Q3 2025 Neptune Insurance Holdings Inc Earnings Call

November 12, 2025

I would like to welcome everyone to the Neptune Insurance Holdings. Third quarter earnings call all lines have been placed on you to prevent any background noise.

Operator: I would like to welcome everyone to the Neptune Insurance Holdings' Q3 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you. I would now like to turn the conference over to Jonathan Carlon, Director of Corporate Development. You may begin.

After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad,

If you would like to withdraw your question, press star 1 again, thank you. I would now like to turn the conference over to John karlen director of corporate development. You may begin.

Jonathan Carlon: Thank you. Good afternoon. With me here today is Trevor Burgess, Chairman and CEO, Matt Duffy, President and Chief Risk Officer, and Jim Steiner, CFO and COO. Before we begin, I'd like to remind everyone that today's discussion will include forward-looking statements, including, among others, statements about our expectations for our future financial performance, growth opportunities, business strategy, market trends, and capital allocation plans. These statements are based on our current views and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially. We direct you to our recent SEC filings for a full description of these risks. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. We will also reference certain non-GAAP financial measures.

Thank you and good afternoon with me. Here, today is Trevor Burgess, chairman, and CEO Matt, Duffy president and chief risk officer, and Jim Steiner CFO and coo,

Before we begin, I'd like to remind everyone that today's discussion will include forward-looking statements, including among others statements about our expectations for our future. Financial performance growth opportunities, business strategy, market trends, and capital, allocation plans. These statements are based on our current views and assumptions and our subject to risks and uncertainties that could cause actual results to differ materially. We direct you to our recent SEC filings for a full description of these risks.

We undertake no obligation to update, any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Jonathan Carlon: These measures should be considered only as supplements to their comparable GAAP measures. Additional information, including reconciliations of the non-GAAP measures to their most comparable GAAP measures, can be found in our earnings release at investors.neptuneflood.com and in our current report on Form 8-K that was publicly filed with the SEC on 12 November 2025. Now I'd like to turn the call over to Trevor.

We will also reference certain non-gaap Financial measures. These measures should be considered only a supplements to their comparable. Gaap measures additional information, including reconciliations of the non-gaap measures to their most comparable. Gaap measures can be found in our earnings release at investors. Neptune flood.com, and in our current report on Form 8K, that was publicly filed with the SEC on November 12th 2025.

And now I'd like to turn the call over to Trevor.

Good evening, and thank you for joining us. For Neptune's. First earnings call as a publicly listed company, an exciting milestone for all of us,

Trevor Burgess: Good evening and thank you for joining us for Neptune's first Earnings Call as a publicly listed company, an exciting milestone for all of us. We're deeply grateful for the support from our investors, our agents, our capacity providers, and our policyholders as we begin this next chapter in Neptune's journey. Due to the timing of the IPO, this earnings release focuses on our last months as a private company, and the results show the ability of our team to execute under the pressure of both the public offering process and hurricane season, typically our busiest period of the year.

We're deeply grateful for the support from our investors, our agents, our capacity providers and our policyholders, as we begin this next chapter in Neptune's Journey.

Due to the timing of the IPO, this earnings release focuses on our last months as a private company.

And the results show the ability of our team to execute under the pressure of both the public offering process and hurricane season. Typically our busiest period of the year

Trevor Burgess: Our success is apparent in our first quarterly earnings that highlights the continued growth and success of our business, including record revenue of $44.4 million, a 31% increase year-over-year, net income of $11.5 million, record adjusted EBITDA of $26.7 million at a 60% margin, record written premium of $102 million, driving a 33% year-over-year premium enforced growth, and record new business sales posted during the quarter. We believe our business model is unique to the public markets. We operate as a managing general agent, or MGA, that takes no balance sheet insurance risk. This allows us to be efficient, asset-light, and profitable. Moreover, our AI-first approach allows our team members to do more, resulting in LTM revenue per employee of $2.5 million and adjusted EBITDA per employee of $1.5 million, both records.

our success is apparent in our first quarterly earnings that highlights the continued growth and success of our business, including record revenue of 44.4 million a 31% increase year-over-year, net income of 11.5 million,

Record. Adjusted IBA of 26.7 million at a 60% margin.

Record written premium of 102 million, driving a 33% year-over-year, premium and force growth and record new business sales posted during the quarter.

We believe our business model is unique to the public markets. We operate as a managing, General agent or MGA that takes, no balance sheet, Insurance risk.

This allows us to be efficient asset light and profitable.

Moreover, our AI first approach, allows our team members to do more resulting in LTM Revenue per employee of 2.5 million and adjusted. Ebit up her employee of 1.5 million both records.

We are most proud of the exceptional customer experience. We provide to agents and consumers Nationwide.

Trevor Burgess: We are most proud of the exceptional customer experience we provide to agents and consumers nationwide and the consistent profitability we have historically provided to our capacity providers. This is only possible through our organization as a technology company operating in the insurance space, not as an insurance company attempting to utilize technology. Our mission is simple: to make insurance easy to buy, simple to understand, and efficient to manage. Powered by world-class technology and data science, the results we delivered in Q3 2025 reflect the strength of that model. I'll now turn things over to Matt Duffy, our President and Chief Risk Officer, to discuss updates from the three core pillars of our business: technology, risk relationships, and distribution.

And the consistent profitability, we have historically provided to our capacity providers.

This is only possible through our organization, as a technology company operating in the insurance space. Not as an insurance company attempting to utilize technology,

Our mission is simple to make Insurance easy to buy. Simple to understand, inefficient to manage.

Powered by world-class technology and data science. The results we delivered in the third quarter of 2025 reflect the strength of that model.

I'll now turn things over to Matt, Duffy our president and chief risk officer to discuss updates from the 3. Core pillars of our business technology risk relationships and distribution.

Good evening during Q3 our data science and engineering teams, made significant progress, delivering, new technology.

Matt Duffy: Good evening. During Q3, our data science and engineering teams made significant progress delivering new technology. We completed a full rewrite of the Triton underwriting system, a year-long project focused on improving speed, accuracy, and flexibility. It enhances the user experience for customers and agents, increases certainty for our capacity providers, and provides management with both enhanced functionality and insight into model performance. We also released a new machine learning model designed to optimize conversion of new business quotes. Early results are encouraging, and we expect it to drive continued growth across our product suite in the coming quarters. In addition, we expanded our flood offering with higher coverage limits. We began writing policies in Alaska, which took our offering nationwide, added a new capacity program, and launched a redesigned agent profile.

Full rewrite of the Triton underwriting, engine a year-long project focused on improving speed, accuracy and flexibility.

It enhances the user experience for customers and agents increases certainty for our capacity providers.

And provides management with both enhanced functionality and insight into model performance.

We also released a new machine, learning model designed to optimize conversion of new business quotes.

Early results are encouraging and we expect it to drive continued growth. Our product Suite in the coming quarters.

In addition, we expanded our flood offering with higher coverage limits. We began writing policies in Alaska, which took our offering Nationwide.

Added a new capacity program.

And launched a redesigned agent profile.

Matt Duffy: As we head into Q4, we have many impactful technology projects underway that will continue to reshape how we think about portfolio development, customer experience, and the future of our business. Our long-term technology focus remains on providing a best-in-class experience across the value chain, from insureds through agents, and to our capacity providers. Those capacity providers continue to be key to the business. On October 1, we launched our seventh carrier program through our partnership with Palomar, adding six new capacity providers and bringing our total panel to 39 risk-taking partners. We also completed the annual renewal of another capacity program, a program on which we expect continued growth through the upcoming treaty period. Our expanding panel and deep partnerships remain a core strength, allowing Neptune to scale efficiently and serve more customers with confidence. That momentum continues into the distribution side of the business.

As we head into Q4, we have many impactful technology projects underway, that will continue to reshape how we think about portfolio development, customer experience in the future of our business.

our long-term technology Focus remains on providing the best-in-class experience across the value chain from insureds, through agents and to our capacity providers,

Those capacity providers continue to be key to the business.

On October 1st, we launched our seventh carrier program through our partnership with Palomar.

Adding 6, new capacity providers and bringing our total panel to 39, risk-taking partners.

We also completed the annual renewal of another capacity program.

A program on which we expect continued growth through the upcoming treaty period.

Our expanding panel and deep partnership's. Remain a core strength, allowing Neptune to scale, efficiently and serve more customers with confidence.

And that momentum continues into the distribution side of the business.

Matt Duffy: Flooding in July again underscored the protection gap in the US flood market, where we believe just 2% of properties nationwide are covered with flood insurance. These events helped raise awareness that our growth continues to come primarily from strategic expansion, putting Neptune's software in the hands of more agents and educating property owners across the country. Over 80% of new business came from non-mandatory purchase situations in Q3, highlighting the strength of our distribution model even in a quiet storm season with no landfalling hurricanes. This performance demonstrates the resilience and reach of our platform. The NFIP's transition to Risk Rating 2.0 remains a long-term structural tailwind. As NFIP rates rise towards full actuarial adequacy, Neptune's competitiveness continues to improve, creating a steady flow of customers moving to private alternatives. Our distribution team continues its excellent work in expanding both the breadth and depth of our relationships.

Flooding in July, again, underscored the protection Gap in the US flood Market. Where we believe just 2% of properties. Nationwide are covered with flood insurance.

These events helped raise awareness that our growth continues to come primarily from strategic expansion.

Putting Neptune's software in the hands of more agents and educating Property Owners across the country.

over 80% of new business came from non-mandatory purchase situations in, Q3

Highlight in the strength of our distribution model. Even in a quiet storm season with no landfalling hurricanes.

This performance demonstrates the resilience and reach of our platform.

the nfip transition to risk rate in 2.0, remains a long-term structural Tailwind

as nfip rates rise towards full Actuarial adequacy Neptune's, competitiveness continues to improve creating a steady flow of customers moving to private alternatives.

Our distribution team continues. Its excellent work. In expanding, both the breadth and depth of our relationships.

Matt Duffy: This is highlighted in the achievement of both record new business sales and a record number of unique agency codes binding new policies during Q3. As we look ahead to Q4, currently, the US federal government remains shut down, and as a result, the NFIP is not authorized to issue or renew policies until reauthorization by Congress. At the same time, federal financial institution regulators have reminded lenders that they may continue making loans without requiring flood insurance during this period. We believe these opposing dynamics partially offset one another. The absence of NFIP authorization creates opportunity for Neptune, while the pause in mandatory purchase requirements limits that overall benefit. Next, I will turn it over to Jim Steiner, our Chief Financial Officer, to discuss financial results for the quarter.

This is highlighted in the achievement of both record, new business sales, and the record number of unique, agency, codes, binding new policies during the third quarter.

As we look ahead to Q4.

Currently the US federal government remains shut down. And as a result, the nfip is not authorized to issue or renew policies until reauthorization by Congress.

At the same time, federal financial institution Regulators have reminded lenders that they may continue making loans without requiring flood insurance during this period.

we believe these opposing Dynamics partially offset, 1, another

The absence of nfip authorization creates opportunity for Neptune.

While the pause in mandatory purchase requirements limits that overall benefit.

Next, I will turn it over to Jim Steiner, our Chief Financial Officer to discuss Financial results for the quarter.

Thanks, Matt. For the third quarter of 2025 Neptune delivered strong financial performance.

Jonathan Carlon: Thanks, Matt. For Q3 2025, Neptune delivered strong financial performance. Revenue increased 31% year-over-year to $44.4 million, driven by record new business sales and continued improvement in renewal retention. Year to date, we've retained 99% of premium in 86.2% of policies, up 1.9 and 2.8 percentage points, respectively, from the same period in 2024. Our asset-light, technology-first model continues to deliver efficiency and strong margins. For the three months ended 30 September 2025, adjusted EBITDA rose 29% to $26.7 million, resulting in a 60% adjusted EBITDA margin for the quarter. On a trailing 12-month basis, we generated $2.5 million of revenue per employee and $1.5 million of adjusted EBITDA per employee, increases of 29% and 30%, respectively, from the prior year. These results underscore the scalability of our model as we grow.

Jim Steiner: Thanks, Matt. For Q3 2025, Neptune delivered strong financial performance. Revenue increased 31% year-over-year to $44.4 million, driven by record new business sales and continued improvement in renewal retention. Year to date, we've retained 99% of premium in 86.2% of policies, up 1.9 and 2.8 percentage points, respectively, from the same period in 2024. Our asset-light, technology-first model continues to deliver efficiency and strong margins. For the three months ended 30 September 2025, adjusted EBITDA rose 29% to $26.7 million, resulting in a 60% adjusted EBITDA margin for the quarter. On a trailing 12-month basis, we generated $2.5 million of revenue per employee and $1.5 million of adjusted EBITDA per employee, increases of 29% and 30%, respectively, from the prior year. These results underscore the scalability of our model as we grow.

Revenue increased 31% year-over-year to 44.4 million driven by record, new business sales and continued Improvement in renewal retention.

Year to date we've retained 99% of premiums in 86.2 policies.

Up 1.9 and 2.8 percentage points respectively from the same period in 2024.

Our asset light technology. First model continues to deliver efficiency and strong margins.

For the 3 months, ended September 30th, 2025 adjusted. Evo is 29% to 26.7 million, resulting in a 60% adjusted EV time margin for the quarter.

Per employee and 1.5 million of adjusted, ebit do per employee.

Increases of 29 and 30% respectively from the prior year.

These results underscore the scalability of our model as we grow.

turning to the balance sheet, a growth in strong, operating cash flow, continue to support deleveraging

Jonathan Carlon: Turning to the balance sheet, our growth and strong operating cash flow continue to support deleveraging. We ended the quarter with $264 million of total debt, or about 3x net leverage, on a trailing 12-month adjusted EBITDA basis. Following quarter end, we were paid $13 million of debt and, on 10 November, refinanced into a $260 million evolving credit facility with $251 million outstanding. The new facility lowers our interest rate, eliminates required amortization, and provides greater flexibility to manage capital efficiently. The largest adjustment to EBITDA this quarter was related to IPO expenses of roughly $5 million. A total of $8.5 million of IPO-related expenses incurred year to date were reimbursed after the IPO closed on 2 October, and that reimbursement will be reflected as an equity contribution in our Q4 financials. Reimbursement proceeds funded a significant portion of the $13 million debt paydown I just mentioned.

Jim Steiner: Turning to the balance sheet, our growth and strong operating cash flow continue to support deleveraging. We ended the quarter with $264 million of total debt, or about 3x net leverage, on a trailing 12-month adjusted EBITDA basis. Following quarter end, we were paid $13 million of debt and, on 10 November, refinanced into a $260 million evolving credit facility with $251 million outstanding. The new facility lowers our interest rate, eliminates required amortization, and provides greater flexibility to manage capital efficiently. The largest adjustment to EBITDA this quarter was related to IPO expenses of roughly $5 million. A total of $8.5 million of IPO-related expenses incurred year to date were reimbursed after the IPO closed on 2 October, and that reimbursement will be reflected as an equity contribution in our Q4 financials. Reimbursement proceeds funded a significant portion of the $13 million debt paydown I just mentioned.Now I'll turn things back over to Trevor for introductory 2026 guidance and closing remarks.

We ended the quarter with 264 million of total debt or about 3 times. Net leverage on a trailing 12-month adjusted ebit, dub basis.

following quarter end, we were paid 13 million dollars of debt on November 10th 3 in a 260 million revolving credit facility with 251 million outstanding

The new facility lowers our interest rate eliminates required immunization and provides greater flexibility to manage Capital efficiency.

The largest adjustment to eat out of this quarter was related to IPO expenses of roughly 5 million.

A total of 8.5 million of IPO related, expenses incurred year to date or reimbursed after the IPO closed on October 2nd, and that reimbursement will be reflected as an equity contribution in our Q4 financials.

Reimbursement, proceeds funded a significant portion of the 13th paid out. I just mentioned.

Now, I'll turn things back over to Trevor for introductory 2026, guidance and closing remarks.

Jonathan Carlon: Now I'll turn things back over to Trevor for introductory 2026 guidance and closing remarks.

I'm generally not a fan of providing detailed guidance as it can shift, Focus, towards quarterly performance rather than long-term value creation.

Trevor Burgess: I'm generally not a fan of providing detailed guidance, as it can shift focus towards quarterly performance rather than long-term value creation. That said, for our first full year as a public company, we're offering initial benchmarks to help investors frame Neptune's trajectory. You will notice that the ranges are narrower than those we typically see for other public companies, that's because of the certainty historically provided by our substantial renewal base and our highly efficient technology-first platform. For full year 2026, we expect revenue between $186 million and $189 million and adjusted EBITDA margin between 60% and 61%. These targets reflect our continued commitment to profitable growth, operational efficiency, and disciplined capital allocation. Where possible, we plan to deploy capital to grow the business and return any excess to our shareholders.

That said for our first full year, as a public company, we're offering initial benchmarks to help investors frame. Neptune's trajectory

You will notice that the ranges are narrower than those. We typically see for other public companies and that's because of the certainty historically provided by our substantial renewal base and are highly efficient technology first platforms.

For full year 2026. We expect revenue between 186 million, and 189 million, and adjusted IBA margin between 60 and 61%.

These targets, reflect our continued commitment to profitable growth.

Operational efficiency and disciplined Capital allocation.

Where possible we plan to deploy Capital to grow the business and return, any excess to our shareholders.

Trevor Burgess: In line with this strategy, in September 2026, our first tranche of restricted stock units is expected to vest, and we intend to satisfy the associated tax withheld via net share settlement, which is expected to withhold and retire approximately 500,000 shares. Before we open the line for questions, I want to take a moment to thank our team at Neptune. Their hard work and dedication made this transition to public company life not only possible but successful. I also want to thank our investors and partners for their confidence in Neptune's vision and strategy. We're still in the early chapters of a very large story, one where technology, data, and customer experience come together to redefine what insurance can be. We look forward to sharing our continued progress in the quarters ahead. We'll now open the call for questions.

In line with this strategy in September 2026, our first tranche of restricted stock units is expected to vest and we intend to satisfy the Associated Tax withheld via netshare settlement, which is expected to withhold and retire approximately 500,000 shares.

Before we open the line for questions, I want to take a moment to thank our team at Neptune.

Their hard work and dedication made this transition to public company. Life, not only possible, but successful.

I also want to thank our investors and partners for their confidence in Neptune's. Vision and strategy.

We're still in the early chapters of a very large Story 1 where technology data and customer experience come together to redefine what insurance can be.

We look forward to sharing our continued progress in the quarters ahead.

We'll now open the call for questions.

Thank you as a reminder to ask.

Operator: Thank you. As a reminder, to ask a question, you will need to press star then the number one on your telephone keypad. If you would like to withdraw your question, press star one again. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Andrew Kligerman with TD Cowen. Your line is open.

You will need to press star then the number 1 on your telephone keypad. And if you would like to withdraw your question, press star 1 again, we will pause for just a moment to compile the Q&A roster.

Your first question comes from the line of Andrew Kiger, man. With TD Cowen, your line is open.

Andrew Kligerman: Hi. Good evening. My first question is around the agency codes. I think it was interesting that you called out that you had a record number of new agency codes. It had been my understanding that you had 100,000 unique agency codes. I'm hoping you could kind of put in context what that record number was and how that relates to the 100,000 that I thought you had. Then with that, it was also my understanding that you have a couple of agencies, big ones, that have this opt-out provision where the client might buy a homeowner's policy, but they have to opt out of flood if they don't want it. I'm curious as to how many within that group of unique agency codes have that type of a provision in place right now.

Hi. Good evening. Uh, so my first question is around the agency codes. Uh, I think it was interesting that you, you called out that you had a record number of new agency codes and it had been my understanding that you had 100,000 unique agency code. So I'm hoping you could kind of put in contact, what that record number was and how that relates to the 100,000 that I I thought you had. And then with that. Um, it was also my understanding that you you have a um,

A couple of agencies, big ones that uh have this opt-out provision where the client might buy a homeowner's policy, but they have to opt out of flood if they don't want it. And and so I'm curious as to how many

Within that group of unique agency codes, uh, have that type of a provision in place right now.

Thanks for the question. Um,

You know.

Jim Steiner: Hey. Good evening and thanks for the question there. In the S1, we disclosed that there was over 20,000 agency codes that had bound a policy through Neptune historically, and over 80,000 that had run a quote through the Neptune system. We see great retention rates in those agency codes that continue to come back and bind policies with Neptune month-over-month. For Q3, we saw a record number of those unique agency codes that bound a policy through Neptune. Our growth during Q3, with this being a slow hurricane season, was really due to that growth in distribution, and that continues to be the case and really has been the case historically on the portfolio.

It's in the S1. We uh disclose that there was over 20,000 agency code.

Found a policy.

Over 80,000 running quote.

so,

You know, we see great retention rates in in those agency codes. The the continues to come back and and bind policies with Neptune.

And you know, other third quarter, we saw a record number of those Communications agency code policies, were not true. So you know, our growth during the third quarter,

with this being a, you know, slow growth in season was really

Jim Steiner: The distribution teams does a great job in sort of facilitating those technology integrations that you mentioned that sort of help with that, as you framed it, an opt-out provision. We really don't have a strong feel on the number of binds or unique agency codes that bound with us using that sort of opt-out provision there.

due to that growth in in distribution and that continues to be the case and really has been the case for the story on the portfolio. So, you know, the distribution teams as a, as a great job in sort of facilitating those technology Integrations that you mentioned so that sort of helped with that as you framed it out provision.

we really don't have a

You know, strong feel on the number of of binds or unit agencies codes that bound with us using that sort of opt out provision.

Andrew, this is Trevor. The only thing I would add is that

we are in the process of moving to a single sign on, uh, system.

Trevor Burgess: Andrew, this is Trevor. The only thing I would add is that we are in the process of moving to a single sign-on system. Most of that rollout will be done by the end of this year, which will then be able to give us more granularity and the ability to more precisely market to individual agents, incentivize individual agents, and have our data science team really dig into the behavior of individual humans starting in 2026.

Most of that roll out will be done by the end of this year which will then be able to give us more granularity.

And the ability to more precisely Market to individual agents.

And incentivize individual agents and have our data science team, uh, really dig into the behavior of individual humans.

Uh, starting in 2027.

Andrew Kligerman: Got it. My follow-up question is around the adjusted EBITDA margin. I think you've guided to 60% to 61%. You came in at 60.2%. I guess that is somewhat of a tight bend, but I'm wondering where you think it will be on the higher end, the lower end, and what might be some of your expected influences toward the higher or lower end going forward?

Got it. And my follow-up question is around the uh adjusted ebit margin. I I think you've guided to 60 to 61%, you came in at 60.2% but I'm I'm wondering, you know.

With where you think it will, it be on the higher end, the lower end and what might be some of your expected influences toward the higher or or lower end.

Going forward.

predict, and

Business.

Is.

What's going to happen with hurricanes here?

Jim Steiner: I think that the hardest thing to always predict in our business is what's going to happen with hurricane season. We saw in 2025 a very light hurricane season and some added expenses of being a public company, such as we have a new general counsel, right? We have new insurance costs, obviously, as part of being a public company that are not adjusted out of EBITDA but are just our new real run rate. As we grow into that in 2026 and we would anticipate a normal hurricane season, which would have 1.8 landfall hurricanes, we would hope that our performance would allow us to drive towards the higher end of that range. We keep a very tight ship here in terms of our G&A expenses. We know what they need to be.

And we saw it in 2025 a very light hurricane season and some added expenses of being a public company. Such as we have a new general counsel, right? With new

Insurance costs, uh obviously as part of being a public company that are not adjusted out of

the other just aren't new reel, run rate.

so, as we grow into that in,

With anticipate a normal hurricane season, which would have 1.8 landfall hurricanes. Uh, we would hope that our performance would allow us to drive, you know,

the higher end of that range, we keep a very, you know,

Run a very tight ship here in terms of our, you know, GNA expenses. But we know what they need to be. And the biggest open question is

what's the hurricane season going to be like and what is how is that going to influence, you know?

Jim Steiner: The biggest open question is, what's the hurricane season going to be like, and how is that going to influence new business sales?

Awesome. Thanks for the helpful responses.

Andrew Kligerman: Awesome. Thanks for the helpful responses.

Goes with Goldman Sachs your line is open.

Hey thanks. Good evening.

Operator: Your next question comes from the line of Rob Cox with Goldman Sachs. Your line is open.

Rob Cox: Hey, thanks. Good evening. First question, I just wanted to ask about the FEMA Advisory Council. Just based on your understanding and your prior dialogues, are you expecting more of firm recommendations from this council sort of in the near term, as I think a report is due there? Are you expecting more of broad-based views in that council's report and maybe a slower timeline for adoption? Just trying to understand better what you all think may or may not be included in that report.

Yeah, just first question, I just wanted to ask about the, uh, you know, the FEMA advisory Council. Um, you know, just just based on your understanding and your your prior dialogues.

um, are you expecting more of

Firm recommendations from this Council uh, sort of in the near term. As I I think a report is due

There. Um, or are you expecting more of like broad-based views, uh, in that council's report and the maybe a slower timeline for adoption. Just trying to understand better. Uh, what you all think may or may not be included in that report.

Thank you for the question.

Trevor Burgess: Rob, thank you for the question. Our understanding is that a report from the FEMA Advisory Council is due to President Trump 180 days after their first meeting, which would put us sometime around the end of November or early December. We have no insight into the contents of what that report may be or what the Trump administration plans to do once they receive that report. What I can tell you is that today, we sent in a letter to the FEMA Advisory Council updating them on what we saw during this shutdown that may be ending as early as this evening. In broad strokes, what we saw during this shutdown was a fully functioning insurance market, even though the NFIP was closed. Countering that, as Matt talked about in the prepared remarks, the federal banking regulators removed the requirement for flood insurance associated with home loans.

We have no insight into the contents of what that report may be.

uh, or

What the Trump Administration plans to do, once they receive that report.

What I can tell you is that today we sent in a letter to the FEMA advisory Council updating them on what we saw during.

This shutdown that may be ending as early as this evening.

And in Broad Strokes. What we saw saw during this shutdown was

a fully functioning Insurance Market.

Even though the

nfip was closed.

And countering that as Matt talked about in the prepared remarks.

the Federal Banking Regulators removed, the requirement for flood insurance, uh, associated with home loans,

but the insurance Market did well.

the private Market was able to perform

Trevor Burgess: The insurance market did well. The private market was able to perform. Home closings were able to continue as expected, and a large number of new customers were able to discover that private flood exists and can be a fantastic alternative to the NFIP because at Neptune, we offer higher limits than the NFIP and optional coverages such as temporary living expense cover that makes our form a more valuable form to the consumer. We were able to share those early observations from the government shutdown with the FEMA Advisory Council, and we hope that they would take that into account. We've had a little test of what it would be like without the NFIP.

Home closings were able to continue as uh, expected.

a large number of

Uh, new customers were able to discover uh that private flood, you know, existing exists and can be a fantastic alternative to the nfip.

Because at Neptune, we offer higher limits than the nfip and optional coverages such as temporary living expense cover that makes our form more valuable form.

To the consumer.

so, we were able to share

uh, those

early observations from the government shutdown with the theme of advisory Council and we hope that they would take that into account that we've had a little test.

Of what it would be like, without the nfip.

Thank you, appreciate it, that color.

Rob Cox: Thank you. Appreciate that color. I know you mentioned you don't like giving guidance, and you gave us some help in 2026. Is there any way to help us better piece apart what you've seen thus far in Q4 here as we're almost halfway through and breaking apart kind of the benefit that it sounds like a net benefit that you've seen from the government shutdown?

Um, and I, I know you mentioned, you don't like giving guidance and you gave us some help on 2026, but is there any way to help us better, you know, piece of part, what you've seen thus far in the fourth quarter here? Um, as we're almost halfway through and, you know, breaking apart, kind of the the benefit, uh, that it sounds like a net benefit that you've seen from the government shutdown.

Yeah. Hey Rob.

Jim Steiner: Yeah. Hey, Rob. We've certainly seen a net benefit there in sales since 1 October, and it was nice how the shutdown sort of aligned with the IPO, which also provided us with some additional publicity there. As Trevor mentioned, the lack of requirements of purchase flood insurance that's existed so far this quarter, right? The effective removal of the mandatory purchase requirement has definitely dampened the impact there, but overall, a net benefit that we've seen so far. The only sort of additional point that I'd add there is we continue to see this sort of long-term trend in the direction of private flood insurance.

So, you know, we we've certainly seen a and that benefit there and, and sales since since October 1st and it was nice. How the shutdown sort of aligned with the IPO, which, you know, also provided us with some

some additional publicity there.

As Trevor mentioned, the the lack of requirements and purchase flood insurance, that's existed, so far this quarter, right. The effective removal of the management purchase requirement is definitely down.

There. But

Overall.

A net benefit that we've seen so far. I, you know, the only sort of additional point that I'd add there is

We continue to see this sort of long-term Trend in the direction of private flood insurance. And that's really the benefit that we've seen from the shutdown is additional distribution Partners as well as, you know, our current and, and

Jim Steiner: That's really the benefit that we've seen from the shutdown is additional distribution partners as well as our current and additional capacity providers reaching out and saying, Hey, we need to be a partner of Neptune now, and we need to work with you to grow the private flood insurance market. Those trends remain very, very favorable for us. In the long term, as we think about 2026 and beyond, that's really where sort of the shutdown is going to help the model and continue to drive that financial performance.

capacity providers.

Reaching out and saying, hey, we, we need to be a partner of Neptune. Now, we need to, you know, work with you to grow the product for the insurance market. So those Trends, you know, remain very, very favorable for us.

and so, in the long term, you know, as we think about 2026 and Beyond,

that's really where sort of the shutdown is going to is going to help the model and, you know,

Drive that Financial.

Got it. Thanks for that.

Line of data.

Rob Cox: Got it. Thanks for the help.

Isi, your line is open.

Operator: Next question comes from the line of David Mutt-Maden with Evercore ISI. Your line is open.

Operator: Next question comes from the line of David Motemaden with Evercore ISI. Your line is open.

Hey thanks, good evening. Um I was hoping um Matt maybe you could just talk about uh within the record new policy sales.

David Mutt-Maden: Hey, thanks. Good evening. I was hoping, Matt, maybe you could just talk about within the record new policy sales, how we should think about how much that grew by. Is there any way to sort of parse that out between it sounded like 80% of it was coming from non-required purchases? Maybe just parsing out the growth between required and sales within the SFHAs would be helpful.

David Motemaden: Hey, thanks. Good evening. I was hoping, Matt, maybe you could just talk about within the record new policy sales, how we should think about how much that grew by. Is there any way to sort of parse that out between it sounded like 80% of it was coming from non-required purchases? Maybe just parsing out the growth between required and sales within the SFHAs would be helpful.

Um, you know how we should think about how much that grew by um is there any way to sort of parse that out between, um, you know, it sounded like 80% of, it was coming from non-required purchases. Um, maybe just parsing out the growth between, um, required and uh, sales within the, um, sfh would be, would be helpful.

So you you sort of Hit the number that hit the nail on the head. So um,

Jim Steiner: Yeah. Thanks for the question. Yeah. You sort of hit the number there, hit the nail on the head. Over 80% of the sales during the period were in those non-mandatory circumstances. When we talk about non-mandatory, that's sales within a Special Flood Hazard Area and built to a mortgage lienholder, so built to the bank. That trend and that number is sort of on-trend for the past 12 and 24 months. As we think about the percentage of sales just outside of Special Flood Hazard Areas, that's also on-trend with the numbers that we've provided in the S1 as well. North of 60%, they were over the past two years.

80% of the the sales over 80% of the sales joined, the period were were in those non-mandatory circumstances and

when we talk about non mandatory that's, you know, sales within a special flood Hazard area and

you know, Bill to to a mortgage leader.

That Trend and that number is sort of on trend for the past 12 and 24 months. And um as we think about the the percentage of sales just outside of special flood Hazard areas. That's also on Trend with you know the numbers that we've provided in the S1 as well. So you know 16% they were over the past.

We continue to see this.

great spread of the book, which is really driven by that, you know,

Jim Steiner: We continue to see this great spread of the book, which is really driven by that ease of use and the technology system that we've been able to develop and that broad-based distribution network that we've been able to develop and continued API integrations, technology integrations with each of those distribution partners. No significant change in the spread of the book that we sold during Q3. It was sort of more of the same, just more of the same.

Ease of use. And and the technology system that we've been able to develop and that broad-based distribution Network, we've been able to develop

continues API Integrations technology Integrations with each of, those distribution Partners. So,

No significant change in the you know spread of the book that we sold during Q3. It was sort of more of the same just more of

David Mutt-Maden: Got it. Thank you. Just to follow up on maybe if you could just talk a little bit about the Palomar relationship, how that's been going initially here? Also just sort of on the agent count, I think they had also provided some other relationships through new agencies that maybe you guys could also leverage not only on the renewal side, but then for new business. I was hoping maybe you could size that as well in terms of how many agents you guys could be distributing through as a part of that relationship?

David Motemaden: Got it. Thank you. Just to follow up on maybe if you could just talk a little bit about the Palomar relationship, how that's been going initially here? Also just sort of on the agent count, I think they had also provided some other relationships through new agencies that maybe you guys could also leverage not only on the renewal side, but then for new business. I was hoping maybe you could size that as well in terms of how many agents you guys could be distributing through as a part of that relationship?

Got it. Thank you. And then, um, just the follow-up on, um, maybe if you could just talk a little bit about, um, the Palomar relationship, how that's been going, um, initially here. Um, and then also, um, just sort of, on the um, agent count. I think they also, um, provided, some, some other relationships through new agencies that maybe you guys could also leverage, um, not only on the renewal side but then, um, you know, for new business. So I was hoping maybe you could size that as well, in terms of how many agents, um, you guys could be Distributing through uh as a part of that relationship.

Yeah. So they they you know polymer or or a great partner and and the new programs off to a a really strong start here.

Jim Steiner: Yeah, absolutely. Palomar are a great partner, and the new program's off to a really strong start here. We continue to expand the capacity-provided panel, and it was great to get such a strong vote of confidence from a partner like Palomar and a sophisticated carrier like Palomar. I'd say there's really been two or three big benefits of the Palomar relationship in addition to the growth in policy count. From a capacity standpoint, it's allowed us to deepen some of the relationships that we already had from a reinsurance standpoint. It's allowed us to add six new names to that panel. We now have those 39 capacity providers. As you mentioned, from a distribution standpoint, so there's a number of agency relationships that Palomar had, especially over on the West Coast, that we did not have or we were beginning to develop relationships with.

We continue to expand the capacity provided panel. And, you know, it was great to, to get such a strong vote of confidence from a partner, like Palomar and the sophisticated carrier like polymer,

I'd say there's really been 2 or 3 big benefits of the the polymer relationships in addition to the, you know, growth and policy count.

Like a passive standpoint is allowed us to deepen. Some of the relationships that we already have from a reinsurance standpoint and it's allowed us to add, you know, 6 new names to that panel. So we don't have those 39.

Providers.

And then, as you mentioned, uh, from a distribution standpoint. So

there's,

you know, a number of

agency relationships.

that Palomar had, especially over on the west coast that

We were.

we did not have a, we were beginning to develop relationships with and so I think if we put

The polymer relationship.

From the IPO. Plus the the end of 5 P. Shut down together.

Jim Steiner: I think if we put the Palomar relationship plus the publicity from the IPO plus the NFIP shutdown together, it drives some of that record to the number of agencies that we saw binding policies during Q3 and then also continued growth as we get into Q4. In terms of putting a number on that, I don't have a great number for you today, but as we get into 2026, we'll be able to understand better how that growth in distribution is actually impacting the policy sales.

It, it drives some of that, you know, record.

to number of agencies that we saw binding forces during Q3, and then also,

Continuing growth.

We get into.

In terms of putting a number on that, I don't have a a great number for you today. But as we get into the 2026, we'll be able to understand better how that, you know growth.

Understood, thank you.

David Mutt-Maden: Understood. Thank you.

David Motemaden: Understood. Thank you.

Next question comes from the line of Josh chancre with Bank of America. Your line is open.

Operator: Next question comes from the line of Josh Shanker with Bank of America. Your line is open.

Yeah, thank you for taking my question. Good evening, everybody.

Josh Shanker: Yeah. Thank you for taking my question. Good evening, everybody. Just wanted to talk a little about the record policy growth. Is policy count a KPI that you're not really interested in us following? Does it matter for the quarter, or how should we think about that?

Just want to talk a little about um, the uh record policy growth. Uh, if policy count a kpi, that you're not really interested in us. Following or does it matter for the quarter or how should we think about that?

Trevor Burgess: Policy count is something that we obviously track. We ended Q3 with about 260,000 policies in force. We are paid policy fees, obviously, based upon the number of policies. It is a component. The premium in force is a larger component of the revenue and is really the primary driver of the economics of our business and gives the best sense of the scale of the operation. We were very, very happy with the growth that we saw in Q3, especially because there were no hurricanes, right? That's really a testament to the team here led by John McExstein on how do we grow our distribution relationships as much as possible.

Policy count uh, is something that, you know, we obviously track we ended the quarter with about 260,000 policies in force.

and we,

Are paid policy fees obviously based upon the number of of policies. So it it is a component. The, the premium enforce gives is a larger component of the revenue and it's really the primary, you know, driver of the economics of our business.

Very happy with the growth that we saw.

In the third quarter, especially because there were no hurricanes.

Right, and that's uh, really Testament to the team here led by John McCain on. How do we

Grow our distribution relationships, uh, as much as possible.

Josh Shanker: When we think about the NFIP being close to new policies and whatnot and you said it's a half of one a six dozen of another, I guess, in terms of the benefit and the pullback. I assume on the policies that would not have bought from the NFIP one way or the other, it didn't really make a difference. Or do you think that agents aware that there was no requirement were less aggressive in wanting to sell flood policies broadly?

And um, when we think about the, uh, the the the NFI being being close to New policies and whatnot and that you said it's a it's a half 1 to 6 of another, I guess, in terms of the benefit and the pullback I assume on the policies that would not have bought from the nfip 1 way or the other, it didn't really make a difference or do you think that, uh, agents aware that there was no requirement uh, or less aggressive in wanting to sell flood policies? Broadly

our sense is that it it was a mixed bag and

but still net positive.

Trevor Burgess: Our sense is that it was a mixed bag but still net positive because it really took either banks raking with the federal guidance and requiring flood, even though it's technically not required, or consumers acting like good boy or girl scouts and wanting to buy flood insurance because they know that they needed it. As the government reopens, though, it's going to be an interesting sort of test to see what happens because what has not been made clear yet is all those people who didn't buy flood insurance that were supposed to, what's the rule going to be for banks? Are they going to have to go back and all buy flood insurance now? Will we see an uptick because of that?

Because it really took either Banks breaking with the federal guidance and requiring flood. Even though technically not required or consumers, asking acting like good boy, or girl, girl scouts and wanting to buy flood insurance because they know that they need it.

As the government reopened. So it's going to be an interesting sort of test to see what happens.

because,

What has not been made clear, yet, is all those people who didn't buy flood insurance that were supposed to.

What's the what are the? What's the rule going to be for banks? Are they going to have to go back and call? Buy flood insurance? Now, will we see you know an uptick because of that? There hasn't been guidance published yet and so we don't know what the follow on.

Effect is going to be in the coming weeks assuming that the government reopens tomorrow.

Trevor Burgess: There hasn't been guidance published yet. We don't know what the follow-on effect is going to be in the coming weeks, assuming that the government reopens tomorrow.

Josh Shanker: If you'll let me sneak one more quickie in, any better uptake given the closures on the direct-to-consumer product, or is it still a product mostly sold and people aren't coming to the website so much?

and if you let me sleep 1 more quickie in uh any better uptake given the closures on the direct consumer product, or is it still a product mostly sold and people aren't coming to the website so much

We've been.

Trevor Burgess: We've been incredibly consistent at about 2% of our business being direct-to-consumer, and there were no material changes in that during this period.

Incredibly consistent at about 2% of our business, uh, being direct to Consumer. And there were no material changes, uh, in that, uh, during this, this period.

Thank you. Congratulations. On the quarter.

Thank you.

Josh Shanker: Thank you. Congratulations on the quarter.

Trevor Burgess: Thank you.

Operator: Next question comes from the line of Tommy McJoint with KBW. Your line is open.

Operator: Next question comes from the line of Tommy McJoynt with KBW. Your line is open.

Tommy McJoint: Hey, good evening. Thanks for taking our questions. Separate from weather, which has been talked about a lot, we suspect that home sales are also a significant input into the growth outlook. On that context, should we focus on existing home sales, new home sales, or just total home sale units? Does your 2026 guidance contemplate a specific home sale market backdrop?

Tommy McJoynt: Hey, good evening. Thanks for taking our questions. Separate from weather, which has been talked about a lot, we suspect that home sales are also a significant input into the growth outlook. On that context, should we focus on existing home sales, new home sales, or just total home sale units? Does your 2026 guidance contemplate a specific home sale market backdrop?

Hey, good evening. Thanks for taking our questions. Um, separate from whether, um, which has been talked about a lot, um, you know, we suspect that home sales are also a significant input into, uh, the growth Outlook, um, on that context. Should we focus on existing home sales, new home sales or just total home sale units. Um and does your 2026 guidance contemplate? A specific home sale Market backdrop?

For 2026. Guidance anticipates a

Trevor Burgess: Our 2026 guidance anticipates sort of the same housing backdrop. I would love for it to be a better backdrop, but we are assuming the same. It's really total sales that is important. There is no different law between existing or new homes, it's really the total that we look at. We are also interested in things like the number of people paying off their mortgages because as people pay off their mortgages and now fully own their home for cash, that may be a reason why they are then allowed to drop having flood insurance. The percentage of Americans who own their home without a mortgage is also another metric to look at, and it has been very unfavorable for the past year or so. We're assuming much the same in our 2026 guidance.

Sort of a same housing backdrop? I, I would love for it to be a better, you know, backdrop. But but we are uh, assuming the same

And it's really total sales, that is important.

But we do, we are also interested in things like the number of people paying off their mortgages.

Or pay off their mortgages and now fully owned their home for cash. That may be a reason why they are then allowed to drop having flood insurance. And so the percentage of

Americans, who own their home? Without a mortgage is also another metric to look at. And it is

Has been very unfavorable for, you know, the past, uh, you know, years or so. And

we're assuming much the same in our 2026 guidance.

Tommy McJoint: Okay. Thanks for that. Switching over, as we think about the Q4 and then the quarterly cadence in 2026, it seems like you might be running into some tough comps here for the next quarter or two, just going up against hurricanes Milton and Helene in the Q3 and Q4 of last year. Is it fair to think about tough comps for the next maybe quarter or two, and then maybe it gets easier to the extent that weather normalizes in the back half of 2026, or should we not think about it that way?

Tommy McJoynt: Okay. Thanks for that. Switching over, as we think about the Q4 and then the quarterly cadence in 2026, it seems like you might be running into some tough comps here for the next quarter or two, just going up against hurricanes Milton and Helene in the Q3 and Q4 of last year. Is it fair to think about tough comps for the next maybe quarter or two, and then maybe it gets easier to the extent that weather normalizes in the back half of 2026, or should we not think about it that way?

I think that's the right way to think about it. If you're focused on what are

New business sales, but obviously the renewal book.

Trevor Burgess: I think that's the right way to think about it if you're focused on what are new business sales. Obviously, the renewal book helps to buffer some of that impact because so much of the business is renewals. From a new business perspective, you're exactly correct. Almost all of the impact of Helene and Milton was in Q4 last year because we have a 10-day waiting period. The last 10 days of September, sales all basically show up as new policies in October. It was really those two storms were really a very large Q4 impact last year. Tough comps from a new business perspective, yes, not necessarily from an overall business perspective because we hope to retain a large number of those people who we added last year.

helps to buffer some of that, you know, impact because so much of the businesses is renewals

Um but from a new business perspective, you're exactly correct almost all of the impact of Colleen and Milton was in Q4 last year.

Because we have a 10-day waiting period. So the last 10 days of September

Sales all basically show up as new policies in October, so it was really a. Those 2 storms were really a very large Q4 impact last year. So,

Uh not necessarily from a overall business perspective because we hope to retain a large number of those people who we have to talk to

got it. Thanks Trevor.

Tommy McJoint: Got it. Thanks, Robert.

Tommy McJoynt: Got it. Thanks, Robert.

Next question comes from the line of euron kinar with mizuho. Your line is open.

Operator: Next question comes from the line of Yaron Kinar with Mizuho. Your line is open.

Yaron Kinar: Thank you. Good afternoon. First question, I just want to confirm that when you are with the 2026 guidance, you are not including any impact from or lingering impact from the shutdown or in the potential changes in NFIP similar to kind of the conversations pre-IPO?

Thank you, uh, good afternoon. Um, first question, I just want to confirm that when you are with the 2026 guidance, you are not including any impact from or lingering impact from the shutdown or in the potential changes in nfip similar to have the conversations pre-ipo.

I'm sorry. Could you repeat that question? There was some noise on the line.

Trevor Burgess: I'm sorry. Could you repeat that question? There was some noise on the line.

Yaron Kinar: Sure. I just want to confirm that the guidance that you offered for 2026, similar to the conversations we had pre-IPO, does not contemplate any lingering impact from the shutdown and/or from changes to NFIP.

Sure, um, I I just want to confirm that the guidance that you offered for 2026 similar to, uh, the conversations. We had pre IPO does not contemplate. Um, any lingering impact, from the shutdown and, or from changes to nfip.

Trevor Burgess: That's exactly correct. Our guidance assumes the status quo for the NFIP. It does not assume an additional shutdown in January. It's not a change in the operations of the NFIP in any way.

That's exactly correct. Our guidance assumes, the status quo for the mfip. It does not assume an additional shutdown January. It's not a

a, you know, change in the operations of the nfip and

Yaron Kinar: Okay. Thanks. My other question, just going back to the record number of new agency codes binding policies in Q3, can you offer any additional color as to how many quotes or how many binds you're getting per new agency and how that compares to the agencies that you already have kind of in your legacy book?

Okay. Thanks. And then my my other question just going back to the, uh, the record number of new agency codes, uh, binding policies in the third quarter. Uh, can you offer any additional color as the

how many quotes or how many binds, you're getting per new agency, and how that compares to the agencies that you already have, um, on um, kind of

In your legacy book.

we don't have that breakdown available but it's something that we can, uh, research

what I can tell you anecdotally is that

Trevor Burgess: We don't have that breakdown available, but it's something that we can research. What I can tell you anecdotally is that a lot of agents were very happy to find that there was an option for their consumers during the shutdown. Certainly, during Q3, we also saw some of the hard work that was done by our distribution team to add new agencies, some of whom came from the new Palomar relationship, quite frankly, just discovering Neptune for the first time. We normally see the impact of that from storms when people are then actively shopping for flood insurance rather than being sold flood insurance. The dynamic during Q3 was much more around agents discovering Neptune, us signing new agents up either through Palomar or our organic efforts, and them being new delighted customers that we hope will continue.

A lot of.

agents were very happy to find that there was an option for their consumers during the shutdown and

Certainly, during the third quarter, we also saw some of the hard work that was done by our distribution team, to add new agencies, some of whom came from the new Calamar relation.

We normally see the impact of that from storms when people are, then actively shopping for flood insurance, rather than being sold flood insurance.

The dynamic during the third quarter was much more around, agents discovering, Neptune.

us signing new agents up either through Palomar or or

Yeah, let's just have that. Yeah.

John McExstein: Yeah. I'll just add that, Yaron, that some of the growth that we saw during Q3 there was really due to this nurturing process that we go through with the distribution partners. Some of these aren't necessarily brand new agents that signed up during Q3. These are agents that we'd onboarded previously, and we go through this process of training, getting them to quote, technology integrations, and then them beginning to bind policies. This is really a long-term effort that we're talking about. It's not just these one-time events that happen just before.

You know, some of the growth that we saw during Q3, there was really due to this little process that we go through with the distribution Partners. So these aren't necessarily, some of these are necessarily brand new agents that signed up during Q3. These are you know agents that we don't.

Previously, and we do this process of.

Training.

quote, technology Integrations and then, you know,

begin to find.

So this is really a a you know, long-term method that we're talking about is not just this, you know.

1 time, uh, event.

Yaron Kinar: Makes sense. If I could sneak one more in, if I could. In response to Tommy McJoint's question, I think you said the absence of an active storm season would definitely impact new business but not really the renewals. I'm curious, as you look at your track record, have you found any difference in the renewal rate, kind of the first-year renewal rate for policyholders that joined after a very active storm season versus policyholders that joined in a more benign season?

So in response to Tommy's question, I think you said, you know, the absence of an active storm season would definitely impact new business but not really the renewals. Um, I'm curious as you look at your track record, have you found any difference in the renewal rate the first year renewal rate for

Uh, policy holders that joined after a very active storm, season versus policy holders that joined.

Uh, in a more benign season.

so,

The different cohorts and different breakdowns of the renewable.

John McExstein: Yes. Great question. Yeah. There's definitely sort of different cohorts and different breakdowns of the renewal book that we look at. There is a lower likelihood of retention at year 1 versus year 2, 3, 4. One thing I'd say is as we look at 2024, a very, very active storm season, as Jim reporters, we have 99% of premium that we've been able to retain so far this year today. That's working under sort of version 1 of the renewal machine learning model that we have. Version 2 of that is underway and is really focused on how do we retain those customers year 1 that are the marginal sales above the baseline that we expect to join in a year. If we think about 2025, those general sales have really come from the shutdown activity as opposed to any hurricane activity.

Got it. There is a lower likelihood of retention.

1 thing I'd say is, you know, as we look at 2024 a very, very active, uh, storm season,

We?

as Jim reporters, you know, we have 999% of premiums that we've been able to retain so far, this this year,

And that's working under sort of version 1 of the renewal machine learning model that we have.

version 2 of that is is underway and is really focused on how do we

You know retain those customers year 1 that are the the marginal sales above the Baseline that we expect to join a year. And so

if you think about 2025,

Those general sales have really come from the shutdown activity as opposed to any hurricane activity. And so that cohort, you know is

John McExstein: That cohort is more mandatory sales and less non-mandatory sales, and so would generally have a higher propensity to pay the renewal. The fact that we've been able to retain 99% of premium and that continues to increase year-over-year is a really strong metric for us this year. As we look into 2026, we hope to be able to continue to grow that rate.

More mandatory sales and less non-mandatory sales. And so we generally have a higher frequency to pay the renewal. And so the fact that we've been able to retain 99% of premium and that continues

To increase year-over-year is a really strong metric for us this year. And then as we look into 2026, with hope to, you know, be able to continue to grow that way.

Makes sense. Thank you.

Question comes from the

Yaron Kinar: Makes sense. Thank you.

your line is open.

Operator: Next question comes from the line of Gregory Peters with Raymond James. Your line is open.

Hey, good afternoon, everyone. Can you hear me? Okay?

Yes, thank you.

Oh good. Just checking that. I was having some connection problems earlier.

Gregory Peters: Hey. Good afternoon, everyone. Can you hear me okay?

Trevor Burgess: Yes. Thank you.

um, I I think for the first question,

Gregory Peters: Good. Just checking that. I was having some connection problems earlier. I think for the first question, as I was going through your financial statements, I was interested in the operating cash flow. If you look at net cash provided by operating activities for the 9 months, I think it's up some 10%, which compares with the revenue for the first 9 months being up some 30+% and net income being up 44%. I thought I'd just inquire, what are the moving parts inside the cash flow that are causing that deviation? I presume that that's going to straighten out over time, but just thought I'd give you an opportunity to talk about the operating cash flow results of the company through the first 9 months of the year.

as I was going through your financial statements,

Was interested in the operating cash flow. Um,

You know, if you look at, you know, net cash provided by operating activities for the 9 months.

I think it's up some 10%, you know, which Compares with

The revenue for the first 9 months, being up some 30 plus percent, and net income being up 44%. So

I thought I'd just, you know, inquire what are the moving parts, inside, the cash flow that are causing that deviation. I, I presume that that's going to straighten out over time, but, um, just thought I'd give you an opportunity to to talk about the operating cash flow, results of the company through the first 9 months of the year.

So this is Trevor, I'll I'll start out and then I'm going to hand it to Jim to do, you know, clean up.

I mean, 1 of the biggest impacts was

Trevor Burgess: This is Trevor. I'll start out, and then I'm going to hand it to Jim to do cleanup. I mean, one of the biggest impacts was we had $8.5 million of IPO expenses. Now, our IPO was on 30 September, but we were reimbursed by the selling stockholders in Q4 at closing on 2 October. We used that $8.5 million to then pay down debt in Q4. We had this sort of strange thing where that hurt our operating cash flow in Q3. $5 million of the $8.5 million was in Q3. We were then reimbursed in Q4, but that flowed through equity, not through the income statement. We'll never get that back as operating cash, but we got the cash anyway.

we had 8.5 million dollars of IPO expenses.

Now.

Our IPO was on September 30th.

But we were reimbursed by the selling stockholders.

In Q4 at closing on October 2nd.

we had this sort of strange thing where

that hurt our

operating cash flow in.

Q3.

5 million of the 8.5 million was in Q3.

We were then reimbursed in Q4 but that flow through Equity, not through the income statement.

And so we'll never, we'll never get that back as operating cash, but we, we got the cash anyway. So the the short answer is. Yes, it will normalize over time.

and especially, now that we've

Trevor Burgess: The short answer is, yes, it will normalize over time, and especially now that we've refinanced the facility and have an even lower interest rate. Jim, anything I missed?

financed, uh, the facility and have

Uh, oh and even lower interest rate, Jim anything I missed.

John McExstein: I would just remind everyone that as our premium volume grows, our fixed costs do stay largely constant. Technology and capacity costs scale efficiently. Most of the incremental revenue drops right to the bottom line. We're able to leverage and optimize cloud costs, process automation, distribution efficiency, etc. As Trevor gave earlier in the guidance, 60% to 61% margins have proven to be sustainable in the years past, and we expect to raise things going forward.

I just remind everyone that that's a premium volume, grows our fixed costs, do stay largely constant, um, technology and capacity cost scale efficiently.

Automation distribution efficiency, Etc. Thanks, Trevor, gave earlier in the guidance. Um, 6066.

The margin says, has proven to be sustainable.

Gregory Peters: Okay. My net takeaway is that when I look at the cash flow from operating activities next year in 2026, when we clear the moving pieces from the Q3 and the Q4 of this year, we'll get something that looks more normalized. Is that an okay inference to make based on your comments?

Okay. So um my my net takeaway is that when I look at the uh cash flow from operating activities next year in 26,

When we clear the moving pieces from the third quarter and the fourth quarter of this year, uh, we'll get something that looks more normalized. Is that and it is that an LK inference to make based on your comments.

Yes.

Trevor Burgess: Yes.

Gregory Peters: Okay. Thank you. Then my follow-up question, I know maybe this has been asked before, but I'm going to come at it from a slightly different way. Your success and growth in the marketplace has been the talk of the town in the insurance marketplace. There's a lot of people that touch the NFIP market. So I'm just curious, I know you're just out of the box here, but I'm just curious if you've seen any change in the competitive environment. Specifically, I'm just curious if there's been any new entrant or an existing player in the marketplace that's becoming more aggressive and becoming more competition for you than what you were seeing before.

Okay, thank you. Um, and then and and then my follow-up question. I know maybe this has been asked before, um, but I'm I'm going to come at it from a slightly different way. Um, you know, your success. Um, and growth in the marketplace has been um The Talk of the Town and the insurance Marketplace and um, you know, there's a lot of people that touch

The nfip uh market and so I'm just curious.

you know, I know you're just out of the box here, but I'm just curious if you've seen any change in the competitive environment,

Uh and specifically, I'm just curious if there's been, you know, any new entrance or an existing, an existing player in the marketplace. It's

Um, becoming more aggressive and becoming more competition for you than, than than what you were seeing before.

well, the biggest change on the competitive front has been that our main competitor has been closed for, you know, the past 6 weeks, um, in the

5p.

Trevor Burgess: Well, the biggest change on the competitive front has been that our main competitor has been closed for the past six weeks in the NFIP. On the private side, the answer is no. We have not noticed any new entrants or existing players acting any differently. Some of that is just because they're beholden to the capacity, right? They have to make sure that ultimately they're delivering return to their capacity providers.

But on the private side, the answer is no, we have not not noticed any new entrance or existing players acting any differently.

and some of that is just because

they're beholden to the capacity.

Right? They have to make sure that ultimately they're delivering return to their capacity providers.

Trevor Burgess: If you look carefully at the available data, which is limited, but if you look at the NAIC data and compare Neptune's results to that of other private providers in the residential primary space, you'll find that the volatility that Neptune has been able to deliver has been far below that of our competitors, which is of huge value to the capacity providers, which is why we're excited that we're now up to 39 risk-taking partners across seven different programs.

And if you look carefully at the available data, which is limited. But if you look at the Nic data and compare Neptune's results to that of other,

Private.

Uh, providers in the residential primary space.

You'll find that the volatility that Neptune has been able to deliver has been far below that of our competitors, which is a huge value to the capacity providers, which is why we're excited that we're now up to 39, risk-taking partners.

Across 7 different programs.

Uh, I'm actually glad you brought that up. I was looking at this report that said, um,

Gregory Peters: I'm actually glad you brought that up. I was looking at this report that said, according to your analysis, that your results might be 77% less volatile than the rest of the market if I look through 2020 through 2024. I guess related to that comment, as you grow, are you going to be able to maintain that margin of outperformance, or do you expect that margin of outperformance to moderate over time?

according to your analysis, that your results might be 77% less volatile than the rest of the market. If I look through like 2020 through 2024,

um, I I guess.

You know, related to that, comment as you grow. Are you going to be able to maintain that?

Um, margin about performance or do you expect that margin of outperformance to moderate over time?

Trevor Burgess: I'm unable to predict what my competitors will do. What I can tell you is that we're focused on delivering great returns to our risk-taking partners so that flood insurance can be an investable asset at scale. One of the things that our risk-taking partners love about Neptune is not just the loss ratios that we're able to deliver, but that we're able to deliver material amounts of premium. Many of them would be very happy to trade off taking additional premium, even if that meant that there was slightly higher loss ratios. We have done a good job at making money for our risk-taking partners. Now they're ready for us to shift into the next gear.

I'm unable to predict what my competitors will do. Um, but what I can tell you is that we're focused on delivering

Great returns to our risk-taking partners, so that of insurance can be an investable asset at scale.

and so, 1 of the things that our risk-taking partners love about Neptune is not just the loss, ratios that we're able to deliver, but that we're able to deliver material amounts of Premium

And many of them would be very happy to trade off.

Taking additional premium even if that meant that there was slightly higher loss ratios. Um we have done a good job at making money for a risk-taking partners and now they're ready for us to you know, shift into the next gear.

Got it. Thanks for the additional details.

Gregory Peters: Got it. Thanks for the additional details.

Next question comes from the line of Pablo es with JP Morgan. Your line is open.

Operator: Next question comes from the line of Pablo Simpson with JP Morgan. Your line is open.

Operator: Next question comes from the line of Pablo Singzon with JPMorgan. Your line is open.

Pablo Simpson: Hey. Thanks for squeezing me in. First question, Neptune's distribution footprint has already been well represented in the Southeast, and the surf makes sense and surf aligns with the geographic spell of your premium. However, as you pointed out, a decent amount of your new business is coming outside of the traditional flood zones. Is it the same set of partners helping you with those sales, or are there specific distributors that do better outside of the obvious flood zones?

Pablo Singzon: Hey. Thanks for squeezing me in. First question, Neptune's distribution footprint has already been well represented in the Southeast, and the surf makes sense and surf aligns with the geographic spell of your premium. However, as you pointed out, a decent amount of your new business is coming outside of the traditional flood zones. Is it the same set of partners helping you with those sales, or are there specific distributors that do better outside of the obvious flood zones?

In the Southeast and the turf makes sense and surf alliance with the geographic spread of your premium. Um, however, as you pointed out, a decent amount of your new business is coming outside of the traditional flood zones, is it the same set of Partners helping you with those sales or Are there specific Distributors that do better outside of the audience flood zone?

I don't think that there is any unique.

Trevor Burgess: I don't think that there is any unique set of agents that is doing better or worse in or out of the high-risk flood zones. I think what we really see is the behavior of our best agents is to offer people flood insurance regardless of their flood zone because they recognize that FEMA's maps are wrong. You all can look at the Wall Street Journal article of the past couple of days, which just re-highlights the work that the First Street Foundation has done, showing that it's not 9 million people who are in high-risk flood zones, which is the FEMA number. It's really something closer to 25 million. The best agents are the ones that are just offering flood insurance every single time. Because Neptune delivers a price that says something about the risk, right, it's a very useful signal to the consumer.

Set of agents, that is doing better or worse in or out of the high-risk flood zones.

I think what we really see is the behavior of our best agents is to offer people flood insurance, regardless of their flood zone because they recognize that FEMA's maps are wrong.

and you all can look at the Wall Street Journal article, over the past couple of days was just rehydrates, the work that the First Street Foundation has done showing

That.

It's not 9 million people.

It's really something closer to 25 million.

and so the best agents are the ones that are just offering flood insurance every single time and because Neptune delivers,

a price that

says something about the risk.

Right. It's a very useful signal uh, to the consumer.

Pablo Simpson: Thanks, Trevor. Second question, I'd just be curious to hear how you view your own insurers, which, as you know, are an important element of the flood insurance ecosystem, right? Some of them have private flood offerings. Some of them offer NFIP as an accommodation to your clients. It's not clear to me, at least, if they'd offer private flood just given the option. I guess the question is, do you see them as competition or potential partners as the NFIP moves towards the private market, right, regardless of whether or not that trend is accelerated by any changes the government is contemplating right now? Thanks.

Pablo Singzon: Thanks, Trevor. Second question, I'd just be curious to hear how you view your own insurers, which, as you know, are an important element of the flood insurance ecosystem, right? Some of them have private flood offerings. Some of them offer NFIP as an accommodation to your clients. It's not clear to me, at least, if they'd offer private flood just given the option. I guess the question is, do you see them as competition or potential partners as the NFIP moves towards the private market, right, regardless of whether or not that trend is accelerated by any changes the government is contemplating right now? Thanks.

Thanks, Trevor. And then second question, um, I I just be curious to hear how you view, uh, write your own insurance, which, you know, as you know, are important element of the, the flood insurance ecosystem, right? Some of them have private. So the offering some of them offer nfib is an accommodation to your clients and it's not clear to me at least if they offer private. Let us give them the option but I I guess the question is do you see them as competition or potential Partners? If the nfip moved towards the nfip moves towards the private market right regards whether or not that trend is accelerated by any changes to the government. It's contemplating right now. Thanks.

what I can tell you is that currently many

Trevor Burgess: What I can tell you is that currently, many write-your-own are partners of Neptune and have asked their technology providers to display the Neptune price alongside the NFIP price. They do that because they want to be the best solution for their customers. They know that if the only option that they're presenting is the NFIP, that opens the door for that consumer to either go direct to Neptune or to talk to a different insurance agent to get that Neptune quote. Neptune, as now the largest and clear alternative to the NFIP, is becoming a must-have option for write-your-own to make sure that they don't lose competitors to some other platform or some other agent system.

write your owns or partners of Neptune and have asked their technology providers to display the Neptune price alongside the nfip price.

They do that because they want to be the best solution for their customers.

They know that if

the only option that they're presenting is the nfip that opens the door for that consumer to either go direct to Neptune or to talk to a different insurance agent to get that Neptune, quote and so

Neptune, as now, the largest

And clear alternative to the nfip.

Is becoming a must-have option for write your own to make sure that they don't lose competitors to some other platform or some other agent uh system.

All right, thanks Trevor.

Pablo Simpson: All right. Thanks, Trevor.

Pablo Singzon: All right. Thanks, Trevor.

Next question comes from the line of Mike the ramski with BMO Capital markets. Your line is open.

Operator: Next question comes from the line of Mike Zaremski with BMO Capital Markets. Your line is open.

Mike Zaremski: Hey. Thanks. Good evening. First question is on the revenue run rate and the guide. Clearly, it exceeded expectations in Q3. Not much change to the revenue guide in 2026. I guess what am I missing? You all don't seem to be too clear on whether the government shutdown is providing a lift to 4Q, or what are we missing about that discrepancy?

Hey, thanks. Good evening. Um, first question is on the, um, the revenue run rate, uh, and the guide, um, you know, clearly exceeds expectations in Q3, um, not much changed to the revenue, uh, guide in 26. Um, so, I guess what am I missing? Are you guys, are you all don't seem to be too clear? Um, on, whether the government shutdown is providing a lift to the 4q or, or you know, what, what, what are we missing? Um, about, um, that that discrepancy.

So, I'm I'm not sure there is a a discrepancy. What I would say is that we haven't provided guidance for Q4, um, because we think that the

Trevor Burgess: I'm not sure there is a discrepancy. What I would say is that we haven't provided guidance for Q4 because we think that, first of all, we're a newly public company, and we want to make sure that we are providing some guidance, which is why we have provided 2026. 2026, we don't anticipate we'll have a government shutdown, and we don't anticipate it will have a change to the NFIP's operating model. We have to make assumptions around renewal rates for next year, premium growth, and we have become more optimistic than we were at the start of Q3 by the end of Q3. We are feeling more excited about 2026 than we were before, and I think that's reflected in the guidance that we gave.

First of all, we're you know, newly public company. Um, and it it's uh, we want to make sure that we are providing some guidance, which is why we have provided, you know,

2026. We don't anticipate. We'll have

A government shutdown and we don't anticipate, it will have a change to the nfip, you know, operating model.

So we have to make assumptions around, you know, renewal rates for next year. Uh premium growth uh you know and

We?

Of the third quarter by the end of the third quarter.

So, we are feeling.

More excited about 2026 than we were before. And I think that's reflected in the guidance uh that we gave to be able to retain a 60 to 61%

Trevor Burgess: To be able to retain a 60% to 61% EBITDA margin while incorporating all public company costs is a pretty amazing feat for year one out of the gate.

Evita margin while incorporating all public company costs is a pretty amazing uh feet for year, 1 out of the the gate.

It's great. That's helpful. Um,

[Analyst]: Okay. Great. That's helpful. Switching gears a bit, Florida Governor DeSantis is on record today saying he would like to see a more robust private flood market. Any insights you all might have behind why he would make those comments?

Mike Zaremski: Okay. Great. That's helpful. Switching gears a bit, Florida Governor DeSantis is on record today saying he would like to see a more robust private flood market. Any insights you all might have behind why he would make those comments?

Switching gears a bit um um Florida Governor DeSantis is on record today saying he would like to see a more robust private flood Market any insights that. You all might have behind why he would make those comments.

I have no insight into, uh, those comments and, uh, was not a not aware of them. But what I can tell you is that

Trevor Burgess: I have no insight into those comments and was not aware of them. What I can tell you is that we're all aware here in Florida that the NFIP has been shut down for the past six weeks and there hasn't been a government option. It needs to have private options as an alternative. Thankfully, Neptune is headquartered in the state of Florida. Florida is our largest state, and we have been able to help a lot of Floridians in the past six weeks. I think the other thing that he often talks to, and this may be related, is just the affordability. We know that for new policies, Neptune is less expensive than the NFIP approximately 60% of the time.

We're all aware here in Florida that the nfip has been you know, shut down.

For the past 6 weeks and has not been a government. There hasn't been a government, you know, option and so he needs to have, you know, private, uh, options as an alternative. Thankfully, Neptune is headquartered in the State of Florida. Florida is our largest state and we have been able to help a lot of lydians.

In.

Uh, the past.

I think the other thing that he often talks to in this may be related is just the affordability.

And we know that for new policies, Neptune is less expensive than the nfip and approximately 60% of the time.

Trevor Burgess: If 60% of consumers can save money by buying a Neptune policy, that's obviously going to help affordability in the state and help control costs for homeowners.

So 60% of consumers can save money by buying a Neptune policy, that's obviously going to help affordability in the state and help control.

Costs, for homeowners.

[Analyst]: Got it. That's helpful. Just lastly, I'm curious if you can offer any perspective. We've heard some industry folks say that in recent years after hurricanes, there's been movement. The private market took on a material amount of policies, but eventually, the private markets, those flowed back to the NFIP. As we think through kind of, right, how the government's going to the administration's going to think about how to especially augment the program going forward, is there any truth to that historical context that you could offer about kind of what happened in recent years regarding movement private NFIP back and forth? Thanks.

Mike Zaremski: Got it. That's helpful. Just lastly, I'm curious if you can offer any perspective. We've heard some industry folks say that in recent years after hurricanes, there's been movement. The private market took on a material amount of policies, but eventually, the private markets, those flowed back to the NFIP. As we think through kind of, right, how the government's going to the administration's going to think about how to especially augment the program going forward, is there any truth to that historical context that you could offer about kind of what happened in recent years regarding movement private NFIP back and forth? Thanks.

Got it, that's helpful. And and just, lastly, I'm curious if you've been offering any perspective, um, you know, we've we've heard some um, industry folks say that, you know, in in recent years after hurricanes um there's been movements, you know, the the private Market took on um you know, a material amount of policies. But but eventually the private markets that those flowed back to the nfip at any, any

you know, as we think through kind of right how the how the government's going to

Administration is going to think about, um,

How to you know, especially augment the program going forward? Is there any truth to that historical context so you can offer about kind of what happened in recent years, uh regarding movement private NFP back and forth. Thanks.

I'm not aware of any data that would suggest policies moving from private back to the nfip.

Trevor Burgess: I'm not aware of any data that would suggest policies moving from private back to the NFIP. The NFIP has been in long-term decline, peaking at about $5 million and is now down to $3.6 million contracts. We've been in long-term structural decline. Obviously, during that time period, Neptune's grown from 0 to 260,000. We have not seen those trends at Neptune. Now, there have been a number, a large number of private flood insurers, competitors of ours, who have tried to enter this business. It's a very complicated and dangerous peril, and their results have been unsatisfactory, and they have exited the marketplace. For those particular insurers who have failed, their policies may then have somewhat flowed back to the NFIP, but not enough to make up for the overall structural decline in the NFIP.

The nfip has been in long term decline peaking at a about, you know, 5 million, and it's now down to 3.6 million contracts. So, we've been in long-term structural decline for obviously during

That time period Neptune's grown from zero to 260,000. So we um we we have not seen those trends at Neptune.

Now, there have been a number, a large number of private flood insurers. Competitors of ours who have tried,

To enter this business. It's a very complicated and dangerous Peril and there were results. Have been unsatisfactory, and they have exited the marketplace. And so, for those particular insurers who have failed, that's their policies. May then have somewhat flowed back to the nfip but not enough to make up for the over.

Structural decline.

Yeah, Mike. I just at the for some context, you know.

[Company Representative] (Neptune Insurance Holdings): Yeah. Mike, just for some context, Trevor and I spent a week in Bermuda in New York at the end of October here meeting with over half of our capacity provider panel. I would just say that the appetite from that panel to grow within the private flood insurance market has never been greater than it is today. If we think about the risk-taking panel that sits behind Neptune, there's certainly no desire to shrink the size of their portfolio. In fact, they would love to have many more of the exposures that they have today.

Trevor and I spent a week in Bermuda in New York. Um at the end of October here meeting with

Over half of our you know, capacity provider panel and I would just say that the appetite from that panel to grow within the private flood insurance Market has has never been greater than it is today. So

If we think about the, you know, the risk, taking panel that sits behind Neptune, there's certainly no uh no desire to to shrink the size of their portfolio. In fact, you know, they would love that.

Many more.

Thanks so much.

Mike Zaremski: Thanks so much.

Sir. No further questions at this time, I would like to turn the call back over to Trevor Burgess for closing remarks.

Operator: There are no further questions at this time. I would like to turn the call back over to Trevor Burgess for closing remarks.

Thank you. I just want to take a moment once again to thank the team at Neptune for their tremendous work.

nearly half of our team are, and

Trevor Burgess: Thank you. I just want to take a moment once again to thank the team at Neptune for their tremendous work. Nearly half of our team are engineers or data scientists who are focused on building the best AI models to deliver the results for consumers, agents, and our capacity providers. I want to thank our frontline staff who are interacting with our agents every day and our consumers every day to help them protect themselves from this most dangerous peril. We are trying to do important work here of protecting many, many more Americans than are protected today from the risk of flooding. Thank you all for your time today.

Years for data scientists who are focused on building the best, AI models to deliver the results for consumers agents and our capacity providers.

And I want to thank our Frontline staff who are interacting with our agents every day.

And our consumers every day.

Help them protect themselves. From this, most dangerous Peril. Uh, we are trying to do important work here of protecting many, many more Americans than are protected uh today uh from the risk of flooding, thank you all for your time today.

Ladies and gentlemen, that concludes today's call. Thank you all for joining me. You may now disconnect

Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

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