EVER - Earnings call transcript Q1 2022

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Operator

Good afternoon. Thank you for attending today's EverQuote First Quarter 2022 Earnings Call. My name is Tania and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call, with an opportunity for questions-and-answers at the end. [Operator Instructions] I would now like to pass the conference over to our host Brinlea Johnson of Blueshirt Group. ahead. go Please

Brinlea Johnson

With afternoon and earnings Good in to first of EverQuote's market EverQuote's press afternoon call Thank Jayme EverQuote. Wagner, is We'll and Chief be XXXX Mendal, closed. the after call. issued Executive announced on discussing quarter the release this Officer; you. Chief today welcome me John the our Officer results Financial

laws business including call, to XXXX, will our acquire concerning and integrations under business, make that existing our may statements including industry, drive our to on plans maintain we to direct-to-consumer auto customers, statements of our quarter new be ability to strategy, goals the plans our for guidance and the During our federal agency, our in financial expect the key related our and securities investments statements expectations recent acquisitions, our insurance business, and the second and for other initiatives forward-looking regarding considered statements execute growth our our growth prospects. the recovery strategy, year our we growth regarding full levers

Forward-looking we and may we we today we believe, expect, may, law. be intend, by reflect such words phrases. identified obligation we update phrases required statements or to of and considered our upcoming, forward-looking These and similar date. as any views words plan, statements disclaim except views not as anticipate, as with and only our be subsequent revise should specifically as of We any statements these

results of could performance a or from not are are future risks cause to subject uncertainties our materially variety promises expectations. statements and Forward-looking differ that and the actual of to guarantees

the in could actual most SEC's with risks recent at Form Report discussion Factors factors important please to Relations cause website Investor Annual Commission on Risk and our investor.everquote.com section available website of the of refer on a sec.gov. which is other Exchange and contained Securities on on under those For and XX-K our the our file heading and results, material the that at

issued of course helpful certain the investors. GAAP measures, non-GAAP the available Investor market to of during call, And close of with are in we on website release of I'll A believe over to which after included the at reconciliation today's is our Relations to measures refer which to we'll is financial today, Finally, non-GAAP press that, we section turn it Jayme. the investors.everquote.com.

Jayme Mendal

of million, diversification. variable you, insurance headwinds Brinlea of primary across today. Thank exceeded the year-over-year industry, thank first auto channel expectations in vertical In three and VMM benefits quarter, progress and in We us our representing the of or and demonstrating margin joining continued and X% $XX.X despite X% respectively. of revenue KPIs $XXX.X growth all delivered we marketing you for the financial million

generated of QX, agent channel. also We strength marketplace exhibited and adjusted in our In $X.X customer our acquisition local distribution million. EBITDA in

the On marketplace, we volume the levels. grew by double-digit consumer side of

which year-over-year. their is agents' EverQuote data valuable we the large performing and side to that drive has applied competitive agents, highest for this performance science in carriers partner. marketplace, On of better models increased extending indicated have channel We budgets our agent by XX% become over largest new local agent-based local our moat and provider multiple

major insurance. strategic upon scale revenues rich internal to only our lines evolution is which The After core investment continues company's has DTCA at QX and marketplace in insurance, acquisitions face historically over significant lines model our a challenges. exceeding policies plans. the channel, largest across company well health life. and to TMC, DTCA, or customer built of continued stages work, quarters of we direct phase in the early our next perform now agency very and This direct-to-consumer to carrier the hybrid of including experience, and of we of two been operating the many a Our the area position, the represented unique of which sell period of provide represents integration across believe for major XX%

the dramatically week auto We notice. little demand us "immense carrier advanced segments due of past we a in continued year" quarter, to, was December pullback states an saw unprofitable that uptick partners March, in they further early our April, encountered QX large amplified pressures one QX unexpectedly and While customer In exit acquisition in lows. the are to as in for informed this reducing example, carriers their profitability budgets. carrier which with from and

carrier these restore and to this they anticipate they rates better are their the align current increase repress will continues rates environment. to to higher budgets once course we loss pressures, As to reverse able

result, auto the from QX, demand As strong we substantially which continued carrier to be our In expect verticals we markets in August that below the auto headwinds saw a levels carriers. remain we we to the level will normalize we of upon recovering. XXXX believe in which

We also Medicare in demand QX the the open period. XXXX, period follows reflecting enrollment entering lower seasonality expect experience of QX to that health lock-in

from one, that in they an filed Number XXXX; previously for include our everyone late indicated to depressed, reported with return recent continuing drive the collection timing QX we about first half paused. To profitability will rebound direct recovery months in Let compared reactivate this year, the customers carrier but expectations latest solicit two, the closely demand to to significantly by which reported partners carrier feedback of of of loss some begin monitor in demand, large auto the the will we on and When likely data points what why? me remain trends. were The of end know. to to three, increases data partner and states, is that and by ratios direct publicly plan input for full large rate July wants that touch Early recovery and their demand suggests approved. improving projection be XXXX. auto support from a expectation number publicly carrier that

rates more consumers as reflect challenging current knowledgeable vision increase data, despite the will react underwriting spend, insurance auto renewal of to to they we long-term higher personalized. to make online to of environment, closing, shopping carriers levels by return normalized insurance of largest to As combining, advisers rates. while and In and customer acquisition more source progress expect technology to become the continue we towards make market, policies, the affordable insurance simpler our insurance driving

direct-to-consumer into distribution agency Our of exceeded of expectations more strategy stable to primary us three KPIs. a all local helped quarter and financial deliver agents diversify our across that channels our

we expanding remain we to company. incredibly adjusted our in being growth, our proud of of that I building our insurance laser-focused an ability strong and objective build continue one-stop EBITDA. the to revenue auto shop expect team's changes industry-defining the industry trends, be demand as digital for the will positioned on be recovers, EverQuote We well return to As carrier historic to navigate age. to

I'll Now, the call provide John more financial turn our to over details on to results.

John Wagner

Thank the start by you, results XXXX. the quarter I'll first guidance and our full the good Jayme updated for provide and discussing afternoon, year second everyone. then for guidance for of and financial quarter

volumes customers. provided and in direct to year-over-year affected first the quarter as for that has in reductions exceeded offset industry-wide and due pullback revenue consumer demand quarter guidance $XXX.X million auto demand to last from non-carrier carrier X% from insurance the monetization our total in our range growth customers grew advertising Our

includes our QX also carrier nearly But and retrenchment year-over-year in distribution as and life to in insurance in as all revenue, a that in to as of year-over-year home increased vertical contributed auto early the a for quarter. channels insurance This in continue and and industry's grew from first evident and the of the the budgets did to to the from persisted did These revenue waned carriers carrier verticals, reversal by challenges million, growth reset historically QX year-over-year we that growing besides $XX.X grew pricing. which While positively our XX% insurance carriers. specifically rate reduction first we renters, quarter improvement quarter distribution. to in of see as agent despite progressed carrier late revenue XX% acquisition and reductions changes. $XX With a benefited auto quarter auto demand in claims non-auto a as policy were as our of other from losses revenue third-party DTCA revenue improvement our as and QX and has carriers QX are consumer targets Jayme auto of diversity insurance were year-over-year XX% increase our vertical, insurance carrier quarter. expected mentioned, DTCA represented other carriers again, evaluate from health regard demand Revenue pricing to X% vertical insurance within impacted the when into million vertical, much health Strong compared in light insurance sales. with from verticals insurance our by

was this year-over-year range year. the first guidance X% advertising quarter. and revenue million During or year, QX, DTCA last strong the defined expense Medicare operational increase open Health revenue in year our coverage enrollment $XX.X Variable increased as a off DTCA we reflecting prior eight-fold an less Margin for the of period nearly improvements for Marketing Advantage made provided quarter, VMM from above last paid in

in Our VMM from the within higher VMM the our VMM reflected blended marketplace upper XXs DTCA. quarter in with contribution

range was loss first Turning was in EBITDA adjusted to net our $X.X exceeding GAAP provided our quarter. guidance million the last and bottom-line. quarter million $X.X

EBITDA over potential the DTCA adjusted we continue the the the while requirement compelling cash with high with with also tightly. We the in Our cash forecast our future it aligns cash DTCA of of but favorable consumer for recall as profitability. revenue revenue With growth investment produces directly time adjusted policy and believe marketplace shopping performance a and of vision creating annuity. collect is is into policy sale manage cash that life to cash the expenses experience as at to has operating our its you'll flow, well VMM correlated demonstrated area translated for and recognize associated and initially, EBITDA, we a regard that that

contribution lower of and For use operating our quarter. led adjusted $X.X in to million EBITDA current point QX, DTCA's the higher a of cash revenue

which grow additional strengthens continue entity of facing cash in balance vertical by Chairman cash to provides placement our demand quarter and is operations as reduced liquidity an We we our to Board a the long-time Capital reflecting ended owned with auto sheet million company. This $XX of investment balance us resources. the Blundin, on and $XX.X and with and DTCA in while the closing the equivalents expect from million, is in private insurance of David the use of investor We our confidence by Directors a sheet recognition cash investment carriers. and

demand and a later in in the not carriers. QX some start similar outlook the market early to reflected lower consumer in spending early insurance up auto consumers insurance QX stronger building the auto demand our Turning we've to increases within new with Overall, QX to levels demand in their to for yet an has carrier conditions spending demand Auto annual Though demand market regarding and did return reflect of seen that bids but eliminating a auto insurance carrier been of industry in and the quarter on much didn't from pullback industry. some tuning from in XXXX. into and segments trends states. near carriers, marketplace, for to QX insurance the cases Within the bids in our on hardening QX some industry reflected carriers acquisition levels. previous persist bids acquisition and entirely at to early Jayme's reset inconsistent of with consumers term in and rate for comments lowering budgets carrier in lower increases in carrier point continue second QX

and pullback our remain we it health to benefit our performance resilience of QX adjusted more QX, beginning we believe vertical to XXXX. in full to are annual operate carrier in health at to combined season in of has to impact until of and open This XXXX, of demand us multi-quarter insurance continue gradual demand vertical QX in the our in combined but the EBITDA our seasonally from growing shopping insurance party positive. demand exits insurance the season cycle consistent expected and agents and Though the auto party lower financial enrollment during from start for in prolonged half second quarters with will a recovery agent a grow and network, expect health a first of the seasonality expect insurance demonstrated in our performance insurance allowed enrollment we third continue rates carrier our this before the auto second auto vertical with year. recovery auto QX. We an the revenue in Through and deeper view demand in a expect middle will insurance, middle shifted trough and

million we For $XX QX, revenue XX% and a to midpoint. of between $XX the million, expect be year-over-year at decrease

be in EBITDA a expect to quarter VMM midpoint. the negative $XX million at negative million, we between the We $XX and XX% And to year-over-year expect million. between of be million $X $X adjusted decrease and

adjusting level a auto we follows. more incorporate of year our recovery year, half prior the second demand lower a are the full to and lower the gradual For as insurance industry in of guidance

and We decrease expect of the million, $XXX revenue year-over-year million X% midpoint. to be between a $XXX at

better $X first we results In recovery year-over-year demand, our adjusted X% the $XXX We in EBITDA insurance which reflected but expect in and VMM than a expect $XX the and million. decrease negative negative million outlook. auto between expect million, a quarter, we've $XXX we between for our to summary, midpoint. be of carrier delivered of And guidance at million slower

we no normalize of in by positioned insurance and we to spending. difficult as strategic begin and I, acquisition will While auto focus there their questions. your is believe Jayme doubt now impacted are this we that auto be in well well areas to cycle execute answer will carriers continue insurance,

Operator

Thank you. of the Graham with Michael first question is [Operator The from Canaccord. Instructions] line

open. line Your is

Michael Graham

state-by-state profitability. don't the on that more had made auto sort drill the competitors. observing wanted that to detail they're a that to you first there. relative at priced the are want Hey. for lot to because if obvious make state, getting lack comment and the We've regulation feedback of in in sense in I to of of It's a Thanks of they macro, low, it guys. sort too approval increases sort much about early ones a the they're in advertise to reasons. days carriers time adding for doesn't of And point the approved, kind the just little then, of advertise, price price the overpriced

get really it so, the approved. And state takes of in of kind carriers the most to

processes, so, just where those terms wanting color in I a with you to of think we state-by-state And if just some you was of of little you are kind more give have could?

Jayme Mendal

is Jayme. Yes. Thanks, This Mike.

So -- right. and that's

that's to movers rates. spend we're think with to I pulling back accurate. later there on advertising the is were earlier with movers both and What respect in observing filing respect and cycle,

movers rates are state. be profitable will what so, they approved given state, will a and their And but happen now is, may earlier in get your they not that competitive in

carriers need so, other as they to rates to in their well, And fully of wait they given state. raise some before that budget for the unleash

be states going second the reactivate sort make of bids is, of ratchet levels by you that They customer recovery "Hey, of is, we'd rates. with sort expect of earlier and that what reactivated carrier more So for unfold levels, was year, And we'll we're states. call of, we those of catch increase year in us in And exit Mike? ours, the middle rate is way to major their others with And July, sense, half to manifesting right? while large their bid. normalized the reaffirming the the all mover, pricing that it, from Does watching is year, they're improves varying as or that our get competitiveness so X, our over a we're increases up expect up an the what that through. should us all of this,

Michael Graham

guidance the high-level you also half ask QX? for and the It can could from perspective? color linearity dynamic. any Yes. on That's if trend between mix side appreciate John, of how just you on And helpful. that on to more to QX revenue sort -- Just can comments wanted of second provide any And I does. expect I I a the

John Wagner

Sure.

in we we've QX. seen have would the as reflected we information what very as expect the early as that's on to So, quarter well recent what quarter in

the And I would in on. half the of we've expect mentioned course increase think going in similar the performance QX. the we through as some see within do year we fairly to annual related to carriers be end And also, guidance enrollment health. Jayme at to of low range, of back we an performance turning do, the period then assumed QX continue of the

-- are we're the second cycle the they in us one indicative is So, carriers to of that of in that states has of the think through what going on seeing cycles, I think certainly stages is in all carrier of those. is faster. their who a different And there large carriers example are I but indicated Jayme's turn the that half kind will

we So, year. the through there's back some as we move half the do of uptick think

Michael Graham

Thanks lot. a Okay. Really appreciate it.

John Wagner

Mike. Thanks

Operator

is Graham. the Mr. next line Blair. with you, The Thank of Schackart William from question Ralph

Your line open. is

Ralph Schackart

the Thanks Good repriced question. what it's point rate I them. the taking of have has carriers curious, behavior for was largely that that afternoon. just largely or from behind been sort commented at this have

are seeing follow-up. Just how I Just carrier trying sort of and a is activity? base same have broad-based get your to sense this headwind of you across a this

John Wagner

Yes.

March, still carriers is holding they move holdup the to to but into now get year. were they what some were who out to acquisition a April rates, all wasn't of they in back their can does holding large May with were of point So and couple order look try second And through today and spend the to sort we basically that tires. like those we Ralph. at a we take of ago top that the of terms in all us other look across let rank if back one look have carriers them the entire how their on all now to their to side. out. air of coming significantly start look their we half that's as coming this back them. of That pulling base the answer pulled And at year. and to me rates. if year carrier now were on somewhat our the And back pulled out acquisition out start case we through expect as have could saw in of carriers, many where the spend point, of in refiling of the the progress carriers increase their sort see, They it we is At is the it spend spend There

Ralph Schackart

then the And the can to about Great. relates demand for on being with any Okay. that on the that looks maybe just to helpful? like talk color side shop side consumers it provide rates? activity you be would and marketplace consumers could platform better to activity coming you put as like there what Just

John Wagner

Yes.

that the board increase think appear be to shopping rates more in activity. across I does the driving

this So, have year. strong in we our performance acquisition customer far so seen

we channels, verified year-over-year across mentioned of balanced that's growing. think double-digit owned and somewhat and terms I request growing growth partner network been well in as as our our quote volume operated

demand rates So shopping form to appear increasing. a up to continue the result And only should provide of as as -- of upwards, more they rates volume. a continue tailwind the does in the it be move up

Ralph Schackart

Thanks, Okay. Jayme. That’s helpful.

Jayme Mendal

Ralph. Thanks,

Operator

with the Thank Oppenheimer. is The you, next Mr. Jed Schackart. line from question Kelly of

Your line is open.

Unidentified Analyst

Thanks on actually for taking question. my for Jed. it's Hey, Sam

half if XXXX. normalization in could expect I'm what somewhat first wondering or you dig Just of you you mentioning the full into said,

impact you're recovery for how related? any the seeing this competition since is and call wondering from or outlook Just more last has industry if changed your the

Jayme Mendal

Sure.

how So in you outlook. our at of changed look I terms guess if we've

first one comments say competitors to past I part related. say, distribution of other already We're by and the I industry our and release you've First carriers I echoed absolutely second And first here. would think in the it's the area. of that take heard

but on So the the think story repeated. kind of I you'll we're hear vanguard

is think and is that that for stronger didn't late we is we really the the changed indeed what's year. to QX still coming expect into that in given quarter saw starting What see half I to pricing. And changed expected demand that the in gains that in those has of of demand, the carriers. extend stronger from improvements expect our QX. stronger some outlook we second we up What

those that So were new with in that in I the the expected are the think dollars. would dollars that budget at associated we and we the largely QX see we retrench coming come back us gains looking to cycle the carriers really would make way

outlook now second we we've this So reflected QX we is what think in that. and trough that that build to is of start of our demand off

when half XXXX a our view thought be second of be think that you thought taken the build the in I stronger. prior, more the we in as outlook would with compared then that So we build year half stronger. would on QX of second the moderate a at And look We've now extending recovery. kind and full into to the

Unidentified Analyst

helpful. you. Very Thank

Jayme Mendal

Sam. Thanks,

Operator

Thank from you. Raymond The Kessler Aaron of is question with line the James. next

open. is line Your

Alex Bolton

of just hiring ask Hi. invest maybe about the if pullback kind This agent your you if in kind on of Maybe to is for for anything Alex that's expectations Aaron DTCA? for for wanted how Kessler. anything guidance. changed with has maybe And your changed auto a

Jayme Mendal

this didn't the what much fact -- been a Alex, and the hey, this see across board. performance -was And circumstances meet of a a the part Jayme. of could expectations is continues why of you our in in first or had of QX more DTCA really have ways exceed quarter in strong The So -- otherwise big many it set year. challenging to

diversified channel has invest borne So as a I the really there strong. some faced the continue And and through appetite distribution to investing think we our out to challenges remains of stable more recently. been strategy

day, the weigh in are investments funded of marketplace we how new the of level end a that against we I the lot marketplace. DTCA and continually evaluating, of historically investment has other the the At performance of think opportunities.

we invest improve of unit it. we the look with behind It there ramp continues trade-offs performance. new to its shape evaluate terms this there recovery of year, the continue that in as DTCA are think, we'll and we I is so And to economics the at to rate which but its at respect some the

to try And just balance that so in mind. we keep

Alex Bolton

flow I know correct? Okay. I would said And Is that think had offset negative It what guess which guess to cash through, like coming flow you vertical invest. as the QX. looks cash close million as in I in you the the I be about $XX coming from health QX, it'd

John Wagner

Yes.

which a operating at business negative overall has in the had quarter DTCA expenses and had we EBITDA looking You're -- but the cash. adjusted the positive

as adjusted a So go marketplace. story into you but middle also especially would higher forward, in And an on we you see improving pressure as there's EBITDA of the cash. DTCA quarters use expect come contribution QX, these within from you'll then higher as think we

and -- So, the you as also of is kind cash balance a and through going combination go be is the recovery can we think in continue to EBITDA DTCA QX marketplace a of which for consistent QX of of can user due net a But of cash. takes we a a use the the place year the accelerated profile EBITDA we're what of to become seen you've way track end to of which actually source with year. but cash as contribution, that in and that the

Alex Bolton

Okay. Appreciate that.

Operator

Kessler. Carpenter with The JPMorgan. question you, Mr. Cory from Thank next is Instructions] [Operator

Your line is open

Cory Carpenter

questions. carrier. two, the have more just on the Thanks one I for auto

implying the macro taking the other from Or be time? more it's here. how specific the the see weeks like also side. pricing growth situation could longer variables the Thank play you of a some want big business taken target carrier Any longer state in And make what's delaying your of sure carriers or happening about changed Is the you. to So in as could about have DTCA perhaps just Europe car recent from on a you business, increases, states you just of just basically here that to across be understand, the separately talk out. play recovery? that's percentage of to could issue on just how in those over think sustainability on then pass through message this price we

Jayme Mendal

Thanks, Cory.

of With holding delay expected respect the not don't certainly mentioned considerations, a gotten the in and inflation take has question. being been in the the environment driving carriers macro used to out are I used think is part first or it place, the where as big rates recovery, of broad the The any to or states right? in terms So of part cars I'll what's approving we And year. change it. there's the in you first why earlier a car market certain loss

were similar profitability the issues. We they adjusting think rates. they of this before us, to time until, We who increasing spring year, pullback knew those they second this out sort we acquisition the of wave of going some surprised year. that, decisions, April carriers on they anticipated of And they sort of made all spend there if I over period kind were all on thing that uniformly the would March that spend would have or May acquisition held was or be were their knew of experiencing would of right?

off really And sized fact longer reduce so a bit waited spend, or that the meaningful than the two that that guard. quite us carriers the caught to three were who was there really acquisition thing their rest

would that later much in the so So cycle. happen

John Wagner

on DTCA potential what one second in of is The really the the long-term.

verticals diversity within XX% what do. think as than and that of to those of we combination So our DTCA could distribution really we other be the grow greater

other So the and could distribution verticals auto DTCA the overtime, minority and become outside become the majority. of really the marketplace could

one we to control lever more started of proven has and it can business growth high has the you've so that a that with marketplace DTCA the think I how for be some performed. dynamics. So than DTCA see

Cory Carpenter

Great. That's very helpful. Thank you both.

John Wagner

Thanks Cory.

Operator

will this now Thank remarks. time. team turn I it you, waiting questions any for Mr. closing the There additional to Carpenter. no at are management

Jayme Mendal

performance, to part us positive that for of that everyone QX second thanks in continue in year period. our Well, offsetting XXXX. we It's The really challenges, intensified. energized. nonetheless, that health enrollment Thank we And one-stop-shop unprecedented the and team right. well us our we the all the with execution. which, Yeah, auto headwinds agents, in headwinds unfortunate age. on EBITDA, and strategy. in does the will enabled recover. up as in us direct-to-consumer insurance Despite And performance all. progress But for year. market. positions us building effect making expect despite diversification strong in in recovery for will verticals grow the industry auto Seasonality also fact Medicare exit We're into to joining current local the channels anticipate an continue diversification laser-focused really insurance and continue industry a half middle market's beginning sets the and have just we progress, distribution QX of this auto further digital in our open downturn today. validated for agency remains adjusted these when the the challenging dampen we've continued the of our Throughout deliver you

Operator

That earnings concludes quarter you Thank call. for first your EverQuote's XXXX the participation.

disconnect your now may You lines.

EverQuote (EVER) 3 May 222022 Q1 Earnings call transcript