EverQuote(EVER) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenues in Q3 2025 grew 20% year over year to a record $173.9 million, driven by stronger enterprise carrier spend, which was up over 27% from the previous year [9][10] - Net income reached a record $18.9 million, up from $11.6 million in the prior year period [10] - Adjusted EBITDA increased to a record $25.1 million, representing a 33% increase year over year, with an adjusted EBITDA margin of 14.4% [10][12] Business Line Data and Key Metrics Changes - Revenue from the auto insurance vertical increased to $157.6 million in Q3, up over 21% year over year [9] - Revenue from home and renters insurance vertical increased to $16.3 million in Q3, up 15% year over year [10] - Variable marketing dollars (VMD) increased to a record $50.1 million in Q3, up 14% from the prior year period [10] Market Data and Key Metrics Changes - Approximately 80% of the top 25 historical carrier partners were below peak quarterly spend in Q3, indicating room for additional growth [12] - The company operates in a favorable environment where carriers are enjoying healthy underwriting margins and consumer shopping activity remains elevated [12] Company Strategy and Development Direction - The company aims to reach a billion dollars in annual revenue in the next two to three years while transforming into a multi-product, AI-powered growth solutions provider for carriers and agents [8][15] - The strategy includes evolving from a lead generation vendor to a growth solutions partner by delivering better-performing referrals, bigger traffic scale, and a broader suite of products and services [4][5] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering strong results in 2025, with expectations of 20% year-over-year revenue growth and over 55% annual growth in adjusted EBITDA [13][14] - The underwriting environment is healthy, and management believes that the current profitability levels of carriers are sustainable, with opportunities for increased customer acquisition spend [18][32] Other Important Information - The company repurchased 900,000 shares of its Class A common stock for $21 million, which reduced shares outstanding by 2% [11][12] - Cash and cash equivalents at the end of the period were $146 million, with no debt [12] Q&A Session Summary Question: Sustainability of current profitability levels and impact on customer acquisition spend - Management indicated that carrier underwriting is at a healthy level and that acquisition spend tends to lag profitability, suggesting room for increased advertising spend [18] Question: Key platform features or innovations expected in 2026 - Significant investments have been made in the SmartCampaigns product, which is expected to drive meaningful improvements in carrier performance and budget allocation [20] Question: Incremental investments in new channels and anticipated impact on VMM - New traffic channels are being rebuilt, and initial investments may run at lower margins, but they are expected to blend in at comparable VMM levels over time [25][77] Question: Broader appetite from carrier partners to ramp up budgets - Management noted that carriers are feeling stronger and are engaging in customer acquisition, defying typical seasonal patterns [32] Question: Update on California carrier participation - California has seen steady ramp-up in carrier participation, with expectations for meaningful upside as the market progresses into 2026 [83]