Q1 2024 Hippo Holdings Inc Earnings Call
Ladies and gentlemen, welcome to the Hippo Holdings first quarter earnings call.
Betsy: Ladies and gentlemen, welcome to the Hippo Holdings first quarter earnings call. My name is Betsy, and I will be moderating your call today. If you would like to ask a question during the presentation, you may do so by pressing star one on your telephone keypad. If you are streaming via a web browser, kindly press the Q&A button and type in your question. I will now hand you over to your host Mark Olson from Hippo Holdings to begin. Mark, please go ahead.
Betsy: My name is Betsy and I will be moderating your call today, if you would like to ask a question. During the presentation. You may do so by pressing star one on your telephone keypad. If you were achieving via a web browser highly press the Q&A button and typing. Your question I will now hand, you over to your host Mark Olsen from <unk>.
Mark Olson: Thanks to begin Marc Please go ahead.
Mark Olson: Thank you operator, good morning, and thank you for joining hit those 2024 first quarter earnings call.
Mark Olson: Thank you, operator. Good morning, and thank you for joining Hippo's 2024 first quarter earnings call. Earlier today, Hippo issued a shareholder letter announcing its Q1 results, which is available at investors.hippo.com. Leading today's discussion will be Hippo President and Chief Executive Officer Rick McCathron and Chief Financial Officer Stewart Ellis. Following management's prepared remarks, we will open the call to questions.
Mark Olson: Earlier today <unk> issued a shareholder letter announcing its Q1 results, which is available at investors that Hippo dot com.
Leading today's discussion will be typical president and Chief Executive Officer, Rick Mccaffrey, and Chief Financial Officer Stuart Ellis following management's prepared remarks, we will open the call to questions.
Mark Olson: Before we begin we'd like to remind you that our discussion will contain predictions expectations forward looking statements and other information about our business that are based on management's current expectations as of the date of this presentation.
Mark Olson: Before we begin, we'd like to remind you that our discussion will contain predictions, expectations, forward-looking statements, and other information about our business that is based on management's current expectations as of the date of this presentation. Forward-looking statements include but are not limited to Hippo's expectations or predictions of financial and business performance and conditions and competitive and industry outlook. Forward-looking statements are subject to risks, uncertainties, and other factors that could cause our actual results to differ materially from historical results and from our forecast, including those set forth in HIPPO's Form 10-Q filed today.
Mark Olson: Forward looking statements include but are not limited to hit those expectations or predictions of financial and business performance and conditions and competitive and industry outlook.
Mark Olson: Forward looking statements are subject to risks uncertainties and other factors that could cause our actual results to differ materially from historical results and ore from our forecast, including those set forth in hippos Form 10-Q filed today.
Mark Olson: For more information, please refer to the risks, uncertainties, and other factors discussed in HIPPO's SEC filings, in particular the section entitled Risk Factor. All cautionary statements are applicable to any forward-looking statements we make whenever they appear. You should carefully consider the risks and uncertainties and other factors discussed in HIPPO's SEC files. Do not place undue reliance on forward-looking statements, as HIPPO is under no obligation to expressly disclaim any responsibility for updating, offering, or otherwise revising any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.
Mark Olson: For more information please refer to the risks uncertainties and other factors discussed in <unk> SEC filings in particular, the section entitled risk factors.
Mark Olson: All cautionary statements are applicable to any forward looking statements, we make whenever they appear you should carefully consider the risks and uncertainties and other factors discussed in Nichols SEC filings.
Mark Olson: Not place undue reliance on forward looking statements as Hippo is under no obligation and expressly disclaims any responsibility for updating offering or otherwise revising any forward looking statements, whether as a result of new information future events or otherwise except as required by law.
Mark Olson: During this conference call, we refer to non-GAAP financial measures, such as total generated premium and adjusted EBITDA. Our GAAP results and description of our non-GAAP financial measures with full reconciliation to GAAP can be found in the first quarter 2024 shareholder letter, which has been furnished to the SEC and is available on our website. And with that, I'll turn the call over to Rick McCatherin, our president.
Mark Olson: During this conference call, we will refer to non-GAAP financial measures such as total generated premium and adjusted EBITDA, Our GAAP results and description of our non-GAAP financial measures with full reconciliation to GAAP can be found in the first quarter 2024 shareholder letter, which has been furnished to the SEC and is available on our website and with that I'll turn the call over to Rick <unk>.
Rick: Catherine our president and CEO.
Richard Lyn McCathron: Thank you, Mark, and good morning, everyone. We started off the new year on the right foot, building on the momentum gained during a transformative 2023, and we are on track to achieve the 2024 operational and financial goals we discussed last quarter. I'm particularly excited to share that during Q1, we were able to continue reducing our cat exposure and streamlining our operations without sacrificing overall growth. In fact, we accelerated top-line growth compared to last quarter.
Thank you Mark and good morning, everyone.
Rick: We started off the new year on the right foot building on the momentum gained during a transformative 2023 and are on track to achieve the 2020 for operational and financial goals, we discussed last quarter.
Rick: I'm, particularly excited to share that during Q1, we were able to continue reducing our cat exposure and streamlining our operations without sacrificing overall growth in fact, we accelerated topline growth compared to last quarter.
Rick: I mentioned previously that we have been focused on meeting our customers' needs with third party policies, while reducing our hit the home insurance program exposure in areas, where we have a lower risk appetite our team's efforts to find the right policy for each customer regardless of carrier have allowed us to maintain high.
Richard Lyn McCathron: I mentioned previously that we've been focused on meeting our customers' needs with third-party policies while reducing our Hippo Home Insurance Program exposure in areas where we have a lower-risk appetite. Our team's efforts to find the right policy for each customer, regardless of carrier, have allowed us to maintain high retention rates during this effort.
Rick: Retention rates during this effort are.
Richard Lyn McCathron: Our success helped drive accelerated total-generated premium growth in Q1 relative to the previous quarter. I expect this growth to accelerate further toward the end of the year as the benefit of reopening certain geographies and the expansion of our builder business overtake the short-term growth impact of reducing cat exposure. Without the effort to rebalance our geographical exposure, our top line could have been even higher, but these efforts are already improving underwriting results and our bottom line. However, no home insurance company will ever be immune to weather.
Rick: Our success helped drive accelerated total generated premium growth in Q1 relative to last quarter I expect this growth to accelerate further towards the end of the year as the benefit of reopening in certain geographies and the expansion of our builder business overtake the short term growth impact of reducing.
Rick: <unk> exposure.
Rick: Without the effort to rebalance our geographical exposure, our topline could have been even higher but these efforts are already improving underwriting results and our bottomline.
Rick: No home insurance company will ever be immune from weather and like others. We experienced losses in March of this year from a large hailstorm that affected Texas and Missouri.
Richard Lyn McCathron: And like others, we experienced losses in March of this year from a large hailstorm that affected Texas and Missouri. However, because of our ongoing efforts to reduce policy counts in these areas and to increase deductibles that further reduce our exposure, we estimate the direct losses from this event will be approximately 43 percent lower than what we would have experienced if the exact same event had occurred in March 2023. This is solid progress in a relatively short period of time, and like we discussed last quarter, we feel confident that later this year, after the changes work their way fully through our book, the reduction in expected losses will even be higher.
Because of our ongoing efforts to reduce policy counts in these areas and to increase deductibles that further reduce our exposure we estimate the direct losses from this event will be approximately 43% lower than what we would have experienced if the exact same event had occurred in March 'twenty.
Rick: 'twenty three.
Rick: This is solid progress in a relatively short period of time and likely discussed last quarter. We feel confident that later this year. After the changes work their way fully through our book the reduction in expected losses will even be higher.
Rick: Finally towards the end of last year, we took aggressive actions to lower costs and drive efficiencies into our operations. We are now realizing the full benefits of these cost reductions in our Q1 financials and those improvements contributed to our progress in reducing our adjusted EBITDA loss during the quarter.
Richard Lyn McCathron: Finally, toward the end of last year, we took aggressive actions to lower costs and drive efficiencies into our operation. We're now realizing the full benefits of these cost reductions in our Q1 finances. And those improvements contributed to our progress in reducing our adjusted EBITDA loss during the quarter, even though Q1 had seasonally higher weather-related losses than Q4 last year. The critical work that started in 2023 has continued into 2024, and our results from Q1 add to the growing evidence of our ability to efficiently grow our business while marching towards positive adjusted EBITDA.
Rick: Even though Q1 had seasonally higher weather related losses than Q4 last year.
Rick: The critical work that started in 2023 has continued into 2024 and our results from Q1 adds to the growing evidence of our ability to efficiently grow our business, while marching towards positive adjusted EBITDA.
Richard Lyn McCathron: Our teams have worked hard during the quarter. I'm encouraged by the progress and excited to report that there's more to come. Now, I'd like to turn the call over to our Chief Financial Officer, Stewart Ellis, to walk through the highlights of our Q1 2024 financial results, as well as our expectations for the future.
Rick: Our teams have worked hard during the quarter I'm encouraged by the progress and excited to report that theres more to come.
Rick: Now I'd like to turn the call over to our Chief Financial Officer, Stuart Ellis to walk through the highlights of our Q1 2024 financial results as well as our expectations for the future.
Stewart Andrew Ellis: Thanks, Rick and good morning, everyone.
Stewart Andrew Ellis: Thanks, Rick, and good morning, everyone. In Q1, we took another step toward achieving positive adjusted EBITDA later this year, continuing the trends we've been discussing the past few quarters and showing measurable progress compared to our results from last quarter and those from a year ago. Before I get into the details of the other line items on the P&L, I'd like to take a minute to highlight how good a quarter it really was for Hippo on the adjusted EBITDA line because it was better than it appears on the surface.
Stewart Andrew Ellis: In Q1, we took another step toward achieving positive adjusted EBITDA later this year continuing the trends we've been discussing in the past few quarters and showing measurable progress compared to our results from last quarter and to those from a year ago.
Stewart Andrew Ellis: Before I get into the details of the other line items on the P&L I'd like to take a minute to highlight how good a quarter. It really was for <unk> on the adjusted EBITDA line, because it was better than it appears on the surface.
Stewart Andrew Ellis: Compared to Q1 of 2023, we improved our adjusted EBITDA loss by $32 $3 million, bringing.
Stewart Andrew Ellis: Compared to Q1 of 2023, we improved our adjusted EBITDA loss by $32.3 million, bringing it down from $52.1 million a year ago to $19.8 million in Q1. Compared to last quarter, the improvement was only $2.5 million, but we need to keep in mind that Q4 is typically our best seasonal quarter in terms of weather losses for the HIPPO program.
Stewart Andrew Ellis: Bringing it down from $52 1 million a year ago to $19 8 million in Q1 <unk>.
Stewart Andrew Ellis: Compared to last quarter, the improvement was only $2 5 million, but we need to keep in mind that Q4 is typically our best seasonal quarter in terms of weather losses for the Hippo program. So the $2 $5 million improvement versus last quarter was achieved despite gross losses on the Hippo program being $19 million higher than they were in that.
Stewart Andrew Ellis: So the $2.5 million improvement versus last quarter was achieved despite gross losses on the HIPPO program being $19 million higher than they were in that quarter. We were able to accomplish this because of the trends we've been discussing over the past year in each of the major line items on our P&L. So I'll try to highlight those trends as we go through the numbers and then, at the end, discuss how each of them contributed to this result.
Stewart Andrew Ellis: Sure.
Stewart Andrew Ellis: We were able to accomplish this because of the trends we've been discussing over the past year in each of the major line items on our P&L. So I'll try to highlight those trends as we go through the numbers and then at the end discuss how each of them contributed to this result.
Stewart Andrew Ellis: So starting with total generated premium.
Stewart Andrew Ellis: Starting with total generated premium, in Q1, TGP grew to $294 million, a 20% increase year over year. As Rick mentioned a few minutes ago, this was an acceleration of growth compared to last quarter, and it was driven primarily by the success we've had offering third-party policies to our customers through our agency and First Connect platform. Our insurance as a service business continues to grow 25% year over year, while our efforts to reduce cat exposure in our Hippo Home Insurance Program caused TGP from that segment to shrink by 29%. All of these results were in line with expectations and consistent with the guidance we shared last quarter for the full 2024 calendar year.
Stewart Andrew Ellis: In Q1, GGP grew to 294, million% to 20% increase year over year as Rick mentioned, a few minutes ago. This was an acceleration of growth compared to last quarter and it was driven primarily by the success. We've had offering third party policy to our customers through our agency and first connect platforms.
Stewart Andrew Ellis: Our insurance as a service business continued to grow up 25% year over year, while our efforts to reduce cat exposure in our Hippo home insurance program TEP from that segment to shrink by 29%.
Stewart Andrew Ellis: All of these results were in line with expectations and consistent with the guidance, we shared last quarter for the full 2024 calendar year.
The parts of our business that are less exposed to underlying weather and underwriting volatility insurance as a service and services rose as a percentage of our total PGP to 80% up from 77% last quarter.
Stewart Andrew Ellis: The parts of our business that are less exposed to underlying weather and underwriting volatility, insurance as a service, and services, rose as a percentage of our total TGP to 80%, up from 77% last quarter. As a reminder, we expect these trends to continue over the course of the year, with the services and insurance as a service segments collectively representing 85% of total TGP by Q4 of this year, at which point we should be starting to see TGP from the Hippo Home Insurance Program segment beginning to grow again, especially in the builder channel, which will help bolster our total TGP growth heading into 2025. Looking at revenue.
Stewart Andrew Ellis: As a reminder, we expect these trends to continue over the course of the year with the services and insurance as a service segments collectively representing 85% of total PGP. Thank you for this year at which point, we should be starting to see TEP from the hip a home insurance program segment, beginning to grow again, especially in.
Stewart Andrew Ellis: The builder channel, which will help bolster our total TDP growth heading into 2025.
Stewart Andrew Ellis: Looking at revenue during.
Stewart Andrew Ellis: During the first quarter, we again grew revenue significantly faster than TGP, with it rising 114% year over year to $85 million, up from $40 million in Q1 2023. As we discussed last quarter, this growth comes from a combination of volume increases at the services and insurance as a service segments, as well as significantly higher monetization of our PGP from the Hippo Home Insurance Program. Within HHIP, we were able to retain 58% of gross earned premium, up from 7% a year ago, and also benefited from a 33% year over year increase in rates on a written basis during the quarter.
Stewart Andrew Ellis: During the first quarter, we again grew revenue significantly faster than GDP with it rising 114% year over year to $85 million up from $40 million in Q1 2023.
Stewart Andrew Ellis: As we discussed last quarter. This growth comes from a combination of volume increases at the services and insurance as a service segments as well as significantly higher monetization of our GGP from the Hippo home insurance program.
Stewart Andrew Ellis: Within <unk>, we were able to retain 58% of gross earned premium up from 7% a year ago and also benefited from a 33% year over year increase in rate on a written basis during the quarter.
Stewart Andrew Ellis: Looking at loss and loss adjustment expense the biggest driver of our consolidated loss and loss adjustment expense. The HIPAA home insurance program segment showed strong progress during the quarter.
Stewart Andrew Ellis: Looking at loss and loss adjustment expense, the biggest driver of our consolidated loss and loss adjustment expense, the HIPAA Home Insurance Program segment showed strong progress during the quarter. Our HHIP gross loss ratio improved by 21 percentage points to 80% from 101% in Q1 of last year. This portfolio level improvement, combined with the improvements to our reinsurance structure, drove an even larger improvement in our HHIP net loss ratio, which came in at 100% during the quarter, an improvement of 455 percentage points versus Q1 of last year. As I mentioned earlier, our gross losses at HHIP were $19 million higher than last quarter because of seasonal weather patterns.
Stewart Andrew Ellis: Our <unk> gross loss ratio improved by 21 percentage points to 80% from 101% in Q1 of last year.
This portfolio level improvement combined with the improvement to our reinsurance structure drove the even larger improvement in our net loss ratio, which came in at 100% during the quarter an improvement of 455 percentage points versus Q1 of last year.
Stewart Andrew Ellis: As I mentioned earlier, our gross losses, and Hh IP were $19 million higher than last quarter because of seasonal weather patterns, but because of the increase in earned premium quarter over quarter. We now have the earned premium base to absorb these losses.
Stewart Andrew Ellis: But because of the increase in earned premium quarter over quarter, we now have the earned premium base to absorb these losses. Driven primarily by the improvements in the HIPPO program, our consolidated gross loss ratio improved 17 percentage points year-over-year to 59%, and our consolidated net loss ratio improved 186 percentage points year-over-year to 87%. We think about fixed expenses and operating leverage. As Rick mentioned earlier, Q1 represents the first quarter where we have realized the full benefit of the cost reduction actions and efficiency improvements we implemented late last year. These improvements show the substantial operating leverage we're achieving as we scale.
Stewart Andrew Ellis: Driven primarily by the improvements in the Hippo program, our consolidated gross loss ratio improved 17 percentage points year over year to 59%.
Stewart Andrew Ellis: And our consolidated net loss ratio improved 186 percentage points year over year to 87%.
We think about fixed expenses and operating leverage as Rick mentioned earlier Q1 represents the first quarter, where we realized the full benefit of the cost reduction actions and efficiency improvements we implemented late last year. These.
Stewart Andrew Ellis: These improvements show the substantial operating leverage we are achieving as we scale.
Stewart Andrew Ellis: Relative to Q1 of last year, our GAAP sales and marketing technology and development and general and administrative expenses collectively declined by 87 percentage points of revenue shrinking from 135% of revenue last year to 48% of revenue this quarter.
Stewart Andrew Ellis: Relative to Q1 of last year, our GAAP sales and marketing, technology, and development, and general and administrative expenses collectively declined by 87 percentage points of revenue, shrinking from 135% of revenue last year to 48% of revenue this quarter. Beyond the improvement relative to revenue, each of our sales and marketing, technology, and development, and general and administrative line items declined in absolute dollar terms during the quarter relative to both Q1 2023 and Q4 2023. Collectively, these improvements drove a year over year reduction in expenses of more than $13 million on a gap basis, a decrease of 24% in absolute dollar terms, all while revenue grew 114%.
Stewart Andrew Ellis: Beyond the improvement relative to revenue each of our sales and marketing technology and development and general and administrative line item declined in absolute dollar terms during the quarter relative to both Q1 2023 and Q4 2023.
Stewart Andrew Ellis: Collectively these improvements drove a year over year reduction in expenses of more than $13 million on a GAAP basis, a decrease of 24% in absolute dollar terms all while revenue grew 114%.
Stewart Andrew Ellis: Turning now to adjusted EBITDA as I mentioned at the beginning of my remarks, our Q1 adjusted EBITDA loss of $19 8 million was a $32 $3 million improvement year over year, and a $2 $5 million improvement quarter over quarter.
Stewart Andrew Ellis: Turning now to Adjusted EBITDA. As I mentioned at the beginning of my remarks, our Q1 Adjusted EBITDA loss of $19.8 million was a $32.3 million improvement year over year and a $2.5 million improvement quarter over quarter. The year-over-year improvement in adjusted EBITDA was driven primarily by a 21 percentage point improvement in our HHIP gross loss ratio and an improved reinsurance structure, which brings our retained premium more in line with the risk we are retaining.
Stewart Andrew Ellis: The year over year improvement in adjusted EBITDA was driven primarily by a 21 percentage point improvement in our gross loss ratio.
Stewart Andrew Ellis: Our improved reinsurance structure, which brings our retained premium more in line with the risk we are retaining.
Stewart Andrew Ellis: Cost Savings Initiatives we initiated in Q4 of last year and the growth in our insurance as a service and services segment. The quarter-over-quarter improvement in adjusted EBITDA was driven primarily by realizing the full benefit of the cost-saving initiatives in Q1 versus only a partial benefit last quarter, while the benefit of higher earned premium offset seasonally higher weather-related losses. As a reminder, the definition of adjusted EBITDA that we are using and have used historically excludes net investment income, which amounted to $5.9 million in Q1.
Stewart Andrew Ellis: Cost savings initiatives, we initiated in Q4 of last year and the growth in our insurance as a service and services segments.
Stewart Andrew Ellis: The quarter over quarter improvement in adjusted EBITDA was driven primarily.
Stewart Andrew Ellis: By realizing the full benefit of the cost saving initiatives in Q1 versus only a partial benefit last quarter, while the benefit of higher earned premium offset seasonally higher weather related losses.
Stewart Andrew Ellis: As a reminder, the definition of adjusted EBITDA that we are using and have you historically excludes net investment income, which amounted to $5 9 million in Q1.
Stewart Andrew Ellis: Looking forward to the full year 2024, we are reiterating the guidance we provided last quarter.
Stewart Andrew Ellis: Looking forward to the full year 2024, we are reiterating the guidance we provided last quarter. As a reminder, 41% of our annual PCS cat load is estimated to occur in Q2, historically our highest weather loss quarter.
Stewart Andrew Ellis: As a reminder, 41% of our annual Tcs cat load is estimated to occur in Q2.
Stewart Andrew Ellis: Historically, our highest whether last quarter. When we report Q2 results we plan to provide updated guidance for the rest of 2024.
Stewart Andrew Ellis: When we report Q2 results, we plan to provide updated guidance for the rest of 2024. And finally, before I close and open the floor for questions, I'd like to point out that Q1 was the first quarter in the company's history where our cash balance increased for reasons other than raising additional capital. Cash equivalents and investments rose by $6.8 million during the quarter. This increase was a function of some working capital changes and other one-time benefits.
Stewart Andrew Ellis: And finally before I close and open the floor for questions I'd like to point out that Q1 was the first quarter in the company's history, where our cash balance increased for reasons other than raising additional capital.
Stewart Andrew Ellis: Cash equivalents and investments rose by $6 $8 million during the quarter. This increase was a function of some working capital changes and other one time benefits. So I don't expect that we will be cash flow positive every quarter. This year, but it is a significant milestone for the company and a reflection that we are getting closer to a point, where we expect to generate consistent.
Stewart Andrew Ellis: So I don't expect that we'll be cash flow positive in every quarter this year. But it is a significant milestone for the company and a reflection that we are getting closer to a point where we expect to generate consistently positive cash flow. And with that, operator, I'd now like to open the floor to questions.
Stewart Andrew Ellis: Positive cash flow.
Speaker Change: And with that operator, I'd now like to open the floor to questions.
Speaker Change: Thank you.
Operator: If you would like to ask a question, please press the star followed by one on your telephone keypad now. If you change your mind, please press star followed by two to withdraw your question. And when preparing to ask your question, please ensure your phone is unmuted locally. We have our first question coming from Yaron Kinar of Jefferies.
Speaker Change: If you would like to ask a question. Please press the star followed by one on your telephone keypad now if you change your mind. Please press star followed by two to withdraw your question Edwin preparing to ask your question. Please ensure your phone is on mute locally.
We have our first question coming from Yaron <unk> of Jefferies.
Yaron: Excuse me that free Katherine go ahead in the quarter.
Yaron Joseph Kinar: Yaron, go ahead.
Yaron: Can you can you help me, we're having a little tougher here and there.
Operator: We're having a little trouble hearing you. But we can now.
Speaker Change: We can now.
Yaron: Okay got it sorry.
Yaron Joseph Kinar: Okay, good morning and congrats on achieving the free cashflow milestone. I guess a few questions, if I could first on the sales and marketing spend seems to come in a little bit lighter, at least than where I'd expected it to be. Is there a seasonality pattern there or do you think that it will remain at relatively these levels as you continue to achieve this strong level?
Yaron: So good morning, and congrats on achieving the free cash flow milestone.
Speaker Change: I guess, a few questions if I cut first Tom on the sales and marketing spend seems to have declined a little bit lighter.
Speaker Change: I'd expect it to be as there is seasonality.
Speaker Change: Pattern there.
Speaker Change: Or do you think that it will.
Speaker Change: Remain at relatively these levels.
Speaker Change: As you continue to achieve this strong level of PGP growth.
Stewart Andrew Ellis: Yaron, this is Stewart. I can take this one.
Speaker Change: Yeah. Ron This is Stuart I can I can take this one I think.
Stewart Andrew Ellis: I think You know, I'm expecting not only our sales marketing but our other fixed cost line items in the P&L to remain roughly at these levels for a while. I think Q1 is a reasonable proxy for the quarterly run rate of this. I think one of the things that's important to remember about our growth is that not all the dollars of incremental TGP require us to go out and spend money to acquire new customers, especially in insurance as a service. A lot of the growth is coming from existing programs. And so we do have an ability to grow efficiently, and I think that we're showing that in the P&L in Q1.
Stewart Andrew Ellis: I am expecting.
Stewart Andrew Ellis: <unk>, our not only our sales and marketing, but are our other fixed cost line items in the P&L to remain roughly at these levels for a while I think Q1 is a reasonable proxy for the quarterly run rate of this.
Speaker Change: I think one of the thing Thats important to remember about our growth is that not all the dollars of incremental PGP require us to go out and spend money to acquire new customers.
Speaker Change: Especially in insurance as a service segment a lot of the growth is coming from existing programs.
Speaker Change: And so we do have an ability.
Speaker Change: To grow efficiently and I think that we're showing that in the P&L in Q1.
Speaker Change: Got it.
Richard Lyn McCathron: You're on all of them. I'll add one quick thing to what Stewart said. The other aspect to remember is in our services segment, we are doing a better job of cross-selling new policies to existing customers, which you see growth related to those efforts, yet we don't have any incremental marketing spend because they're existing customers.
Speaker Change: Hi, Ron I'll add I'll add one I'll add one quick.
Ron: You're an odd one quick thing to what Stuart said the other aspect to remember is in our services segment. We are doing a better job of cross selling new policies to existing customers and which you see growth.
Ron: Related to those efforts yet we don't have any incremental marketing spend because their existing customers.
Speaker Change: That makes sense.
Stewart Andrew Ellis: And, you know, while we're on services, why was the very strong PGP growth there, like 37%? Why did that translate to only 16% revenue?
Speaker Change: And.
While we're on services why was the very strong TDP growth there like 37% why is that translate to only 16% revenue growth.
Speaker Change: Sure I can take this one I think it's a combination.
Stewart Andrew Ellis: Yaron, I can take this one. I think it's a combination of things. Within the services segment, we do have, I think, as we've talked about in the past, multiple kinds of businesses. So we have our agency where we sell insurance policies, both homeowners and non-ownership policies, to consumer customers. We also have our First Connect platform, where we are helping carriers who are looking for incremental demand for their products and agents who are looking for incremental capacity to sell to their customers.
Speaker Change: Thanks.
Speaker Change: Within the services segment, we do have I think as we've talked about in the past multiple kinds of businesses. So we have our agency, where we're selling insurance policies, both homeowners and non homeowners policies to the.
Speaker Change: Consumer customers. We also have our first connected platform, where we are helping carriers who are looking for.
Incremental demand for their products and agents, who are looking for interim incremental capacity to sell to their customers. The first connect platform is a marketplace.
Stewart Andrew Ellis: The First Connect platform is a marketplace. The revenue we have is a share of the commission that is paid from carriers to independent agents, and it monetizes at a lower percentage of TGP. It's a high variable contribution margin business, but at the percentage of TGP, it's lower. And the First Connect platform is growing incredibly quickly. So there was a mixed shift during the quarter to more First Connect premium within that particular segment.
Speaker Change: It's a share the revenue we have as a share of the commission that is paid from carriers to the independent agents and monetize at a lower percentage of TEP.
Speaker Change: It's a high variable contribution margin business.
Speaker Change: As a percentage of <unk>.
Speaker Change: TCP is lower and the first connect platform is growing incredibly quickly. So there is a mix shift.
Speaker Change: During the quarter two to more first connect premium within that particular segment.
Speaker Change: Got it so it would be reasonable to think of that conversion rate, maybe continuing to track a bit lower.
Stewart Andrew Ellis: Got it. So it would be reasonable to think of that conversion rate and maybe continue to track it a bit lower.
Speaker Change: These are the mixture.
Speaker Change: I think thats right I think first connect we see us continuing to grow quickly and over time will become a larger share of the.
Stewart Andrew Ellis: I think that's right. I think First Connect we see as continuing to grow quickly and, over time, will become a larger share of the services segment. It is We're continuing, as Rick said, within the agency to add new consumer customers and to broaden the share of wallet, if you will, by selling policies to more than one policy to consumers through the cross sell efforts, but the first connects are growing really quickly. And I think you'll see a slow makeshift toward First Connect as it continues to grow.
Speaker Change: Of the services segment is.
Speaker Change: It's we're continuing as Rick said within the agency to add new consumer customers and to broaden the share of wallet. If you will.
Speaker Change: By selling policies more than one policy too.
Speaker Change: To consumers through the cross sell efforts, but but first connects growing really quickly and I think youll see youll see.
Speaker Change: A slow mix shifts toward first connect as it continues to grow.
Speaker Change: I will add this is Rick.
Richard Lyn McCathron: I will add, this is Rick. I will add Yaron. Over time, as we continue to reopen geographies for our HIPPO home insurance program, when we acquire customers for that program, we don't always place them with HIPPO. We look for the best policy to meet the needs of that particular customer. Therefore, we will continue to grow third-party policies in our agency or our services business that is not part of the First Connect platform over time as we get into the second half of the year. So, I would keep that in mind as well.
Yaron Joseph Kinar: [inaudible]
Speaker Change: This is Eric I will add your on over time.
Speaker Change: As we continue to reopen.
Speaker Change: Geographies for our Hippo home insurance program, when we acquire customers for that program, we don't always place them with Hippo.
Speaker Change: Look for the best policy to meet the needs of that particular customer. Therefore, we will continue to grow third party policies in our agency, where our services business that are not part of the.
Speaker Change: First connect platform over time as we get into the second half of the year. So I would keep that in mind as well.
Speaker Change: Okay. That's helpful.
Yaron Joseph Kinar: Okay, that's helpful. And last question for me.
Speaker Change: Last question for me.
Speaker Change: Hh IP.
Speaker Change: Excuse me, we saw the Attritional loss ratio improved by a point I think there's a lot going on underneath that though.
Stewart Andrew Ellis: In HHIP, excuse me, we saw the attritional loss ratio improve by a point. I think there's a lot going on underneath that, though. You have a mixed shift away from cat-exposed business, which I would think would drive the attritional loss ratio higher, at the same time have the rate impact and maybe other underwriting actions. Can you maybe help us sort through that, maybe offer some way points in terms of the puts and takes there? What was a good guy? What was a bad guy? By what magnitude? Just so we have maybe a better sense of what is truly going on under that improvement in the loss.
Speaker Change: The mix shift away from cat exposed business, which I would think would drive that attritional loss ratio higher.
Speaker Change: I have the right.
Speaker Change: Impact and maybe other underwriting action.
Speaker Change: <unk> can you maybe help us sort through that and maybe offer some way points in terms of the puts and takes there what was the good guy what was a bad guy by what magnitude just so we have maybe a better sense of.
Speaker Change: What's truly going on under that improvement in velocity ratio.
Speaker Change: Yes, Ron I can I can I can take us out of that I think you're absolutely right.
Stewart Andrew Ellis: Yeah, Aaron, I can I can, I can take a stab at that. I think you're absolutely right. That On a like-for-like basis, the attritional loss ratio or the non-PCS loss ratio improved more substantially than one point year-over-year. But we do, as you said, have a mixed shift away from higher tax geographies within the portfolio. So all things being equal, lowering the amount of premium in the book that is related to higher volatility, or whether we should see an increase in the attritional loss ratio just for mixed reasons alone.
Speaker Change: That.
Speaker Change: On a like for like basis.
Speaker Change: The attritional loss ratio or the non PCI loss ratio improved.
Speaker Change: More substantially than one twice a year over year, but we do as you said, we do have a mix shift away from.
Speaker Change: Higher cat geographies within the portfolio.
Speaker Change: So all things being equal lowering the amount of premium in the book that is related to higher volatility weather should see an increase in the attritional loss ratio just for mixed reasons alone.
Speaker Change: And the fact that we are improving attritional loss ratio despite that headwind on the mix is a testament to the rate that we have burns.
Stewart Andrew Ellis: And the fact that we are improving the personal loss ratio despite that headwind on the mix is a testament to the rate that we have earned. And, you know, we've been talking about high 20s and low 30s that we've been able to achieve on a written basis over the past few quarters. And, you know, we're starting to see some of that benefit on earnings, which is helping. And and, you know, we have had in the quarter some non-weather water issues that contributed to some of the losses there. But I think they're out there.
Speaker Change: And we've been talking about.
Speaker Change: Hi, <unk>.
Speaker Change: <unk> and low <unk> that we've been able to achieve on a on a written basis over the past few quarters and.
Speaker Change: We're starting to see some of that benefit on the earned which is helping.
Speaker Change: And we have had in the quarter.
Speaker Change: We did have some.
Speaker Change: Non weather water issues.
Speaker Change: Contributed to some of the losses, there, but I think they are there.
Speaker Change: The variation there is within kind of.
Speaker Change: The normal parameters.
Speaker Change: I don't know that I can quantify on this call.
Speaker Change: Don't think.
Speaker Change: Really spoken at this level of detail.
Speaker Change: About the puts and takes but.
Speaker Change: The things that you are.
Speaker Change: Ventured highlighting our are real I do think that we will see additional improvements.
Stewart Andrew Ellis: You know, the variation there is within kind of the normal parameters. The I don't know that I can quantify on this call because I don't think we've really spoken at this level of detail about the puts and takes, but the things that you're highlighting are real. I do think that we will see additional improvements over the course of the rest of the year, as we look quarter, or sorry, year over year.
Speaker Change: Over the course of the rest of the year, as we look quarter or sorry year over year.
Stewart Andrew Ellis: We'll continue to see improving trends on both the PCS and the non-PCS loss ratio. So yeah, the trends there are positive. They're mapped a bit by the mix, but especially as we get through project volatility, which is our internal effort to lower our exposure to higher CAT areas, this mix shift effect will come into the background or will fade away, and you'll start to see more substantial improvement in nutritional loss as we get toward the end of the project.
Speaker Change: We will continue to see.
Speaker Change: The improving trends on both the Pts and the non PCI loss ratio.
Speaker Change: So yes, the trends there are positive there Matt.
Speaker Change: A bit by the mix, but.
Speaker Change: But especially as we get through the project volatility, which is our effort internally to lower our exposure to <unk>.
Speaker Change: Higher cat areas.
Speaker Change: This mix shift effects will will come into the background or will fade away and youll start to see more substantial improvement in attritional losses, as we get towards the end of the year and into 2025.
Speaker Change: Yes, Ron this is Rick I, just want to emphasize that.
Richard Lyn McCathron: Yeah, you're on. This is Rick. I just want to emphasize. Oh, no. Thanks for that, Yaron.
Stewart Andrew Ellis: I just want to emphasize something that Stewart said. We, although we've been able to keep the attritional loss ratio relatively flat, and that's a difficult balance to achieve when you're writing less business at higher premiums in cat-exposed areas while the additional premium works itself into the business. I just want to emphasize that our attritional loss ratio is not where we expect it to be. At the end of the year, we're continuing not only will that make shifts start to fade, as Stewart mentioned, but we are continuing our efforts and earning additional rates and taking other positive actions from an underwriting perspective, we expect that to also improve throughout the end of the year. We're not even close to being done with that improvement. We are looking forward to seeing that. Thank you.
Rick: Thanks for that you are on I, just want to emphasize something that Stuart said, we although we've been able to keep the attritional loss ratio. Despite that mixed shift relatively flat and that's a that's a difficult balance to achieve when you're writing less business at higher premiums in cat exposed.
Rick: Areas.
Rick: While the additional premium worked itself into the business I just want to emphasize that our attritional loss ratio is not where we expect it to be.
Rick: At the end of year, we're continuing not only will that mix shift start to fade as Stuart mentioned, we are continuing our efforts in earning in additional rate and taking other positive actions from an underwriting perspective that we expect that to also improve.
Rick: Throughout the end of the year, we're not even close to being done with that improvement.
Speaker Change: We're looking forward to seeing that thank you.
Richard Lyn McCathron: We're looking forward to seeing it. Thank you.
Stewart Andrew Ellis: Thanks, Ron.
Speaker Change: Thank you we now have our second question.
Operator: Thank you. We now have our second question, coming from Tommy McJoynt of KBW. Tommy, go ahead.
Speaker Change: Coming from Tommy Moll join of K B W.
Tommy Moll: So let me go ahead.
Tommy Moll: Hey, good morning, guys. Thanks for taking my questions.
Thomas Patrick Mcjoynt: Hey, good morning, guys. Thanks for taking my questions. So you did disclose that the rate increase on a written basis, you know, has come in at 33% year over year. How far along would you say that you are, kind of? Is that 33% relative to what you think that you need over time? And then putting that in the context of, you know, the HHIP program, we've seen the TGP in that business continue to fall for a number of quarters now.
Tommy Moll: So you did disclose that the rate increase on a written basis has.
Tommy Moll: Has come in at 33% year over year, how far along would you say that you are kind of is that 33% relative to what you think that you need over time.
Tommy Moll: And then putting that in the context of the <unk> program, we've seen the <unk> in that business continue to fall for a number of quarters now where do you kind of see the trough level of that business kind of falling during the year. It sounds like it's going to hit an inflection point.
Thomas Patrick Mcjoynt: Where do you, kind of, see the trough level of that business, kind of, falling during the year? It sounds like it's going to hit an inflection point, perhaps, at the start of next year. But I just, kind of, wonder where the trough is this year.
Tommy Moll: Perhaps at the start of next year, but just kind of wonder where that where the trough is this year.
Tommy Moll: Yeah, Hey, Tommy This is Rick I'll go ahead and sort of the Stewart can can add in on this this one a couple of different things.
Richard Lyn McCathron: Yeah, hey, Tommy, this is Rick. I'll go ahead and start, and Stewart can add in on this, this one, a couple different things. First, I'll answer your second question. First, you, as I think I mentioned this at the end of the earnings call last quarter, we started our what we call project volatility, which is the culling or improvement of the existing HHIP business, approximately October of last year; we take the actions at renewals of policies.
Rick: First I'll answer your second question first you're.
As I think I mentioned this at the end of the earnings call last quarter. We started our what we call project volatility, which is the choline or improvement of the existing Hh IP business.
Rick: <unk> October of last year.
Rick: We take the actions at renewals of policies.
Rick: And we would expect those efforts to be done approximately October of 2024.
Rick: And as such the growth that we get from the non existing portfolio. The new business. We're writing both in the builder channel in other areas. That's when it will reverse itself. So I think towards the end of this year in Q4, that's when you're going to start seeing growth again.
Richard Lyn McCathron: And we would expect those efforts to be done in approximately October of 2024. And as such, the growth that we get from the non-existing portfolio, the new business we're writing, both in the builder channel and other areas, that's when it will reverse itself. So I think towards the end of this year, in Q4, that's when you're going to start seeing growth again in the HHIP channel. Your first question: with some exceptions, and the exceptions being geographically or regulatoryly based, we think that we have filed and approved the majority of what I would call corrective rate actions to get us to price adequacy. Those need to work their way through the business.
Rick: The Hh IP channel. Your first question with some exceptions in the exceptions being geographically or regulatory based we think that we have.
Rick: We have filed and approved the majority of the what I would call corrective rate actions to get us to price adequacy those need to work their way through the business. However, it's a process that never ends. So we continue to look at trends, both frequency and severity and <unk>.
Richard Lyn McCathron: However, you know, it's a process that never ends. So we continue to look at trends, both frequency and severity, and inflation components. And we expect us to continue to take incremental steps as those trends dictate the need to do so over time. But in terms of what I would consider the heavy lift, that's been done. And now it's just working itself into the book with a few geographical exceptions.
Rick: Relation components, and we expect us to continue to take incremental rates.
Rick: As those trends dictate the need to do so over time, but in terms of what I would consider the heavy lift.
Rick: That's been done and now it's just working itself into the book with a few geographical exceptions.
Speaker Change: Got it I appreciate the color there.
Thomas Patrick Mcjoynt: Got to appreciate the color there. Switching over, can you give us an overview of, you know, the capital and kind of capacity situation and perhaps break it down by, you know, how much unencumbered capital is currently upholding the company? You know, how much capital is at Spinnaker in terms of, like, what premium leverage that is supporting? Just kind of give us an overview of the capital.
Speaker Change: Switching over can you give us an overview of the capital on kind of capacity situation and perhaps breaking it down by how much unencumbered capital is currently up holding company.
Speaker Change: How much capital is at spinnaker in terms of like what premium leverage that are supporting just kind of give us an overview of the capital.
Speaker Change: Yes.
Speaker Change: Okay.
Stewart Andrew Ellis: Hey, Tommy, this is Stewart. I can try to give you a little color. I don't think you know, historically, we haven't gotten into the details here. But generally, we have the ability to move capital, you know, subject to some restrictions around the organization where we need it. And we always try to think about where we can put capital that will position us to earn the highest return on that capital in any given period.
Speaker Change: Hey, Tommy this is Stuart I can try to give you a little color I don't think historically, we havent gotten into the details here, but generally we have the ability to move capital.
Stewart Andrew Ellis: Subject to some restrictions around the organization, where we need it and we always try to think about where can we put capital.
Stewart Andrew Ellis: That will well position us to earn the highest return on that capital.
Stewart Andrew Ellis: In any given period and so we feel good about the places that we have capital in the broader kind of corporate organization.
Stewart Andrew Ellis: And so, you know, we feel good about the places that we have capital in the broader, you know, kind of corporate organization. And, you know, we feel comfortable that we have the liquidity and the flexibility within our capital structure to, you know, be able to continue to invest aggressively in the business. And we're continuing to do that while we converge to just a diva job positive. So I think, you know, from a flexibility and a capital standpoint, I think we've got the flexibility that we need. And, you know, we're putting capital where we feel like we can earn the highest return.
Stewart Andrew Ellis: And in.
Stewart Andrew Ellis: We're feeling comfortable that we have the liquidity and the flexibility within our capital structure too.
Stewart Andrew Ellis: To be able to continue to invest aggressively in the business and we're continuing to do that while we converged to adjusted EBITDA positive.
Stewart Andrew Ellis: So I think.
Stewart Andrew Ellis: Flexibility and a capital standpoint, I think we've got the flexibility that we need and where we're putting capital where we feel like we can earn the highest return.
Stewart Andrew Ellis: One thing I'll add Tommy is that from a spinnaker perspective, our carrier our insurance as a service.
Richard Lyn McCathron: One thing I'll add, Tommy, is that from a Spinnaker perspective, our carrier, our insurance as a service perspective, we believe it is well capitalized to continue to grow that business with a very favorable BCAR score. So we feel very good about, as Stewart mentioned, not only our flexibility but our position to continue to invest and grow the business.
Stewart Andrew Ellis: Perspective, we believe it is well capitalized to continue to grow that business with very favorable be car score. So we feel very good about the Stuart mentioned, we feel very good about not only our flexibility but are positioned to continue to invest and grow the business.
Thomas Patrick Mcjoynt: Thanks, and then this last one real quick. You gave the disclosure that the sort of annual cat load breaks down into 41% of it coming through in the second quarter. Do you have, you know, what the typical mix is in the other quarters, first, third, and fourth? Perhaps it's a, you know, dynamic question, given the changing book of business, but if you could kind of help us out with just modeling that.
Speaker Change: And then just last one real quick you gave the disclosure that the.
Speaker Change: Sort of the annual cat load breaks down into a 41% of it coming through in the second quarter do you have what the typical mixes in the other quarters first third and fourth perhaps it's a dynamic.
Speaker Change: A dynamic question just given the changing book of business, but.
Speaker Change: If you could kind of help us out with just with our modeling.
Stewart Andrew Ellis: Yeah, I, Tommy, I can, I think I can take this one. We broke that down annually in our last shareholder letter in the guidance that we put out for the year. And we just Let's see if I can, it looks, yeah, so. The guidance that we gave for the year, which we've kind of reiterated on this call, is around 29% in the first quarter, 41% in the second quarter, 19% in the third quarter, and 11% in the fourth quarter.
Speaker Change: Yes tell me I can't I.
Speaker Change: I think I can take this one.
Speaker Change: Yes.
Speaker Change: We brought that down annually in our last shareholder letter in the guidance that we put out.
Speaker Change: For the for the year and let me just.
Speaker Change: See if I can it looks yes so.
Speaker Change: Yeah.
Speaker Change: The guidance that we gave for the year, which we reiterated on this on this call is around 29% in the first quarter, 41% in the second quarter, 19% in the third quarter and 11% in the fourth quarter and that is.
Stewart Andrew Ellis: And that that is That is a catalog that is a function of the geographic exposure of our policies and the nature of the weather that we're exposed to and, you know, reflects the changes that we make during the year related to the exposure concentrations
Speaker Change: That is a cat load that is a function of the geographic exposure of.
Speaker Change: Our policies and the nature of the weather that we are exposed to.
Speaker Change: And.
Speaker Change: Reflects that.
Speaker Change: The changes that we're making.
Speaker Change: During the year.
Speaker Change: Related to the exposure concentration in higher cost areas.
Richard Lyn McCathron: Yeah, Tommy, just a couple things. This is Rick. Yeah, Tommy, I would like to add a couple things to this, to Stewart's comment. So, first of all, the weather doesn't really look at the calendar, so those numbers are based on historical averages and breakdowns and where we expect the portfolio to be going. I will emphasize that the work that we're doing in our project volatility, that's over a year's time, so from October to October.
Speaker Change: Yes, Tom just a couple of things this is ray.
Ray: Yeah, Tammi I would like to I had a couple of things to this.
Ray: To Stuart's comments so far.
Ray: First of all the the weather doesn't really look at the calendar. So those numbers are based on historical averages and breakdowns and where we expect the portfolio to be going I will emphasize that the work that we're doing in our project volatility that's over a years a years' time, so okta.
Ray: To October when we experience or if we experience.
Richard Lyn McCathron: When we experience, or if we experience, earlier season events, that will have more of an impact on our portfolio than if the events get pushed later in the season because each month we're making greater strides in reducing our exposure to volatility. So there is some variation there, but what helps our portfolio is if this turns out to be a later season Q2 as opposed to an earlier season Q2. We don't think it's dramatic, but there is some variation based on that.
Ray: Earlier season events that will have more of an impact on our portfolio than if the events get pushed later in the season, because each month, we're making greater strides on.
Ray: Reducing our exposure to volatility. So there is some variation there, but the what we are.
Ray: What helps our portfolio is if this turns out to be a later season Q2 as opposed to an earlier season in Q2, we don't think it's it's.
Ray: <unk> dramatic, but there is some variation based on that.
Thomas Patrick Mcjoynt: Makes sense. Thanks. Thanks, Tommy.
Speaker Change: Makes sense. Thanks.
Speaker Change: Thanks Tommy.
Speaker Change: Okay.
Ray: Okay.
Operator: As a reminder, ladies and gentlemen, to ask any further questions, you can press the star followed by 1 on your telephone keypad. Great. Well, if there are no further questions, oh, sorry, we have another question for Mr. Yaron Kinar from Jeffrey.
Ray: As a reminder, ladies and gentlemen to ask any further question you can press the star followed by one on your telephone keypad.
Ray: Great well if there are no further darrin.
Ray: Oh, sorry.
Ray: Sorry, we have another go ahead, sorry, Mr. Yarrington here from Jefferies.
Yaron Joseph Kinar: Thanks. Just one quick follow-up, Rick, on your last comment on the timing of catastrophe losses. So just given where we are now, the beginning of May, are you seeing? I think we've already seen several larger convective storms form over the last couple of weeks. Where would you say we are, relatively speaking, on that seasonality pattern? Are we early? Or are we late? Or are you kind of happy with the turn of events and the timing of the storms? Or are you a little bit concerned?
Ray: Thanks.
Yarrington: Just one quick follow up Rick on your last comment on the timing of catastrophe losses.
Yarrington: So just given where we are.
Alexander Scott: Now beginning of May are you seeing I think we've already seen several larger convective storm for them over the last couple.
Yarrington: A couple of weeks.
Alexander Scott: Where would you say we are relatively speaking on that seasonality pattern or are we.
Alexander Scott: Early are we late are you.
Alexander Scott: Happy with the turn of events and the timing of the storms or.
Speaker Change: A little bit concerned.
Yaron Joseph Kinar: Yeah, that's a you're on. That's a really good, really good question. So, a couple
Richard Lyn McCathron: Yeah, that's a, Yaron, that's a really good, really good question. So a couple of things.
Speaker Change: Yes, that's a you're on that's a really good really good question. So a couple of a couple of things one.
Speaker Change: The more recent events that we've been seeing have been in areas generally of course, they're they're they're widespread but you know I think Oklahoma as an example got hit relatively hard we don't write business in Oklahoma, So I think where the events happen do Matt It does matter.
Richard Lyn McCathron: One, the more recent events that we've been seeing have been in areas, generally, of course, they're, they're, they're widespread. But, you know, I think Oklahoma, as an example, got hit relatively hard. We don't write business in Oklahoma.
Richard Lyn McCathron: So I think where the events happen does matter. It does matter. I would say we're now in the, what I would consider traditional or historical, second quarter. I think some of the events that we saw in mid March, I think it was around March 15, the PCS events on March 15, I would have considered that early. But right now, I think we're, you know, But I would consider, from a calendar perspective and a quarter perspective, we're in line with our expectations as of now.
Speaker Change: I would say we're now in the what I would consider traditional or historical second quarter.
Speaker Change: I think the some of the events that we saw in mid March I think it was around March 15th the PCF events March 15th I would have considered that early but right now I think we're.
Speaker Change: Sure.
Speaker Change: What I would consider from a calendar perspective in a quarter perspective, we're in line with our expectations as of now.
Speaker Change: Got it thanks.
Operator: We currently have no further questions.
Speaker Change: We currently have no further questions.
Richard Lyn McCathron: Great. Well, if there are no further questions, we appreciate everybody's time today, and we look forward to speaking with you next quarter. Have a great day.
Speaker Change: Great well if there's no further questions. We appreciate everybody's time today and we look forward to speaking with you next quarter have a great day.
Operator: Ladies and gentlemen, this concludes today's call. Thank you for joining us. You may now disconnect your lines.
Speaker Change: Ladies and gentlemen. This concludes today's call. Thank you for joining you may now disconnect your lines.
Unnamed: [inaudible]
Speaker Change: Goodbye.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: Yes.
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