in the number of renewed home service plans. Real estate revenue was down 27% to $184 million, primarily due to a lower number of home service plan sales, as you heard from Jess earlier this morning. DTC revenue was up 9% versus prior year to $219 million, primarily due to improved price realization and a mix shift to higher priced products that offset a decline in the number of home service plans sold in this channel. Our gross profit was $710 million in 2022, which equates to a gross profit margin of 43%. This was nearly 620 basis points lower than 2021 due to the previously mentioned factors around inflation and the real estate channel. As Evan discussed earlier, our net cost per service request inflation rate increased approximately 16% in 2022. Though the number of service requests declined 3% to approximately $4.4 million during the year. Our 2022 net income declined $57 million to $71 million in 2022, which includes a $34 million impact from previously announced impairment and restructuring charges, and our full year adjusted EBITDA declined $86 million to $214 million. Moving to our full year adjusted EBITDA bridge, where I'll walk through the changes from the full year 2021 to the full year 2022. Starting at the top, we had $62 million of favorable revenue conversion in 2022 versus the prior year. Full year contract claims costs increased $137 million for the reasons we've already covered. Sales and marketing costs increased $8 million, and general and administrative costs increased $10 million. As a result, our full year adjusted EBITDA was $214 million in 2022, which equates to an adjusted EBITDA margin of approximately 13%. Now turning to our full year 2022 cash flows, where we continue to generate meaningful levels of positive cash despite the extraordinary challenges we faced last year. Here you will see that our net cash provided from operating activities was $142 million for the 12 months ended December 31, 2022, which was comprised of $151 million in earnings adjusted for non-cash charges, partially offset by $5 million in payments for restructuring charges and $5 million of cash used for working capital. I would note that we usually generate more cash from our positive working capital business model, the decline in first-year real estate sales reduced this amount from what we originally planned for, as we received a full year of a home service plan upfront in the real estate channel. Net cash used for investing activities was $35 million for the 12 months ended December 31st, 2022, was primarily comprised of capital expenditures related to investments in technology. Net cash used for financing activities was $77 million for the 12 months ended December 31st, 2022, primarily driven by $59 million of share repurchases in the first half of the year. As a result, cash increased $29 million during the year. I will now discuss our free cash flow and cash position for 2022 in more detail. Free cash flow, calculated as net cash provided from operating activities minus property additions, was $102 million for the 12 months ended December 31, 2022. We ended the fourth quarter with $292 million in cash, with restricted cash totaling $145 million and unrestricted cash totaling $147 million. As you can see from the previous slide, we've generated strong free cash flow that has enabled a flexible capital strategy. We continue to maintain a consistent capital allocation strategy. First, we are targeting investments to drive growth, both organic and acquisitions. We have modest capital requirements, and we typically generate positive cash flow even after investments to fund organic growth, including the launch of our new Frontdoor brand. Our M&A strategy continues to evolve but remains opportunistically focused on our core business across the larger home services space as well as on technology platforms to enable growth at scale. Our second objective is to provide a prudent debt structure for the long term, and we achieved our objective with the debt repayment and refinancing we completed in June 2021. As such, we don't expect additional actions at this time. Finally, our third objective is to return cash to you, our valued shareholders. With the refinancing completed, our capital allocation strategy progressed to the point where we instituted our share repurchase program in September of 2021. It is our intention to return the majority of our excess cash to shareholders over the next few years, but we certainly could pause the program for a strategic acquisition or other considerations as detailed in our public filing. Turning to our financial outlook, where we are expecting our adjusted EBITDA to improve in 2023. We expect our first quarter revenue to be within a range of $355 million-$365 million or approximately 3% higher than the prior year period. This reflects double-digit growth in the renewals channel, partially offset by an approximately 30% decline in the first-year real estate channel and a low single-digit decline in the first-year direct-to-consumer channel. First quarter 2023 adjusted EBITDA is expected to range between $27 million - $37 million, reflecting mid-single digit inflation. Turning to the full year 2023 outlook, beginning with revenue. We expect our full year revenue to be within a range of $1.70 billion-$1.74 billion or approximately 4% higher than prior year. The full year revenue growth assumptions includes an 11% increase in realized price, partially offset by a 6% decline in volume. Our 2023 full year guidance includes a modest amount of revenue from the launch of our new Frontdoor brand. Our full year gross profit margin is projected to be between 43% and 45%, a 130 basis point increase over 2022 as our pricing actions begin to flow through to realized revenue in a more meaningful way and as inflation moderates. This projection assumes that inflation will average approximately 9% on a cost per service request basis, and also assumes the number of member service requests will be down approximately 5%-6% from 2022 to approximately 4.2 million. We're now targeting full year SG&A to range between $560 million - $585 million. The increase over 2022 is primarily driven by costs associated with marketing, technology, and staffing related to the launch of the new Frontdoor brand. We are targeting full year 2023 adjusted EBITDA to range between $220 million and $240 million. Primarily driven by the impact of higher pricing actions rolling through our financial statements, moderating levels of inflation, and investments in the new Frontdoor brand. It also includes a projected $29 million in stock compensation expense and a projected $10 million in interest income. We're projecting full year capital expenditures of approximately $35 million-$45 million and the annual effective tax rate to be approximately 26%. Finally, we want to share some of our thoughts on where this company can go over the next few years. On the revenue front, we are looking at approximately $2 billion of revenue in 2025, assuming the expectations of future macroeconomic conditions remain unchanged. We also expect margins to continue to improve, which should drive double-digit adjusted EBITDA growth in 2024 and 2025. With this, we are targeting at least $300 million of adjusted EBITDA in 2025. As I shared earlier, I joined this company because I believe in our vision. I'm excited about our two growth engines, and I'm confident we have a bright future ahead. With that, I'll turn it back over to Bill for closing comments before Matt opens it up for Q&A. Thanks, Jessica. That was a great job covering our financials and our outlook. Before we conclude and go into Q&A, I wanna leave you with some final thoughts summarizing today's key messages. First, my number one priority when I became CEO last June was to stabilize our core business, American Home Shield. Over the last 9 months, we have taken a host of actions and believe we are positioning American Home Shield for growth. To that end, we have invested significant resources in our core business, especially in technology and marketing. We now expect to rebase our member count in 2023 and then return to growth after that. At the same time, we have identified a massive opportunity with our new Frontdoor brand of over 42 million households, and we are moving quickly to seize it. We also believe the new Frontdoor brand will be a category disruptor, and only we can do it at scale nationally. To launch this new brand properly, we need to make the right investments, from branding and marketing, to technology, to the hiring and training of our Frontdoor experts and the video chat feature. As a result, I understand that our 2023 adjusted EBITDA outlook may not be what some of you were expecting. I get it, our long-term outlook accounts for launching the Frontdoor brand the right way. We are investing for tomorrow and the increased growth rate in our business that will benefit all of our stakeholders. Here's where we are. The macroeconomic conditions are turning in our favor as inflation moderates. Real estate should turn around, and we are pumped up about the Frontdoor brand launch. Taken together, we expect to hit $2 billion in revenue and adjusted EBITDA of at least $300 million in 2025. What does everything we have presented this morning mean? It means our time is now. Frontdoor's time is now. Thank you all for being with us this morning. With that, I'd now like the team to join me on stage for Q&A. Dayton McKinney will be monitoring our online questions, so we're gonna vary between her and the people in the room. Is everyone ready to get started? Ready. Okay, great. I think we had a question over there. Good morning. Thank you for the presentation. Mark Hughes with Truist. Could you talk to the extent you can give details on what you expect in terms of revenue and then margin impact from the Frontdoor launch? How diluted this year? When does it turn accretive? Any specifics would be helpful. Thank you. Yeah. No. Thank you. As I shared, we're launching two brands. We're gonna have a modest amount of net revenue coming from the new Frontdoor launch. We're gonna learn a lot this year. Not giving additional details between the two at this time. I would add one thing. We know that this is a different proposition. We have a membership model, you know, a $99 product. In the future, as this unfolds, we will be giving details about how, you know, the way we do with the AHS business. Right now, I wanna make it clear, we are trying to grow the total corporation here. We're trying to get more members. We're trying to get first-mover advantage with the Frontdoor launch. The outlook we gave you was for the total company. You know, at that point, that's what we wanna convey to all of you. Jason, I think Brian had a question next. Thanks. I'm Brian Fitzgerald from Wells Fargo. Kathy, we wanted to get a sense for, you know, with respect to the Prime office, Prime offering and the research you did there, in many of the services that you guys offer, it would cost significantly more to get an expert into the house. We're wondering if you give us a sense for how well consumers realize that value proposition. How well? I'm sorry. How well the homeowner values or understands that value proposition of, hey, you know, I can get this done on an app now, at a minimal cost with Prime versus how much it would cost to actually get a service provider into the house to look at it. Got it. Yeah. It does really depend on which segment we're talking to. That more traditional, the Proud Protectors, the more traditional home service plan audience, they have a much better understanding, and they are looking for that almost insurance or assurance in a traditional plan. What we learned from some of the other segments, like the Confident Outsourcers, is they have the money to spend, but they don't wanna take the time. Those Self-Reliant Skeptics, they're not sure they trust people, so what they were looking for was something like an app, and they're so used to apps being in every other segment of their life that this just seemed like a natural to them. In terms of the cost, we have started to float out kind of the cost of membership, and it was very well received. Yeah. I think, Brian, the other thing is, I think as you saw Kathy's marketing plan, et cetera, I mean, we're gonna have a high impact marketing plan. I think people are gonna realize, wow, let me try this thing out, which is why we have a free product, a basic product. Then, we think we have a really good value for the Prime members. We think as this behavior comes by, and that's why we asserted that we think this is a category disruptor. We think that math that you're citing is gonna fold with consumers. Great. Now let's go to Cory next. Hey, Cory Carpenter from JP Morgan. A couple on the Frontdoor brand. Is it safe to assume you're leveraging your current network of mostly preferred service providers to fulfill the service requests that ultimately get, you know, let leads sent out? If so, would you be able to price on or pass on some of the pricing discounts up to 45% that you get from those service providers typically? Maybe more on the financial side, just could you talk a bit about how the economics would work? I know you have a $99 membership fee, but would you be taking, like, a cut on leads that you pass out, you know, beyond the video connection? Maybe just some on the financial profile difference of that brand versus AHS. Evan, why don't you take the first question and then, Jessica, you can take the second one. Yeah. To the first question, the answer is absolutely- Whatever the second part is. Right. Yeah. To the first question, absolutely we'll leverage our Prime contractors, preferred contractors for Prime. The reason isn't just the cost savings. We know they provide the best customer experience, and so we'd quite honestly be heading the wrong direction if we didn't. It is a win on both fronts. Bill, if you'd like to take the second question. If not, I'm happy to. Go ahead. Why don't you start, and then Jessica and I or I can jump in. Yeah. To the second question on how this goes, as we build the business, right now we are looking to, one, stand up the customer experience and make sure we're using the experts exceptionally well and get those opportunities to contractors. Over time, absolutely. If we don't figure out how to monetize the business, why are we doing it? We need to first land the customer experience, training the experts in orange shirts, and then figure out how to best set up our preferred contractors to deliver that customer experience. Yeah. No, I completely agree with that. Again, I think about when you think about AHS, you're coming in at, you know, a set price point with kind of limited opportunities. I do think that when you think about Prime and bringing in customers in, there's gonna be a lot more opportunities to learn about that experience and learn directly what they want and then monetize off of that. Did that answer your second part, Cory? Yeah. I guess maybe right now, or in the new Frontdoor brand, just in terms of the monetization model, maybe it's not fully fleshed out, so maybe it's not a fair question yet. I guess I'm trying to understand, right? If I'm doing the a la carte plan, and I'm ultimately having a plumber come to my house, for that a la carte plan, is that something that you would be monetizing more, like, on a take rate basis, getting a fee from the service pro? Would you be recognizing the revenue of the job and kind of owning the job like you do in the service plan? No, it's the same. We will continue to recognize growth. We will own the full contract. Yeah. I think another way to look at this is, we think this is a, gonna be a very unique offering. Obviously we're, if you will, teasing the redefinition of the home service plan, which is coming. Frontdoor Pro is an evolution, if you will, of ProConnect. There are those elements with all that Kathy laid out and Raj's team leads on appliance, you know, appliance repair and HVAC upgrades and, you know, we have six Raj maintenance services that we're offering. We have other ways we're gonna monetize. This is gonna be a different approach. Really, what 2023 is about, and we've talked about this a lot, we need to build capability. We need to build a complete service offering, then we're gonna figure out how to monetize this in the best way. We think that with... It's, you know, with today's economy, et cetera, a $99 offering on what we contend is a disruptor, a new consumer experience. You know, as Kathy said, the research we have is people are like, "Wow, I could do that?" You know, one of those things. So. I'd say, Cory, I know it's not as much detail, right, as you would want, which is why we felt it important to put 2025 out there, right? 2025 is gonna require that we are really delivering on both of these growth engines. Like I said, this year is about really stabilizing AHS, investing for growth with the launch of the Frontdoor brand, learning a lot, and making sure that we've got the right plan in place to get to 2025. Great. Why don't we take one from State McKinney online? Sure. Is there cannibalization of these new Frontdoor products with your current business? I'll go first and then, Kathy, you can pipe in on the brand piece. Look, we're looking at a total company. You know, we are looking at, you know, two distinct segments, the solution seekers and the budget protection folks, the Proud Protectors, we call them. We're trying to build, get more members, get additional growth engines, additional revenue streams. We don't think about cannibalization in that. You know, I'm thinking about it from a corporate perspective. You obviously think about the brand cannibalization, why don't you talk about that? Right. From a brand perspective, that's what that segmentation told us very clearly, was there are very distinct segments in the population who are looking for different things when it comes to home repair and maintenance. We do not expect to see cannibalization. We know what the American Home Shield Proud Protector is looking for, and we know what those new solution seekers are looking for. Developing all of those products and services and marketing to target appropriately. One last thing. We're the market leader, category leader in the Proud Protectors, the traditional home service plan area. We expect to be the market leader amongst all the solution seekers. Eric, did you have a question earlier? Thanks so much for all the detail. The team gets a lot of credit, 200 slides in 90 minutes. kudos on that. With respect to that, on the detail, you guys talked a lot about market share, and it seemed what you were implying is that you would hold market share as the broader economic environment continued, where I would think what you're trying to gain for is possibly being in a market share gainer position, given the way you're bifurcating the market. Should we help us understand some of the variabilities at play that could allow you to be a market share taker as we look out over the next 3-5 years? Yeah. When you split it this way. Maybe I just have a quick follow-up on the numbers after. Raj, why don't you talk about D2C one, and then Jess, why don't you talk about real estate? Sure. you know, if you look at the home service plan category, it's had a lot of growth over the last 5 years. We have been the primary beneficiary of that growth. Our overall market share was 46% 5 years ago of category revenue, and it's 46% today. Despite challenges in the real estate market, we think the actions we're taking on the direct-to-consumer channel, plus our intense focus on renewals and making sure we're growing our member base is what's gonna drive our growth in the future. Jess, you wanna talk about real estate? Okay, real estate. You know, as I mentioned, we've maintained our share of 32%. We obviously see dynamics in the real estate channel coming back to our favor, which is great, but how do we get more share of that? The three things. One, putting the right sales team in place in the right places and building that world-class sales organization. Number two, really going deep on the relationships that we have nationally. That's part of the reason I came here and probably why Bill brought me on, was because of my relationships in that industry, really leaning into those to translate relationships into business. Finally, we've got to create some more excitement in this category for the real estate agents. We have new products and services launching and piloting later this year that will allow us to continue to differentiate with the real estate agent and their consumer. Great. Thank you. Maybe just follow up on the 2025 number you put out. I think next to the $2 billion, you said, due to macro conditions. I just wanna make sure we understand. I think it's pretty clear the landscape you're playing for in 2023, but when we go from 2023 to 2025, are there certain benchmarks or assumptions on the macro side that we should be assuming or- I think we've shared everything. Kind of we're looking at CPI, we're looking at PPI, we're looking at our own internal rates, but I think the past couple of years have just taught us that uncertainty exists. I think another way to look at it, Eric, is, given where we sit today, given the conditions we have today, I think Jessica appropriately said, given that, here's what we're committing to. State McKinney, why don't we take another question online? Okay. What have you learned from ProConnect that better informs your plans with the new Frontdoor offering? Raj, do you wanna take that? Yeah, I'd love to. We obviously are learning a lot from our past efforts. We've had some wins and we've had some misses, and we're gonna learn from both. We've completed over 100,000 service requests through our ProConnect platform, and we're learning from all of those experiences. We've also had some programs that have been really successful. One I'd love to mention is our HVAC upgrade program, where we're able to take our scale advantage and cost savings with contractors and suppliers and pass that on to our members, so that they can buy a new air conditioner that's more energy efficient and saves them money at a really great price. That's one of the components of the Frontdoor Prime model. You know, we're certainly learning from everything we've done. What really gets me excited, though, is we're doing it in a different way. We're offering these services on- On top of a powerful app and membership platform. We're spending once to acquire a customer, then we're going to have multiple opportunities to offer them a growing assortment of services through our Frontdoor Pro business. If you recall from the Q2 and Q3 earnings calls, always had a question about Pro Connect, and I kept saying, "We're not giving up on Pro Connect. We're gonna be restaging it." Today is what the outcome of that was. Stephan, it looks like you got another question online. Could you discuss M&A since you mentioned it as part of potential cash use and capital allocation? Yeah, no, it remains part of our strategy. We're remaining opportunistic, but really this year it's gonna be a focus on investing in growth with the launch of the Frontdoor brand and returning cash to shareholders. I think any good capital allocation strategy includes that. We will obviously always be looking at it, especially with our position in the marketplace. To Jessica Ross's point, we are all about execution right now. We wanted to be complete in terms of our look at capital allocation. How important is that geographic optimization process you talked about, making sure that you have good concentration in these markets in order to be more efficient on your service, provision? I'm happy to start with that, Bill. Both of you. Yeah. As I stated with our preferred contractors, scale drives our business. It's how we find those contractors and then work with them, coach them to deliver the service that our members demand. The greater concentration we have, the better we're able to deliver that. It's, from my perspective, assessing the markets and saying, "Is there critical mass that I can make this meaningful to contractors and make it a meaningful part of their business?" In the majority of markets it is, but it's being very thoughtful about how we create that critical mass, because once I do it, I get better cost outcomes and better member outcomes. Where that's more tenuous for remote locations, et cetera, how do we rethink that approach? The only thing I'd add is we think we have that level of scale that drives both costs and quality outcomes in the majority of the country. We're looking at around the edges of our footprint where it's harder to build scale in rural areas. When you look at the major, you know, areas where people live, where we have great footprint. Well, that's one great thing about the Frontdoor app too, is we'll have nationwide coverage without any issue because it's all done virtually. I think that's gonna be a big benefit for us as well. Great. Stephan, one more from online. What are your growth expectations for the American Home Shield brand going forward? Again, I point to the 2025 outlook, right. Which we wanted to set a bold target to kind of really make it clear where this is going. Right now we're gonna, like I said, we're gonna learn a lot this year. We're gonna stabilize AHS. We're gonna launch Frontdoor, and both of those are gonna contribute significantly to our 2025 goal. Yeah, over time, we will be in a position where, you know, we have a very well-defined business with AHS. As we've talked about a few times, as we go forward with all the revenue streams we're building on Frontdoor, we'll have a better effect to talk about both businesses. Again, from a corporate point of view, which is obviously where my focus is, we stand by what Jessica laid out in terms of outlook. Thanks for all the detail today. Sergio Segura from KeyBanc. Two questions, one on the core home service business and another on the Frontdoor brand. There was a slide in the presentation just showing the similarity between all of the home warranty services out in the market. Appreciate the color on the marketing plan for the Frontdoor brand. How are you planning to shift maybe the marketing strategy to differentiate that service in the consumer's mind between everything else that's out there? The second one on the Frontdoor brand, could you provide more color either on, you know, the investment in the headcount, within the video experts or the tech or marketing, for 2023? Yeah. I think on the first one, we will, you know, we're pretty in a very good position with American Home Shield within the home service plan category. As a matter of fact, as you saw in the Sea of Sameness that Kathy showed, American Home Shield was in there. The great thing for us is with category leadership, we can, we can work within that, within that Proud Protector segment. Obviously there is always things we're looking to refresh. You know, you saw our new creative and the like. We will continue to drive at that brand because it's, you know, in many ways the definer for traditional home warranty. With regard to people and investment in that, we're not gonna disclose at this point how many experts or anything like that, but, we realize we're gonna have to have nationwide coverage, and that's what Evan and team are working towards. One thing I will add is when we talk about the brands and marketing, nobody should feel that we are paying less attention to American Home Shield because we're so excited about the launch of Frontdoor. American Home Shield is so important to this corporation, to all of us, and we are very, very focused on making sure that we keep that brand front and center with the right audiences, and that we continue to innovate and that we continue to differentiate, and that's, like, a big focus for my team. Great. Thanks. Stephan, one more from online. The number of home service plans is expected to decline in the mid to upper single digit rate for 2023. Can you discuss the factors here? Number of home service plans. Are you talking about category or? Is expected to decline in the mid to upper single digit rate. Just customers. There are certain-. I think our customers. Yeah. Certainly we've had some customer count challenges. You know, I think there's a few factors there. One is obviously the real estate market has been incredibly challenging. Jess covered. We've got some challenges more recently in the direct-to-consumer channel. As we've had to take price to overcome inflationary pressure, that's put more pressure on our customer counts. As Bill mentioned at the beginning, we are focused on growing member count. That is the goal for this team, and that is why we're launching the new Frontdoor brand. With that said, we're still incredibly optimistic about the American Home Shield's business ability to increase customer count. We know the real estate market's gonna turn around, we think we're taking the right actions on D2C, but again, a continued intense focus on renewal. We expect to finish the year with about 2 million members and grow from there. Got a question over there. Thank you. Thanks for having us. On that point about customer count, with the 24 month pricing cycle that you guys mentioned, can you talk about the drivers to increasing customer count in 2024 and beyond? Basically another question, the 19.5% margin that you guys discussed, do you think that's a margin level that's attainable in the years beyond 2025? Raj, go ahead with the first one. Sure, yeah. I think the key drivers of increasing customer count are, as I mentioned, you know, one is the real estate market returning to a more normal state. Home resales rising, hopefully toward the back half of the year. The second is our direct-to-consumer channel. We're rebasing our spend levels, and we're getting more effective in our customer acquisition efforts there. That's the second one. The third is, we've had some really strong performance with renewals, and we've invested there, and we continue to expect to improve our renewals performance. We think those combination of those factors is what's gonna drive increased customer count if you look out beyond 23. All right. Just on the... I'm not sure about the 19.5, but I would refer back. We're not giving 2024, but 2025 gives you directionally. It's about a 6.7% CAGR on revenue, about a 12% CAGR on EBITDA. We're gonna have to continue to grow margins. We're doing that this year despite the headwinds that we've got on our go-to-market channels and launching a new brand. That should give you some direction on where we're going. Great. Thank you. Cory, do you have a question? Cory's back. I'll be quicker this time. Evan, could you just talk about your visibility into costs next year? You mentioned, I think, like, locking things in further in advance. Could you just expand on that and how confident you are in the inflation cost request target? Jessica, just anything on gross margin expectations. You know, you've previously, before your time, given a 50% target, is that still realistic? Or maybe what you're assuming for gross margins in the 2025 guidance. Do you wanna go first? Certainly. Without being too glib, I'm confident enough to come here and speak to all of you about it. This has been a tremendous fight for both my team and myself over the past year. I took this role about a year ago now, and my confidence is based on the improvements we saw through the back half of the year, changes we've made within our business that I spoke to earlier in the presentation, and the moderating factors broadly. As we make our forecast, as we talk about the things that are there, I can't stress how much this is a different conversation than if we had spoke last June or July. That was truly an all hands on deck fight to figure out what we were doing and how aggressive we needed to take that action. Because of that, we're now here and saying it is getting better, and that is a tremendous testament to my team, a tremendous testament to everyone that's up here. All right. Cory, I know you want more, you want more data. I know you keep coming at me here. We've given you 43%-45% for this year. I do wanna kind of reiterate back to you, we are gonna be managing a portfolio of brands, right? Two brands, we've gotta, like, use this year to really learn, understand those two, then figure out what is the right pricing mix, what's the right margin mix. We'll come back to you with more detail, just know directionally, we believe in both products, we believe in both brands, we've got big aspirations. State McKinney, tell me there's another question online. Why do you think renewals have re-performed so strongly recently despite your pricing actions? Well, you know, as I mentioned, renewals is a super long lever in our business. A 1% improvement in renewal rate is $20 million of revenue. Obviously, we put an intense focus on managing that part of our business. We're pleased with some of the progress we've made there. We had a 150 basis point improvement in retention rate this past year. We've made some really good improvements in our renewal marketing processes and our cancel save processes. Dynamic pricing has allowed us to optimize our price increases to minimize the impact on customer count. You know, I think for the first time ever, our renewal rates in the real estate channel are at 30%, which is a nice milestone for us to achieve. With that said, we think there's a ton more opportunity. A 30% renewal rate in the real estate channel is still less than half of what it is in the D2C channel. We see a ton of opportunity there. We've got teams working on it actively to get even better. When I've talked about we're executing better, one of the prime examples is the work that is being done on the renewals business across the board. you know, in terms of the service operations group that we have, the large service operations group, the contractor relations team, Raj and Kathy's team, et cetera. Jess has taken it on as a personal mission to improve the renewal rate in real estate. I'm really proud of all the efforts that have gone on, around that really terrific business. All right. I think Brian has a question. Maybe a bit of a clarification. Are there any changes to your outlook for American Home Shield ProConnect as you focus investment on Frontdoor? I don't think we're giving specific ProConnect. you know, ProConnect is now going to be Frontdoor Pro. Okay. I think what Jessica said was the outlook is for the total company. The total company, yep. Okay. Got it. Thanks. Got one in the back? Thank you. Just on the attachment rate for real estate, it used to be around 30%, it's now around 16%. How do you guys gauge whether there's been a permanent change in behavior after it's been two or three years of not using this product to whether it's just been because the rate of change of real estate transactions was so frenetic that they didn't have to? Great question. We do see the dynamics coming back already because of the length of the transaction. You know, last year at this time, we were about 19 days on market, now we're at 33. That's giving us a lot more time to attach the plan. In terms of agent behavior, they're slowing down. They're getting back into the best practices. You know, they're not waiving inspections anymore. We're getting back to kidding on all the key points of the transaction. Probably the biggest dynamic is the offers on each home, so the sellers have really lost their power in the transaction. It's giving buyers the opportunity to negotiate, you know, maybe post-inspection to get that attachment. The final, you know, thing there is, you know, real estate agents want the deal to stay together. That's how they get paid. We are a key tool in keeping that transaction together, by attaching that plan. The other thing, for what it's worth, Jessica and I have met with, she's met with all 10 of the top brokerages. I've met with 4 to a person, and I don't think it's just because they're talking to the two of us. They've said, "Things are normalizing. We have to get back to attaching home warranties." You know, that's from the top of their houses. They said that's what a good, a good real estate transaction is about. It's been a crazy market, didn't have to do any, you know, multiple offers, et cetera. All indications are that things will turn, but, fair ask, you know, in terms of, the situation we have today. All right. Before we get to Ian, we got one online question here. What gives you confidence launching the new Frontdoor brand is going to work? Say that again? What gives you confidence launching the new Frontdoor brand is going to work? I'll go first, and then if you wanna... I think it's not only, you know, looking at segmentation, looking at the offering we've had, but we've kind of been moving in this direction for a while. Raj led an effort to, you know, the home service plan reinvention that we're gonna be bringing out in the summer. You know, Raj has led a pilot program on that for the past, you know, six or seven months that we've tested in Texas and Arizona. We also have done over, I think it's almost 200,000 streams with contractors dealing with customers. We have also, you know, we have the ProConnect restaging of that. A lot of these have come together as a value prop that we think is gonna give us a lot of confidence, notwithstanding the fact that, you know, I think Kathy has helped to identify for all of us what a large market we can try to target here. I don't know if you have anything to add. Yeah. Just I kind of harken back to sitting through some research when I literally. We would explain it to people and they would say things like, "I would do this all day long. If I didn't have to have somebody come to my house and try to find a time to schedule them when it's an easy fix or I don't know what's happening and I can just get on my phone, I will do that all day long." We heard that repeatedly throughout the research that we conducted, and there's just this unmet need. To Bill's point, it just feels like the time is now. We've been saying this, we've been talking about it for nine months, so it feels like old news to us. To say the time for us is now is spot on because we heard the consumer tell us that they want something different. To me That gives me all the confidence in the world. All right. Thanks for being patient, Ian. Thank you. How do you guys think about migrating maybe some of the, call it, Prime and Pro customers over to the AHS side? When you think about your business model, especially on the AHS side, you really have two value propositions, right? Number one, coming to fix the appliances or fix whatever is broken. Number two, the warranty aspect of it, right? The peace of mind, that is worth something. You do kinda miss out on that when you look at it from the Prime or the Basic or the Pro, maybe more on the Pro-Prime side than the Pro side. How do you think about migrating those customers over to maybe something more wholesome like an AHS is? Thanks. I would say two things. One, we think there could be great, you know, synergy between especially the Frontdoor Prime product and AHS. Stay tuned. Our reinvention of the home service plan approach that Raj has been testing and that we talked about coming this summer will be another way for us to get people into, I wouldn't say a more traditional plan, it'll be different, but a home service plan that has basically a coverage plan, wouldn't you say, Raj? We've tried to build a product that appeals to the unique segments of customers that we're targeting through the Frontdoor brand, but has more coverage for home systems and appliances similar to what American Home Shield offers. That's part of what we'll learn, is how these businesses coexist. Like I said, we think we're going after, you know, a much larger base of consumers and a much larger base of customers. We think we're gonna have a number of offerings and, you know, like I said a couple of times, you know, it's all about growing the total pie for us. When you think about the funnel for the new Frontdoor program, can you give us an indication of what metrics you guys are gonna release or what you look at internally so we can track it over time, whether it's number of app downloads, you know, people moving from premium, free to premium? Yeah. No. Whatever you want. You go first. I was just gonna say, I mean, that's a big part of this year is gonna be really looking at our metrics and really figuring out with this new product, with this new brand, what's gonna be the right way to measure it, both internally and externally, to tell the right story and make sure you all have the right data. Yeah. We know we need to do that. Yeah. We didn't release any metrics today. We wanna see how things unfold. Obviously, the way we've compiled this, you know, it's gonna go out in the market. I think a big point that we're trying to make today, we wanna be the first mover. While you could have argued that, "Gee, you should have tested this in market, you should have done this," we decided that because we had various components of this already tested, we wanted to be the first mover. We wanted to be the category disruptor. That has left us a little bit short on disclosing specific metrics. We know we have to, over time, deliver those. Okay, we got one from Staytın here online. We got a follow-up. We got one follow-up. One follow-up. Oh, sorry. Just to follow up on the paid plan. I think it's $99 and includes three video visits. Three video visits. What happens if I need a fourth? Is it a paid plan? What's the pricing of that? That's a great question. No, that's the end of it. We are working on a way for customers to buy extra video chats. That is not part of the launch. That's on the roadmap. Okay. Dayton McKenney. How much of your SG&A increase is core AHS, and how much is the new Frontdoor product you're launching? I'd point back to the earnings release. I think we're targeting $560-$585, which is around a $50 million increase. That's largely gonna be going towards the Frontdoor brand marketing strategy. You saw the great work Kathy's team has done, technology and the right investments in people. I think one of the things we're learning, and Kathy's team is probably gonna be at the forefront of this, is how we pulse AHS and Frontdoor and our investments in that. We don't have specifics around, beyond what Jessica just said, beyond that. But part of the art and science of marketing is gonna be around figuring out where we, where we make the investments. We have to launch Frontdoor, we believe, in a big way. We have to support AHS, and we plan to do that. All right, last question. Any last questions in the room? Otherwise, State McKinney has one from online. Yeah, go ahead. You guys have put buyback on hold while you were dealing with inflation. Is it fair to say that you're gonna be a little more aggressive and should generate maybe-? You're talking share buybacks? Yeah, share buyback. I think maybe $400 million-$500 million over the next three years in free cash flow. Just, you know, how aggressive on the buyback. Well, our program right now standing is about $400 million. We've executed about $160 million of that, and we're looking forward to continuing to execute on that this year. Yeah. I mean, when I came in, I said, "Let's just hold here. We gotta see where we're at," you know, as I talked about stabilizing things. As Jessica clearly laid out, our intention is to do just that. Great. Well, thank you everyone again. Well, we can take the last question. Okay. State McKinney, one more. Can you help me better understand your rollout strategy and launch dates? You want me to take it? Yep. The Frontdoor rollout strategy. We mentioned that we're launching Frontdoor Basic, Frontdoor Prime, and Frontdoor Pro in mid-April, and then we will come back with our reinvention of the Home Service plan in mid-June. The reason we are doing that is, to Bill's point, to be the first mover. We think it's important. We think the time is right. I will also say that I'm excited about that because it gives us two bites of the apple, if you will, that we get to go back out and kind of have new news in a couple of months. We're going to be loud, and we're gonna be hopefully on every network you're all tuned into, telling our story. It just gives us something new to come in with in a couple of months. Expect to see us. Yeah. I think the other thing was you had a chart up there about what we call teaser marketing. Yeah. We're not really talking... You know, before, you know, we're gonna tease our way into the information for mid-April. Yes. Great. Well, thank you again. For those online and those in the room, if you have any follow-up questions, please reach out to me. We'd be happy to speak with you. With that, I'll turn over to Bill to conclude. Yeah. I, you know, I wanted to say thank you very much for coming to this morning's presentation. We hope you got a lot out of this. We worked pretty hard on this and I hope you could feel our optimism. I'm very proud of this team. I think they've done a terrific job. We are, as I said, super pumped about Frontdoor, and we are super happy that we have the AHS business. We're really, really high on the future of this company. You know, Kathy said it again, I'll say it again, and we believe our time is now. Thanks very much and, you know, we'll be talking to many of you soon. Thanks. Thank you. Yeah, you can clap. Thank you, Eric.