Frontdoor, Inc. Leases Disclosure
Note 5. Leases
We have operating leases for our corporate headquarters located in Memphis, Tennessee, a collaboration center located in Scottsdale, Arizona and a technology collaboration center in Pune, India. We also continue to lease certain office space in other geographies, which we have, as indicated below, either exited or subleased. Our leases have remaining lease terms ranging from one year to 9 years, some of which include options to extend the leases for up to five years.
The weighted-average remaining lease term and weighted-average discount rate related to our operating leases are as follows:
|
|
As of |
||||||||
|
|
2025 |
|
2024 |
||||||
Weighted-average remaining lease term (years) |
|
|
8 |
|
|
|
|
9 |
|
|
Weighted-average discount rate |
|
|
6.6 |
|
% |
|
|
6.5 |
|
% |
We recognized operating lease expense of $1 million, $1 million and $3 million for the years ended December 31, 2025, 2024 and 2023, respectively. These expenses are included in selling and administrative expenses in the accompanying consolidated statements of operations and comprehensive income.
Supplemental statement of financial position information related to our operating lease liabilities is as follows:
|
|
As of |
|
|||||||
(In millions) |
|
2025 |
|
|
2024 |
|
||||
|
$ |
|
3 |
|
|
$ |
|
2 |
|
|
Operating lease liabilities |
|
|
|
18 |
|
|
|
|
20 |
|
Total operating lease liabilities |
|
$ |
|
20 |
|
|
$ |
|
22 |
|
Supplemental cash flow information related to our operating leases is as follows:
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|
Year Ended |
|
||||||||||||
(In millions) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
||||||
Cash paid on operating lease liabilities(1) |
|
$ |
|
3 |
|
|
$ |
|
4 |
|
|
$ |
|
4 |
|
Right-of-use assets obtained in exchange for lease obligations |
|
|
|
— |
|
|
|
|
7 |
|
|
|
|
— |
|
In conjunction with the operating leases of our corporate headquarters located in Memphis, Tennessee, and our collaboration center located in Scottsdale, Arizona, we recognized $1 million in tenant improvement allowances during the year ended December 31, 2025, which is a non-cash investing activity.
The following table presents the maturities of our operating lease liabilities as of December 31, 2025:
(In millions) |
|
|
|
||
2026(1) |
|
$ |
|
3 |
|
2027(1) |
|
|
|
3 |
|
2028 |
|
|
|
3 |
|
2029 |
|
|
|
3 |
|
2030 |
|
|
|
3 |
|
Thereafter |
|
|
|
10 |
|
Total future lease payments(1) |
|
|
|
24 |
|
Less imputed interest |
|
|
|
(6 |
) |
Total operating lease liabilities(1) |
|
$ |
|
18 |
|
Closure of Leased Facilities
In August 2023, we entered into a new lease in Scottsdale, Arizona and subsequently decided to exit our leased facility in Phoenix, Arizona. Additionally, in November 2023, we decided to exit our leased facilities in Seattle, Washington, Portland, Oregon and Denver, Colorado. As a result of exiting these leased facilities during 2023, we incurred non-cash impairment charges of $5 million for the year ended December 31, 2023 relating to the corresponding operating lease right-of-use assets.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2022 | Mar 1, 2023 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Feb 23, 2021 | |
| 2019 | Feb 28, 2020 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.