Q4 2021 EverQuote Inc Earnings Call
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Good afternoon, ladies and gentlemen, thank you for attending todays Evercore fourth quarter 2021 earnings call. My name is Tia and I'll be your moderator for today's call.
Speaker 1: Good afternoon, ladies and gentlemen. Thank you for attending today's EverQuote fourth quarter 2021 earnings call. My name is Tia, and I will be your moderator.
All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end.
Speaker 1: All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end of the call.
If you would like to ask a question. Please press star one or your telephone keypad.
Speaker 1: If you would like to ask a question, please press star one on your telephone.
I'd now like to pass the conference over to your host Bradley Johnson with Blue shirt Group you May proceed.
Speaker 1: I would now like to pass the conference over to your host, Bradley Johnson with Blue Shirt Group. You may proceed.
Thank you good afternoon, and welcome to Evercore fourth quarter and full year 2021 earnings call, we will be discussing the results announced in our press release issued today after the market close with me on the call. This afternoon is Jamie Mendel Everglades, Chief Executive Officer, and John Wagner, Chief Financial Officer, I've ever close during the call we will make statements related to our business.
Speaker 2: Thank you. Good afternoon, and welcome to EverQuote's fourth quarter and full year 2021 earnings call. We will be discussing the results announced in our press release issued today after the market closed. With me on the call this afternoon is Jamie Mendel, EverQuote's Chief Executive Officer, and John Wagner, Chief Financial Officer of EverQuote.
Speaker 2: During the call, we will make statements related to our business that may be considered forward-looking statements under federal securities laws, including statements concerning our financial guidance for the first quarter and full year 2022, our growth strategy, and our plans to execute on our growth strategy, the initiatives, including our direct-to-consumer agency, our investments in the business, the growth levers we expect to drive our business, our ability to maintain existing and acquire new customers, our expectations regarding the recovery of the auto insurance industry, our recent acquisitions, our goals for integrations, and other statements regarding our plans and prospects.
That may be considered forward looking statements under federal securities laws, including statements concerning our financial guidance for the first quarter and full year 2022, our growth strategy and our plans to execute on our growth strategy key initiatives, including our direct to consumer AGP our investments in the business the growth levers, we expect to drive our business our ability to maintain exist.
And acquire new customers, our expectations regarding the recovery of the auto insurance industry, a recent acquisition our goals for integrations and other statements regarding our plans and prospects forward looking statements maybe identified by words and phrases such as we expect we believe we intend we anticipate we plan may upcoming and similar words and phrases.
Speaker 2: Forward-looking statements may be identified with words and phrases such as we expect, we believe, we intend, we anticipate, we plan, may, upcoming, and similar words and phrases.
These statements reflect our views only as of today and should not be considered our views as of any subsequent date, we specifically disclaim any obligation to update or revise these forward looking statements except as required by law.
Speaker 2: These statements reflect our views only as of today and should not be considered our views as of any subsequent date. We specifically disclaim any obligation to update or revise these forelooking statements except as required by law.
These statements are not promises or guarantees of future performance and are subject to a variety of puts uncertainty that could cause the actual results to differ materially the box vacation for a discussion of material risks and other important factors that could cause our actual results. Please refer to those contained under the heading risk factors in our most recent quarterly report on Form 10-Q , and our annual report on form <unk>.
Speaker 2: Poor-looking statements are not promises or guarantees of future performance and are subject to a variety of risks and uncertainties that could cause the actual results to differ materially from our expectations.
Speaker 2: For a discussion of material risk and other important factors that could cause our actual results, please refer to those contained under the heading Risk Factors in our most recent quarterly report on Form 10-Q and our annual report on Form 10-K , which is on file with the Securities and Exchange Commission and available on the Investor Relations section of our website at investor.everquote.com and on the SEC's website at sec.gov.
10-K, which is on file with the Securities and Exchange Commission and available on the Investor Relations section of our website at Investor <unk> ever quote Dot com and on the SEC's website at SEC Gov.
During the course of today's call, we will refer to certain non-GAAP financial measures, which we believe are helpful to investors a reconciliation of GAAP to non-GAAP measures was included in our press release issued after the close of market today, which is available on the Investor Relations section of our website at investors that Evercore dot com and with that I'll turn it over to gene.
Speaker 2: Finally, during the course of today's call, we referred to certain non-GAAP financial measures, which we believe are helpful to investors. A reconciliation of GAAP to non-GAAP measures was included in a press release we issued after the close of Market Day, which is available on the Investor Relations section of our website at investors.everclose.com. And with that, I'll turn it over to Jill.
Thank you Bradley and thank you everyone for joining us today two.
Speaker 3: Thank you, Brinley, and thank you, everyone, for joining us today. 2021 marked a defining year for EverQuote.
2021 marked a defining year for other quote.
Despite significant headwinds emerging in the auto insurance industry in the second half of the year the team exhibited tenacity and the business showed its resilience.
Speaker 3: Despite significant headwinds emerging in the auto insurance industry in the second half of the year, the team exhibited tenacity and the business showed its resilience.
In 2021, we delivered revenue and variable marketing margin or Vms year over year growth of 21% and 19%, respectively. We generated adjusted EBITDA of $14 $6 million.
Speaker 3: In 2021, we delivered Revenue and Variable Marketing Margin, or VMM, year-over-year growth of 21% and 19% respectively. We generated adjusted EBITDA of $14.6 million.
We made significant strides toward our strategy to move down the insurance value chain, enabling richer connections between shoppers and providers selling policies directly to consumers and building deeper customer relationships.
Speaker 3: We made significant strides toward our strategy to move down the insurance value chain, enabling richer connections between shoppers and providers, selling policies directly to consumers, and building deeper customer relationships.
Q4, accentuated this progress and resiliency.
During Q4, we exceeded our revised revenue expectations growing 5% year over year, while delivering performance in line with our guidance on both variable marketing margin or V M M and adjusted EBITDA.
Speaker 3: During Q4, we exceeded our revised revenue expectations, growing 5% year over year, while delivering performance in line with our guidance on both Variable Marketing Margin, or VMM, and Adjusted EBITDA.
The following advances towards our long term strategy contributed to our solid results in Q4 amidst a very challenging auto insurance industry backdrop.
Speaker 3: The following advances towards our long-term strategy contributed to our solid results in Q4 amidst a very challenging auto insurance industry backdrop.
On the shoppers side of our marketplace. We added 50, new partners in 2021 to our verified partner network.
Speaker 3: On the shopper side of our marketplace, we added 50 new partners in 2021 to our verified partner network.
Tumor volume acquired through these partners contributed to 25% year over year quote request growth in Q4.
Speaker 3: Consumer volume acquired through these partners contributed to 25% year-over-year quote request growth in Q4.
On the provider side of our marketplace auto revenue in our local agent channel grew in Q4, even as revenue from our auto carrier channel contracted significantly during the period.
Speaker 3: On the provider side of our marketplace, auto revenue in our local agent channel grew in Q4, even as revenue from our auto carrier channel contracted significantly during the period.
We expanded adoption of our service to manage the online to offline connection on behalf of local agents driving better performance for agents and extending our competitive moat in this valuable channel.
Speaker 3: We expanded adoption of our service to manage the online to offline connection on behalf of local agents, driving better performance for agents and extending our competitive moat in this valuable channel.
Our direct to consumer agency or <unk> a cornerstone.
Speaker 3: Our Direct-to-Consumer Agency, or DTCA, a cornerstone investment area over the last two years, delivered a breakthrough Q4.
Stone investment area over the last two years delivered a breakthrough Q4.
In health and Medicare are ever assurance agency delivered $14 $5 million revenue.
Speaker 3: In health and Medicare, our EverAssurance agency delivered $14.5 million of revenue and over three full
And over threefold year over year increase since the start of the enrollment period.
Speaker 3: And since the start of the enrollment period, Eversurance customers have given us a positive 84 NPS score, effusively citing the helpfulness and friendliness of our advisors.
<unk> customers have given us a positive 84, NPS score effusively, citing the helpfulness and friendliness of our advisors.
We also integrated policy fuel the P&C agency, we acquired last summer, culminating the assembly at Evercore, It's multiline direct to consumer agency.
Speaker 3: We also integrated PolicyFuel, the P&C agency we acquired last summer, culminating the Assembly of EverQuotes multi-line direct-to-consumer agency.
We entered 2022, performing well in customer acquisition and in our local agents and <unk> distribution channels.
Speaker 3: We enter 2022 performing well in customer acquisition and in our local agent and DTCA distribution channels.
Unfortunately, the carrier channel, which has historically been our largest remains problematic with continued uncertainty around the timing of recovery in auto insurance carrier digital customer acquisition spend.
Speaker 3: Unfortunately, the carrier channel, which has historically been our largest, remains problematic with continued uncertainty around the timing of recovery and auto insurance carrier digital customer acquisition spend.
While we have seen modest recoveries from Q4 lows, we remain 30% to 40% below August 2021 levels of carrier online revenue per quote request or our PQ are.
Speaker 3: While we've seen modest recoveries from Q4 lows, we remain 30 to 40% below August 2021 levels of carrier online revenue per quote request, or RPQR.
Each week carriers continue making large changes to campaigns, including pausing or reactivating entire states our segments, which is highly unusual during more stable times.
Speaker 3: Each week, carriers continue making large changes to campaigns, including pausing or reactivating entire states or segments, which is highly unusual during more stable times.
These changes result from ongoing profitability analysis being done by the carriers as both rate and loss environment continue shifting dynamically.
Speaker 3: These changes result from ongoing profitability analysis being done by the carriers as both rate and loss environments continue shifting dynamically.
Given this uncertainty our.
Speaker 3: Given this uncertainty, our full year forecast is based on conservative assumptions about the recovery and auto carrier monetization, which has two implications.
Our full year forecast is based on conservative assumptions about the recovery in auto carrier monetization, which has two implications first it negatively affects revenue, particularly in the first three quarters of the year as our 2022 forecast anticipate minimal growth in the auto business as expected gains with local agents.
Speaker 3: First, it negatively affects revenue, particularly in the first three quarters of the year, as our 2022 forecast anticipates minimal growth in the auto business, as expected gains with local agents and a DTCA are offset by an extended period of lower year-over-year carrier demand.
And a D. TCA are offset by an extended period of lower year over year carrier demand.
And second it has a relatively larger negative impact on adjusted EBITDA.
Speaker 3: And second, it has a relatively larger negative impact on adjusted EBITDA.
Ultimately the recovery in auto carrier monetization will be driven by the pace at which carriers receive approval to increase rates, enabling them to restore a broader underwriting appetite and higher willingness to pay.
Speaker 3: Ultimately, the recovery in auto carrier monetization will be driven by the pace at which carriers receive approval to increase rates, enabling them to restore broader underwriting appetite and higher willingness to pay.
We approach 2022 with discipline and flexibility.
Speaker 3: We approach 2022 with discipline and flexibility.
We will apply discipline and managing profitability by sharpening our near term focus to a limited set of strategic initiatives.
Speaker 3: We will apply discipline in managing profitability by sharpening our near-term focus to a limited set of strategic initiatives.
These include first in customer acquisition growing and expanding newer channels like live calls.
Speaker 3: These include first and customer acquisition, growing and expanding newer channels like live calls.
Second in our marketplace, extending our advantage with local agents as we continue improving the quality of shopper agent connections.
Speaker 3: Second, in our marketplace, extending our advantage with local agents as we continue improving the quality of shopper-agent connections.
And third in our DTC, a more fully integrating policy fuel with our broader organization continuing to optimize our funnels to improve unit economics, and establishing our ability to cross train agents and cross sell consumers across product lines.
Speaker 3: And third, in our DTCA, more fully integrating policy fuel with our broader organization, continuing to optimize our funnels to improve unit economics, and establishing our ability to cross-train agents and cross-sell consumers across product lines.
We are also pausing efforts to build a commercial insurance vertical.
Speaker 3: We are also pausing efforts to build a commercial insurance vertical.
At the same time, we will invest judiciously in areas, where we can extend our competitive advantage and emerge from the auto downturn in a position of relative strength.
Speaker 3: At the same time, we will invest judiciously in areas where we can extend a competitive advantage and emerge from the auto downturn in a position of relative strength.
We will be measured early in the year, while planning for and creating options to accelerate investment quickly if auto insurance carrier pricing rebounds faster than expected.
Speaker 3: We will be measured early in the year while planning for and creating options to accelerate investment quickly if auto insurance carrier pricing rebounds faster than expected.
In closing, we remain steadfast and building towards our long term vision of becoming the largest online source of insurance policies by using data and technology to make insurance simpler more affordable and personalized.
Speaker 3: In closing, we remain steadfast in building towards our long-term vision of becoming the largest online source of insurance policies by using data and technology to make insurance simpler, more affordable, and personalized.
It has been a busy first year as CEO of ever quote I couldnt be more proud of our team's ability to navigate changes in the industry or more excited by the long term opportunity forever quote.
Speaker 3: It has been a busy first year as CEO of Everquote. I couldn't be more proud of our team's ability to navigate changes in the industry, or more excited by the long-term opportunity for Everquote.
Last year's progress with local agents and in our D. TCA has set the foundation for Evercore. Its next phase of growth as we build the one stop insurance shop for the digital age.
Speaker 3: Last year's progress with local agents and NRDTCA has set the foundation for EverQuote's next phase of growth as we build the one-stop insurance shop for the digital age.
Now I'll turn the call over to John to provide more detail on our financial results.
Speaker 3: Now I'll turn the call over to John to provide more detail on our financial results.
Thank you Jamie and good afternoon, everyone I'll start by discussing our financial results for the fourth quarter and full year of 'twenty, One and then provide guidance for the first quarter and full year of 2002.
Speaker 4: Thank you, Jamie, and good afternoon, everyone. I'll start by discussing our financial results for the fourth quarter and full year of 21, and then provide guidance for the first quarter and full year of 21.
Our total revenue for the fourth quarter grew 5% year over year to $102 $1 million. Despite macro challenges in the auto insurance industry full year revenue increased 21% to $418 $5 million.
Speaker 4: Our total revenue for the fourth quarter grew 5% year-over-year to $102.1 million, despite macro challenges in the auto insurance industry. Full-year revenue increased 21% to $418.3 million.
As anticipated revenue in our auto insurance vertical decreased to $74 million in the fourth quarter down 8% year over year as auto insurance carriers cut your advertising spending to manage for overall profitability considering the recent increase in claims losses affecting the auto insurance industry.
Speaker 4: As anticipated, revenue in our auto insurance vertical decreased to $70.4 million in the fourth quarter, down 8% year-over-year, as auto insurance carriers cut their advertising spending to manage for overall profitability, considering the recent increase in claims losses affecting the auto insurance industry.
Unpacking, the overall performance of our auto insurance vertical in the fourth quarter makes it clear that we benefited from the diversity of our distribution channels, even within the auto insurance vertical as revenue from carriers declined more significantly by 29% year over year, but that decrease was partially upset by an.
Speaker 4: Unpacking the overall performance of our auto insurance vertical in the fourth quarter makes it clear that we benefited from the diversity of our distribution channels, even within the auto insurance vertical. As revenue from carriers declined more significantly by 29% year-over-year, but that decrease was partially offset by an increase of 12% from our local agent network and additional contribution from our DTC agency.
<unk> of 12% from a local agent network and additional contribution from our DTC agency.
The auto insurance carriers have dialed back their direct advertising to increase their immediate profitability agent businesses and their commission payments from carriers are not affected in the same manner, because those well established structures cannot be throttled back in the short term without long term consequences for the carriers business.
Speaker 4: Though auto insurance carriers have dialed back their direct advertising to increase their immediate profitability, agent businesses and their commission payments from carriers are not affected in the same manner because those well-established structures cannot be throttled back in the short term without long-term consequences for the carrier's business.
Revenue from our third party agents was 39% total revenue in both Q4 and the full year 'twenty, one reflecting the resilience of agent distribution during this difficult auto insurance cycle.
Speaker 4: Revenue from our third-party agents was 39% of total revenue in both Q4 and the full year 21, reflecting the resilience of agent distribution during this difficult auto insurance cycle.
For the full year notwithstanding the challenges in the second half our auto insurance vertical grew by 17% to $339 million.
Speaker 4: For the full year, notwithstanding the challenges in the second half, our auto insurance vertical grew by 17% to $330.9 million.
Revenue from our other insurance verticals, which include home and renters life and health insurance increased to $31 $6 million in the fourth quarter growing 50% year over year, which demonstrates the progress we've made diversifying our revenue streams beyond the auto insurance vertical.
Speaker 4: Revenue from our other insurance verticals, which include home and renters, life and health
Speaker 4: increased to $31.6 million in the fourth quarter, growing 50% year over year, which demonstrates the progress we've made diversifying our revenue streams beyond the auto.
For the full year revenue from our other insurance verticals increased 38% to $87 $6 million.
Speaker 4: For the full year, revenue from our other insurance verticals increased 38% to $87.6 million.
Notably these non auto insurance verticals represented 31% of our fourth quarter revenue, an all time high and representing significant growth compared to 22% of revenue in the prior year period.
Speaker 4: Notably, these non-auto insurance verticals represent 31% of our fourth quarter revenue, an all-time high, and representing significant growth compared to 22% of revenue in the prior year period.
Our non auto insurance revenue growth benefited from our strong execution in the health insurance vertical and specifically from our direct to consumer agency policy sales. During Q4, we increased our health first party employee agent count by over 200% to approximately 130 agents and we did.
Speaker 4: Our non-auto insurance revenue growth benefited from our strong execution in the health insurance vertical, and specifically from our direct to consumer agency policy sales.
Speaker 4: During Q4, we increased our health first party employee agent count by over 200% to approximately 130 agents and we delivered revenue of $14.5 million, achieving a 281% year-over-year increase in our health DTCA revenue.
<unk> revenue of $14 $5 million, achieving a 281% year over year increase in our health Ptca revenue.
Turning to our metrics quote requests in the fourth quarter increased 24, 5% year over year to $8 2 million with a strong contribution from our verified partner network, especially in support of our open enrollment period within the health vertical.
Speaker 4: Turning to our metrics, quote requests in the fourth quarter increased 24.5% year-over-year to 8.2 million, with a strong contribution from our verified partner network, especially in support of our open enrollment period within the health of our.
Revenue per quote request for the fourth quarter decreased 16% year over year, reflecting price declines from carriers within our auto insurance vertical partially offset by greater contribution from our non autos verticals and our DTC agency.
Speaker 4: Revenue per quote request for the fourth quarter decreased 16% year over year, reflecting price declines from carriers within our auto insurance.
Speaker 4: Partially offset by greater contribution from our non-autos verticals and our DTC AC.
The variable nature of our advertising and consumer acquisition spending was evident in a nearly equal reduction of our cost per quote request, 15% year over year aligning.
Speaker 4: The variable nature of our advertising and consumer acquisition spending was evident in a nearly equal reduction of our cost per quote request of 15% year over year.
Aligning our cost of acquisition with the current lower levels of auto insurance carrier demand.
Speaker 4: aligning our cost of acquisition with the current lower levels of auto insurance carrier demand.
Q4 marked our second quarter with accelerated consumer volume growth at greater than 20% year over year quote request growth, we anticipate that once consumers start receiving rate increase notices from their current carriers. Many of those consumers will shop for new policies in search of lower rates, adding.
Speaker 4: Q4 marked our second quarter with accelerated consumer volume growth at greater than 20% year-over-year quote requests.
Speaker 4: We anticipate that once consumers start receiving rate increase notices from their current carriers, that many of those consumers will shop for new policies in search of lower rates, adding support for continued quote request growth in 2022. However, our business has evolved beyond a referral marketplace to include new models in traffic, like the Verified Partner Network, and new models in distribution, like DTC Agent.
Port for continued quote request growth in 2022, however, our business has evolved beyond the referral marketplace to include new models and traffic like the verified partner network and new models and distribution like DTC agency.
We believe that the quote request metrics no longer fully reflects the dynamics of our marketplace and is generally an output as we manage the business for variable marketing margin.
Speaker 4: We believe that the quote request metric no longer fully reflects the dynamics of our market.
Speaker 4: and is generally an output as we manage the business for variable marketing margins.
As a result, we will no longer be providing quote requests as a regular quarterly metrics, but we will update you on consumer acquisition Congress and metrics periodically.
Speaker 4: As a result, we will no longer be providing quote requests as a regular quarterly metric, but we'll update you on consumer acquisition progress and metrics periodically.
Variable marketing margin or <unk> defined as revenue less advertising expense remains the north star of our business and the key metrics that we seek to maximize as we grow the business.
Speaker 4: Variable Marketing Margin, or VMM, defined as revenue-less advertising.
Speaker 4: remains the North Star of our business, and the key metric that we seek to maximize as we grow the business.
We delivered fourth quarter DMM of $32 9 million, an increase of 3% year over year full.
Speaker 4: We delivered a fourth quarter VMM of $32.9 million, an increase of 3%.
Full year, <unk> expanded 19% year over year to $129 6 million.
Speaker 4: Full year of VMM expanded 19% year over year to $129.6 million.
Turning to our bottom line.
GAAP net loss was $8 5 million in the fourth quarter and $19 4 million for the full year, while we continue to make investments to support our growth initiatives. We've also been focused on managing our operating expenses, especially as it relates to resources dedicated to the auto insurance vertical to maintain positive adjusted EBITDA.
Speaker 4: Gap net loss was $8.5 million in the fourth quarter and $19.4 million for the full year. While we continue to make investments to support our growth initiatives, we've also been focused on managing our operations.
Speaker 4: especially as it relates to resources dedicated to the auto insurance.
Speaker 4: to maintain positive adjusted EBITDA during this difficult period.
During this difficult period.
We delivered adjusted EBITDA of 543000 for the fourth quarter and $14 6 million for the full year of 2022.
Speaker 4: We delivered adjusted EBITDA of $543,000 for the fourth quarter and $14.6 million for the full year 2022.
Operating cash flow was a use of cash of $6 $9 million in the fourth quarter, reflecting a modest adjusted EBITDA in the quarter, which drives cash flow from a referral marketplace and higher revenue contribution of policy sales commissions and our DTC agency, which we collect over the expect.
Speaker 4: Operating cash flow was the use of cash of $6.9 million in the fourth quarter, reflecting our most adjusted EBITDA in the quarter, which drives cash flow from our referral marketplace and higher revenue contribution of policy sales commissions in our DPC agency, which we collect over the expected lifetime of the policy sold, which stretches into future periods.
Lifetime of the policy sold which stretches into future periods.
We ended the year with cash and cash equivalents on the balance sheet of $34 9 million and $25 million in availability on our debt facility.
Speaker 4: We ended the year with cash and cash equivalents on the balance sheet of $34.9 million and $25 million in availability on our debt facility.
Turning to our outlook, including an update on the market conditions within the auto insurance industry as Jamie detail, though we've seen increases in demand and pricing from our carrier customers in our auto insurance vertical in Q1 2022.
Speaker 4: Turning to our outlook, including an update on the market conditions within the auto insurance industry. As Jamie detailed, though we've seen increases in demand and pricing from our carrier customers in our auto insurance vertical in Q1, 2022, as compared to Q4 of 2021. We are far from the more normal levels of demand in the first half of 2021.
As compared to Q4 of 2021, we are far from the more normal levels of demand in the first half of 2021.
And discussions with our carrier customers they are expressing less near term confidence and visibility in their advertising budgets as compared to a typical year.
Speaker 4: In discussions with our carrier customers, they are expressing less near-term confidence and visibility in their advertising budgets as compared to a typical year.
Last quarter, we identified the expected stages of this cycle with carriers recalibrating rates re filing with regulators and implementing those higher rates and renewal cycles and renew business that process is now widely reported there has been underway within the industry and we believe we are in the middle East.
Speaker 4: Last quarter, we identified the expected stages of this cycle with carriers recalibrating rates, refiling with regulators, and implementing those higher rates in renewal cycles and with new business.
Speaker 4: That process is now widely reported as being underway within the industry and we believe we are in the middle ends of a multi-quarter hard market cycle within auto insurance.
Have a multi quarter hard market cycle within auto insurance.
We expect measured and gradual improvement in demand and pricing within our auto insurance vertical through 2022 as carriers realize premium increases from rate changes those changes improve their overall profitability and they reinstate advertising spending to grow new business.
Speaker 4: We expect measured and gradual improvement in demand and pricing within our auto insurance vertical through 2022. As carriers realize premium increases from rate changes, those changes improve their overall profitability, and they reinstate advertising spending to grow new.
We expect that return of carrier demand combined with higher levels of insurance shopping caused by consumers reacting to higher renewal rates will set the stage for an eventual return to a more normal market and a return to our long term model higher growth and increasing profitability.
Speaker 4: We expect that return of carrier demand, combined with higher levels of insurance shopping caused by consumers reacting to higher renewal rates, will set the stage for an eventual return to a more normal market and our return to our long-term model of higher growth and increasing profitability.
As we manage through this cycle, we are focused on auto insurance opportunities within more resilient distribution channels, such as our large network of third party agents and our DTC agency and in our non auto insurance verticals, which are not impacted by the auto insurance headwinds.
Speaker 4: As we manage through this cycle, we are focused on auto insurance opportunities within more resilient distribution...
Speaker 4: such as our large network of third-party agents and our DPC agency, and in our non-auto insurance verticals, which are not impacted by the auto insurance
Q1, we expect revenue to be between 101 and $103 million.
Speaker 4: Q1, we expect revenue to be between $101 and $103 million.
A year over year decrease of 2% at the midpoint.
Speaker 4: a year-over-year decrease of 2% at the mid...
We expect variable marketing margin to be between 32 and 33 point in time.
Speaker 4: We expect variable marketing margin to be between 32 and $33.5 million.
A year over year increase of 4% at the midpoint.
Speaker 4: a year-over-year increase of 4% at the national level.
And we expect adjusted EBITDA to be between zero and one $5 million for.
Speaker 4: And we expect adjusted EBITDA to be between zero and $1.5 million.
For the full year 2022, we expect revenue to be between 420 and $430 million a year over year increase of 2% at the midpoint, we expect variable marketing margin to be between 128 $134 million a year over year increase of 1%.
Speaker 4: For the full year 2022, we expect revenue to be between $420 and $430 million.
Speaker 4: a year-over-year increase of 2% at the mid.
Speaker 4: We expect variable marketing margin to be between $128 and $134 million, a year-over-year increase of 1% at the midpoint. And we expect adjusted EBITDA to be between $0 and $5 million.
At the midpoint, and we expect adjusted EBITDA to be between zero and $5 million.
We expect to grow revenue modestly for the year and maintain positive adjusted EBITDA on a full year basis, despite market challenges in auto insurance with.
Speaker 4: We expect to grow revenue modestly for the year and maintain positive adjusted EBITDA on a full year basis despite market challenges in auto...
With the increased contribution of our DTC agency, we expect our seasonal pattern will reflect a slightly negative adjusted EBITDA in Q2, and Q3 as we exit the secondary Medicare open enrollment season in Q1, and incur staffing costs in advance of Q4's annual enrollment period.
Speaker 4: With the increased contribution of our DTC agency, we expect our seasonal pattern will reflect a slightly negative adjusted EBITDA in Q2 and Q3 as we exit the secondary Medicare open enrollment season in Q1 and incur staffing costs in advance of Q4's annual enrollment.
We expect Q4 will be our strongest quarter for revenue and adjusted EBITDA.
Speaker 4: We expect Q4 will be our strongest quarter for revenue, VMM, and adjusted even.
Similar to Q4 of 'twenty, one our operating cash flow will reflect a use of cash is policy Commission revenue recognized in the DTC agency is growing and primarily collected in future periods.
Speaker 4: Similar to Q4 of 21, our operating cash flow will reflect a use of cash as policy commission revenue recognized in the DTC agency is growing and primarily collected in future periods.
In summary, we delivered results in line or better than our revised guidance for the fourth quarter, reflecting the resilience of our multi vertical insurance model and our diversity of distribution channels.
Speaker 4: In summary, we delivered results in line or better than our revised guidance for the fourth quarter, reflecting the resilience of our multivertical insurance model and our diversity of distribution channels.
In 2022, we're maintaining discipline in managing operations, while investing in select opportunities to drive growth with the eventual recovery of the auto insurance market, we expect to be in a strong position to capitalize on that recovery and to return to revenue growth and increasing profitability consistent with our long.
Speaker 4: In 2022, we are maintaining discipline in managing operations while investing in select opportunities to drive growth. With the eventual recovery of the auto insurance market, we expect to be in a strong position to capitalize on that recovery and to return to revenue growth and increasing profitability consistent with our long-term model. Jamie and I would now welcome your questions.
Term model.
Jamie and I would now welcome your questions.
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The first question is from the line of Jed Kelly with Oppenheimer You May proceed.
Speaker 1: The first question is from the line of Jed Kelley with Oppenheimer. You may proceed. Hey, great. Thanks for taking my question.
Hey, great. Thanks, Thanks for taking my question.
Just two if I may.
Any way to quantify the impact you think you'll see maybe from an organic traffic standpoint or volumes.
Speaker 5: impact you think you'll see maybe from an organic traffic standpoint or volume.
For more more consumer shopping when they when they get the.
Speaker 5: from more and more consumers shopping when they get the letter from the insurance company that their rates are going up. And then just on the guidance, it kind of looks like your VMM dollars are going to be
I guess when they get the letter from the insurance company that their rates are going up and then Dan just on the guidance.
Looks like your V. M. M dollars are going to be consistent with with last year or so so it looks like we're going to see an increase in opex.
Speaker 5: last year so it looks like we're going to see an increase in op-at.
Yes, I get the staffing costs, but can you kind of touch on more of those investments. Thank you.
Speaker 5: I guess I get the staffing costs, but can you kind of touch on more of those investments?
Okay.
I'll take the first question Hey, Chad how are you doing thanks.
Speaker 3: I'll take the first question. Hey, Jed, how you doing? Thanks.
You know it is.
It's.
Hard to quantify.
Speaker 3: Hard to quantify with any precision the impact that.
Any precision the impact that increased rates will have on shopping behavior, but we've seen it historically when you know when there's a wave of rate increases it tends to be followed by by a bomb and and shopping behavior and in this particular case, we anticipate the wave of rate increases to be widespread.
Speaker 3: increased rates will have on shopping behavior. But we've seen it historically when there's a wave of rate increases, it tends to be followed by a bump in shopping behavior. And in this particular case, we anticipate the wave of rate increases to be both widespread and significant. So I don't believe it's unreasonable to expect you'd see sort of a tailwind of 10%, 20% in volume as a result of the rate increases. Thank you.
And significant so I don't believe it's unreasonable to expect you'd see sort of a tailwind.
10% to 20%.
And volume as a result of the rate increases.
And Ah Hi, Jed.
Speaker 4: And on next year, yeah, there is additional operating costs built in. I'd say the most significant aspect of that, you know, outside of our investments in DTCA, which are probably most important to note, is also just generally higher operating costs. I think we are not alone in that. We are seeing higher costs even on our wages.
On the next year, yes, there is additional operating cost built in I'd say, the most significant aspect of that outside of our investments in DTC E, which are probably most important to note. It is also just generally higher operating costs. I think we are not alone in that we are seeing.
Higher costs, even on our wages.
As the environment for talent is very competitive and we're seeing that even in the the wages in fair market value for our employees. So we have we do have a level of increase.
Speaker 4: as the environment for talent is very competitive, and we're seeing that even in the wages and fair market value of our employees. So we do have a level of increase.
Our cost in the model that reflects some of those pressures that we're seeing.
Speaker 4: costs in the model that reflects some of those pressures that we're seeing in the wage model as well. Got it, and it's just back to the I guess the DCA
In the wage model as well.
Got it and.
Just back to the I guess the D C a revenue.
It was.
$14 5 million.
Do.
Do you think youre gaining share from from from some of your other competitors that.
Speaker 5: Do you think you're gaining share from some of your other competitors?
Already reported results and it might it might have struggled with with some of the health care.
Speaker 5: already reported results and might have struggled with some of the healthcare, with some of the healthcare.
We'll do some of the health care insurance policies.
Yes, Jed. So so you know obviously, we're at a different level of magnitude right in terms of this being really our second open enrollment season, but I think that different from what we're hearing elsewhere is that we were pleased with our open enrollment.
Speaker 4: Yeah, Jed, so obviously we're at a different level of magnitude in terms of this being really our second open enrollment season. But I think different from what we're hearing elsewhere is that we were pleased with our open enrollment. We performed above our revenue targets within the health DTCA business.
We performed above our revenue targets within.
The health DTC a business.
And we did so with economics that we had largely planned for and so I think <unk> heard elsewhere commentary.
Speaker 4: And we did so with economics that we had largely planned for. And so I think you've heard elsewhere commentary around challenges in the market, more shopping, less conversion. You know, that's not what we experienced. So, you know, hard to say exactly what others are seeing, but we were very pleased with the performance of DTCA Health, and we really took it as a point of validation on the strategy.
Around challenges in the market more shopping less less conversion.
That's not what we experienced.
So hard to say exactly what others are seeing but we referred pleased with the performance of DTC E Health and we really took it as a point of validation of our strategy.
And Jack just to maybe just add a final point directly to the question about market share as John said, we're obviously starting from a considerably smaller base, but I would just I think just the growth rate at three to four fold growth year on year would suggest that.
Speaker 3: And Jed, you know, just to maybe just add a fine point directly to the question about market share, as John said, we're obviously starting from a considerably smaller base, but I would, I think just that the growth rate of three to four-fold growth year on year would suggest that, you know, we took some share from the existing market.
We took some share from from Nick's testing market.
Thank you.
Thanks Chip.
Thank you Mr. Kelly.
Speaker 1: Thank you, Mr Kelly. The next question is from the line of Michael Graham, but can
The next question is from the line of Michael Graham with Canaccord You May proceed.
Thank you Hey, guys.
Speaker 6: Thank you. Hey, guys, I wanted to ask a couple. The first one is just on the auto headwinds. I think, you know, John , your comments.
Wanted to ask a couple the first one is just on the auto.
Headwinds I think John your comments.
Seem to indicate that Q4, you expected Q4 to be sort of a low point and building from there I just wanted to.
Speaker 6: seem to indicate that Q4, you expected Q4 to be sort of a low point and building from there. I just wanted to see if that was the correct perception. And then, you know, I think we identified that like the last couple of times this happened, it took sort of four to six quarters for the industry to work itself out. And I think.
See if that was the correct perception and then.
I think we.
Identified that like the last couple of times. This happened it took sort of four to six quarters for the industry to work itself out and I think.
When we first started talking about this we felt like perhaps this cycle might happened more quickly and I'm just wondering if some of the more recent data points you gathered has.
Speaker 6: when we first started talking about this, we felt like perhaps this cycle might happen more quickly and I'm just wondering if, you know, some of the more recent data points you gathered have.
Giving you any more insight into how how long do you think this is the cycles likely to take relative to prior ones.
Speaker 6: have, you know, given you any more insight into how long you think, you know, this is the cycle is likely to take relative to prior one.
Thanks, Michael I'll kick it off by saying.
Speaker 4: Michael, I'll kick it off by saying, you know, we still believe that we did see an increase in January . That was largely expected.
We still believe that we did see an increase in January that was largely expected.
Speaker 4: if nothing else, based on the seasonal nature of budgets with the carriers and the fact that Q1 is a stronger season for auto coming off of Q4. So we do think that Q4 was the low point for auto demand and that we now start a ramp going through 2022. I think what you could debate within the industry is what that ramp looks like.
Based on the seasonal nature of budgets with the carriers and the fact that Q1 is a stronger season for auto coming off of Q4. So so we do think that Q4 was the low point in Toronto demand and that we now start a ramp going through 2022, I think what you could debate within the.
Within the industry is what that ramp looks like.
What's the slope of that line to recovery as Jamie mentioned, we've been very thoughtful in how we've estimated that recovery, we're being judicious in terms of a modest growth through the year. When we look at auto insurance and we're really focusing on those pockets within auto insurance, where we.
Speaker 4: and what's the slope of that line to recovery. As Jamie mentioned, we've been very thoughtful in how we've estimated that recovery. We're being kind of judicious in terms of a modest growth through the year when we look at auto insurance.
Speaker 4: And we're really focusing on those pockets within auto insurance where we can still grow revenue. And that's, you know, things that we highlighted, like our third-party agents or our first-party agents within auto. And then, of course, the other verticals as well. So that guidance is built on this combination of, you know, the other things in the business going well and growing as expected, and then we can't.
We can still grow revenue in that thing.
Things that we highlighted both licensed third party agents or our first party agents within auto and Aero.
Of course, the other verticals as well so that that guidance is built on this combination of the other things in the business going well and growing as expected and then we can avoid the idea that roughly 80% of the business as is all of 2025% recover.
Speaker 4: Avoid the idea that roughly 80% of the business is.
Speaker 4: is off 20-25% and recover as we go.
As we go through 2018, so that's a headwind that we can avoid but we think we're largely seeing it play out as we expected.
Speaker 4: do. So that's a headwind that we can't avoid. But we think we're largely seeing it play out as we expected, right?
We're pretty early last last quarter.
Speaker 4: I think we were pretty early last quarter talking about the trends and we've seen that.
Talking about the trends and we've seen that.
Code elsewhere, we're seeing the rate changes come through the carriers, we're seeing combined ratios start to get better from the carriers.
Speaker 4: you know, be echoed elsewhere. We're seeing the rate changes come through the carriers. We're seeing combined ratios start to get better from the carriers.
But it is still early on.
Speaker 4: But it's still early on in that process, and although that has translated to some increase in demand, it is, as Jamie said, volatile when you look at it. And we think there is a slope that builds through the years. It's not a light switch.
In that process and although that has translated to some increase in demand. It is as Jamie said volatile when you look at it.
We think there is a slope that builds through the year, it's not a light switch is it their switch.
Yeah, Mike if I, if I could just add a little more color.
Speaker 3: Yeah, Mike, if I could just, like, add a little more color.
Yeah.
We are the situation is still very dynamic right. So.
Speaker 3: We are, the situation is still very dynamic, right? So each week we're seeing carriers continue to make.
Each week.
We're seeing carriers continue to make.
We would characterize it's pretty significant changes to their campaigns.
Speaker 3: We would characterize as pretty significant changes to their campaigns. That means pulling out of states or segments or reactivating states or segments as things change.
Calling out of state, so or segments or reactivating states, our segments as things as things change.
This is like very unusual during more normal times. So these are now like weekly occurrences happen since it tends to downturn sort of started.
Speaker 3: This is like very unusual during more normal times. So these are now like weekly occurrences have been since the downturn sort of started, which used to happen, you know, in normal times would happen maybe once or twice a year. So the environment's dynamic, and in the face of that, we chose to take a kind of conservative.
Which used to happen you know in normal times would happen, maybe once or twice a year.
So the environment is dynamic and in the face of that we chose to take.
Kind of conservative.
View of the recovery in our forecast.
Speaker 3: view of the recovery in our forecast. It could come sooner than we're forecasting. And when it comes, the business will be in great shape. As John said, we're firing on all other cylinders, right? And I think there's.
It could come sooner right there more than we're forecasting and when it comes to the business will be in great shape as John said, we're firing on all other cylinders right and I think there is.
If you were you know if if I were to take a half a glass half full view of it you might argue that hey look the carriers are getting their rates pushed through.
Speaker 3: If you were, you know, if I were to take a glass half full view of it, you might argue that, hey, look, the carriers are getting their rates pushed through.
A lot of the driving factors of higher losses are subsiding in terms of inflation.
Speaker 3: A lot of the driving factors of higher losses are subsiding in terms of inflation, supply chain bottlenecks.
Supply chain bottlenecks.
The used car tightness in the used car market and.
Speaker 3: the used car, tightness in the used car market, and there's gonna be more shopping behavior as rates roll through. So one could argue there'll be a bit of a swinging of the pendulum in auto insurance. And if and when that happens, right, especially in light of the progress we're making in other parts of the business.
There's going to be more shopping behavior as rates roll through so one could argue there will be a.
Bit of a swinging the pendulum in auto insurance, and if and when that happens right, especially in light of the progress we're making in other parts of the business.
It will be it'll be a great swing for us, but I think in terms of our expectations with respect to timing, where we're taking it where we're assuming it will come through quite slowly. This year, just because of what we're seeing day to day at this point in time.
Speaker 3: it will be a great swing for us. But I think in terms of our expectations with respect to timing, we're assuming it will come through quite slowly this year just because of what we're seeing day to day at this point in time.
Okay, Yes that makes that makes perfect sense. Thanks, a lot guys I appreciate the insights.
Speaker 6: Okay, yep, that makes perfect sense. Thanks a lot, guys. Appreciate the insights.
Thanks, Michael.
Thank you Mr. Graham.
The next question is from the line of Ralph <unk> William Blair You May proceed.
Good evening, Thanks for taking the question Jamie I wanted to just go back on a comment I think I may have heard you.
Speaker 6: Good evening, thanks for taking the question. James, I wanted you to just go back on a comment. I think I may have heard you sort of.
So I'm talking.
Talking about the recovery, but just wanted to be clear when I thought I heard did you mentioned that in certain states or maybe you could provide some color more broadly and states. Even if it's not broad based that have reset their rates and consumers are coming back to perhaps you know shop, new policies have you seen even if it's on a small.
Speaker 6: about the recovery, but just wanted to be clear when I thought I heard it. Did you mention that in certain states, or maybe you could provide some color more broadly, in states, even if it's not broad-based, that have reset their rates and consumers are coming back to perhaps shop new policies. Have you seen, even on a small scale, that traffic pickup where consumers are indeed coming back to the marketplace and shopping policies?
Gail.
That traffic pick up where consumers are indeed coming back to the marketplace and shopping policies and or a budget starting to come back even if they're starting to trickle in in that company at the pace that you would typically see in the seasonally strong Q1.
Speaker 6: and or a budget starting to come back, even if they're starting to, you know, trickle in and not coming at the pace that you would typically see in a seasonally strong Q1.
Yeah, So I would separate the consumer volume from the budgets on the consumer side, we have seen.
Speaker 3: Yeah, so I would separate the consumer volume from the budgets. On the consumer side, we have seen a noticeable bump in shopping behavior as we turn the corner into the new year. So that is playing out as expected. With respect to budgets, we're still seeing it cut both ways.
Oh noticeable bump in shopping behavior as we turned the corner into the new year. So so that is playing out as expected with respect to budgets, we're still seeing a cut both ways.
So we're seeing as rates get approved carriers reactivating certain segments or geographies, but we're also seeing them continue to parse out others and so its moving in both directions still.
Speaker 3: So we're seeing, as rates get approved, carriers reactivating certain segments or geographies. But we're also seeing them continue to pause out others. And so it's moving in both directions still, which, again, is why we're not forecasting a sort of rapid recovery in the first half of the year. We think it will take a bit more time to play out. Thank you.
Which again is why we're we're not forecasting a sort of.
Rapid recovery in the first half of the year, we think it will take a bit more time to play out.
Okay. That's helpful. Thanks, Jamie.
Thanks, Rob.
Yeah.
Thank you Mr. Chicago.
The next question is from the line of Matt yet put on with Needham You May proceed.
Speaker 1: The next question is from the line of Maniac Tadum with Needham.
Hey, Good evening guys. This is actually a cow Peterson on for <unk>.
Speaker 7: Hey, good evening, guys. This is actually Kyle Peterson for Myunk. Just wanted to touch a little bit on the cost side of the business. I know you guys have previously taken some actions.
Just wanted to touch a little bit on on the cost side of the business. I know you guys had previously taken some actions on the cost side. It seemed like it was going to preserve.
Speaker 7: cost side. It seems like it was going to preserve EBITDA reasonably well. Did some of those cost savings end up getting reinvested back in the business, or is it just that the recovery is taking a little longer and so without the volume there, it's harder to see that in the 22 guide?
EBITDA reasonably well I guess is that some of those cost savings end up getting reinvested back in the business or is it just that the recovery is taking a little longer and so without the volume there it's harder to.
To see that in the in the 'twenty two guide.
Yeah.
Yeah.
I'd say, there's a there's a bit of a combination there.
Speaker 4: Thanks Kyle. I'd say there's a there's a bit of a combination there you know I'd say the biggest aspect of the the first component is what we called out which is you know we are seeing pressure on wages and we are making sure that we are retaining our folks and and being responsive to what the market conditions are. The other component I think is is just you know that auto is
I'd say the biggest.
Aspect of the first component is what we called out which is we are seeing pressure on wages and we are making sure that we are retaining our folks.
And being responsive to what the market conditions are the other component I think is just you know the auto is.
Auto was.
Speaker 4: Auto is, you know, even with the growth of the other verticals, auto is just such a significant part of the business that that pulling, that coming, you know, pulling back at the magnitude it has puts pressure on EBITDA, rolls right through to EBITDA, and puts pressure on us for the next several quarters as we go through the years. Really just no way to avoid that in the auto insurance turndown.
Even with the growth of the other verticals auto is just such a significant part of the business that polling that coming pulling back at the magnitude. It has put pressure on EBITDA rolls right through to EBITDA and puts pressure on us for the next several quarters as we go through the year is really just no way to avoid that.
In the auto insurance turned out.
Okay.
That makes sense and then I guess, just a quick follow up on thoughts on the recovery.
Speaker 7: That makes sense and then I guess just a quick follow-up on thoughts on the recovery. I guess just kind of with what you guys have seen, you know, since you guys
I guess, just kind of with what you guys have seen him you know he's.
Since you guys reported in in November versus now it seems like there was some thought that <unk> was going to be the bottom and I think that the guide kind of implies it'll be flattish at least for the first quarter.
Speaker 7: reported in in November versus now it seemed like
Speaker 7: There was some thought that 4Q was going to be the bottom and I think the guy time implies will be flat-ish at least for the first quarter.
If things did things get worse like in in December and early January or have they just not recovered at the pace originally anticipated.
Speaker 7: Did things get worse in December and early January , or have they just not recovered at the pace originally anticipated?
So the Q4 transpired more or less as expected I think the trough went a little bit lower than than we planned for.
Speaker 3: So the Q4 transpired more or less as expected. I think the trough went a little bit lower than we planned for. The good news is, you know, the health business outperformed our expectations. And so.
The good news is the health business outperformed our expectations and so.
It was the sort of benefit of our diversification played out in Q4.
Speaker 3: It was, you know, the sort of benefit of diversification played out in Q4 as the other channels kind of more than, you know, covered for auto. But that does appear to have been the trough, right? So we saw a slight tick up in January .
As the other channels kind of more than covered for Toronto.
But that does appear to have been the trough right. So we saw a slight tick up in January .
And and here we are now in mid February and and things are still sort of dragging near the bottom.
Speaker 3: And here we are now in mid-February and things are still sort of dragging near the bottom.
And so we you know again because of that we're forecasting most of the recovery to occur in the later part of the year, but it's it's.
Speaker 3: And so we, you know, again, because of that, we're forecasting most of the recovery to occur in the later part of the year.
Not too far off of our original expectations I would say.
Speaker 3: not too far off of our original expectations. I would say, you know, went a little bit lower in Q4 and hasn't quite stepped up the way we thought it might in Q1. So.
A little bit lower in Q4.
And it Hasnt quite stepped up the way we thought it might in Q1.
So did I answer your question.
Yeah, Yeah, no. That's that's helpful. So I guess, it's just.
Speaker 7: Yeah, yeah, no, that's helpful. So I guess it's just maybe bottomed a little lower than it has faded and it's taking a little longer to fight its way back, but that's helpful. Appreciate the color, thanks guys.
Maybe bottomed a little lower than anticipated and it's taking longer to find its way back but.
Helpful. I appreciate the color thanks, guys.
From.
Yes.
Thank you Mr tandem.
The next question is from the line of Cory Carpenter with Jpmorgan you May proceed.
Speaker 1: The next question is from the line of Corey Carpenter with JPMorgan, you may proceed.
Good afternoon, and thanks for the questions I wanted to ask about the healthcare DTC business.
Speaker 8: Good afternoon, thanks for the questions. I wanted to ask about the health care DTCA bill.
Now that you've had a few successful open enrollment period can you just talk about how that informs your view on the size of the opportunity going forward and how big that business could be for you over time.
Speaker 8: Now that you've had a few successful open enrollment periods, can you just talk about how that's informed your view on the size of the opportunity going forward and how big of a business this could be for you over time?
I'm, sorry, I'm getting I'm getting feedback hopefully.
Speaker 8: I'm sorry, I'm getting feedback. Hopefully it's just me. And then just more broadly, you hired a bunch of agents this year, but what do you need to do kind of next steps just to kind of scale that business to the next level from here? Thank you.
And then just more broadly you hired a bunch of agents. This year, but you know what do you need to do kind of next steps just to kind of scale of that business to the next level from here. Thank you.
Sure I'll start thanks Corey.
So listen you know our vision is to become the one stop shop for insurance in the U S.
Speaker 3: So, listen, you know, our vision is to become the one stop.
Speaker 3: shop for insurance in the U.S. where we really help customers.
Where we really help customers.
Manage all of their insurance needs across all lines of insurance and over the arc of their life and so.
Speaker 3: manage all their insurance needs across all life insurance and over the the arc of their life and so
This year was kind of a culmination of assembling the assets that we need to do that and really punctuated in Q4 with with.
Speaker 3: This year, you know, was kind of the culmination of assembling the assets that we need to do that and really punctuated in Q4 with.
The success, we had at sort of the next level of scale in health and Medicare and so as we think about what we're building it's more than just a health and Medicare agency, it's really it's a fully integrated multiline agency.
Speaker 3: the success we had at sort of the next level of scale in health and Medicare. And so as we think about what we're building, it's more than just a health and Medicare agency. It's really like a fully integrated multi-line agency. And in that agency, we'll have agents, you know, who can be cross-trained and rotate across product lines to reflect the seasonal patterns and needs of consumers.
And in that agency will have agents, who can be cross trained and rotate across product lines.
To reflect the seasonal patterns and needs of consumers.
We will have agents, who can serve consumers across multiple lines of business to improve retention and LTV over time.
Speaker 3: We'll have agents who can serve consumers across multiple lines of business to improve sort of retention and LTV over time. So cast in that light, Corey, you know, we think this can become a sort of
So cast in that light Corey.
Think this can become a.
Sort of.
On equal footing with our marketplace business overtime and sort of how I'd think about it and it's very complementary to the marketplace business. It kind of sits on top of it where we have consumers coming through and in many cases, the right product for them will be.
Speaker 3: on equal footing with our marketplace business over time. That's sort of how I would think about it. And it's very complimentary to the marketplace business. It kind of sits on top of it, where we have consumers coming through. And in many cases, the right product for them will be State Farm auto policy. In other instances, it might be something that we offer directly. And so that's kind of how we think about it. It really extends beyond just like a health and Medicare brokerage.
State Farm auto policy.
In other instances it might be something that we offer directly and so.
So that's kind of how we think about it it's it really extends beyond just like a health and Medicare brokerage.
Which which.
Affects how you think about the sort of potential scale of it over time.
Speaker 3: affects how you think about the sort of potential scale of it over time.
Does that answer your question or at least your first question.
Yes, yes. It does thank you.
And sorry Korea.
Speaker 3: And sorry, Corey, I lost the thread on the second part of your question. Can you restate it?
Lots of threat on the second part of your question could you restate it.
The only problem like it was a meaningful way.
Speaker 8: No, no problem, it was a mouthful, I apologize. I was just asking...
And I was just asking the second part was just you ramped hiring of agents. This year, I think doubling or tripling of headcount what are kind of the next steps.
Speaker 8: ramped hiring of agents this year, I think doubling or tripling of headcounts. What are kind of the next steps to kind of scale it as you go into the next open enrollment period? Is it as simple as hiring more agents, maybe could there be more M&A? Or kind of how do you, what do you think you need to do to take it to the next level?
Just to kind of scale and as you as you go into you know the next open enrollment period is it as simple as hiring more agents, maybe could there be more M&A.
How do you what do you think you need to do to take it to the next level. Thank you.
Yeah, No that's a good question.
Speaker 3: Yeah, it's a good question. So, you know, certainly there's a straight ahead path that involves.
So certainly theres a theres a straight ahead past that.
That that involves growing the team size, but as we do right and sort of going back to the vision I cast for it there's a lot of work to be done to to build this integrated both operational and technical platform that will allow us to get where we're going and so I think this.
Speaker 3: growing the team size, but as we do, right, and sort of going back to the vision I cast for it, there's a lot of work to be done to build this integrated, both operational and technical platform that will allow us to get where we're going. And so I think this year will be balanced in the way that we approach growth.
Here, we'll be balanced in a way that we approach growth.
While we go to work on building the platform improving unit economics, making sure we understand and have high confidence around the sort of patterns of these businesses.
Speaker 3: while we go to work on building the platform, improving unit economics, making sure we understand and have high confidence around the sort of patterns of these businesses.
And so I would expect to see growth this year, but it won't just be there will be a more balanced approach, which has some growth, but also improving unit economics as we do.
Speaker 3: And so I would expect to see growth this year, but it won't just be.
Speaker 3: there will be a more balanced approach, which has some growth, but also improving unit economics as we do.
Yeah.
Okay. Thank you.
Okay.
Thank you Mr. Carpenter, Thanks Kartik.
The last question is from the line of Aaron Kessler with Raymond James You May proceed.
Speaker 1: The last quote is from the line of Aaron Kessler with Raymond James, you may proceed.
Hi, This is Alex Bolton, calling in for Aaron Kessler.
Speaker 9: Hi, this is Alex Bolton calling in for Aaron Kessler. Maybe extending the last question, you know, you kind of touched on balancing growth and DCA, DTCA.
Maybe it's been in the last question.
You know you kind of touched on balancing growth and D. C E D.
Ptca.
No I guess, maybe could you talk through you know some of the cash flow challenges in that in that business.
Speaker 9: You know, I guess maybe could you talk through, you know, some of the cash flow challenges and that and that business, you know, specifically, you know, happens with the other brokers in the industry, you know, I guess, how are you thinking about balancing growth, you know, as you grow that business and it becomes, you know, a bigger size within ever quote.
You know specifically you know what happens with the other brokers in the industry. You know I guess, how are you thinking about balancing growth.
You know as you grow that business and it becomes a bigger size than ever quote.
Sure. Thanks, Alex so so it definitely has a different cash flow profile than the than our referral marketplace.
Speaker 4: Sure, thanks Alex. So it definitely has a different cash flow profile than our referral marketplace.
Generally our referral marketplace tracks well in terms of cash flow against adjusted EBITDA here within the agency business those dollars are collected.
Speaker 4: Generally, our referral marketplace tracks well in terms of cash flow against adjusted EBITDA. Here, within the agency business...
Speaker 4: those dollars are collected in periods after the policy sale, some first year value and then some trails after that. So traditionally, this has been an area that as we scaled it, the cash flows coming off of the marketplace has been part of the way we have financed the growth of DTCA.
In periods after the policy sale, some first year value and then some trails after that so traditionally as this has been an area that as we scale that.
The cash flows coming off of the marketplace has been part of the way we have.
Financed the growth in DTC.
This next year as we look forward I made the point in my point.
Speaker 4: This next year, as we look forward, I made the point in my script that we're seeing some use of cash, and that really reflects the fact that we are
In my script that we're seeing some use of cash and that really reflects the fact that we are we are seeing.
Speaker 4: we are seeing relatively modest overall adjusted EBITDA. And so the source of cash that normally
Relatively modest overall adjusted EBITDA and so the source of cash that normally we would see fueling kind of the growth in DTC E is not there and so we do expect that there'll be some growth as Jamie said, we're carefully kind of.
Speaker 4: we would see fueling the growth in DPCA is not there. And so we do expect that there'll be some growth.
Speaker 4: As Jamie said, we're carefully kind of monitoring and managing DTCA for not only growth, but also profitability, and we consider cash flow as well in there. And so we're able to...
Monitoring and managing DTC, a for not only growth, but also profitability and we consider cash flow as well in there and so we were able to.
We're able to kind of the governor or invest in the business, especially as we see the economics.
Speaker 4: We're able to kind of governor or invest in the business, especially as we see the economics
Really justify the cash requirements of the business as well. So so we are monitoring across kind of all three levels.
Speaker 4: really justify the cash requirements of the business as well. So, we are monitoring across kind of all three levels, levers of growth, profitability, and equity.
Levers of growth.
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Okay, Great and then.
Speaker 9: Okay. Great. And then maybe on the third-party agency channel, you know, I guess as rate increases come through, even if carriers are holding back, you know, I would expect, you know, the third-party agencies to grow as a percent of total revenue. Maybe you can touch on, you know, what your expectations are for the third-party agency
Maybe on the third Party agency channel.
You know I guess, that's as rate increases come through even the carriers are holding back you know I would expect.
The third party agencies to grow as a percent of total revenue maybe you can touch on you know what your expectations are for the third Party agency channel.
Yeah, well the local agents continued to.
Speaker 3: Yeah, the local agents continue to, uh, the channel continues to perform well for us. Our team has done an excellent job of delivering high levels of service to local agents. Um, you know, we've rolled out products that, that help us improve the sort of connection rates to, to consumers, uh, who come in, you know, online digitally through the marketplace.
The channel continues to perform well for us our team has done an excellent job of delivering high levels of service to local agents.
You know we've rolled out products that help us improve the sort of connection rates too to consumers who come in online digitally through the marketplace.
And by and large we believe we have sort of some of the best performance in the industry with our local agents.
Speaker 3: And by and large, we believe we have sort of some of the best performance in the industry with our local agents.
And as a result, it's grown steadily over the over the years up to and including the back part of last year. When we saw a contraction in the carrier business. So I don't know that the prevailing industry dynamics.
Speaker 3: And as a result, it's grown steadily over the years, up to and including the back part of last year when we saw a contraction in the carrier business. So I don't know that the prevailing industry dynamics
Are going to materially affect or change the agent behavior, we haven't seen it yet right. We saw acutely with the carriers, but less so with the agents and so we have no reason to believe we won't see kind of continued stability and growth in that channel.
Speaker 3: are going to materially affect or change the agent behavior. We haven't seen it yet. We saw it acutely with the carriers, but less so with the agents. And so we have no reason to believe we won't see continued stability and growth in that channel.
Okay.
Okay. Thanks for the answers.
Thanks, Alex.
Thank you Mr Kessler.
Speaker 1: Thank you, Mr. Kessler. There are no additional questions at this time. I will now pass it back to the management team for any closing remarks.
There are no additional questions at this time I will now pass back to the management team for any closing remarks.
Alright, Thank you and thank you all for your time today.
Speaker 3: All right, thank you. And thank you all for your time today. Our Q4 performance, to me, it represents really a validation of our strategy, as the diversification enabled us to grow and deliver positive adjusted EBITDA during unprecedented headwinds in the auto insurance market.
Our Q4 performance to me it represents really a validation.
<unk> of our strategy as the diversification enabled us to grow and deliver positive adjusted EBITDA during <unk>.
Unprecedented headwinds in the auto insurance market.
Yes, we've made with local agents and in our D. TCA has set the foundation for Forever quotes next phase of growth as we build the one stop insurance shop for the digital age.
Speaker 3: The progress we've made with local agents and in our DTCA has set the foundation for ForeverQuote's next phase of growth as we build the one-stop insurance shop for the digital age.
Our team is focused we're executing well across the business and we're increasingly well positioned for accelerated progress and strong performance when the auto insurance industry recovers. So thanks, all for your time today.
Speaker 3: Our team is focused, we're executing well across the business, and we're increasingly well positioned for accelerated progress and strong performance when the auto insurance industry recovers. So thanks all for your time today.
That concludes today's conference call. Thank you and have a great day.
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