EverQuote, Inc. (NASDAQ:EVER) is a leading online marketplace for insurance shopping, connecting consumers with insurance provider customers, which includes both carriers and agents. The company's vision is to be the leading growth partner for property and casualty (P&C) insurance providers. EverQuote has carved out a strong position in the dynamic insurance industry, leveraging its proprietary data and technology platform to deliver results-driven solutions that are transforming how insurers attract and connect with consumers.
Business Overview EverQuote was incorporated in Delaware in 2008 under the name AdHarmonics, Inc. before changing its name to EverQuote, Inc. in 2014. The company's core business model involves operating an online marketplace that connects insurance consumers with carriers and agents. EverQuote generates revenue primarily by selling consumer referrals to its insurance provider customers, including both insurance carriers and third-party agents.
In its early years, EverQuote faced challenges common to companies in similar industries and stages of development, including rapid technological changes, competition from larger companies, and the need to obtain additional financing to support growth. Despite these hurdles, the company was able to establish itself as a leading online marketplace for insurance shopping.
Over the years, EverQuote has evolved from a niche player to a dominant force in the insurance technology landscape. In 2020, the company completed the acquisition of Crosspointe Insurance Financial Services, LLC, a health insurance agency. This acquisition, later renamed Eversurance, LLC, allowed EverQuote to expand its offerings into the health insurance vertical. However, in 2023, the company made the strategic decision to exit the health insurance vertical to increase focus on its core property and casualty insurance verticals.
Also in 2023, EverQuote implemented a workforce reduction plan to improve operating efficiency. This plan included the elimination of 175 employees, or approximately 28% of the company's workforce. The restructuring and exit from the health insurance vertical were completed by the end of 2023.
EverQuote's growth has been fueled by its ability to leverage its proprietary data and technology platform to efficiently match consumers with relevant insurance options. The company's marketplace utilizes advanced algorithms and machine learning to optimize the consumer experience, while also providing insurance providers with targeted, high-quality referrals that align with their specific underwriting and profitability requirements.
As of the end of 2024, EverQuote had built a network of approximately 60 insurance carriers and 6,000 agents, representing a significant competitive advantage in the industry.
Financial Performance Financials EverQuote has demonstrated impressive financial performance in recent years, despite facing headwinds in the auto insurance industry. In fiscal year 2024, the company reported record revenue of $500.19 million, representing a 73.7% year-over-year increase. This strong top-line growth was driven by a 96% surge in revenue from the auto insurance vertical, which accounted for 89% of the company's total revenue.
The company's profitability also reached new heights in 2024, with net income of $32.17 million, a significant turnaround from the $51.29 million net loss reported in the prior year. This improvement was largely attributable to EverQuote's ability to leverage its operating leverage and drive efficiency across its business.
For the fourth quarter of 2024, EverQuote reported revenue of $147.46 million, representing a 165% year-over-year increase. This growth was driven by a 200% increase in the automotive insurance vertical and a 15% increase in the home and renters insurance vertical. Net income for Q4 2024 was $12.31 million.
In terms of cash flow, EverQuote generated $66.57 million in operating cash flow and $62.45 million in free cash flow for the fiscal year 2024.
The property and casualty insurance industry, in which EverQuote operates, had a compound annual growth rate (CAGR) of 4.5% from 2019 to 2024, highlighting the company's outperformance relative to the broader market.
Liquidity EverQuote's balance sheet remains solid, with $102.12 million in cash and cash equivalents as of the end of 2024, and no outstanding debt. The company has a revolving credit facility with Western Alliance Bank, providing a maximum borrowing capacity of $25 million. As of December 31, 2024, EverQuote had no outstanding borrowings under this credit facility.
The company's debt-to-equity ratio stands at 0.027, while its current ratio and quick ratio are both 2.36, indicating strong short-term liquidity. This financial flexibility positions EverQuote to continue investing in its technology, data assets, and strategic initiatives to further strengthen its competitive position.
Navigating Industry Challenges The insurance industry has faced significant challenges in recent years, particularly in the automotive insurance segment. In 2023 and 2022, the auto insurance industry experienced deteriorating underwriting performance due to a rise in claims, inflation, and inadequate policy premiums. This dynamic put pressure on insurance carriers, leading many to reduce their spending on customer acquisition, which had a negative impact on the pricing and demand for consumer referrals in EverQuote's marketplace.
However, EverQuote has demonstrated its resilience and adaptability in the face of these industry headwinds. The company has remained laser-focused on its strategic priorities, which include becoming the number one growth partner for P&C insurance providers by efficiently delivering high-performing referrals, driving traffic scale, and expanding its suite of products and services.
In 2024, EverQuote emerged from the auto insurance downturn with record performance, having sharpened its focus on the P&C insurance market. The company's execution has improved quarter-over-quarter, with a hardened and capable team that has streamlined its operations and technology platforms, enabling greater efficiency and responsiveness to support the growth of its insurance provider customers.
Regulatory Landscape The insurance industry is heavily regulated, and EverQuote's business is subject to a variety of federal, state, and industry-based laws and regulations. One notable regulatory event was the FCC's proposed one-to-one consent rule, which would have amended the consent requirements of the Telephone Consumer Protection Act (TCPA) by requiring explicit consent for outbound telemarketing calls or texts.
While the 11th Circuit Court of Appeals ultimately vacated this rule in early 2025, EverQuote had already implemented changes to its operations in preparation for the new requirements. Notably, the company decided to maintain certain of these changes, as they were found to benefit both consumers and the company's strategic objectives, despite the rule being overturned.
Looking Ahead As EverQuote enters 2025, the company is well-positioned to capitalize on the improving conditions in the P&C insurance market. With a sharpened focus, streamlined operations, and a strong financial foundation, EverQuote is poised to build upon its momentum and continue delivering exceptional results for its insurance provider customers and shareholders.
The company's guidance for the first quarter of 2025 reflects this optimism, with management forecasting revenue between $155 million and $160 million, representing 73% year-over-year growth at the midpoint. Furthermore, EverQuote expects to generate adjusted EBITDA of $19 million to $21 million, a 163% increase compared to the prior-year period. The company also provided guidance for Variable Marketing Dollars (VMD) between $44 million and $46 million, representing 46% year-over-year growth at the midpoint.
EverQuote anticipates that revenue growth rates will normalize after Q1 2025 as the rate of increase in auto insurance premiums returns to more normalized levels. The company plans to make strategic investments in its technology and data assets in the second half of 2025 to position itself for long-term growth, while aiming to maintain adjusted EBITDA margins at or near current levels.
Going forward, EverQuote plans to leverage AI and automation to drive greater operational efficiencies and develop new, innovative products and services for its insurance provider partners. By continuing to execute on its well-defined strategy, the company believes it can maintain its position as a leading growth partner in the dynamic P&C insurance landscape.
Conclusion EverQuote has established itself as a digital insurance leader, navigating the complexities of the industry with a steadfast commitment to innovation and customer-centricity. The company's robust financial performance, resilient business model, and strategic focus on the P&C insurance market position it for continued success in the years ahead. As EverQuote advances its technology, expands its product offerings, and strengthens its partnerships with insurance providers, the company is poised to capitalize on the shifting tides of the insurance industry and deliver sustainable growth and value for its shareholders.