Hippo (US:HIPO)2022-11-11 04:21Financial Data and Key Metrics Changes - The third quarter adjusted EBITDA loss was $54.8 million, including $4.7 million related to Hurricane Ian, showing an improvement from the previous quarter's loss of $55.8 million [19][23] - Revenue reached $30.7 million, up 44% from Q3 last year, indicating an acceleration in growth compared to Q2 [28] - Net loss attributable to Hippo was $129.2 million or $5.66 per share, compared to a loss of $30.9 million or $2 per share in the prior year quarter [35] Business Line Data and Key Metrics Changes - The builder business accounted for 26% of total Hippo and agency premiums in the quarter, nearly half of new business [24] - Hippo blended premium retention across both Hippo policies and agency customers was 90%, up from 89% in Q2 [12][26] - Gross loss ratio, excluding Hurricane Ian, was 58%, an improvement of 70 percentage points from the previous year [16][28] Market Data and Key Metrics Changes - The customer base reached 332,000 by quarter's end, driven by customer acquisition and retention [12][25] - Growth was noted in states like New York, North Carolina, and Massachusetts, with a focus on attracting "generation better" customers [14][26] Company Strategy and Development Direction - The company aims to achieve adjusted EBITDA profitability by late 2024 while expanding its product offerings [38] - Investments in technology and service capabilities are ongoing to drive long-term growth and enhance customer experience [20][38] - The launch of the "Book a Pro" feature for Texas customers is expected to connect homeowners with home improvement professionals [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in building a superior underwriting model despite challenges from inflation and supply chain issues [10] - The company expects Q4 2022 adjusted EBITDA loss to be below $50 million, with continued improvements anticipated thereafter [19][23] - Management highlighted the importance of maintaining discipline in underwriting and market entry strategies, particularly in Florida [43][44] Other Important Information - The company wrote off a remaining goodwill asset of $53.5 million in the quarter, reflecting market valuation concerns [35] - Total generated premium is expected to be between $790 million and $810 million for the full year, representing over 30% growth [36] Q&A Session Summary Question: How did the company fare from a customer's point of view regarding Hurricane Ian? - Management expressed satisfaction with the proactive response to customers and positive feedback received, highlighting the effectiveness of their underwriting discipline [41][42] Question: What drove the decision to write off goodwill? - The decision was based on routine testing of goodwill and market valuation concerns, as the company's stock was trading below its cash balance [54][55] Question: How does the company view the impact of economic slowdown on different business segments? - Management believes there is still significant upside in the builder channel despite a slowdown, as they are just beginning to tap into opportunities [68][69] Question: What is the company's approach to reinsurance costs and profitability? - Management noted that while the reinsurance market is hardening, their multiyear capacity with partners and improved loss ratios position them well [75][76] Question: How will sales and marketing spend be affected by growth in the builder channel? - Management indicated that sales and marketing strategies are flexible and can be adjusted based on market conditions, with a focus on maintaining customer lifetime value [86][90]