So that’s why we’re pretty pumped up about this area.
Jessica Ross: And one thing that I would add too is I think the contractor relations team has really been out there and doing a roadshow also expanding the adoption with the contractors and they continue to be really excited about that. So I think it’s both the consumer, what we’re anticipating from a consumer perspective, but we are doing everything we can here on the ground to make sure that the program is scaling.
Mark Hughes: And then, Jesscia, the claim development or reserve development. I think it was the $1 million tailwind this quarter. Is there anything structurally that you can talk about there? I think maybe in the past when inflation improved you ended up kind of coming in better than expected in your earlier accruals ended up being too high. But [inaudible] speaking, is there where do we stand on that?
Jessica Ross: Yes, no, I think it’s a great point. It’s actually something that I’ve been reflecting on. I think when that first quarter that I came in, so Q4 2022 and delivered results, we had an adjusted EBITDA beat of about $24 million. And I think we had about $25 million of claim costs for home at that quarter. And coming down to that one, I think as we’ve gotten off the volatility of that inflation, it’s really stabilized and narrowed. So that same quarter we had about 15% or that year a Frontdoor inflation tailing down to flat. I think that really aligns with why you’re seeing the tightening up of that claims cost development. And again, remember, fair, thank you.
Mark Hughes: Okay. What was the point again.
Jessica Ross: I was just going to say I think there’s inflationary pressures. I just want to reiterate the work that the team is doing in terms of driving process improvements across the board that are also tightening up our costs. So I think there’s, again getting to everything firing on all cylinders. It’s just a holistic profit working together.
Operator: The next question goes to Brian Fitzgerald of Wells Fargo.
Brian Fitzgerald: Thanks. A couple of follow-ups. When you guys think of the strengths and weaknesses of the brand historically talking about the marketing campaign across regions and demographics, how are you thinking about the opportunities to maybe address regional or demographic opportunities that may have been underserved in the past? And then I have one follow-up.
William Cobb: Yes, I think the core of this is with any 50 year old brand, you got to revitalize it and but I think Frontdoor is extremely resilient. So I think that we’ve had a really good look at trying to revitalize, a brand. Kind of fire alarm in our building. I didn’t set it off Brian, I really will answer your question, Anyway. I’ll keep going go. We’ll go find out what’s going on here, but of course, perfect timing. Anyway, to your point about targeting, I think that there is and Kathy Collins and the marketing group have done a lot of work around new demographics. The Latino market is one that we’re particularly interested in as they become a larger part of homeownership overall, we have a Spanish-language website now, and that’s just some of the elements.
That’s just one example of ways we are trying to get more specific on our targeting efforts, but it’s the right point to bring up. I think from a regional perspective, we still think there is a lot of opportunity and beyond the Sun Valley and kind of the Smile States where we have traditionally been very strong. So that is something that we are also trying to drive is greater penetration into some more northern markets. But that is part of the opportunity set that we think we’re going to help to grow into.
Brian Fitzgerald: Thanks, Bill, and then the other question we had was around the gross margin benefits from the service fee change. Could you give us some color on your expectations for how long that tailwind potential persists.
William Cobb: One thing I would say, and I’ll let Jessica answer the specific is, the trade service fee increase was really an outcome of, as contractor costs and increased labor costs and fuel and insurance and all those elements. We raised the trade service fee really in response to staying current with where contractor costs were. Now as far as how it flows through the P&L, I’ll let Jessica –.
Jessica Ross: I mean, again, these are behavior shifts and so they debate can take time so we’ve anticipated this in our plans throughout 2024.
Operator: Thank you. We have no further questions. Ladies and gentlemen, thank you again for joining Frontdoor’s First Quarter 2024 Earnings Call. Today’s call is now concluded.
