EverQuote Inc (NASDAQ:EVER) is a leading online insurance marketplace that connects consumers with insurance providers in the United States. The company operates a results-driven marketplace, powered by its proprietary data and technology platform, which aims to improve the way insurance providers attract and connect with consumers shopping for insurance.
Business Overview
EverQuote was incorporated in the state of Delaware in 2008 and has since established itself as a prominent player in the online insurance industry. The company's mission is to empower insurance shoppers to better protect life's most important assets - family, property, and future. EverQuote's vision is to become the largest online source of insurance policies by using data, technology, and knowledgeable advisors to make insurance simpler, more affordable, and personalized.The company's marketplace enables consumers to choose to visit an insurance provider's website to purchase a policy or engage with a carrier or agent by phone or submit their data to insurance providers to receive quotes. EverQuote's services are free for consumers, and the company derives its revenue from consumer inquiries sold as referrals to insurance providers and directly from commissions on sales of policies by its direct-to-consumer insurance agency.
In 2023, EverQuote exited its health insurance vertical, an area that would have required significant capital investment and scale to effectively compete amid an increasingly unpredictable regulatory environment. This strategic move allowed the company to increase its focus on its core verticals, automotive and home and renters insurance.
Financial Performance
For the fiscal year ended December 31, 2023, EverQuote reported annual revenue of $287,921,000, a decrease from the previous year's revenue of $309,141,000. The company's annual net income was -$51,287,000, compared to -$42,981,000 in the prior year. Annual operating cash flow was -$2,828,000, and annual free cash flow was -$6,668,000.In the first quarter of 2024, EverQuote generated revenue of $91,065,000, a decrease of 16.6% compared to the same period in the prior year. The company reported net income of $1,907,000 for the quarter, a significant improvement from the net loss of $2,529,000 in the first quarter of 2023. EverQuote's adjusted EBITDA for the first quarter of 2024 was $7,588,000, up from $5,373,000 in the same period last year.
Segmental Performance
EverQuote operates two main verticals: Automotive and Home and Renters. In the first quarter of 2024, the Automotive vertical generated $77,538,000 in revenue, representing 85% of the company's total revenue. This was a decrease from the $89,699,000 in revenue generated by the Automotive vertical in the first quarter of 2023.The Home and Renters vertical generated $12,689,000 in revenue in the first quarter of 2024, an increase from the $9,456,000 in revenue generated in the same period last year. The company's "Other" segment, which includes its now-exited health insurance vertical, generated $838,000 in revenue in the first quarter of 2024, down from $10,065,000 in the first quarter of 2023.
Operational Highlights
EverQuote's strong performance in the first quarter of 2024 was driven by continued execution of its operating teams against an improving auto carrier landscape. The company saw a broad-based recovery in the auto insurance industry, with all of its top 10 carriers from the fourth quarter of 2023 increasing their spending in the first quarter of 2024. This led to a 72% sequential increase in revenue from the Automotive vertical.The company's Home and Renters vertical also saw strong growth, with revenue increasing 29% sequentially from the fourth quarter of 2023. EverQuote attributed this growth to improvements in the homeowners insurance market, as carriers experienced better underwriting results in the first quarter of 2024.
Guidance and Outlook
For the second quarter of 2024, EverQuote expects revenue to be between $100 million and $105 million, variable marketing margin to be between $31 million and $33 million, and adjusted EBITDA to be between $7 million and $9 million.The company remains cautiously optimistic about the sustainability of the auto insurance industry recovery, noting that while a handful of large carriers have been aggressively expanding their state footprints, the timing of other carriers' re-entry into the market remains uncertain. EverQuote expects strong year-over-year growth in the second half of 2024 but is not currently anticipating the typical sequential improvement from the second to third quarter.
Liquidity and Capital Resources
As of March 31, 2024, EverQuote had $48.6 million in cash and cash equivalents and up to $25.0 million of availability under its revolving line of credit. The company believes its existing cash and cash equivalents will be sufficient to fund its operating expenses and capital expenditure requirements for at least the next 12 months, without considering the borrowing availability under its revolving line of credit.Risks and Challenges
EverQuote's financial performance is heavily dependent on the auto insurance industry, which has experienced volatility in recent years due to factors such as rising claims, inflation, and inadequate policy premiums. The company's reliance on a small number of insurance providers for a significant portion of its revenue also poses a risk, as does its dependence on third-party media sources for a significant portion of visitors to its websites and marketplace.Additionally, the company's business could be affected by changes to federal, state, and industry-based laws and regulations, or changes to standards concerning the enforcement thereof, particularly with respect to the insurance industry, telemarketing restrictions, and data privacy requirements.