Financial Performance - Managed Premium increased significantly to $1,201,597, up from $496,347 in the same period last year, representing a growth of approximately 142.5%[165] - Managed Policies rose to 263,753, compared to 94,587 in the prior year, indicating a growth of approximately 178.5%[165] - Annual Recurring Revenue reached $192,410, compared to $117,645 in the previous year, marking an increase of approximately 63.5%[165] - Revenue for the three months ended September 30, 2025, increased by 89.5% to $55,166, compared to $29,110 in 2024, driven by growth in underwriting and management services[186] - Total revenue for the three months ended September 30, 2025, increased by 83.0% to $163,664, compared to $89,415 for the same period in 2024[209] - Total revenue increased by $74,249, or 83.0%, to $163,664 for the nine months ended September 30, 2025, compared to $89,415 for the same period in 2024[210] - Net income for the three months ended September 30, 2025, was $21,151,000, compared to $5,257,000 for the same period in 2024, representing a significant increase[234] - Adjusted EBITDA for the nine months ended September 30, 2025, was $83,501,000, up from $27,169,000 in 2024, indicating strong operational performance[234] Revenue Breakdown - Underwriting and management revenue rose by 103.5% to $44,879, representing 81.4% of total revenue, primarily due to new management fee arrangements with two additional customers[188] - Claim services revenue increased by 48.2% to $8,030, representing 14.6% of total revenue, influenced by higher managed premiums and severe weather events in 2024[189] - Underwriting and management revenue rose by $66,244, or 98.6%, to $133,424, representing 81.5% of total revenue, driven by new management fee arrangements with two additional customers[211] - Claim services revenue increased by $6,134, or 35.4%, to $23,482, representing 14.3% of total revenue, influenced by higher CAT claim service fees following severe weather events[212] - Other technology services revenue grew by $1,871, or 38.3%, to $6,758, representing 4.2% of total revenue, primarily due to higher CAT software fees related to Hurricanes Milton and Helene[213] Profitability Metrics - Gross profit for the three months ended September 30, 2025, was $33,773, a 203.7% increase from $11,121 in 2024, driven by growth in managed premiums[186] - Gross profit for the nine months ended September 30, 2025, was $96,149, reflecting a 178.6% increase compared to $34,507 in 2024[209] - Adjusted Revenue for the three months ended September 30, 2025, was $27,560,000, compared to $1,550,000 in 2024, reflecting substantial growth in core platform services[236] - Adjusted EBITDA Margin for the three months ended September 30, 2025, was 54.9%, compared to 32.1% in 2024, demonstrating improved operating efficiency[237] Expenses and Costs - Cost of revenue for the three months ended September 30, 2025, increased by 18.9% to $21,393, representing 38.8% of total revenue, down from 61.8% in 2024[191] - Total operating expenses rose by $4,904, or 40.6%, to $16,973, while as a percentage of total revenue, it decreased to 10.3% from 13.5% in 2024[220] - Operating expenses for the three months ended September 30, 2025, increased by 48.5% to $6,521, representing 11.8% of total revenue, down from 15.0% in 2024[198] - Selling, general and administrative expenses rose by 51.5% to $3,900, accounting for 7.1% of total revenue for the three months ended September 30, 2025[199] - Research and development expenses increased by 44.3% to $2,494, representing 4.5% of total revenue for the three months ended September 30, 2025[200] Cash Flow and Liquidity - Cash and cash equivalents as of September 30, 2025, were $140,919,000, significantly higher than $54,502,000 at the end of 2024, indicating enhanced liquidity[238] - Net cash provided by operating activities for the nine months ended September 30, 2025, was $89,017,000, an increase of $59,669,000 from $29,348,000 in 2024, driven by higher operating income[245] - The company expects existing cash and cash equivalents, along with anticipated operating cash flows, to be sufficient for liquidity needs for at least the next 12 months[239] Strategic Focus and Market Position - The company has shifted its focus towards expanding technology and insurance solutions services following the sale of TypTap Insurance Company, which involved 2,500,000 shares[158][159] - The company aims to diversify its revenue by acquiring new customers outside of its existing relationships with HCI, which currently dominate its revenue stream[163] - The competitive landscape in the P&C insurance technology market remains intense, with the company competing on cost, functionality, and customer knowledge[161] - As of September 30, 2025, the company provides services to P&C companies in 13 states, aiming for rapid national expansion to enhance premium growth and geographic diversity[166] Risk Management and Compliance - The transition to a standalone public company post-IPO in November 2025 has led to increased governance and compliance costs[166] - The company maintains a conservative capital structure with no significant outstanding debt and does not engage in trading or speculative investment activities[266] - Credit risk associated with accounts receivable is limited through credit evaluations, but no collateral is required to secure amounts owed by customers[270] - The company conducts operations through a subsidiary in India, but is not exposed to material foreign-currency translation risk as the subsidiary's functional currency is the U.S. dollar[271] Taxation - Income tax expense for the three months ended September 30, 2025, was $7,203, with an effective tax rate of 25.4%, compared to $1,655 and 23.9% in 2024[205] - Income tax expense was $20,674 for the nine months ended September 30, 2025, with an effective tax rate of 25.4%, compared to $5,088 and 26.2% in 2024[228] - The company expects its effective tax rate to continue to vary from the statutory rate due to state tax obligations and permanent differences[229] Economic Factors - Inflationary pressures could adversely affect operating results, but the company does not believe inflation has materially impacted its financial condition to date[268] - A hypothetical 10% change in interest rates would not have had a material impact on the company's unaudited interim Consolidated Financial Statements[267]
Exzeo Group(XZO) - 2025 Q3 - Quarterly Report