Financial Data and Key Metrics Changes - For Q4 2025, pre-tax income was approximately $29 million, with diluted earnings per share at $0.25. For the full year, pre-tax income exceeded $110 million, and diluted earnings per share were $0.99 [4] - Revenue for Q4 increased to $53 million, while full-year revenue rose to $217 million [4] - Adjusted EBITDA margins were over 54% for both Q4 and the full year, indicating significant leverage in the operating model [5] - Managed Premium at the end of Q4 was approximately $1.39 billion, up from about $580 million the previous year [5] - Annual recurring revenue reached $215 million in Q4, an increase from approximately $139 million in the prior year quarter [5] - Free cash flow for the full year was about $97 million, with a conversion rate of 117% [6] Business Line Data and Key Metrics Changes - The company booked its first non-HCI revenue during Q4, with contributions from two new clients expected to grow to approximately $100 million in Managed Premium by the end of Q1 2026 [4][5] - The addition of a new client, Tokio Marine Highland, for flood insurance is expected to enhance the product offerings on the platform [9] Market Data and Key Metrics Changes - The company anticipates Managed Premium to exceed $1.4 billion by the end of Q1 2026, raising the outlook for year-end 2026 to $1.55 billion [6][7] Company Strategy and Development Direction - The company aims to add non-HCI clients and grow them significantly, with a focus on expanding its sales funnel and enhancing its product offerings [8][9] - The rise of AI in the insurance industry is seen as a catalyst for modernization, with the company positioned to leverage its fully automated platform to reduce operational friction and costs [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strong operating margins, growing earnings, and positive cash flow, emphasizing the importance of execution in adding clients and products [12] - The future operating model of the insurance industry is expected to change significantly due to AI, with the company designed to adapt to these changes [12] Other Important Information - The company ended the year with $305 million in cash and cash equivalents and no debt, with stockholders' equity increasing 16-fold to $254 million [6] Q&A Session Summary Question: Insights on the flood market entry with Tokio Marine - Management highlighted the speed of the partnership and the potential for expansion, noting Tokio Marine's licensing in 42 states [18][19] Question: Development of the customer pipeline post-IPO - Management indicated that the sales funnel is developing well, with three new customers onboarded in four months, and emphasized the growing interest in the platform due to AI advancements [21][22] Question: Free cash flow conversion and guidance for 2026 - Management expects free cash flow conversion to remain over 100%, driven by growth and a positive working capital cycle [24] Question: Clarification on Managed Premium and revenue recognition - Management confirmed that third-party revenue was nominal at the end of Q4 but expected to reach approximately $100 million by Q1 2026 [46]
Exzeo Group(XZO) - 2025 Q4 - Earnings Call Transcript