MILE - Earnings call transcript Q2 2021

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Operator

Greetings, welcome to the Metromile, Incorporated Second Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. Please note this conference is being recorded. the to turn ICR. Edson now will conference Garrett over at I you. Thank

You may begin.

Garrett Edson

this are current statements. more and those company's forward-looking materially a that that with any for cause detailed actual or materially or differ achievements and Good to Relations historical would in based could call. its and from characterizations are XXXX you, that available www.metromile.com. results XX, afternoon, Thank and may duty operator. statements information I statements letter activity, shareholder the certain in course not forward-looking made risks the are statements. welcome based statements the results, Company cause the filings in statements. discussion on call statements ended This circumstances, is forward projections, of of beliefs on described uncertainties to plans, of differ company's subject the forward may XXXX. remind refer everyone to management's at The that These SEC assumptions the trends during refer those factors levels for the or earnings afternoon, are Any and of you any Metromile’s the of the any undertakes today. course statements company forward-looking like could of to constitute performance results released Investor to to to financial in update made implied no this underlying events expressed quarter actual June looking section made including call. to quarter that second forecasts, future expectations, other the website made number I be from looking

measures will conference discussed Additionally, call. certain this non-GAAP on financial be

Reconciliations in with isolation a or the presentation be Our accordance GAAP measures GAAP. prepared accessed measures through most in with for at not financial with information be accordance our this to substitute presented www.sec.gov. these to as the of non-GAAP comparable filings the information is considered intended financial in of can SEC

Dan Officer; call company's Metromile’s the am and Dan. call Senior on With Executive Regi the turn Preston, Vice today Chief Officer. to me to going Financial the Dye, I Joining that, Chief are over now President of Vengalil, Growth; Troy

Dan Preston

Thank to to call. in We XXXX everyone and afternoon you. second continued quarter Good your our to welcome appreciate Metromile. earnings support interest

unexpected COVID-XX the several post challenges, in journey including the are shifts a behavior as During that consumer quarter, we the environment. country second some seeing we continues encountered to

leader also to growth to how optimize learning navigate growth using market. we Board, shipping new as best We’re an this are with our on the opportunity strategy. the long-term And and refresh

XXXX. we XX, returns During the experienced positive June levels, sizable run in which in rate our premium near as sparked several of direct milestones. earned Driving a and premiums quarter, pre-pandemic increase

to to As more more Americans a we road, continue expect solid generate hitting basis. consistent direct year-over-year continue earned premium the on growth

of quarter. said, the President to of seasoned to-date, I'm the this to forward of with experience working high look a were to are to Senior rounded Both excited Officer. forward. Financial on part That measured with believe leadership team us one complete a we're we headwinds by Chief them and have significant to latter management drive senior have thrilled with experience. Regi and Vengalil, our already XX% the I year experienced to positives continue team. offset contributions our valuable Personally, switch for making Metromile, We the business the we and they group Board. the as to retention, key because We Dye for quarter. Metromile hires to of second robust Drivers of continue Growth to new stay Vice Troy customer the and as out which

We as bodily know it accident mile onset our loss injury, pandemic. frequency quarter has the largely the claim higher, the consistent industry. trended that of been for excluding with throughout ratio First, did per others

the our mainly and This unit increased or premium inflation drive we so drivers to miles the previously recent variably even a observed more In severity has of leveraged low driven economics throughout claim in we've adjust additional have industry, fixed costs relationship monthly is the mile, millions bodily to and and be due elastic rate subsequent insight damage injury to priced and improved miles However, competitiveness expect way further per do losses, the price than between reduce to to and at more powerful claims. US. rate for of filings. modeled. and Further, filings, this physical

those to although noted that the than call greater expansions COVID-XX quarter, be to in payment second expected. Second, be cancellations our we government in turned we related last cancellation will out mandated processed is

higher miles behavioral state also experienced cancellations due than of vehicle to and high driving. such changes, We sales out expected consumer moves, as

encountered we approvals changes. delays, Finally, unexpected differed industrywide pricing regulatory which of our timely

and approvals effect into at August. will the they of end We have received go those since

we reminder, the a additional policy these force in expect will As changes pricing in future. drive

quarter, and the of drive a to strong the for have of customer we'll debt. As these proposition our flat few experience a superior we priority outline on we're and a examples We underwriting high to areas us, value were in Force and growth. and executing a result believe These customers. model are deliver headwinds, results margin second contribution roughly Policies for not acceptable

who to noted, you Metromile switch As save annually XX% drivers average. consistently on

for to before, nearly of or driving to Metromile after levels of the the XX% savings exploring quarter, This half substantial self-reported and near compared two-thirds when clearly prospects savings can demonstrates pandemic. return the Additionally, during current premium. pre-pandemic greater Americans second their in provide nearly we

our plan. growth the states. laying to now for continue more opportunity robust path expansion, team visible long-term have We to us challenges given go-to-market and new groundwork have Metromile we an to and and of our recent leadership our a assess believe the nationwide significant thoroughly our we achieve introduce strengthening to As strategy mid growth

on Policies growth in Force as few near-term will our the be we implementation. a strategy, by this execute to deferred However, focus quarters

forward. policy insurance a have slower to trajectory incredible long-term brought believe clear near-term Metromile we Troy scale, pay the Troy plan through path drive that, unchanged. go-to-market President leads board growth, of us I'll toward to most Growth, in we an the growth late you that now. immediately would We Americans over that joined team, work Dye. Vice remains per driven recently on this our by the from turn substantially walk with While One, Senior to to mile call went them refining With new our strategy and he will May Capital

Troy Dye

much, priorities, talented Dan. and I'm with very executing look Metromile, to a who working such at with sharing ahead. more I today, you the team Thank quarters forward quickly are to thrilled in you our top and be on

than our expand to and billion As on first we with share market, post-COVID-XX developed At we growth months, and premium have an strategy I've efforts, addressable Dan shifting incredible In journey. what as a aligns optimizing ultimately to we our mileage more total in been will that three $XXX had represents strategy that fulsome drivers. have the mentioned profitable we opportunity ensuring that end, that nationwide. pre generate rapid material growth, low are believe focused my the previously, consumer more overpriced believe behavior for we of a policies capture

several in been Metromile. for XXXX external As year key expectations both Force Policies for full a to a and have by result, changes our deferred based few growth initial internal on quarters

experienced reduced in second we COVID-XX for of quarter the XXXX. pay-per-mile demand First, proven pandemic

elevated and expect creating to We on this near Force net the channel cancellation pressure in term rates trend Policies downward and and persist, performance, growth.

expectation our to XXXX. Second, in initial policies to XXXX, the enforced contribute in of compared expansion we material for second expect contribute states to state new half

critical implementing delayed our third of making in growth believe enable that new and to pricing elements regulatory spend multiyear few changes will in the reduce minutes customers We enhancements next will we growth us the on trajectory. plan referenced acquire earlier previously of this plan. quarter growth rapidly to the the call, meet the our Lastly, in Dan I'll expected more future three are the XXXX.

drivers do we refreshed or not new value normal reflect too Simply offer. and First, settling savings, the to positioning recognize seeks are many there to drivers understand into. that the recently we and brand Metromile are still that experience our that product believe proposition, put,

Metromile to trust. customers see forward, sharing you the our Moving to will us greater and target familiarity story drive actively more

want omnipresent be to consumers. we to our Next,

opened The first two Hippo market. to our optimize channels, and enhance channel. continue customers. addressable and Hippo direct-to-consumer homeowner Metromile to today sold policies talk channels week, our from recently distribution insurance partnerships greater about we new we we'll are Last While an few bundles independent even we capture agent the to and

as We are very We to our schedule. believe existing solution our attractive to proved well home bundle thrilled auto prospects. well homeowners auto be of ahead customers, and will a of as and many formally to launch

our additional in support and partners. this expect a In integrations second we account more to quarters, appointed believe integrating who agents sales, time. also there a of distribution build to-date. believe new infrastructure their policies structure agency by we independent scale raters our the with and growing with adding will auto and as and market. contributor XX% of than program We're it beginning and independent agent comparative our quarter, in sales strong production incentive target launched become is double about to more all phase access We're and the our In our fine-tuning XXX insurance have coming to opportunity significant our excited efforts. agents to initial with to independent significantly channel add the over We agents for successfully channel, force

bases. our launching to more leading like-minded million be soon. we continue aligned that customer serves companies and X distribution over ahead, opportunities company partnerships customers In and forward new partnership We sharing scalable additional to look advance the weeks with while also a with we'll details to Fintech a plan through

like I'd state The to key strategy. is third discuss our area expansion

will to of more of rates XX% plan by with our which us We to the than end in to when current Americans. year, file allow the states footprint new combined continue reach

beginning we on realize states become other are that Missouri, our we'll two-thirds fronts with will that, strong We markets managing begin of US ease and our I'll on updates the to will believe to policies disciplined back our ultimately, ahead, In expand progress ensure states move Metromile profitable fit initiatives. customers. Texas. drivers growing in deliberate We our With were hand based strategy these on new contribute a number to and growth, Indiana, generate we growth existing that call of rapidly and ahead, Metromile as Americans that and is well loyal ensure months economics. We for growth as provide sacrificing believe a and in to the Dan. unit We're we satisfied expect of and really our the XXXX. choosing start similarity these Metromile to contribution order force Iowa, We meaningfully entry to our in and Colorado, in to healthy margin. in expansion without

Dan Preston

Thanks, Troy.

our with In best offerings along into leading Metromile in to offering, Finally, our to the insurance breed continues industry. expanding Lob, Enterprise platform streamline. software to July, set of platform interest ecosystem its generate demand. a direct mail Enterprise provide auto insurance with integration is announced Enterprise partners of

direct platform make platform to and for expanding app, more include the Enterprise automation its and automate to tools. digital with formalizing relationship mail payments claims workflows and low-code payments Metromile XX% also Our claims is efficient customer insurers. new

to We optimistic Metromile now quarters bring Financial that to revenue. pipeline. over the in our recurring Officer, Regi $X amount in expect Enterprise million rise And Chief Regi? I'll the call will to ahead are annual given over turn Vengalil. our this nicely we standalone

Regi Vengalil

to everyone. afternoon Thank good you, and Dan,

second me you some XXXX results. Let our of take through quarter

and For earned when XX,XXX period. the X% ending of compared quarter, XX. the At $XX.X increase the direct quarter from increase March prior the generated to quarter, year the enforce, the from largely prior second end had XX% policies premium period, a we of flat year million, we

of ending force at Our XX% prior premium premium we million increase as the a define which period. year average policies compared end per policy run QX, multiplied by was rate, $XXX to annual the in the

policy and and new million, of or remained of Accident loss Our million percentage given period, June is primarily unfavorable of XX.X% premium $X.X XX, incremental servicing XXXX. of at revenue. Accident accident An of driven the was revenue, including the loss period. policy revenue in our year frequency, compared and staffing in an prior to the LAE, or expense, the industry-wide in of accident year adjustment inventory were expense quarter the In XXXX was after prior premium XXXX, claims of as offset the was the a reserves, the to of in XXXX us claims adjustment Metromile we XX%. margin development, given due who million, earned compared to the annual premium XXXX the injury quarter. bad was end XX.X%, $XXX.X higher $X.X which to loss loss compared period reduce $XX.X of million, year quarter contribution Accident year debt prior in $X.X an higher segment due million, was $X.X ratio count. the percentage $XXX,X our cash losses period. mile due or recurring partially in one-year was both million, loss increase direct the quarter compared prior development were the additional second ratio to model. second XXXX million per LAE minus of of nature by $X.X the contribution two compared QX Enterprise of profit bodily pricing ratio increased increase our to LAE director X.X the earned $X.X prior primarily contribution leading in to to as or in The quarter difference for the by million compared of we was expenses. period. second in lower quarter for million, quarter for is $X.X had with expense. in quarter contribution an X.X% prior the quarter XX.X% KPI to million, difference to retention contribution to QX due of year of loss at period million terms segment, quarter the positive Cash observed first ratio profit in end the customers second earned The compared prior of ended quarter the during department million quarter when $X.X was period. the with loss servicing Policy premium loss XX.X% expense due first second the XX.X% generated quarter $X.X the claims primary were to primarily earned to from and million the it claim calendar booked XX.X%, At higher of an and equivalents of durable in of The severity, direct of X.X% of

result XXXX lowering to premium run expect a factors full $XXX your As as follows the are Dan we now outlook by and Troy million end earlier, $XXX the an of of year our shared XXXX of we million. for rate

of and rate the expansion. achieve We given previously premium policies premium expect With million XXXX million growth XXX,XXX than rate the we strategy project our nation-wide by of run end $XXX year in run timing more $XXX forecast to now to the XXXX. outlook, with to also third lower revised force, quarter the of

it record between X%. to to back in loss the to increase year accident incur turn we X% year bodily and and severity margin year now the Given claim accident frequency, an and now contribution ratio expect injury for I'll XXXX and full between XX% XX% Dan.

Dan Preston

Operator? opportunity during and our we expect to temporary The are customers have shareholder and want consumers executing our right we pandemic for community are now working will a nationwide, I for the and value. a up we and We the on potential expand of to growth. believe growing before, questions. confident drive entire enhance Thanks, loyal open are savings in Metromile to believe ahead. we plan team, unmistakable profitable sustainable We'll thank tirelessly and create Regi. after team challenges the

Operator

[Operator Cantor Instructions] from Please Siegler Fitzgerald. first you. is Our Thank Josh proceed. question with

Josh Siegler

think expansion terms question. slowly Good more or of by still XX footprint have To the to do a occur a state you you are end states taking start, plans, in little my may of moving afternoon. Hi. XXXX, the forward? for expansion in targeting Thanks

Dan Preston

XXXX. continue to next file nationwide to we year, additional the primarily states expect number next over years. out pretty we're second we with If the of So rapidly rolling to but on in specific we’re the expect giving going live growth, not are in half guidance of few -- anticipated do year, the that be this coming

Josh Siegler

the any Great. competition Thank mile the the significant landscape? for there you. traditional insurers, you space more in And has Are been competitive per seeing example? in change from

Dan Preston

show level happening, changing Troy for pandemic a elevated anything things of more one was awareness particular deploying there seen which is And mile, that tailwind the that shifting, is and dynamic. now. as are to of people haven't which part team We that's If competitive the the around awareness that us. strategy the in per start drive to anything, is of is

Josh Siegler

you Thank much. Great. very

Operator

is with question Gary next Our from Dowling Please Partners. Ransom & proceed.

Gary Ransom

Yes. the had a anything questions. agent those couple get own about new relationships, normal? I of just relationships is special the afternoon. commission They agent Good One, there relationship? on the are a customer, they

Dan Preston

customer, independent on part business of experience a is that standard so, digitally, unchanged for relationship agent file the that's you buy that, is Troy the a from overall their product, right model regardless book. pay interact how I so and that It's with agents’ One add else a but ability of traditional the of commission value yes, thing experience, the book app, still their that now. get claim we to everything will that, shares

Gary Ransom

right. All

is Okay. up more, what the that so message missing starting what you or little I wanted give Could drivers address it And us follow now you the other the connecting were message good much. quite a just was the weren't by to was more the as how then, people mile different they're that color about to thing a on, idea? drive

Dan Preston

it more tailwind about and pandemic. And a the the the about driving I I less think way great reduction more a from in is question. characterize consumers It's that it's

they car when sitting they less place a much pay place and seeing expire, and to focused of front and of demand people that in in drove pandemic, their during a the organic the in back were in get consumers a order how on much house shelter So -- off, Shelter, was broadly as order you had trail think folks really mile their I product. incredibly on per in that drove places no We're shelter kind road. orders how

year working we're what to for positioning, ongoing which be so that the or. really to what is we've living so for And isn't mile past positioning three last been months pandemic, that's what's evergreen per the understand testing quite the centric is more able a on we've just been the pay really over where course

we present growth that it's how sustained marketplace, about So retooling, longer can a basis. on in largely drive term ourselves we so the

Troy Dye

of much one add is may a I'll call We asking folks had of letter things that where Yeah, shared people in was. the part the period data that started and drive be were on they to insurance in more average. what that's people How currently we half for would again. us. with the and more figure about pay drive of auto where XX% have on they save or And of

talk So ever the and needs was. the the about evolving. market is you way size product than larger that to has But been

Gary Ransom

or change to how does or kinds I the I'm versed as well change that not customers just, those target bringing here, you streaming mean, also Does of that whether means here whether searches have or terms target of the it's in? approach, of you customers in

Dan Preston

think don't I it's. that Yeah,

your on Let question points. answer me couple a

interest are partially still think who that folks ton home don't and at at home. increasingly of a works the who was have customer parents, retirees, pandemic. different that who true sort it's we're of urban to targeting. environments stay I in live And First, We are who in prior folks a

as have kind we're workforce the the on of populations a home existing of can gotten population front, as channels. change. changing channel of particular work And the those way not you methods pandemic in result and bigger use imagine of Some the as we from

going a I it, again, is agents channels to DTC in diversifying back I to we've our both we really the and how the our still good on how those funnel access as so of to come some independent then is force And to story, we mature, tell side. engine got solid a to a Our DTC that think Adding investment, but upside real in really multiplier doubled top agent market. over the foundation. over want starting the our focus on has on independent and educate the and our time customers be top

we about channel we use today. more the changing it's So way diversification that channels have than the

Gary Ransom

you, Thank very Great. much.

Operator

is question Christopher from KBW. next Our Please with proceed. Martin

Christopher Martin

on to for join time. I quick-quick thanks the here guys, glad side. first question enterprise the have taking Hey the call my and for a question

that with million revenue, $X.X revenue one at PLC from with the that like your and -- total talk about pilot is a or can to selling any moving you from bit go looking client forward. there's what can here, $X.X do to a engagement you was million little you disclosures detail to how of is moving more full a So, your into is current that thing enterprise part business expect a that customer in about, looks kind

Dan Preston

question. Yeah, thanks for the

the So, it dollar period charge. has we of some the prior multiple represents part in fees amount customers, implementation larger that that

part initial the customers. multiple basically, setup, today of represent So but the ARR

Christopher Martin

enterprise That's kind going this out different the going versus on I to hit, off traditional but I is directions? – in really, out those sort your of just of you it. that see growth had that building side And building two might guess guys started where those energy with, product what be focus focus

Dan Preston

great question. its Yes,

overall. own have and And about independent two the And deployed in with they that, side, distinct they how technology P&L. not that's the as their two. So, we businesses we're their the leveraged is across have those look with being decisions distribution being necessarily making enterprise opportunity operations at own investment

focused team over independent is the to so, how there cashflow way. positive their achieve in And on own time

infrastructure longer a robust they quarter expand And to sales along there’s with the allowing partners of late insurers so, of accelerate to expect the is we developing that this business. year ecosystem that overall, that close companies. a over It pipeline team that to rapidly years for is insurance and pipeline team business strong that deals has come. ultimately larger expect stage with a But to of cycle that several been

Christopher Martin

any that of there the you're following one up to kind work around about, sort expanding drive states there what of in marketing was post been Has having of Have having type of Awesome. any home our in seems out on asking be companies? customers. as more any, focus That's and things that versus the into messaging type around type like to so Appreciate of you definitely mentioned that that helpful. from And messaging more on Gary understanding work the there like that you're in versus traditionally quick what not there you're one been is the pin focus saying, that. in workplaces driving very shift office – could a companies to Colorado the moving in actually what way much was the done and shift Indiana but being and work be be forward?

Dan Preston

to I you significantly to product, position per one and because like pay play our to that actually to of an Chris, And a work continue car bit insurers, who is a when not now just environment dynamic that path, mile home home has is incredibly immediately, a moving a powerful less. other to less going try we from been because home we're XXX%. is And We've from huge -- and their hybrid it's respond minute home think plan watching the from I level who up rates this time. think little work driving to to you about at a of work we It's those think on will have today catch work from think be drive but built opportunity. the the this over that or who's product a occupation to less. can bought is is workers Metromile anyone commutes

that a this We now “new product it is to more the unclear stable. And And kind our superior further than just marketplace. incredibly is certainty so, this opportunity alternatives next see in to the we in and of was six pandemic of would did normal months, huge what we I marketplace for marketplace think think again, and just powerful around middle you're because us activity a feel a be”. have of the deal the like we going when when is be over this lot a great will the

I really we can develop segment, strong can education into So, particular think drive position. this if a good we

Christopher Martin

all Thank Awesome. That's now. have for much. very you I

Operator

Please a follow do Josh we Fitzgerald. And Cantor have with proceed. up Siegler from

Josh Siegler

for taking Thanks Hi. my follow-up.

are were in trying vaccines point weeks think, Are lifted time? that downs So get XQ shock trend the for you out kind the beginning was to severity seeing loss to you, and the really I'm first a the I of, this continuing XQ? trends rolled impact seeing the at lock persist? as

Dan Preston

It's leading a the up Yes. followed with happened of faster. on pieces course, and of question. What in are went are good us. pandemic fewer there premium that away. when reduction we the the that right people severity -- But obviously saw happened people for is, frequency, set And behind first behind going being the road

thing we happen, that's things enter period post-pandemic a down, more likely as as would is we do surprising was dire severity that The accident the other severe. went hits to. and that that never into So can be started that of be expect to that are severity. more to And you see also back that, in it pedestrian

other elevated, seen to the frequency an From on some seen higher is I that ratio. leading stayed So basis the earnings industry-wide severity of this out you've largely but other is trend. from think, we've overtime, loss consistent that, what reports stayed per insurers which a of mile is there,

rate well. we'll expect we need adjustments as So as others will to make

Josh Siegler

or of rate time? building states at areas, the And you or speaking just you new That's plan over specific in scale out that change. specific to and August in super scale adjustments, roll Do helpful. know, Great. pricing

Dan Preston

behavioral happen ways per portfolio way will number across pricing of areas mile have the be one. adjustments, a rate very that those rate just a a a targeted where more on tools broad targeted segments in of in impact -- because available focused do across different to need will do going It rather than We're we we mean which other ways. to at disposal our

Josh Siegler

very and my for Thanks much follow-up. taking thanks

Dan Preston

Good.

Operator

are As no closing Dan there the Thank back Preston queue, more for questions in the remarks. turn over I to conference like you. to would

Dan Preston

joining our all you for very Thank Okay. second us for call. earnings much quarter

product well that to the this, taking really more and gigantic accelerated And growth can finding market drive is save the Metromile XX% Metromile. substantial. opportunity for for would potential It's the market fit drive as you is the that consumers substantial of known fundamentally, clear. is First [ph]

So conversation. we look forward to continuing the

Operator

Thank you. conference. today's This does conclude

participation. may thank time. you this for your at You your lines disconnect And

Metromile (MILE) 10 Aug 212021 Q2 Earnings call transcript