Good morning, everyone. We're going to get started. Thank you all for joining us today. I'm Maria Ripps, Internet Analyst here at KianaCore Genuity, and it's my pleasure to introduce Jamie Mendel, CEO of EverQuote, and Joseph Sandborn, CFO. Gentlemen, thank you so much for joining us today.

Thanks for having us.

Well, let's kick in with this exciting announcement last night with your partnership, exclusive partnership. where you did exclusive partnership and took minority stake investment in funny funny I think I pronounced that right so just give us an overview of that platform what does this mean for your sort of for your platform how does it strengthen your capabilities and just talk about what this means yeah so Waniwani is an infrastructure layer that helps companies and regulated industries distribute their product through AI and AI platforms and as you know the insurance

distribution landscape continues to evolve you know we feel it's important that we start to carve out our position in the AI value chain and so this is you know one of a number of things that we're doing some of which you know will be through partnerships some of which will be through things that we build to really take a leadership position in establishing our position in that AI value chain and helping carriers and agents evolve their distribution capabilities for I think where you know where the world is going great and how should investors think about the impact to your P&L as a result of this I don't know on the revenue side and expense side anything

else you would highlight?

Yeah, I would say is as we think about Q3, thoughts for Q3 are reflected in the guidance we gave. I think as we think about going forward, we see this partnership as well as a lot of the things we have in the works as part of, you know, there'll be big growth drivers for us as we get to, you know, 2027, 2028, and 2029. And so we'll be talking more about those as we progress. I'd say in near term, reflecting what we've said in our guidance, but I would say it really represents this opportunity for us as Jamie said to think about how we're gonna carve out a leadership position as this world is evolving with AI we think we're in a very unique spot to do that you know we've had long trusted relations with our carriers and they're looking to us they help us guide us in this era and so we think that's an exciting part for us and I think that'll be important to our business we'd look ahead to the future right so maybe we can turn to a question that I think is top of mind for a lot of investors which which is AI and this intimidation risk.

So we know that insurance is a vertical that's highly regulated. It's regulated state by state and sort of needs real time carrier sort of integrations. And this is something that's not easily, can be easily replicated by LLMs. Sort of how do you think about AI as a threat versus a tailwind? And what are you leaning in the most kind of on the opportunity side?

Yeah. As soon as you mentioned, the insurance market is unique in a number of ways. It's regulated. It's regulated at the state level. And importantly, the carriers themselves have never and continue to not support public rate transparency. They want to own the quoting and sales conversation themselves or through one of their appointed local agents. And as the landscape shifts, every conversation we have with the big direct carriers just reinforces what we already knew, that they do not plan to expose their rates to AI agents or to LLMs. so with that you've got this sort of imbalance in the market where you know the carriers continue to favor sort of friction or you know owning that that conversation with the consumer but the consumers who are increasingly going you know online to loms in the future maybe you know agentic shopping is is more a part of the ecosystem but there's this imbalance and this is where we feel every quote can play a role in that value chain. We understand the sort of needs and preferences of the carriers and of the agents. We have integrations that allow us to connect the digital shopper with them in a way that works for them. And we think there's an opportunity to really build a bridge between LMS and agentic shopping in the future and insurance distribution in the way that the industry would like it to persist.

And maybe talk about some of your initiatives that you're investing in on the AI traffic side. And what are those and sort of what do they mean sort of in terms of your broader sort of customer acquisition efforts?

So on the customer acquisition side, we have historically not built a sort of organic search traffic program. All of our traffic today is programmatic paid customer acquisition. So as this traffic pool begins to sort of grow in AI search, we view it as an incremental pool of traffic to, forever quote, to access. And there's a number of ways you can access it. The first is through a content strategy that is really purpose-built and designed for how the LLMs want to consume information. Number two is through technical integration, so you can build applications within the platforms. And the third is through paid advertising. And we're pursuing all three. We have a dedicated team and effort whose primary objective is to access traffic flow through the LLMs. And it'll be a combination of these three things over time that we think will sort of be the winning combination depending on the platform and depending on how each of the platforms evolves.

Maybe let's talk about the paid advertising sort of aspect, which is really just chat GPT at this point in terms of LLMs, right? So just talk about where you are with that sort of, with that channel, and what would give you confidence to scale that more? And is it really kind of, is it contributing at this point yet?

Yeah, all these pilots are running at a relatively small scale. I mean, except for Google, which is finding ways to sort of integrate it into their results. In the case of OpenAI, in the case of LLM traffic broadly, I think what we see is consistent with what the industry sees, which is, you know, kind of relatively low volume, but high performance or high conversion. So it's very early days. I think it's, you know, immaterial at this point. But as they open up paid advertising to more and more traffic, we think it's going to be a large opportunity. Now, the question is, what format will this advertising take? You know, their sort of version one is more just kind of like links out, right, which sort of feels a lot like traditional Internet advertising. Now, you know, OpenAI is maybe talking more about application-based advertising. So you're actually, you know, creating an advertising application that takes the consumer from OpenAI into a conversational flow that you are owning. And that's where some of our experience now having sort of built and deployed apps into the ChatGPT store, I think will be helpful. My sense is that's probably more likely where things go for a company like OpenAI, but it's all changing. It's moving very quickly. So, you know, we'll see how it develops over the next year or so.

Got it. Interesting. So let's talk about the industry more broadly. So we've been in a soft market cycle for some time here. Can you walk us through how sort of combined ratios have trended recently across your carrier base? And sort of how, just talk about your carrier sort of willingness to spend more and to acquire policies more aggressively.

Sure. So I think, let's say broadly, the industry's healthy, right? And we started the year with that backdrop for the industry that was very healthy. That continues to be the dynamic. We don't see that changing in the foreseeable future. And I think that's reflected by combined ratios. They're generally sort of in the 80s for a lot of carriers, depending on, you know, where you look at each carrier, but broadly healthy. If you put that in context, you know, for those of you who are new to the industry, what does that mean? You know, some carriers talk about, you know, being in the mid-90s as a goal. Some actually operate in the high 90s and consider that. healthy. So there's quite a bit of room there. I think that what that means is that the industry is very healthy, and they're now focused on growth. What they've said to us since the start of the year, and they continue to say, is we want to grow policies in force, and that's obviously a very favorable backdrop for EverQuote. So that's the dynamic for us broadly. I would say the other piece I would say is as we see the industry recovery, it's broadening out very much as we expected. When we talked about this last year, we said we'll see a broadening out. It has played out, you know, along the lines that we expected. What we had in Q2 was the growth was really driven by our top five carriers within the marketplace. A couple things to highlight there. One carer who had really been out of digital acquisition broadly until really the start of this year, but really leaned in meaningfully in Q2. We said they would, they did. They became one of our top five carriers again. And we thought that was a sign of reflecting that the health is not just one carrier who led the pack initially, it's broadening out. What is interesting to see is carriers 6 through 20 have not been participating as much in the growth we saw in Q2. You had this sort of fierce competition amongst the largest carriers. And it's not that 6 through 20 don't want to grow. They've been very clear they want to grow. They're just getting outbid right now in various dynamics in our market. We think that'll be interesting to see how that unfolds. We think that's a healthy sign for broadening out even further as we progress through the year.

Well, that was going to be my next question. How do you see this broadening sort of unfolding? Like if you look at your top 10 versus the sort of the longer tail, how do you think sort of where do you think we're going to be like, let's say, a year or so from now?

So I would say, I guess, I would say when we think about the carriers, you know, it's really a question of how aggressive they will be relative to each other. So their intent is they're all saying they want to grow. The question we will see is how exactly does that manifest on how they bid and how aggressive they are in given states. And we think, you know, you never know exactly how the industry will play in a given quarter, but over time it's hard to imagine the 6 through 20 will not be finding out a way to get into that as well. You know, it's one thing to be behind the largest carriers for a quarter, two quarters. At some point that competition kicks in as well. Because remember, if you're a carrier CEO, you really have two jobs in life, right? One is to get underwriting profitability, which they focused on for the past two or three years. They got that through last year with a lot of rate increases. The second thing is maintaining and growing policies in force. And so every carrier C-suite is worried about that now. And so I think that will result in more broadening out over time. How exactly it will play out, we'll see in a quarter-to-quarter basis. What's interesting about our business is it's really not CARA is operating in a national way. It's really operating in 50 individual markets. And in any given quarter, puts and takes can take place based on that competitive dynamic. But I think, again, it's a very good backdrop for us.

Got it. So we've also seen some rate relief initiatives across a few states. New York is one example. How should investors think about the impact of those initiatives on carriers, again, willingness to spend and just broadly on consumers? And are there any other states to keep in mind?

No, and we haven't felt a material impact from that. I think we're now in a stage of the sort of market cycle where we're at relative stability and underwriting profitability. And so in these more normalized times, there's always something going on in one state or another state, but it's really kind of at the margin for the marketplace. And so while I think that we have had such intensive focus on what's going on in the key states as we're waiting for carriers to sort of reinitiate and start spending again, at this point, I think we just expect it to be a more normalized environment. It'll be kind of ebbs and flows, depending on a number of factors, but nothing that we foresee materially impacting the performance of the business.

Got it. So if we look at the sort of industry more broadly, it looks like carriers have historically been slower to shift ad spend online. Do you think that sort of AI and all the sort of progress we're seeing there, do you think that's helping to accelerate that transition?

I think it's less about AI. I think it's more about carriers building competency in digital customer acquisition. and by that I mean things like how well do their digital quoting funnels convert? How adept are they at receiving data integration, passing, receiving data from partners like us? How well are they able to figure out how to route a consumer between a local agent and a digital binding workflow? So it's these things that the carriers have been, you know, focused on really for the last 10 years, but now in this pressurized environment where they're feeling, you know, well, they're feeling a lot of pressure to grow, you're seeing them sort of accelerate the rate of investment in optimizing the digital funnels. So that, to me, is more the kind of tailwind in terms of the shift from analog channels to more digital channels than AI per se. now they're all paying attention to ai and trying to figure out how to you know what's the right way to engage but that to me still feels a little bit more um kind of speculative you know they're still trying to they're trying to make some determinations and decisions about what to do there more than you know leaning in so i i see the former impacting the business more than the latter at this time got it so let's uh let's switch gears and talk about your product initiatives let's and And let's start with Smart Campaigns, which continues to show pretty strong results.

Maybe just for the broader audience, talk about that product. What are some of the key features and what's driving growth?

So Smart Campaigns, for those who are less familiar with it, is our AI bidding product. So when a consumer comes to the marketplace, we gather all the relevant underwriting information about that consumer. We're then able to sort of expose it to the carrier at the time they place a bid. they decide do I want to sort of compete for this person and if so how much am I willing to pay now historically the carriers have managed their own bids their own campaigns either manually or using their own sort of decision models and over time you know we have concluded that we can do this better than the carrier can in some cases because we we are sort of more capable in this area but in in many cases it's simply because we have better access to data than they do so our Their models are trained on data that they don't have access to. And we've had a big push over the last few years to get more and more carriers to adopt smart campaigns and let go of the bidding. When they do that, what it requires is for them to feed us back a lot of outcome data. So did this consumer quote, did this consumer bind, what was their LTV? So they're sharing a lot of sensitive data with us. We're able to use that and optimize their bidding models. and ultimately deliver them better performance. In some case, we'll actually guarantee or stand behind that performance in a certain way that allows us to access more budget. So the net effect of all this is carriers get better performance, we get more budget, and we sort of end up in a position where we have just a much deeper and more tightly integrated kind of high-trust partnership than we had at the outset. So... it's been a journey to get carriers to adopt this because it requires them to share a lot of sensitive data and give up control. And it began with some of the smaller carriers, some of the more sort of tech forward carriers, kind of the insure tech type carriers. But over the last couple of years, as some of the larger, more established carriers have felt a lot of pressure to figure out how to grow and grow efficiently, we've started to see some of the majors now adopting smart campaigns, and that's driven a lot of growth in the last year or so.

Are you able to share sort of what percentage of platform spend is flowing through smart campaigns?

So right now, seven of our top 10 carriers are on smart campaigns. Let's start with that stat. I'd say in terms of spend, we haven't talked about it specifically as a stat. I would say it's the majority of carriers using it broadly. In terms of revenues, it is meaningful, but it is not the majority yet. One thing I would note is as you think about how carriers work with us, They often start with something and they add more. And so what we've seen with smart campaigns is, like many other initiatives we have, is they say, geez, we're not willing to do that. Okay, maybe we should try that because the other guy did pretty well with it. Okay, that's working better than we thought. Let's put more spend on that. And so that's been the evolution for us. But I think you'll see us sharing more details as we progress through the second half of the year.

That's helpful.

And then you just recently rolled out smart campaigns for agents. maybe talk about that offering and just what that means for the span on the platform yeah it's it's similar in concept but the the actual feature sets simplified for the local agent so we're sort of evolving that agent relationship where they opt in to one which is you know having pricing per lead be more dynamic relative to the actual performance of that lead and relative to their cost per sale targets or whatever targets they have so it performs sort of a similar function with the agent it's just a simplified application we did a lot of testing with agents over the last year to try and figure out what's the right balance of sort of simplicity and robustness and you know we've finally found what we think is the right spot we've got it in market in a couple of states now and with plans to expand significantly in the back part of the year.

Got it. So let's talk about verticals. Your home and renters vertical is now over 10 percent of total revenue, I believe, growing nicely. What's driving growth there?

Sure. So just our home vertical, folks who are familiar with us, is so, you know, our home vertical, 12 percent of business in Q2, and it's grew 35 percent year-on-year. So another second quarter in a row we've had 30-plus percent growth. We view, we're really excited by the opportunity in home, In the medium-term time horizon, we see it'll be a faster grower than auto. It's obviously faster right now, but in the medium term, you'll see it as even a relatively larger contribute to the marketplace. Maybe what's driving a little bit of the backdrop. So you think about the macro opportunity around home. If you look at today, carers in the home market are roughly half the size of the auto market. For us, it's sort of this 90-10%. So between 10% and 50% or 12% and 50%, we have a long way to go. And so we're excited by that opportunity. One of the things that's enabled us to do it is one is the backdrop with carriers. They're trying to lean in more to home. If you could think about many of the carriers who do auto also do home, they prioritize getting rate adequacy in the auto marketplace. Think about digital acquisition there. They've now been shifting in the past year to home. So we're sort of benefiting from that backdrop. We think that will continue. The other thing I would say is from an organizational point of view, we have put a lot of effort into this. We've talked about, going back over a year, how we put operational steps in place, a new plan. And in many ways, we wanted to get home to parity with auto, but we said, what are the things we can do to make home? It's reflected. There's a lot of things we can leverage that are similar from a technology infrastructure, but there are things that are different. What are the things we have to do to optimize traffic, optimize the distribution for that home environment? And our teams are doing a really nice job of that, which is also supporting that growth. So we're bullish on that as we continue to progress.

Are there any other verticals that could be of interest to EverCloud?

So our focus remains in PNC, so property and casualty insurance. And historically, that's been primarily auto and homeowners. We are seeing customer demand or appetite increase for other products within these markets. so that would include things like ancillary personal lines you know like toys rv motorcycle boat things like that as well as small business commercial so those are vertical markets that you know we will likely get pulled into by our customers uh over time and the idea is you know again we want to be the leading growth partner to pnc insurance providers so i think um you know Getting into those vertical markets will help, and it will help deepen the relationships with a lot of our existing customers.

Got it. So let's touch on financials for a couple of minutes before we wrap up. Last fall, you shared your target of reaching a billion or over a billion in revenue within the next two or three years. Can you maybe talk about some of the drivers there and sort of what would determine how quickly you get there?

So just to remind folks, we shared our first target publicly to be a billion-dollar business in our remember earnings call. We said it would be a billion-dollar business in two to three years. So nine months in, we remain confident of that goal, except it will be in 15 months to 27 months. Now we're less than nine months. So we still feel good about that goal. And I think what's driving it, you know, three things, I'd say. First is, you know, better performance. You know, how do we help carriers do better in acquiring consumers online? and we think we continue to invest in those areas, the platforms that drive that, how we leverage our data. The second is bigger, and obviously that's getting more traffic. We're investing in new traffic sources we've talked about. We're also getting more provider budget. Smart campaigns is a good example of that, whether it be on carrier agents, but broadly making it a bigger, getting scale. And third is this idea of broader, providing more products to carriers and agents to help grow their business. We've talked about how we're bringing out more products per agent. Historically, you know, if you go back three years, we were basically one product, an online to offline connection to an agent. Today, we're at, you know, 1.4 plus products per agent as we bring in new tools to help them grow their business. You know, helping with their local marketing presence, for example, in the digital environment. How do we help them do that? So examples of ways we're getting broadening the relationship and doing more for them, we think that's important. And those are the three big drivers. And, of course, another driver for us is we think about that billion-dollar target. It's the idea of achieving revenues, but also expanding levels of profitability. So the fourth leg is also efficiency. How do we continue to drive efficiency in our operations, which often comes to our investments in automation and AI? And so those are the big pieces that drive that.

Great. I think we have roughly 30 seconds left here, but I want to see if there are any questions from the audience. Go ahead.

Yeah, yeah, so typically they will, sorry, the question is when a carrier uses smart, when they adopt smart campaigns, do they win more? Is that right? Right, yeah, so typically what we see is a performance improvement to the tune of 10 to 20%, in some cases 20% plus, and then typically what they'll do is if they're getting what's called 15% more efficiency in their ad spend through that campaign is they'll reinvest it in the form of more budget so they can win more volume at the same cost per sale target. Correct, correct. Although, yes, but typically as they win, they'll win more, they'll reinvest more budget into the marketplace. And that will allow us to go back into the traffic landscape and acquire more traffic for everyone. But yes, in like a fixed point in time, they would take share as a result, they would take share in our marketplace as a result of improved performance and increasing their budget. That's right, and that's what Joseph was pointing out, is there is this cycle where, you know, a carrier is holding out because they want to control bidding or they don't want to share the data, but as more and more other carriers adopt it and get the benefits of it, you know, they start to feel more pressure and probably have more confidence that it's actually going to work them to allow us to at least get into a test and then we prove it from there all right with that we are out of time gentlemen thank you so much for joining us and thank you all for coming thank you