Conference Transcript - EVER 2026-06-02

Ralph Schackart, Analyst — William Blair

I want to go ahead and kick it off while we're getting assembled here. I'm Ralph Shackart, Internet Analyst here at William Blair. Thanks again for attending our annual Growth Stock Conference. I'm really happy to have Jamie Mendel, CEO, Joseph Sandburne, the CFO here again to present. A quick intro, EVER is a leading marketplace for home and auto insurance. So on the consumer side if you're shopping for a quote, oftentimes you'll find in the marketplace you could actually lower your policy premiums. The company's done a really great job coming out of the taking rate cycle that they'll get into. Growth has really come back fairly vigorously. They're expanding margins, buying back stock, so doing all the right things from our vantage point that should hopefully continue going forward, assuming the rate cycle remains robust. So I'll keep it brief. Jamie, you're gonna kick it off? Do a couple slides, and then we'll jump into a Q&A format. All right. Thank you, Ralph. Thanks everyone for joining. So if I just press... there we go. Oh, one more. I'm supposed to tell everybody to check our website for disclosures. Of course. Thank you. Our team would appreciate that, Ralph. Come on over if you

Jayme Mendal, CEO

want. All right. Thanks all for joining. So for those who are less familiar with us, as Ralph mentioned, we're a leading online marketplace for P&C insurance. Our mission is to empower all the largest insurance carriers and thousands of local agents to grow, to compete effectively in the digital age and gain share through more effective digital customer acquisition. Just a brief snapshot of who we are. We are a leader, a leading marketplace in a large and growing sector as insurance distribution spend increasingly moves digital and it's a bit slower to do so than a lot of other sectors and so we've got the secular tailwind behind us as it does we have a differentiated model that is really built around the technology and data we've designed and built a system that's really purpose built for acquiring insurance risk online and we've amassed you know a huge amount of proprietary data over the years to help us optimize the system on on behalf of carriers and agents. And we have proprietary distribution relationships. So we have deep longstanding relationships, not only with the largest, all the largest carriers in the country, but also with thousands of local insurance agents, which have been built up over the years. On the financial front, we went in public in 2018. Our stated financial model was to grow 20 plus percent per year and expand our margin one to 200 basis points per year on average. So we're now seven, eight years on and we've executed exactly to that plan. Our CAGR since IPO is 22, 23% added 150 basis points of margin per year on average. And so we've just continued to sort of execute and say what we're gonna do and do as we say we will. Last year, you can see on the bottom there was a particularly robust year with high growth, quite a bit of margin expansion across all the lines, and now generating consistently a very high healthy level of cash flow. We have seven of the top 10 carriers active in the marketplace today, a couple more beginning to reactivate this year coming out of that hard market cycle, and thousands, as we said, of local agents who depend on us for their growth. So the business model at the highest level is as follows we look for consumers who are online with some intent to buy insurance we drive them to ever quote web properties largely through paid programmatic advertising when they arrive at one of our properties we'll gather all the relevant underwriting data that would be needed to make an informed real-time decision about the right insurance provider for them so we do the work to kind of classify and stratify risk and then route the consumer to to the provider that's most likely to have the right coverage for them. From the consumer's point of view, the value prop is pretty straightforward. They save time and money shopping or re-shopping their insurance. From the provider's point of view, we represent a very large, highly targeted and high return on ad spend channel for customer acquisition. So just to sort of preempt, I think, some of the the questions about um the the market and its exposure to some of the developments in ai i think it's important to understand that insurance is a very complex and uh and regulated market it doesn't quite resemble what you'd see in a lot of other markets first and foremost it is regulated but more than than that it is very opaque in that the carriers really want to own that quoting and binding conversation directly with the consumer. Therefore, they go to great lengths to ensure that their rates are not exposed to the public for any type of rate comparison experience. It's an industry where the carriers are very, very targeted in terms of the specific risk that they're looking to take on. And so unlike in a category, say, like travel or booking reservations or something like that, where all the data is readily available. In insurance, it's really not. And so there's a role to play for a company like EverQuote could help bridge the gap between a lot of the LLM platforms looking to help consumers shop for insurance and the carriers and the local agents who are gonna be very particular about how their distribution is actually exposed into the AI market. We'll talk, I'm sure, a bit more about this. You know, Ralph referenced it. the market has been experiencing tailwinds for the last year or two. This is coming out of a particularly challenged period for auto insurance, referred to in the industry as a hard market cycle. That occurs once every three to five years when the pricing and risk get somewhat misaligned last time it happened was 2017 and you know typical cycle like this results in the carriers pulling back a bit on their growth on marketing spend while they work to reprice their risk and then they sort of re-enter the market with more advertising dollars and in that period things you know sort of normalized to you know single-digit growth forever quote for a period of six to 12 months before coming back to higher growth levels the more recent hard market cycle was more driven by COVID it was a bit more extreme because of some of the hyperinflation that occurred coming out of coming out of COVID and so for a period between roughly 2022 and 2024 combined ratios were elevated and carriers had pulled back quite a bit on their growth efforts. Since 2024 we've been seeing sort of steady improvement in the market and we now come into 2026 with a very healthy insurance market. So typically carriers are looking to run at a mid to high 90s combined ratio. Anything below that is favorable, it's profitable. And we come into this year now with carriers, you know, you can see sort of the trend over the last few years, but in the kind of mid to high 80s on average, and therefore quite intent on growing and coming into the market with a very healthy appetite for new customers. So I guess in summary, we're a market leader in a high growth sector with secular tailwinds. We have these deep, long-standing customer relationships with carriers and then a large distributed network of local agents. we have some differentiated proprietary data assets that will help us I think be more of a beneficiary as AI tries to navigate its way into the insurance market and you know growing profitable business that's generating a tremendous amount of cash flow a very healthy balance sheet and track record of growth and profit expansion which we intend to persist in the coming years so with that Ralph, I think we can turn it over to questions.

Ralph Schackart, Analyst — William Blair

You touched on it briefly, Jamie, but carriers are obviously very profitable right now, which would be a good backdrop, but maybe they're overly profitable. Maybe kind of walk through the behavior you've seen from some carriers. I think you've talked about the top 20 or 25 sort of not coming back, but kind of where are you in that cycle? What sort of stage are we at right now? And we'll launch off from there.

Joseph Sanborn, CFO

So thanks, Ralph. broadly carriers are quite healthy. So what we've seen the experience starting this year, just to dovetail on Jamie's comments, there's carriers are coming into the year with low combined ratios. What that means to those of you who are new to insurance, meaning they're at a level where they have ample room between the current spend to invest in customer acquisition to still meet their profitability target. So we're in this period and it's quite broad. It's with the commentary we've given about the marketplace, our business over the past year is we've seen more and more carriers coming as we've progressed through this period if you go back to our comments in early 2025 we said that's exactly what expect to happen as we start to see industry come out of this hard market cycle we'll see a broadening out of demand and we're seeing that in the Q1 we made the commentary that one of the notable things for us was the one sort of carrier who was a top 10 carrier who had not been back on the market actually came back in the marketplace they had pulled back broadly from digital channels for a better part of you know three years but they've been a top three carrier for us prior to that so they came back in so that's another piece we have of the story but again pretty broadly healthy and you look at that dynamic for us the other piece I would add to it is carriers are focused on really two things right at first they focus on underwriting profitability got that now they have that they're shifting to how do we grow policies in force this is a period where carriers want to grow policies in force that's the driving impetus and we're hearing that broadly from our carrier partners we heard that made that comment on February call same dynamic is continuing into our may calls that's the second piece and the third is how they're using digital channels digital channels for the carriers as we describe the model carriers are trying to be very precise in how they target their consumers they make the business of on a 50 state base if you're a national carrier it's really 50 markets and you're trying to find the exact profile that fits the the underwriting criteria you've established and so digital channels work really well that again that plays very well to every quote so that's sort of the backdrop as we start the

Ralph Schackart, Analyst — William Blair

year great and then thinking about the drivers you've sort of framed a billion dollar revenue target over the next few years maybe sort of frame that for the audience you know where are the contributors obviously carries spending coming back Jamie talked a lot about product development on the calls maybe kind of sort of like walk us through that that path how do you get to a

Joseph Sanborn, CFO

billion dollars revenue sure so for context in our November call last November 2025 we later target it will be a billion dollar business in two to three years what at the time we were about the the models had us about 650 million for 2025 you know a little higher than that but what it means if we did it in we set the target if we did in three years it'd be a business there was a 14 percent grower on top line revenues it was in two years it'd be 21 22 so as we keep progressing on that target we we reiterated that in our on our on our both of our recent calls what are ways we get there so first is how we think of additional budget coming from providers so you know on our carrier side we have our smart campaign product which is our ai driven product where carriers are able to turn over their bidding to us rather than using our platform directly that results often in them getting better performance you know one example we gave in our last call was they had a carry was still managing their own campaigns versus using ours they got a 20 improvement those types of examples make carriers say let's give more budget to us so that's one example on the carrier side on the agent side we have a a concept of how we're gonna become the one-stop growth shop for agents to grow their business. If you go back three, four years, you've known us for a long time, Rob, we had really one product, which was leads, helps carriers, helps consumers connect with agents in online to offline connection. Over time, we've added other products. Today, it's like 1.35, 1.4 products per agent, reflecting that at digital marketing services, connections via calls, all those things be the one-stop growth shop for agents. We're actually bringing the smart campaign product we had for carriers to agents and so we see that'll be another where we'll get more budget out of the agents as well when you shift to the the other side of the marketplace the traffic side we'll continue to grow traffic it is the marketplace you gotta do both sides and so we've talked about in our recent calls we've added new traffic channels whether it's whether it be social ctv other other areas we're thinking about how to drive additional traffic to drive performance for traffic for the providers that's a piece that's another second piece and the third piece i think is about our vertical strategy so you know our business today is 90 auto 10 home all in the pnc landscape but we look at that home business home we see as an area that's had some nice success for us the past couple quarters up 30 year on year but more importantly i would i would look at the backdrop of the industry as a whole they focus the pnc carriers largely focused on auto recovery first but some of the same factors that impact auto impacted home you you know, coming out of COVID, you know, supply chains, labor costs, those rates have starting to come through. If you've seen your recent home insurance bill, the rates have definitely come through, unfortunately, for us. But it has certainly benefited, made a more favorable environment for us as a company. And the last piece I would look at is just the size of the overall market for us on home is a big driver for us, which is home is a market today that is roughly 10% of our business, 90% is auto. So if you look at the broader industry, it's roughly two to one, auto to home, so there's a lot of growth there. So when you look at the path to a billion, those would be the three. Where we're gonna add additional budget from carriers, we see opportunities to drive additional traffic, and then the third is also on the vertical strategy.

Ralph Schackart, Analyst — William Blair

Great, and then maybe just on the product strategy, obviously your business has evolved quite a bit from certainly when William Blair and others helped take you public. Maybe you kind of walked through that evolution, Jamie, and you talked about the opaqueness of insurance, and then if you could tie in your direct integration to the carriers and how that sort of like differentiates your model within the market.

Jayme Mendal, CEO

Yeah, so over the years what we're trying to do is align the consumer with the provider that's most likely to have the right product for them and then eliminate as much friction as possible given the sort of market structure to get that consumer to a bound policy. That's good for the consumer, it's good for the provider. and so you know i think there was a period of time shortly after the ipo where a lot of the focus was in building building deeper integrations with the carriers so that when a consumer comes to ever quote they can provide all their data one time and then we can basically transmit it via integration and land the consumer on a you know on a quote or as close to that bindable quote as possible and make that truly seamless that again it's better experience for the consumer provider benefits through higher conversion rates and that really helped you know in those early years as we kind of went through the carrier landscape and built out all these integrations help drive performance and growth more recently you know our attention has turned over the last few years to really applying ai to that like that matching process and so you know we we have this product that joseph referenced called smart campaigns that's really meant to take over a lot of the targeting and bidding on behalf of the carriers and agents to make sure that they're really kind of targeting the right consumers that are most likely to convert with them and that they're paying the right price relative to the expected lifetime value and conversion rate of that customer so that their economics are sort of optimal. So that's been like a large thrust of the focus in terms of sort of like the technical and analytical product development. and then you know the other piece that Joseph referenced is particularly for the local agent I think there's also a more of a sort of software value-add service component where you know we've been helping them for many years grow by delivering them leads effectively but if you actually talk to an agent they have you know they work with five to ten different point solutions for different things all oriented towards really just hitting their monthly numbers and growing their agency so over the last couple of years we've begun kind of building out a more comprehensive solution for the local agent that is really meant to be their one-stop shop to help them grow and that's been getting some traction we're now up to you know closer to two products per agent and as we continue to introduce more into that portfolio that that notion of aggregating the the agent's growth budget is very much becoming a key part of the strategy.

Ralph Schackart, Analyst — William Blair

And you quote the metric of number of products per agent or customer. Where do you see that evolving over time? And obviously no discussion be complete without AI. So maybe if you're gonna wrap in how you're using on the product side and then maybe on the operational side for cost savings, maybe kick it off, Jamie.

Jayme Mendal, CEO

Yeah, sure, so product, I think we'd like to get to a place where whatever the agent needs are as it relates to growth so that could be digital marketing it could be leads it could be a lot of calls it could be telephony services it's basically the whole like front office of the agency you know we have a product to meet their needs and I don't know if you know the terminal state for the average agent will be three or five you know different point solutions brought together with every quote but it may be somewhere in in that neighborhood is my guess. Then as it relates to AI, beginning with the product, we referenced Smart Campaigns. So Smart Campaigns is all built on AI. I mean, it was machine learning driven and we're continuing to enhance those models by introducing more data and more attributes, which is improving the sort of precision and the downstream performance for carriers. so that continues to be a big focus and then we've begun to introduce it into some of our like telephony products so all of our you know with AI voice working on behalf of customers now every day and now it's beginning to extend into kind of the traffic landscape and so integrating with some of the AI platforms to help carriers and agents access a lot of the traffic the consumers who are starting their search now through these AI platforms. And there's different ways that we do that through content, through technical integrations, through paid advertising even, which is sort of bringing and making the AI landscape more accessible to the carrier and the agent who tend to be a little slower to adopt new technologies.

Joseph Sanborn, CFO

Maybe the piece I'd add on is when you think about AI, there's sort of two ways we describe it. So Jamie talked about innovation for customers, helping advance the customer, you know, success and driving performance, you know, driving better operations in an agency to drive growth. The other piece is efficiency for us. And sometimes you have both, you know, so great example with the smart campaigns. Smart campaigns helped carriers grow certainly more effectively, will help agents grow more effectively. It also means we need fewer folks to run the account management function because we can automate a lot. So these are examples that sometimes hit both. But when I think an example on AI or a simple one is, you know, we gave the the comment is through 2025 we more than doubled our business with the same cost structure. It reflected that automation driven by AI has been going on under the covers for some time and we continue to do that. And you'll expect, we'll continue to drive that efficiency. At the same time looking for ways we're gonna invest to make sure we drive the innovation for the carrier.

Ralph Schackart, Analyst — William Blair

With the new traffic channels starting more top of funnel, maybe talk about what you're seeing in your marketplace, the extent that you could see different changes is the conversion or just the change in traffic. And then as it relates to VMD, Mark, sort of your thoughts around that as well or how it may impact on it.

Jayme Mendal, CEO

So I'll start with the portfolio of traffic. Our traffic is quite diversified. Our largest traffic partner, not surprisingly, is Google, but that's sub 20% of the overall traffic portfolio. We operate across basically all channels, wherever there's consumers online with some intent for insurance, whether it's video or social or through affiliate programs and partnerships in addition to search and now AI search. So, did I answer the question? Was there a second part?

Ralph Schackart, Analyst — William Blair

Yeah, just maybe what you're seeing from the more top of funnel traffic that's coming today.

Jayme Mendal, CEO

Yeah, so we've mentioned in recent calls that over the last couple of quarters, we've begun re-expanding into some or higher funnel channels. Typically when we talk about higher funnel channels, these are things like video or display, social channels where the consumer is a little earlier in their shopping journey. They're not in market searching for auto insurance now. And we've had some good success. These are channels that we used to run before the hard market. Then when we lost some monetization during the hard market, we pulled out of these channels, mixed category just couldn't really compete. Now that the monetization's back, we've begun sort of rebuilding these channels and then also stepping into some new ones like connected TV. And it's been successful. It's kind of going as planned so far. And, you know, we're working hard to sort of keep pace with, it seems to be insatiable demand from the carriers to grow and consume traffic right now.

Joseph Sanborn, CFO

Just a question a little bit on the margin profile. So VMM, which is we run the business revenue list, advertising expenses for marketing dollars. That divided by revenues is VMM margin. Our VMM margin has been sort of in the high 20s, and we think it'll stay in the high 20s is how we're viewing it. As traffic channels scale, we think they'll get to comparable margins for us. I think it's important to remember the way we run the business, though. In a day-to-day basis, we're solving for VMD dollars, not for margin. We just, over time, what we've, our analysis is that sort of the optimal trade-off between maximum VMD dollars results in a margin in the high 20s. And as we look across the different channels, as you're starting new channels, yes, like in Q4 of last year, we made a comment, we're constantly starting several new channels at once. We expect they'll have some downward pressure. Why does it have downward pressure? Because as you're trying to start channels and scale them and, quote, burn them in, you have to get some efficiency. In Q1, you actually saw the results of our VMM go back up to the high 20s, just as we expected. It did. We shared that news in our May call. And I think that's how we'll see it evolve over time is our expectation.

Ralph Schackart, Analyst — William Blair

Go ahead and pause, see if there's any questions from the audience, we've got about five minutes left. Maybe it's kind of my ending point, and feel free to spend some time on this, but if you're an investor in the room, anything we didn't cover today, or just anything you would like to reemphasize or highlight for investors as they're thinking about the EverQuote story?

Jayme Mendal, CEO

Yeah, I think we've covered a lot of it. We are a team that has performed very consistently. we've sort of in spite of quite volatile market conditions you know we have said what we're going to do for seven years and you know we continue to deliver against those commitments it's a very the business today sort of dramatically healthier than it's ever been it continues to grow at healthy rates you know it's generating a tremendous amount of cash we have a very healthy balance sheet so we feel really well positioned at a time when the industry itself is is very focused on growth and there's quite a bit of opportunity in like the changing landscape as it as it relates to AI we feel extremely well positioned within that to play a very significant role in helping the industry adapt and so I think there's probably you know judging just by how we've traded some trepidation out there about what's going to happen to you know marketplaces or search or this or that but I will say you know we see we've seen the business continuing to perform quite strong and you know we're actively engaged in kind of working through some of the opportunities that I think the changing landscape is going to present and I do expect that Everquilt will end up on the sort of beneficiary side of the ledger as as things play out over the coming years.

Ralph Schackart, Analyst — William Blair

Maybe since we have another minute, I hear I cover all marketplaces, so it's probably not good for job security. But if you're an investor and you're sort of looking at it on the other side in terms of threat, what would be the one or two things you'd highlight? Certainly insurance vertical, the pricing's opaque, but just maybe if you could spend one or two minutes on that in terms of sort of the durability of the marketplace models and the changing landscape.

Jayme Mendal, CEO

Yeah, I mean to your point, I don't think all marketplaces are created equal. i think some are more susceptible to disruption than others i think we're on a very far end of the spectrum where the the category is going to actively resist um the the sort of type of disintermediation that i think some people are concerned about and the carriers are the ones with all the the sort of market power in this industry and i think they're going to be looking for sort of trusted partners to help them navigate their way through this because at the end of the day, they do want all the people who are shopping for insurance and ChatGPT to end up, you know, binding a policy with them. They just don't want it to be through a process that they don't control and submits them to some kind of rate comparison experience. So for us, I think that there's an opportunity to play that sort of trusted intermediary role where we're building, you know, both technology and relationships on both sides with the AI platforms and with the carriers and and local agents themselves to help bridge that gap in a way that works for this industry.

Ralph Schackart, Analyst — William Blair

That looks like a question.

Jayme Mendal, CEO

I think in the U.S. it's probably more similar than different, you know, different, once you get outside of the U.S., which we don't operate outside the U.S., but it's very different market structures. I think in the U.S. it's more similar than different. You know, the key difference with homeowners is it tends to be a far more complex buying process If you look today, there's still a lot more of the homeowner's buying that happens over the phone than auto, and both still often fall off to the phone, but it's especially true at home. So I think that one will be sort of having even more kind of friction or difficulty kind of moving into a true AI-native type model. Today, well, we monetize, our revenue, we would classify about 90% as auto revenue, and some of that are auto, people shopping for auto insurance who own homes, who get cross-sold by the providers, a lot of that is. But we, because it's sort of, the primary intent is on auto, we would classify that as 90%.

Joseph Sanborn, CFO

I guess one of the reasons we're so bullish on home, is the thing about the evolution. another factor is the complexity of that sale will end itself well as we give the AI evolution we're home we think we will continue to be important through that

Ralph Schackart, Analyst — William Blair

process fortunate out of time thanks for the interest in EverQuote Jamie and Joseph thanks for attending thank you appreciate it thanks thank you