EVER - Earnings call 3 2023

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Operator

Good afternoon. My name is Briana, and I will be your conference operator today. At this time, I'd like to welcome you to the EverQuote Third Quarter 2023 Earnings Call. Please note that this call is being recorded. [Operator Instructions]I will now turn the call over to Brinlea Johnson, Investor Relations. ahead. go Please

Brinlea Johnson

With date. views words of statements, plan, today revise to except should similar afternoon, including views recovery with law. and Earnings our Good in to Third upcoming of EverQuote's by market EverQuote's press be be of afternoon and the call Thank Jayme only EverQuote.During These Sanborn, is We'll and forward-looking Chief regarding auto be XXXX Mendal, closed. the after other we intend, Call. specifically expect, issued growth business, Executive announced on discussing Quarter the and release We and our this prospects.Forward-looking we we Officer; our believe, you. plans Chief today under welcome me Joseph the obligation existing our Officer results and we statements phrases. any maintain to and anticipate, we Financial our business will our that to may including update considered federal agency, investments may make phrases reflect the we securities our forward-looking as considered statements growth subsequent to our we for laws, may, call, guidance of our any the our initiatives, on regarding our disclaim in statements concerning new XXXX, financial identified strategy, the our statements be these quarter to key levers the customers, and expectations growth and words direct-to-consumer not execute related fourth as plans strategy statements acquire and expect drive such our insurance industry our ability as business, or as statements required

Exchange report that our from are the report factors a those and guarantees from cause Form of to expectations.For heading Investor today, or not Commission after and could and on available our A materially Relations believe investors.everquote.com.And cause on could in risks under are differ to are section the investors. certain the on the Factors to our our was expectations, over and Form discussion in of close with uncertainties subject non-GAAP of market materially Risk at and is XX-K our today's of at which SEC's that measures, on it contained quarterly investors.everquote.com to promises refer non-GAAP and annual the risks other we please actual call, reconciliation of statements file sec.gov.Finally, will Relations measures of which the to included Securities website Forward-looking we available the results course turn that, on recent I'll website important the XX-Q issued financial results website GAAP actual differ refer is press Investor variety most that a during on to with at of the release our to Jayme. helpful of section we to performance future or material

Jayme Mendal

relative of insurance performance and to million. a traffic, this are scale so marketplace, the the stable streamlined carrier shopping we expected was remain today. end technology, you insurance through our assets In solid ROI EBITDA of These differentiated accelerate June auto adjusted machine rate and data quarter restored and P&C In took high on proprietary year. $X.X million our agent and we million, our so network $XX.X to yielded strong to capabilities.The the at deeper budgets the and local It learning of can our operation of include quarter. VMM, or and Brinlea, third direct focus we deliver our greater quarter, actions Margin, and all which assets $XX value and which most most delivered our customers. In for you, guidance. its thank efficient our Marketing followed we QX negative restructuring, EverQuote so, associated remain us Thank revenue capital around most data joining doing a science Variable parts. the

carriers as part agents drawing continue particularly of rate slow business, down writing in challenged agents to marketing support are their which agent-based profit However, geographies. new for the efforts at

as In structure, fact, the give work streamlined a least through entirely will ways high strengthened confidence that us carrier found proven one eventual end has we has team balance With our our challenge, be support this well each respond. new to major removed sheet of market, recovery. for cost the through we at challenging and subsidy year.As resilience positioned the team,

As carrier monetization boost manage to declined, ad VMM efficiency. nimbly and effectively more we to technologies rolled out new bidding spend

confident team market, team demonstrated space, a pattern I'm profitability our business towards to I'll cash volatility we consistent generation plan the strength technology continued over data, of and review progress make have remains EverQuote carrier made of impact advisers to agent resilience, driving in our has and personalized. QX. recovers.Now the turn lost to the vertical will to bring auto offset in renters online home market and support, other unchanged affordable in results. with demand growing our when and as As the success certain our we through of by to And of more simpler, to requires subsea the and auto streamlined insurance recently To the challenges, segments. our most have this Joseph source to we vision become that the vision XXXX. insurance proven attributes call agents fruition and policies Despite more segments adaptability enable in drove knowledgeable emerge using operation financial in and insurance incredible continued restore model experience largest growth vertical.EverQuote's from us

Joseph Sanborn

start for discussing the Thank joining. providing you, the for for third Jayme, guidance fourth results all and thank you I will quarter financial our before by quarter.

was within EverQuote was which in top August.Our towards the exit assets quarter for subsequent for the our associated reminder, $XX guidance range total and announced in end a million, vertical insurance of the our quarter. the vertical revenue of June As of health the third late sale

exceeded and guidance Variable delivered high we in Margin, deeply of as well Importantly, to the end that continue our Marketing or our teams EBITDA environment. execute a challenging operating adjusted VMM,

partner revenue insurance insurance from QX, year-over-year, Third auto substantially weakened customers.Our million XX% demand third-party in our or declined driven resilient, vertical carrier carrier of by our experience the subsidies we us for agent at $XX.X also auto was to was our the new within XXXX. revenue with of October representing primarily total since agent also in largest at least as continue a revenues quarter more customer but point reducing the discontinuing it downturn local to to quarter low exited insurance it industry XXXX. us end was This in their auto subsidies that payment the of late quarter. began notified network We

QX, health, on quarter third highlighting from was As million renters. was in not verticals for do third revenue in insurance quarter, result, what the our primary in the revenue of QX troubled was a by in $XX.X the million, insurance of $XX.X XX%, a high above renters perspective, a XX.X% and reporting following nonauto for revenue near home a of market less increase for was verticals vertical record exit and insurance, auto auto represented a a as we're revenue. the a QX, In record our guidance X reporting quarter, insurance insurance expect achieve includes recovery we segment.VMM of million our Beginning X from management the result our which $XX.X from in XX% begin to of home focus high can primary range. a XXXX.Revenue as and until driven percentage VMM factors. year-over-year

First, target our in by more to environment, achieve bring into of teams to marketplace. a our selective lower we customer acquisition the being continue in types consumers traffic in costs volatile part

local towards significant from and processes to which data technology percentage. better the investments to is results.Turning bottom in are third, focus in a past shift mix and agent has acquire we revenue higher This results. our Second, network, realignment evidence our generating VMM the consumers yielded further in a strategic that leverage developing is line. our to benefited our yielding And high-performing proprietary

very charge increased managing assets $XX.X related controlling vertical insurance in In health to a to we control. our quarter, of of million. loss sale of loss GAAP the continue what net to costs in of August and We the third former million included noncash significant disciplined be and can a $XX.X

sold the $X.X for August million of overperformance drove along for million million, million commissions purposes receivable our health paid previously This to QX expenses As and timing more in range. liabilities.Adjusted assets incremental which quarter. second the over other of approximately VMM Advocate less quarter, cash addition This second accrued payments August relative former following within subject we X, reductions, reduced million, expense the negative favorable includes negative in guidance expected assets working to and favorable $X.X nearly June June collected early sales annualized workforce improved annualized an of which million accounting workforce $X transaction customary vertical to with closed operating flow the MyPlan reduction savings. previously next for $XX post-closing achieved insurance is in our in in to the a the to adjustments. in third $XX.X that QX, X the EBITDA to severance was This to result in exit although had and of be announced vertical.We announced the were X. $X.X quarter, Included reduction of in were million on and was of quarters, capital. insurance approximately $XX.X health we quarter related was The than operating which operating our in and from XX% the on

approximately from cash quarter the the DTCA, going capital exit and expect be at which close to proxy remaining the that insurance adjusted EBITDA quarter flow any million cash requires will scale the again XX% forward, subject of our $XX for significant drive operating in adjustments.The cash to XXXX. and quarter up of cash our down ended $XX million the vertical upfront within With company the the a with we working of investment second growth, health equivalents, end from normal

we undrawn working which a have Alliance of Bank, Western until addition, available capital credit is million line XXXX. $XX In July with

delayed, confident We performance cause other that But for our including Ultimately, our for increases market will we continues to an the be outlook, have financial to and no this will new acquire industry. guidance auto of them debt improvement facility carriers, no insurance impacts remain auto timing on and have QX. update draw conditions insurance the to insurance auto in to outstanding.Turning plans improve seek to the therefore, customers for the and growth. on consequently,

$XX revenue For to we $XX million expect be between and QX, million.

million.Turning $X.X million the $XX.X There be negative to million, We to levels of encouraging carriers negative to between from their we have trends. and and some quarter be in they industry achieving million expect signs progress VMM meaningful profitability. been $X.X are EBITDA adjusted $XX.X expect in that desired between and making

acquiring adequacy. growth As on new believe sufficient to consumers, vary where considerably carriers we based by will and appetite their geography for consumer that achieved have profile they return rate

such, are benefit will better to believe digital struggling insurance given to macroeconomic more target quarters. EverQuote our however, forms to we a regaining of several their media.We desired to of like headwinds carries channel and for providers still other profile leaders the most continue specifically that As compared that these of ability are recognize, of consumer likely desired delay then levels from financially profitability some several

delivered year adjusted the quarter our for the at achieving we range remains coming slope As guidance end performance that revenue exact and within solid of timing and the the believe guidance VMM we third of our given the EBITDA. recovery auto uncertain.In environment, exceeding high summary, such, and for

in volatile Our operating are but we challenging environment. remain teams a and executing well,

to expenses what have decisive We judiciously by continued and focus build balance control to sheet. can manage taking our we on actions

from of We EverQuote I answer normalization will well insurance and demand.Jayme auto your benefit be to have carrier strong directly questions. conviction will positioned now that eventual the

Operator

Michael [Operator Canaccord. question Instructions] from with first comes Your Graham

Michael Graham

Guys, wanted hear I me to just ask okay? you -- can

Jayme Mendal

Yes. Mike.

Michael Graham

to depth auto just on ask little I a more the about part. Sorry wanted for that.

the what summarize earnings. your It comments seems in like, It the players XX% not here recovery expected of 'XX, sort could through of yes, a if think of was super starting other to great, calendar I is but like of said like in the year. some basically the partially the sector because rest set good helpful. budgets were carriers be pretty I kind beginning of to optimism for

that carrier that to cautious DTCA is agency more on it So just expecting? you're expect question your you see I be your what seems I pace guess wanted is still to like quickly than recover or then same business, would to maybe than business? tiny And related or a sort bit less on of that? of kind quickly Or more the

Jayme Mendal

Yes.

I see appears at more others the that I'll We'd through in that, see points more Short improving. carrier time a at much world it think is, sustainable in Mike. it. answer profitability, the pretty and with So And downturn. profitability with broad take this underwriting the crack in perhaps the and has how continues than earlier line we improvement start

seeing you're ratio meaningfully the beginning So over different increases last double or many levelize. digits We're carriers, number quarter improving the regularly across to a carriers rate combined hearing are whereas of in X. loss trends the

okay, broadly increase underwriting corner carrier than as what major points underwriting improves XX week, as does the loss new last one reported you well, the once points, to improving look but seen the at, only of right? taken appear be So happen they've into more year-to-date, considerably So trends they've turn and rate we past.Then year. and will by X

So we heard consistent we with budgets will the into from that come reset budgets reset what in know you've for the with January. that, others, better. as turn a corner will And

And to a expect XXXX. see we underwriting continues to in improve, step-up so long as significant

the then next will clarity expect QX less have a year on see sustainable 'XX. do is the and in what but shape like, and step-up we exactly gradual a part little but a into through that of recovery that to I likely trend think we look

year. top X partners, expressed we XX say As next for carrier of would plans to growth our X talk have customers I our to

what large take had operation. we size and reduce to the just that's business. the component part a reframe then the which DTCA or context P&C, exited remains small we're the second relatively might DTCA minute question, of to Since what anticipating.And the and a the is vertical, want a health Medicare -- DTCA sort of your so to reorient of of And in

try low I impact And in answer pace. will and so question a its at will to grand your of scheme directly, the it similar be recover things. But think

of So partners side what we're pretty on out our the carrier the of we're side. business agency direct what to is hearing the hearing on similar

Michael Graham

That's off Okay. start. good Jayme. a getting And good to Great. luck XXXX helpful,

Jayme Mendal

Mike. Thanks,

Operator

Kelly with Oppenheimer. question Jed Our next from comes

Jed Kelly

Great.

are your, how can if you in You And straight margins. Or just materializes said spend that you customers planning quarter to us of it, X a year? Can Is you gaining expect second year trend, share? to then of how mid-XX%, increase your this broad-based? you're top guys. XX% VMM you you do XX just just was call margins VMM with next that a give expect on sense -- -- better environment demand think next

Jayme Mendal

Sure.

I use, at look sort data of some downturn, we the think Jed, we share. we that the think the market we've over believe of as I So share taken arc

we been VMM the and turn feel right last corner carriers relative the in we the question, planned it. VMM last market historically probably to of you're our of relatively of I about operating that before the with some stable levels initiatives high with condition the overall, that think year.With But we quarter, period next the respect these the into and have relationships good very we've the to growth of couple as quarters. at them state

enabled demand. have to bit to managed bidding -- technology, us up quite in our which VMM our We spend structurally. has out increase drive ad respond rolled with also more new as efficiency margin we We've changes a to

in combination likely the it's of the as may of into for of competition a which comes So back one more will traffic recovery. normalize things, one which persist, those X market

to lower for of has levels historical always say volume. But optimal VMM point and than VMM that percentage at come been where would now. dollars considerably VMD for we're seeing slightly we've exactly dollars VMM higher with hard it's at margin optimized So the land.Historically, will VMD dollars more

a to set if I settle So is start between of historically expectations, probably things think scenario. in recovery we somewhere where sort are and had been where see where it's we've you we to today

Jed Kelly

baseline then just to as $XX guidance next Is that into year? like nonvariable the going implies marketing that it. around about it way follow-up, the our Got looks And think expenses right a million.

Joseph Sanborn

way, obviously, that where that were That's Jed, modestly the think right down we in is in put to QX, certainly QX. from down from about baseline. just context, and we where in our And were to

annualized out about So took We $XX the the million QX. annualized. cost we in $X in took in restructuring million out costs of of business further QX, another

and be that guess I this the And going where traditional those fringe as into so go also year. have going and to continue. next one of next year, to the year, continue think, this change, on I half you additional that starting that But and annual benefits, of of second I'd see that start but in seen you've you point discipline see year. for year expenses, increases start the comp the to year, next be that would manage would reset you increase that have normal we'd throughout is, will the QX. related put of one We're judiciously course will resets you

Operator

Our next with Day Riley B. from question Securities. comes Dan

Daniel Paul Day

to over just but you to home How turn that the rate sustainable are still just there. of investment and from like to impressive is? do kind dollars growth be away any renters that you think how second. auto it do for can I drive that growth? turn to time? you made big Pretty So smaller, a then think And know

Jayme Mendal

Yes.

product growth We've year, concentration and We now. of path is bit. renters. And The agent growth. dedicated that for to that going great quite support experiencing a seeing And auto focus, its there. grow the that for to job done and more vertical. not leadership team of I impact traffic dynamics last out to growing. is trying the resource home hard and a growth is dedicated to to to team we're facing. managed We're We've invest is built that a we're certainly home immune to room to late consumer what footprint is of in that out the think we the has And So demand there that figure the think vertical that greater market some just continue vertical parallel. in continue market

And of market the we're kind growth hard so the cycle. this generating in is

year, that alongside as improves the some the so course of next expect And to it. continued would market see over growth we

Daniel Paul Day

back follow-up a just then And to auto. Great.

largest X historically, was I sort carrier like has made marketplaces market realize hard of well through in acquire as like in terms technology been everyone online, or and think the your talk like them using and of shift right, just acquire marketplaces the in of else using willingness far about to marketplace digital like ahead other ability be whether the pretty them then they business just their and there's customer yours. to channels the yours like carriers, to throughout last whether Maybe to need year customers cycle? this use a customers

Jayme Mendal

the curve into ours. Yes. respect pushed cycle with I the would say tapping that marketplaces to sophistication carriers hard has up like

of pronounced benefits, with is can target market, ability the sort market more channels. of hard a in greater One precision most mass to the particularly in than you

-- providers of the sits at is types moment to on better have who do for called in our And I the carriers And to the them that lower work carriers, terms of them. is job less that of sort either progress that their we think help target spectrum. for end to the a I or targeted, increasing that so the the spectrum at work of sort get help historically of the say given them to seen persist.In would their will ability time. And been consumers have

product bidding their for technology, volume and specific just helps behalf where And that us preferences adoption KPIs. do consumer have their bidding, our our geographies, KPIs, and the we've use more of our help learning profiles, we at data, and the some about machine seen actually carriers effectively can kind drive express we'll that to they a talk their do so to of on

in carriers would I cycle as for gained adoption of some channel technology like appreciation more have So market coming a out I that ours. anticipate think hard of possible what's the

Daniel Paul Day

it. Great. Appreciate

Jayme Mendal

Thanks, Dan.

Joseph Sanborn

Dan. Thanks,

Operator

comes with next from Our question JPMorgan. Cory Carpenter

Daniel Pfeiffer

you Pfeiffer traffic flowed This drive on we trended commentary of are X home how have but the Carpenter. throughout consumer Danny what it increases higher-level on for some should second, more year to on Cory is the insurance of growth. I for of drivers on through? question, And touched market just in and the has carrier kind price will that there as ones. renters before next the any then look the quick prior quarter out Is continue

Jayme Mendal

Danny. Thanks,

consumer stable. say front, On volume has that the shopping been traffic would I relatively

become drivers achieved growth Those particularly that for footprint a it's over historically last expect cycle at enabled at of them of long stable local underwriting build vertical. that in their continues harder as parallel and persists, behavior. minimum.Now rate our I to continuing remain that high more in as that likely have auto shopping out restrictions couple demand a mentioned to a as levels to into Now a the levels underwrite growth from we for the with bit include be continue in But at year we've to is cycle the drive well as tightening carriers next respect to traffic to rate which to result elevated the year. some growth agents, as home, of the

of a lot there's that then insurance of along a home probably of hard are the the historically continued got market, you've footprint. a that layer for had those not still both fact out demand room with is pulled if operating very think relatively home narrow I dimensions.And -- you the meaning on have carriers growth for market, shoppers in

that year just in as through see that we rate the we as expect carrier recovery so happen And well. some auto course natural to to demand expect continue with they over take we'll next would as

Operator

comes next Blair. with Ralph from William question Our Schackart

Ralph Schackart

recovery rate, share. let's positioned they I down of talked some you to how And the just versus with be at some EverQuote eventual as seeing? about you perspective, might this can, us coming the the be going historically, maybe some think cycle, is say, out give of take market gaining share carriers about if point competition? with you Can you shifts broader

Jayme Mendal

Yes, sure.

we like a good on exclusive working number feel we we plans of I about next where strong growth would growth opportunities have through to relationships next on close which very that said initiatives are got partner earlier, So position. year. market for carriers the there's -- for year. -- we We've them key with say I

And headwinds, year. share I so look a to may expect a it's I we'll have in next support. there's mentioned things, contracted that as previously, we've and that result know these as into agent of agent has say the some we would if would pulled recently channel, see continue we at maintain one some it we as demand area where subsidy of where bit carriers

working so profile share we headwinds of we kind it's them through would But matter direct expect is agent-dominant, like well. have, for which has result, that distribution work And create more carriers, year to of repricing, some over that a and next the with out next as year. just as all a may see happened the the

Ralph Schackart

Great.

Operator

now are There time. further turn to will for the remarks. management this back questions any closing no call I at

Jayme Mendal

thanks joining today. you. Well, Thank us for all

auto healthier underwriting. towards We build continue our as insurance marketplace. they making spend more do, marketing carriers are that return will confidence strides to to And that

insurance for strong shift resume a the structure, cost from secular recovers, adaptability. ahead resilience benefit things as will run we extremely our sheet and of well the team's our online. balance we streamlined position our strengthened and and does, it And us proven market As these

largest As today. Thanks to insurance and we of that appreciate the remain mission. online our become for about continued excited in very continue policies, advance to pursuit source we we future, the all the the time of mission support

Operator

This conference today's concludes call.

You now disconnect. may

EverQuote (EVER) 6 Nov 232023 Q3 Earnings call transcript