EverQuote, Inc. SEC 10-Q Report — TradingView News

EverQuote, Inc., a leading online insurance marketplace, has released its Form 10-Q report for the quarter ended September 30, 2023. The report highlights significant financial growth, strategic initiatives aimed at enhancing operational efficiency, and the challenges the company faces in a volatile market environment.

Financial Highlights

EverQuote, Inc. reported robust financial performance for the three and nine months ended September 30, 2023:

• Total Revenue: $144.5 million, a 162.7% increase from $55.0 million for the three months ended September 30, 2023.
• Total Revenue: $352.7 million, a 51.9% increase from $232.2 million for the nine months ended September 30, 2023.
• Cost of Revenue: $5.5 million, a decrease of 11.4% from $6.2 million for the three months ended September 30, 2023.
• Cost of Revenue: $15.5 million, a decrease of 11.2% from $17.5 million for the nine months ended September 30, 2023.
• Income (loss) from operations: $11.7 million, compared to $(29.4) million for the three months ended September 30, 2023.
• Income (loss) from operations: $19.7 million, compared to $(45.2) million for the nine months ended September 30, 2023.
• Net income (loss): $11.6 million, compared to $(29.2) million for the three months ended September 30, 2023.
• Net income (loss): $19.9 million, compared to $(44.9) million for the nine months ended September 30, 2023.
• Basic Net Income (Loss) Per Share: $0.33, compared to $(0.87) for the three months ended September 30, 2023.
• Basic Net Income (Loss) Per Share: $0.57, compared to $(1.36) for the nine months ended September 30, 2023.
• Diluted Net Income (Loss) Per Share: $0.31, compared to $(0.87) for the three months ended September 30, 2023.
• Diluted Net Income (Loss) Per Share: $0.54, compared to $(1.36) for the nine months ended September 30, 2023.

Business Highlights

EverQuote, Inc. demonstrated strong business performance across its key verticals:

• Revenue Segments: Significant growth in the automotive vertical, with revenue increasing by $86.9 million for the three months ended September 30, 2024, and $127.6 million for the nine months ended September 30, 2024. The home and renters insurance vertical also saw an increase, with revenue rising by $3.3 million for the three months ended September 30, 2024, and $9.6 million for the nine months ended September 30, 2024. The other insurance verticals experienced a decline due to the exit from the health insurance vertical.
• Operational Efficiency: The company completed its restructuring by September 30, 2023, which included exiting the health insurance vertical and implementing a workforce reduction plan to improve operating efficiency.
• Advertising and Marketing: Sales and marketing expenses increased significantly due to higher advertising costs, driven by increased carrier spend. Advertising expenses totaled $100.6 million for the three months ended September 30, 2024, and $241.5 million for the nine months ended September 30, 2024.
• Research and Development: Research and development expenses increased slightly, primarily due to higher personnel-related costs. The company continues to focus on improving the functionality of its marketplace platform and developing new offerings.
• General and Administrative: General and administrative expenses increased due to higher personnel-related costs and professional fees for consulting services.
• Future Outlook: The company expects an overall increase in revenue in 2024 compared to 2023, particularly in the automotive and home and renters verticals, driven by anticipated increased spending from carrier partners. However, revenue from other insurance verticals is expected to decrease significantly due to the exit from the health insurance vertical.

Strategic Initiatives

EverQuote, Inc. has undertaken several strategic initiatives to enhance its operational efficiency and market position:

• Strategic Focus: In 2023, the company exited its health insurance vertical to focus on its core verticals, which included implementing a workforce reduction plan to improve operating efficiency. Additionally, the company has been actively expanding its consumer traffic through various advertising channels and leveraging its data assets to attract high-intent shoppers.
• Capital Management: The company has a revolving line of credit with Western Alliance Bank, allowing it to borrow up to $25.0 million, which is collateralized by substantially all of its assets. As of September 30, 2024, the company had no amounts outstanding under this credit line and was in compliance with all covenants. The company has also been active in issuing common stock upon the exercise of stock options and vesting of restricted stock units, contributing to an increase in additional paid-in capital.
• Future Outlook: Looking ahead, EverQuote, Inc. expects an overall increase in revenue in 2024, particularly in its automotive and home and renters insurance verticals, driven by anticipated increased spending from carrier partners. The company plans to continue its focus on expanding consumer traffic and improving the efficiency of its advertising spend. Additionally, the company is assessing the impact of new regulatory changes, such as the FCC’s amendments to the TCPA, which may require modifications to its marketing practices.

Challenges and Risks

EverQuote, Inc. faces several challenges and risks that could impact its business:

• Auto Insurance Industry Risk: The company derived 88% and 79% of its revenue from auto insurance providers for the nine months ended September 30, 2024, and 2023, respectively. The financial results depend on the performance of the auto insurance industry, which has experienced deteriorated underwriting performance due to a rise in claims, inflation, and inadequate policy premiums. This has caused insurance carrier customers to reduce spending on new customer acquisition, negatively impacting the pricing and demand for consumer referrals in the marketplace.
• Regulation: Changes to federal, state, and industry-based laws and regulations could affect the company’s business. For example, the FCC’s amendments to the TCPA, effective January 27, 2025, will require “one-to-one consent” for outbound telemarketing calls or texts, which may adversely impact the market for insurance quote requests and require modifications to marketing practices.
• Market Risk: The company has a credit agreement that provides credit at a floating rate of interest. As of September 30, 2024, there were no outstanding borrowings under the revolving line of credit, thus no material exposure to fluctuations in interest rates. The company also has exposure to adverse changes in exchange rates of foreign currencies associated with its foreign transactions and subsidiaries, although this exposure is considered immaterial.
• Risk Factors: Important factors specific to the industry and company could have a material and adverse impact on the business, financial condition, results of operations, and cash flows. These include risks related to data privacy laws, regulatory changes, and market volatility.

SEC Filing: EverQuote, Inc. [ EVER ] – 10-Q – Nov. 04, 2024