Q1 2022 Digital Media Solutions Inc Earnings Call
And our full year estimates are seasonally weighted towards the second half of the year with the fourth quarter, the quarter that includes the Medicare open enrollment period, typically the strongest. So yes, there are headwinds within the auto and health insurance verticals. That said, I want to reiterate the importance of our ability to remain dynamically diversified.
Our estimates are seasonally weighted towards the second half of the year with the fourth quarter a quarter that includes the Medicare open enrollment period typically the strongest so yes, there are headwinds within the auto and health insurance verticals that said I want to reiterate the importance of our ability to remain dynamically diversified.
We're technology enabled data driven business that's both vertical agnostic and channel agnostic. And we've demonstrated our ability to pivot with our publishers and advertiser partners towards the most viable current opportunities. This is across both channels and across verticals. Includes auto insurance, health insurance, e-commerce, careers and education and consumer finance.
Were technology enabled data driven business, that's both vertical ignostic channel agnostic and we've demonstrated our ability to pivot with our publishers and advertiser partners towards the most viable current opportunities. This is across both channels and across verticals, including auto insurance health insurance E Commerce.
Cruise in education and consumer finance.
Likewise, we continue to win more wallet share from our top advertiser clients.
While we continue to win more wallet share from our top advertiser clients year over year revenue from our top 20 clients was up 46% because these advertisers know they can rely on us to help them achieve a strong return on ad spend.
Year over year revenue from our top 20 clients was a 46% because these advertisers know they can rely on us to help them achieve a strong return on ads.
and we're not just diversified within the verticals. We also have diversification of fires within verticals. For example, in addition to working directly with many of our nation's property and casualty insurance providers, we work with a significant roster of agents, almost 6,500 in Q1 2022.
And we're not just diversified within the verticals. We also have diversification of buyers within verticals. For example in addition to working directly with many of our nation's property and casualty insurance providers, we work with a significant roster of agents almost 6500 in Q1 2022.
And we just onboarded a large insurance provider that will be leveraging our solutions and technology to connect their agents with consumers that are actively shopping for insurance products. Therefore, we expect significant growth over the next 12 months to our already substantial insurance agent base.
And we just on boarded a large insurance provider that will be leveraging our solutions and technology to connect their agents with consumers that are actively shopping for insurance products. Therefore, we expect significant growth over the next 12 months to our already substantial insurance agent base.
Lastly, our tool set, including our first-party data asset, our proprietary technology, and our expansive media reach continues to help us be more efficient and more effective with our digital performance advertising solutions. This tool set was key to us achieving our strong VMM of 35 percent during the past quarter.
Lastly, our toolset, including our first party data asset our proprietary technology and our extensive media reach continues to help us be more efficient and more effective with our digital performance advertising solutions. This tool set was key to us achieving our strong BMI of 35% during the past quarter.
Our data technology and media reach are synchronized to help.
Our data technology and media reach or synchronize to help us.
to help us better understand the intentions of consumers, including when they are shopping and what offers they want to see from our average.
To help us better understand the intentions of consumers, including when they are shopping and what offers they want to see from our advertisers to help us better engage and Reengage high intent audiences with personalized offers that encourage action to help us better support the retention efforts of our advertiser clients that are seeking.
to help us better engage and re-engage high intent audiences with personalized offers that encourage action, to help us better support the retention efforts of our advertiser clients that are seeking solutions to reduce churn and improve lifetime value.
<unk> to reduce churn and improve lifetime value metrics.
Activated by our proprietary technology, our data program is a key component to our growth as our data and technology enable us to deliver on the four Rs. Right person, right offer, right place, and right time to achieve gross margin efficiency for ourselves and better ROI for our average.
Activated by our proprietary technology, our data program is a key component to our growth as our data and technology enable us to deliver on the four hours right person right offer right place and right time to achieve gross margin efficiency for ourselves and better ROI for our advertisers.
To give more context on what our data asset is, we receive over one billion consumer intent signals per month. Those consumer intent signals append our data asset, which at the end of last month included 240 million operating US adults with as many as 1100 data points per individual.
To give more context on what our data asset as we receive over 1 billion consumer intent signals per month post.
Those consumer intent signals append, our data asset, which at the end of last month included $240 million operating U S. Adults with as many as 1100 data points per individual.
internally we are expanding and refining the use of data signals and we're beginning to recognize consumer acquisition cost savings both from targeting efficiency and from reduced cost of good sold.
Internally, we are expanding and refining the use of data signals and we're beginning to recognize consumer acquisition cost savings both from targeting efficiency and from reduced cost of goods sold.
This ties back to comments I previously made about our variable market.
This ties back to comments I previously made about our variable marketing margin.
Our data and technology help us map current consumer actions against prior consumer behaviors, which help us to better predict future consumer shopping patterns. And once again, this goes back to the four hours right person right offer right place, right time.
Our data and technology help us map current consumer actions against prior consumer behaviors, which help us to better predict future consumer shopping patterns and once again. This goes back to the four ours right person right offer right place right time.
Externally, we're increasingly partnering with our strategic data providers, publisher partners, and advertiser clients to expand and leverage our data and technology to enhance advertising performance, including customer retention efforts.
Externally, we are increasingly partnering with our strategic data providers publisher partners and advertiser clients to expand and leverage our data and technology to enhance advertising performance, including customer retention efforts. These types of programs enhanced performance and ROI for our publisher and advertiser partners, creating sticky.
These types of programs enhance performance in ROI for our publisher and advertiser partners, creating sticking in.
Heinous and scale for.
For example, with our Consider Intent Signals activated, we can help advertiser clients know when the current customers are actively shopping around so they can take action by messaging those customers to retain them.
For example, with our consumer intent signals activated we can help advertiser clients know when their current customers are actively shopping around so they can take action by messaging those customers to retain them.
Given the current dynamics of the health and auto insurance verticals, customer retention is the main priority for many of our large advertiser clients. So we expect retention-focused monetization or data signals to ramp up later this year and into 2023.
Given the current dynamics of the health and auto insurance verticals customer retention as a main priority for many of our large advertiser clients. So we expect retention focused monetization or data signals to ramp up later this year and into 2023.
As you may have seen, we announced our acquisition of perverse data in a separate press release from our earnings release.
As you May have seen we announced our acquisition of traverse data in a separate press release from our earnings release, we are very excited about this transaction because we believe the addition of the traverse data technology platform into our already meaningful proprietary tech stack will be strategically important for us.
We're not releasing financial details of the acquisition because it will have a negligible effect on the PNL or company besides the DMS.
We're not releasing financial details of the acquisition because it will have a negligible effect on the P&L of a company the size of DFS.
What we expect from the acquisition of Traverse, and the reason we're excited about it, is for Traverse to accelerate our use of data, both in terms of volume and our ability to execute on our data road.
What we expect from the acquisition of traverse and the reason we're excited about it is for traverse to accelerate our use of data both in terms of volume and our ability to execute on our data roadmap.
This ties back to the prior comments I made about the importance of efficient reactivation, free engagement, and retention.
This ties back to the prior comments I made about the importance of efficient reactivation re engagement and retention.
Plus, the traverse acquisition includes an existing base of strategic advertiser and publisher partners actively subscribing to the power of signal activation for client nurturing and remarketing.
Plus the traverse acquisition includes an existing base of strategic Advertiser and publisher partners actively subscribing to the power of signal activation for client nurturing and remarketing.
This will complement and expand our current customer nurturing and marketing strategies beyond just the current activation and media buying strategies we employ against our first party data.
This will complement and expand our current customer nurturing and remarketing strategies beyond just the current activation and media buying strategies, we employ against their first party data asset.
In conclusion, we continue to be optimistic about our business, despite current headlands and future uncertainty. We acknowledge that there are a lot of macro factors impacting our business that we do not control, but our dynamic diversification continues to allow for growth.
In conclusion, we continue to be optimistic about our business. Despite current headwinds and future uncertainty. We acknowledged that there are a lot of macro factors impacting our business that we do not control, but our dynamic diversification continues to allow for growth.
Retention rates for our top customers remain incredibly strong at 100% for our top 20 customers, demonstrating the efficacy of our solution.
Tension right to our top customers remain incredibly strong at a 100% for our top 20 customers demonstrating the efficacy of our solutions.
Our data and technology are increasingly providing new opportunities to engage consumers and we're very focused on continuing to control and cut costs where we can.
Our data and technology are increasingly providing new opportunities to engage consumers and we're very focused on continuing to control and cut costs, where we can.
create efficiencies and help us continue to operate profitably.
To create efficiencies and help us continue to operate profitably.
We believe the current headwinds we're facing will subside later this year, early next year, and because of that, we remain bullish on our 2023 and longer term prospects as our total addressable market growth remains strong with a category of 17%.
We believe the current headwinds we're facing will subside later this year early next year and because of that we remain bullish on our 2023 and longer term prospects.
Our total addressable market growth remained strong with a CAGR of 17%.
Before turning it over to December to dig deeper into the financials, I want to offer a quick update on our strategic review. As previously discussed in August of last year, we announced plans to evaluate strategic alternatives for DMS to further maximize shareholder value, and we were hoping to have an update for you today. However, we have still not finished this process, so I have nothing to share other than the state that we're working towards the best result possible. We appreciate your patience and as soon as we are able to, we will provide up.
Before turning it over to the senior to dig deeper into the financials I want to offer a quick update on our strategic review.
As previously discussed in August of last year, we announced plans to evaluate strategic alternatives for Dms to further maximize shareholder value and we were hoping to have an update for you. Today. However, we are still not finished this process, we have nothing to share other than to state that we are working towards the best results possible. We appreciate your patience and.
As soon as we're able to we will provide updates now I will turn it over to Dms CFO soon just front of us.
Now we'll turn it over to DMS CFO , Mr. Srinivas.
Thank you, Joe. Hello and thank you to everyone for joining us today.
Thank you Joe Hello, and thank you to everyone for joining us today.
I will start off with some color on our revenues. Reported GAP revenue was $109 million, a record quarter up 13% over the same quarter last year. Insurance, which accounted for approximately 60% of our total revenues in Q1, drew 22% over the first quarter of 2021.
I'll start off with some color on our revenue reported GAAP revenue was $109 million.
The current quarter up 13% over the same quarter last year.
Insurance, which accounted for approximately 60% of our total revenue in Q1 grew 22% over the first quarter of 2021.
The breakdown of the insurance business was as follows. Auto made up 60% of total insurance, health came in at 29% followed by life at 7% and home at 3%.
The breakdown of the insurance business.
Autos auto made up 60% of total insurance health came in at 29% followed by life at 7% and home at 3%.
As Joe said, dynamic diversification has remained important to us, touching on other
Ed.
Diversification has remained important to us touching on other sector.
Career and education, which was approximately 12% of our total revenues in Q1 grew 28% year over year, driven by strong demand for our services as we continue to win wallet shares.
Career education, which was approximately 12%.
Total revenue in Q1 grew 28% year over year.
Even by strong demand for our services as we continue to win wallet share E Commerce, which represented 13% of total.
eCommerce, which represented 13 percent of our total revenues, was down 38 percent compared to the year ago quarter. Fluctuations like this are why we remain a dynamically diversified company so we can quickly pivot with our advertiser clients and publisher partners towards the best opportunity.
Total revenue was down 38% compared to the year ago quarter fluctuations like this are why we remain a dynamically diversified company. So if we can quickly pivot with advertiser client and publisher partners towards the best opportunities.
Consumer finance accounted for 10% of our total revenue and grew 90% in Q1 over the prior year's quarter, driven by an uptick in consumers taking financing optionality as rates rise. Likewise, higher market rates are increasing demand from lenders as we see to expand the buyer database.
Consumer finance accounted for 10% of our total revenue and grew 90% in Q1.
Prior years quarter, driven by an uptick in consumers seeking financing optionality as rates rise likewise higher market rates.
Leasing demand from lenders as they seek to expand the buyer databases.
For the first quarter, reported gross profit was $31 million equating to a 29% margin within the guidance range of 28 to 31% and matching the 29% margin in Q1 2021.
First quarter reported gross profit was $31 million equating to a 29% margin within the guidance range of 28% to 31% and matching the 29% margin in Q1 2021 data about marketing margin on our DMF with 35% compared to 32% in Q1 2002.
variable marketing margin or VMM was 35% compared to 32% in Q1 2021 and 36% in Q4 2021.
One and 36% in Q4 2021 during the quarter.
During the quarter, we experienced headwinds from increased media costs through our CMS across both our Brand Direct and Marketplace solutions. However, our experience in media buying and, of course, our strong data assets helped mitigate some of these margin pressures.
Headwinds from increased media costs throughout Dms across both brand direct and marketplace solution.
Our experience in media buying and of course strong data asset Hudson mitigate some of these margin pressures.
On a reported segment basis, excluding intercompany revenue, the Q1 brand direct solution growth margin was 21% compared to 27% in Q1 2021, and the Q1 marketplace solution growth margin was 28% compared to 26% in Q1 2021.
On a reported segment basis, excluding intercompany revenue Q1 brand direct solutions gross margin was 21% compared to 27% in Q1 2021, and the Q1 marketplace solutions gross margin was 28% compared to 26% in Q1 2021 technology.
Technology Solutions, which was formerly called Other Solutions, has primarily included our SAS business. And going forward, we'll also include our Trevor's acquisition. This segment had a gross margin of 89% contributing to our overall gross margin level. We are excited about the prospects of this segment. And as our SAS-based revenues ramp up, we will have more to discuss on future earnings calls.
The Ocean, which was formerly called other solution has primarily included our SaaS business and going forward.
We'll include travelers acquisition. This segment had a gross margin of 89% contributing to our overall gross margin level. We are excited about the prospects of this segment and as our SaaS based revenues ramp up you will have more to discuss on future earnings calls overall gross margins were.
Overall growth margins were impacted by media costs, as I mentioned, but also by wage inflation and the tight labor market, especially for our call centers, as well as Omicron resurgence in the first two months of the quarter, all resulting in very high call center staff attrition rates.
Marked by media cost as I mentioned, but also by wage inflation and the tight labor market, especially for our call centers as well as omicron resurgence in the first two months of the quarter.
Resulting in very high content of staff attrition rates.
for operating expenses, total operating expenses amounted to $37 million in the first quarter and increase of $9 million year over year, driven in large part by acquisition-related expenses across several categories including people costs, technology, and contingent consideration.
For operating expenses, our total operating expenses amounted to $37 million.
First quarter, an increase of $9 million.
Of the year driven in large part by acquisition related expenses across several categories, including people costs technology and contingent consideration.
While we are embracing an efficiency and cost-saving philosophy and continue to identify and resolve redundancies throughout the business, we are seeing the effects of inflation and the type labor market alongside our professional services partners.
While we are embracing efficiency and cost savings philosophy and continue to identify and resolve redundancies throughout the business. We are seeing the effects of inflation and the tight labor market alongside our professional services partners. What this means is that we are finding it more expensive and difficult to attract.
What this means is that we are finding it more expensive and difficult to attract, develop, and retain top talent, and we're also being affected by our professional services providers who are also seeing higher wages and are in turn increasing their fees.
Develop and retain top talent and they are also being affected by a professional services providers, who are also seeing higher wages and are intent on increasing the fees.
We ended the quarter with a total headcount of 546 full-time equivalents.
We ended the quarter with a total headcount of 546 full time equivalents.
Finally, on profitability, our adjusted either down the quarter was $10.5 million or a margin of 10 percent down $6 million, which is the same quarter last year, given by a more moderate recovery than expected within auto insurance platform distribution challenges for some of our partners and macroeconomic challenges from inflation, which are impacting us across several areas of the business, inclusive of operational expenses and media costs.
Finally on profitability adjusted EBITDA for the quarter was $10 $5 million on a margin of 10% down $6 million versus the same quarter last year driven by <unk>.
Moderate recovery than expected within auto insurance platform distribution challenges for some of our partners and macroeconomic challenges from inflation, which are impacting us across several areas of the business inclusive of operational expenses and media costs are.
Our net loss came in at $5 million versus a loss of $0.2 million in the same quarter last year. EPS came in at a loss of 9 cents compared to a break-even on an EPS basis in Q1 2021.
Net loss came in at $5 million versus a loss of <unk> 2 million in the same quarter last year.
Came in at a loss of nine compared to a breakeven on an EPS basis in Q1 2021.
Lastly, turning to the balance sheet and liquidity, we ended the quarter with $22 million in cash, cash equivalents, and marketable securities, down $5 million from the end of Q4, reflecting normal shifts in working capital. Our total debt at quarter end was $220 million, and net of issuance costs, it was $218 million.
Lastly, turning to the balance sheet and liquidity, we ended the quarter with $22 million in cash cash equivalents and marketable securities down $5 million from the end of Q4, reflecting normal shifts in working capital.
Total debt at quarter end was $220 million and net of issuance costs. It was $218 million as of quarter end, we had the full $50 million balance available to us.
As a quarter end, we have the full $50 million balance available to us on our revolving credit accessibility.
Solving credit facility, our net leverage stood at three eight times at quarter end as a reminder, our credit facility from last year puts our leverage covenant at five times currently.
A net leverage stood at 3.8 times at quarter end as a reminder, a credit facility from last year puts a leverage covenant at five times currently, so we feel that we have plenty of liquidity under our facility, but of course, they are very mindful of our obligations given current volatility.
We feel that we have plenty of liquidity under our facility, but of course, we are very mindful of our obligations given current volatility.
As we look to the rest of 2022, we do not believe that current volatility and uncertainty are long-term factors for our budget.
As we look to the rest of 2022, we do not believe the current volatility and uncertainty are long term factors for our business.
We are expecting auto insurance recovery, especially against weaker comms likely dragging into 2023, plus we're working closely with our health insurance clients to help them maximize their marketing spend during the non-enrollment period, and they're focused on being an important strategic partner for them as soon as AEP begins in Q4.
Expecting auto insurance recovery, especially against weaker comps likely dragging into 2023 lots were working closely with our health insurance clients to help them maximize their marketing spend given the non enrollment period and thats focused on being an important strategic partner for them as soon as <unk> to begin.
Q4 <unk>.
Lastly, we anticipate solid demand across our other verticals, including education and consumer finance, that should result in continued growth on the top line.
Lastly, we anticipate solid demand across our other verticals, including education and consumer finance that should result in continued growth on the top line.
However, health insurance revenues, a large part of our business in the back half of the year are difficult to predict at this time. So it is prudent for us to take a more conservative approach to forecasting for the time being in addition inflation.
However, health insurance revenues and large medical business in the back half of the year are difficult to predict at this time. So it is prudent for us to take a more conservative approach to forecasting for the time being.
In addition inflation is continuing to affect us.
that we have to remain competitive on wages in a tight labor market is easy to see, but inflation also has impacted us in other areas of the business.
We have to remain competitive on wages and a tight labor market. It's easy to see inflation also has impacted us in other areas of the business. This includes operation expenses and as mentioned before even spill over into media cost.
This includes operational expenses and, as mentioned before, even school over intermediate costs.
Lastly, even though COVID restrictions have eased, we have now battled several parks that affected our business with Delta in late summer and early fall and then Omicron in December to February . This pandemic still represents uncertainty with regards to a number of factors, including staffing for us and our publisher partners and advertiser clients.
Lastly, even though COVID-19 restrictions have eased we have now back to the federal spikes that affected our business with Delta in late summer and this fall and then omicron in December to February this time to make still represents uncertainty with regards to a number of factors, including staffing for us and our publisher partners and advertisers.
Clients.
As for guidance, we currently feel comfortable in achieving a Q2 gap revenue range of $97 million to $100 million, and we are lowering our full year 2022 range to $440 million to $450 million. These numbers
As to guidance, we currently feel comfortable in achieving our Q2 GAAP revenue range.
$97 million to $100 million and we are lowering our full year 2022 range to $440 million to $415 million.
These numbers include travelers.
Please note that while the importance of travels for our data program is significant, its effects on our P&L in 2022 is de minimis.
Please note that while the importance of travelers for a beta program has significant effects on our P&L in 2022 is de Minimis.
Despite a number of macro headwinds on our gross margin, a dynamic diversification remains key for us to be able to adjust and pivot quickly.
Despite a number of macro headwinds on our gross margin dynamic diversification remains key for us to be able to adjust and pivot quickly as.
As such, we remain comfortable with maintaining our previously discussed gross margin guidance range of 28 to 31% and a variable marketing margin range of 32 to 36% for both Q2 and full year 2022.
As such we remain comfortable with maintaining our previously discussed gross margin guidance range of 20% to 31% and available marketing margin range of 32% to 36% for both Q2 and full year 2022.
Our current Q2 either depth forecast is $8 to $10 million and a full year guidance range is adjusted down to $45 to $50 million.
Our current Q2, EBITDA forecast is $8 million to $10 million and our full year guidance range adjusted down to $45 million to $50 million.
I would like to close by saying that longer term into 2023 and beyond, we see recovery in the areas that are currently challenged and the anticipate continued and significant growth opportunities for our business.
I would like to close by saying that longer term into 2023 and beyond we see recovery in the areas that are currently challenged and we anticipate continued and significant growth opportunities for our business.
With that, we thank you for your interest in DMF, and we will now open the lines for questions. Operator, please let our listeners know what they have to do to ask questions.
With that we thank you for your interest in BMI and.
And we will now open the lines for questions. Operator, please let our listeners know what they have to do to ask questions.
Absolutely we will.
We'll now begin the Q&A session.
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We will pause here briefly to allow questions to generate in Q.
The first question is from the line of Maria Rips with Chemicord. You may proceed.
The first question is from the line of Marine Rips Kenacort you May proceed.
Great, thank you so much for taking my questions. First, I just wanted to ask about the Traverse Data Acquisition. Anything you can share maybe on the timing of the transaction and sort of the integration process? And you mentioned the impact on financials is sort of negligible this year, but is there any way to sort of think about potential synergies or efficiencies as a result of the acquisition?
Great. Thank you so much for taking my questions first I just wanted to ask about the traverse data acquisition anything you can share maybe on the timing of the transaction and sort of the integration process and you mentioned the impact on financials that sort of negligible. This year, but is there any way to sort of think about potential synergies or efficiencies.
As a result of that position.
Primary and good afternoon.
Thank you again.
So the timing of the acquisition, it closed today, so that's why it was announced today, just prior to earnings.
So the timing of the acquisition that closed today. So that's why it was announced today just prior to earnings. So this is pretty much happening real time in conjunction with the earnings call.
So this is pretty much happening in real time in conjunction with the earnings call. The way that we look at this is, and this is very.
The way that we look at this is.
And this is very much true.
The acquisition is basically, the impact is negligible, as Basundar said during the earnings call. And it gives us, this acquisition gives us leverage on our research and development curve, and has us meaningfully ahead of where we otherwise would have been with regards to continuing to develop our technology platform to better connect our first party data asset.
The acquisition is basically.
The impact is negligible as the sender said during the earnings call and it gives us this acquisition gives us leverage in our research and development curve and has US meaningfully ahead of where we otherwise would have been with regards to continuing to develop our technology platform to better connect.
Our first party data asset.
with our media buying capabilities. So if you look at it from that perspective, we expect to have it.
With our media buying capabilities. So if you look at it from that perspective, we expect to have it.
fully integrated this year so that we can leverage.
Fully integrated this year, so that we can leverage the technology to better execute against what we've called before ours putting.
the technology to better execute against what we've called the four R's, putting the right offer in front of the right person in the right place at the right time. So close today.
The right offer in front of the right person in the right place at the right time, so close today.
got us a meaningful segment of our R&D development curve, will be integrated this year. We expect to see, let's call it, we've continually talked about the power of data in our ecosystem, so hopefully meaningful impact in 2023 and beyond.
Got it.
<unk> segment of our R&D development curve will be integrated this year, we expect to see.
We've continually talked about the power of data already in the system, So hopefully meaningful impact in 2023 and beyond.
Got it, that's helpful. And Joe, you mentioned sort of some uncertainty within health. Sort of as you look to Q4 this year, are there any sort of areas of investments that you think you may need to sort of undertake to maintain maybe strength in health or maybe to strengthen that vertical? So anything specific to call out regarding CRISP or your Protect Medicare agency?
Got it that's helpful and Joe you mentioned sort of some uncertainty within health sort of as you look to Q4. This year are there any sort of areas of investments that you think you may need to sort of undertake to maintain maybe strength in how can we strengthen their vertical so anything specific to call out with regard increased.
Protecting Medicare agency.
Yes. So there is certainly is.
know cyclicality or seasonality in the business now with if you look at the Q1 period you know insurance was
Cyclicality or seasonality in the business now with.
If you look at the Q1 period insurance was.
60% of the business and of that.
auto was, property and casualty was 60 percent, but health was 29 percent, so health has moved up meaningfully. You know, if we look further out the year, the senator did talk about some of the uncertainties in health, so there's a lot going on.
Auto was property and casualty was 60% with health was 29% to help health has moved up meaningfully.
As we look further out for the year.
You did talk about some of the uncertainties and help so.
<unk>.
There is a lot going on there in terms of.
right now we're not in an enrollment period so marketing dollars have been pulled back because profitability has changed as opposed to when you're in the enrollment period and we expect there to be a very significant ramp into the enrollment period and as has been indicated and as was cited on the earnings call uh
Right now we're not in an enrollment period, so marketing dollars that's been pulled back because profitability has changed as opposed to when youre in the enrollment period, and we expect it to be a very significant ramp into the enrollment period.
As has been indicated and as was stated on the earnings call.
Those advertisers are expecting a higher degree of accountability on their spend and greater ROI and
Those advertisers are expecting a higher degree of accountability on their spend and greater ROI.
And.
The indication is other channels are going to be phased out, and we likely should see an increase in digital advertising. But there's a lot of distance between now and the enrollment period, and there's a significant ramp up that occurs towards the end of Q3. So
The indication is other channels are going to be phased out and we likely should see an increase in digital advertising, but there's a lot of distance between now and the enrollment periods and there is a significant ramp up that occurs towards the end of Q3. So.
How we can be best positioned to take advantage of that is to continue to leverage the toolbox at top, which is the technology-enabled data asset, which we access via our proprietary technology, which connects us with our media reach and the media network.
We can be best positioned to take advantage of that is to continue to leverage the toolbox talk which is the technology enabled data asset.
We access via our proprietary technology, which connects us with our media reach and <unk>.
Data leads the day, it's connected to media via technology. And the best example I can show you of this is why we had a good first quarter. If you look at our variable marketing margin, we've previously talked about VMM ranges.
Tech data leads the day, it's connected to immediately of technology and the Best example, I can show you. This is why we had a good first quarter. If you look at our variable marketing margin, we previously talked about Vms ranges.
up to 36% we've indicated a range of 32 to 36% and in Q1 our VMM was 35.3%.
Up to 36%.
We've indicated a range of 32% to 36% in Q1, our Vms was 35, 3%.
basically top of the range and that's because we're able to continue to be competitively differentiated as a result of the data asset. So we just need to continue to leverage that as our North Star, move forward, everything that we do starts data first and that's what leads to the VMM and then behind that, although we don't control what we don't control, so the macro we don't control obviously and you know there's a lot of variability there, volatility.
<unk> top of the range.
And that's because we're able to continue to be competitively differentiated as a result of the data assets. So we just need to continue to leverage that as our north star going forward everything that we do starts data first and Thats what leads to the Vietnam and then behind that although we don't control what we don't control so the Max.
We don't control, obviously theres a lot of variability there volatility we.
We do control how we're able to leverage that data asset, and we do control a lot of the costs that we have internally. So as Vasundhara said, we're very focused on efficiency and maintaining a cost structure that benefits the business. And to that point, we do convert meaningful EBITDA, and we have a high free cash flow conversion rate off that EBITDA.
We do control, how we're able to leverage that data asset and we do control a lot of the costs that we have internally. So it's the center said, we're very focused on efficiency and maintaining a cost structure that benefits the business and to that point, we do convert meaningful EBITDA and we have a high free cash flow conversion rate off that EBITDA.
Got it thank you very much for the color.
Sure you're welcome.
Thank you.
Next question is from Delana Rob Shapiro with Singular Research.
Next question is from the line of Rob Shapiro with singular research.
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Hey, can you talk about if there are any verticals which you currently don't have a big presence in, which could be a good opportunity for you?
Hey can you talk about if there are any verticals would you currently don't have a big problem for them.
It could be a good opportunity for you.
Yeah.
Hey, Rob good afternoon.
Hey Rob, good afternoon. Good to have you on the call.
Good to have you on the call.
So, look, I mean, dynamic diversification, we talked about it on the Q4 call and Q1, it continues to win the day for us.
So look I mean dynamic diversification, we talked about it on the Q4 call in Q1. It continues to win the day for US we have significant diversification with on within all parts of our business. We're diversified even inside of the different verticals and then we're diversified in categories.
We have significant diversification within all parts of our business.
we're diversified even inside of the different verticals and then we're diversified in categories. So we look at it, I guess the answer to your question is yes, but we look at it as growing inside of the different verticals and categories that we're already in because we believe in dynamic diversification. So if you look at insurance and even take a look into property and casualty, you know, we have diversification in the buyers there. So you look at the enterprise client.
We look at it I guess the answer to your question is yes, but we look at it as growing inside of the different verticals and categories that were already in because we believe in dynamic diversification. So if you look at insurance and then you can take a look into property and casualty we have diversification in the buyers. There. So you look at the <unk>.
<unk> clients, which we work with directly and then underneath the enterprise clients you have the smbs the independent insurance agents and as mentioned.
which we work with directly, and then underneath the enterprise clients, you have the SMBs, the independent insurance agents, and as mentioned on the earnings call.
On the earnings call.
We have in fact, I don't think I went into this on the earnings call, but we currently have about 6500 independent agents on the platform and we just brought on a new major carrier and we expect as a result of that to see significant growth net agent base, which against the enterprise clients gives us nice diversification because.
In fact, I don't think I went into this on the earnings call, but we currently have about 6,500 independent agents on the platform. We just brought on a new major carrier and we expect, as a result of that, to see significant growth in that agent base, which, against the enterprise clients, gives us nice diversification because the agents...
The agents.
you know, regardless of the headwinds, they need to write policies as they're dealing with churn issues, so it represents an opportunity for us to grow. So dynamic diversification for us continues to win the day and because the business can move and it's agile, it's dynamically diversified from a vertical perspective and it's dynamically diversified from a channel perspective. You know, we're looking at opportunities inside of insurance, e-commerce, consumer finance, and education, and then we get into what's called the subcategories, like I just went into, where we see pockets, like in...
So the headwinds inventory policies as they're dealing with churn issue. So it represents an opportunity for us to grow so dynamic diversification for US continues to win the day because the business can move and it's agile dynamically diversified from a vertical perspective, and it's dynamically diversified from a channel perspective.
We're looking at opportunities inside of insurance ecommerce consumer finance and education, and we get into what's called the subcategories like I just went into where we see pockets like inside of our agent base that we have where we can add a new carrier add new agents as a result of that industry significant growth. So that's how we're looking.
agent base that we have where we can add a new carrier, add new agents as a result of that, and thus see significant growth. So that's how we're looking at it, and we're pretty excited about that. Okay. Thank you.
At it and we're pretty excited about that.
Okay. Thank you.
Thank you.
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There are no questions at this time. That concludes today's conference call. Thank you. You may now disconnect your line.
There are no questions at this time that concludes today's conference call. Thank you you may now disconnect your line.