Hippo (US:HIPO)2025-05-07 22:02Financial Data and Key Metrics Changes - In Q1 2025, revenue grew 30% year over year to $110 million, up from $85 million in Q1 2024 [13] - Adjusted EBITDA loss was $41 million, a $21 million increase compared to Q1 2024, with $45 million of expenses related to the LA wildfires [16][17] - Net loss for Q1 was $48 million, a $12 million increase from Q1 2024, but would have improved by $33 million without the impact of the wildfires [16] Business Line Data and Key Metrics Changes - The Hippo homeowners insurance program saw a 35% year over year increase in gross written premium from homebuilder partners [7] - Insurance as a Service revenue grew 91% year over year to $39 million, driven by a 27% increase in gross earned premium [13] - HHIP revenue grew 12% year over year to $62 million, supported by improvements in reinsurance structure [14] Market Data and Key Metrics Changes - Written premium outside of HHIP increased 21% year over year, indicating diversification in business lines [9] - The HHIP gross loss ratio increased 41 percentage points year over year to 121%, primarily due to the LA wildfires [14][15] Company Strategy and Development Direction - The company is preparing to expand new business in the HHIP program after reducing written premium from existing homes in catastrophe-prone areas [8] - Plans to raise an additional $50 million in surplus notes to support growth in the Spinnaker platform, which has shown consistent profitability [10] - The company aims to generate net profit by the end of 2025, with a focus on revenue growth and improved underwriting performance [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving net profit by Q4 2025, driven by higher premium retention and improved loss ratios [18] - The impact of the LA wildfires was acknowledged, but management emphasized that the new homes channel remained unaffected [12][16] - The company is optimistic about its long-term growth trajectory and plans to share a three-year roadmap at the upcoming Investor Day [11] Other Important Information - The company is focused on reducing fixed expenses through investments in infrastructure and automation, which will support future operating leverage improvements [10] - As of Q1, cash and investments decreased by $42 million to $528 million, primarily due to payments related to the LA fires [17] Q&A Session Summary Question: What will be the cost of the surplus note being raised? - The rate on the surplus note is approximately 9.5%, which is considered favorable for the company [23][24] Question: Will the capital from the surplus note fund the HHIP program or just Spinnaker? - The primary driver for raising the note is to fund the Spinnaker platform, but it will also support growth in the HHIP portfolio now that risks have been reduced [26][27] Question: How does the company view tariffs and their impact on new home sales? - The company can adjust coverage and premiums automatically at each renewal, ensuring adequate protection for policyholders despite material inflation [32][34] Question: When does the company expect to achieve EBITDA profitability? - The company is guiding for net income profitability in Q4 2025 and expects adjusted EBITDA to improve throughout the year [36][38] Question: Does the EBITDA loss include the assessment from the Fair Plan? - Yes, the $45 million loss includes the Fair Plan assessment, with $12 million attributed to Spinnaker non-HIPPO programs [39][41]