Executive Summary

Revenue grew 18% year over year to $306.3M, with organic revenue growth of 19% and Adjusted EBITDA up 53% to $64.0M; Adjusted EBITDA margin expanded 480 bps to 21% .
Management updated Q4 and full‑year 2023 guidance (Q4 revenue $275–$285M, Adjusted EBITDA $40–$45M; FY23 revenue $1.21–$1.22B, Adjusted EBITDA $245–$250M), citing Juniper Re start‑up costs, conservative assumptions for loss‑ratio sensitive contingents, and softer project‑based insurance in IAS .
Strong UCTS and Mainstreet execution (UCTS +25% organic, MIS +29% organic) offset IAS headwinds tied to client sensitivity to rate increases and weaker project/M&A activity; leverage improved to ~4.8x on EBITDA growth .
Subsequent event: retirement of Chief Strategy Officer and Chief Partnership Officer effective year‑end 2023, with ~$8M one‑time costs in Q4; compensation/bonus structure detailed in 10‑Q, potentially a catalyst for sentiment re leadership transition .

What Went Well and What Went Wrong

What Went Well

Margin expansion and cash generation: Adjusted EBITDA margin rose to 21% (+480 bps YoY); YTD free cash flow reached $76.0M despite higher interest paid, reflecting operating leverage and cash discipline .
Segment execution: Q3 organic growth at UCTS (+25%) and MIS (+29%); renters/homeowners MGA products drove UCTS strength, with intercompany pass‑throughs aligned with QBE Program Administrator Agreement .
CEO tone on momentum: “Robust underlying health, momentum and operating leverage… organic growth of 19% and approximately 480 basis points of margin accretion…” .

What Went Wrong

IAS softness: Client sensitivity to two years of rate increases and weaker project/M&A activity pressured IAS new business; organic growth in IAS was 11% vs stronger UCTS/MIS prints .
Higher interest burden: Net interest expense increased to $30.6M in Q3 (from $20.8M prior year), with year‑to‑date interest expense of $87.6M amid higher rates, dampening GAAP profitability .
Fair value losses on contingent earnouts: Change in fair value of contingent consideration was a $13.9M loss in Q3 and $55.1M YTD, as measurement dates approached and partner growth trends shifted .

Financial Results

Metric	Q3 2022	Q2 2023	Q3 2023
Revenue ($USD Millions)	$259.4	$297.2	$306.3
GAAP Diluted EPS ($)	$(0.43)	$(0.40)	$(0.29)
Adjusted Diluted EPS ($)	$0.18	$0.27	$0.29
Adjusted EBITDA ($USD Millions)	$41.9	$61.6	$64.0
Adjusted EBITDA Margin (%)	16%	21%	21%
Organic Revenue Growth (%)	28%	22%	19%

Segment revenue breakdown (commissions and fees):

Segment	Q3 2022 ($MM)	Q3 2023 ($MM)
Insurance Advisory Solutions (IAS)	$130.2	$144.4
Underwriting, Capacity & Technology Solutions (UCTS)	$97.9	$118.4
Mainstreet Insurance Solutions (MIS)	$47.8	$62.3
Corporate & Other (Intercompany eliminations)	$(16.6)	$(18.8)
Total	$259.4	$306.3

KPIs and balance sheet/cash:

KPI	Value
Cash & Equivalents (9/30/2023)	$79.0M
Revolver Availability (9/30/2023)	$276.0M
Net cash from operations (YTD)	$22.8M
Free cash flow (YTD)	$76.0M
Leverage (Mgmt commentary)	~4.8x

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	Q4 2023	Not disclosed	$275–$285M	Maintained range vs internal plan; explicit update shared
Organic Growth	Q4 2023	Not disclosed	12%–14%	Maintained vs internal plan
Adjusted EBITDA	Q4 2023	Not disclosed	$40–$45M	Updated due to Juniper Re start‑up costs and contingents (lower)
Adjusted EPS	Q4 2023	Not disclosed	$0.10–$0.12	Updated (lower)
Revenue	FY 2023	Prior plan (not quantified)	$1.21–$1.22B	Updated; implies modest reduction
Adjusted EBITDA	FY 2023	Prior plan (not quantified)	$245–$250M	Updated (lower)
Organic Growth	FY 2023	Not disclosed	“High‑teens”	Maintained
Initial 2024 view	FY 2024	—	Revenue $1.38–$1.42B; Adjusted EBITDA $320–$335M; FCF $170–$200M	New outlook disclosed

Drivers of update: Juniper Re start‑up costs, conservative view on loss‑ratio‑sensitive contingents, continuation of lower project‑based insurance revenue in IAS .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 2023)	Previous Mentions (Q2 2023)	Current Period (Q3 2023)	Trend
Technology/MGA of the Future	Investments moderated; focus on tech/talent; Adjusted EBITDA in line; ADJ EPS slightly better	“Deep investments… to scale the business… bear fruit… margin and earnings profile in second half”	Two new MGA products launched (HNWI homeowners up to $10M RV; habitational Commercial Property); UCTS organic +25%	Building product suite; delivering growth; margin accretive
Macro rates/Interest sensitivity	Noted operating leverage, strong organic growth across segments	De‑leveraging progress; positioning for opportunities	IAS softness from client rate sensitivity; higher interest expense YoY; hedged with interest rate caps	Rates weigh on IAS and interest costs; hedging mitigates
Segment performance	Double‑digit organic across all segments	22% total organic; expected margin expansion in H2	IAS +11% organic; UCTS +25%; MIS +29%; intercompany flows via QBE program	Mixed: strength in UCTS/MIS; IAS softer
Reinsurance (Juniper Re)	—	—	Launch impacts Q4 (start‑up costs); specialty treaty focus initially; housed in UCTS	New strategic capability; near‑term cost drag; long‑term optionality
Executive changes	—	—	CSO & CPO retirements; ~$8M one‑time Q4 costs; bonus/compensation structure detailed	Leadership transition; Q4 earnings neutral via accounting offsetting mechanisms (earnouts)

Management Commentary

CEO (press release): “Robust underlying health, momentum and operating leverage… organic growth of 19% and approximately 480 basis points of margin accretion versus the third quarter of 2022… growing contribution from prior investments and ongoing efforts to drive greater free cash flow” .
CFO (call): Segment organic growth contributions (IAS +11%, UCTS +25%, MIS +29%); Q4/FY23 guidance update and rationale; earnout compensation neutrality to Adjusted EBITDA reconciliation .
CEO (call on Juniper Re): Initial focus on specialty treaty (CAT property programs), with strategic expansion over time; Juniper Re will be in UCTS .

Q&A Highlights

Earnout compensation accounting: Management highlighted potential Q4 compensation expense up to $15M for maturing earnouts, neutral to Adjusted EBITDA via reconciliation offset; helps clarify modeling implications .
IAS environment: A few million dollars attributed to lower project‑based insurance revenue and client rate sensitivity; informs Q4 guide .
Juniper Re placement: Housed in UCTS; specialty treaty focus initially; strategic build‑out over time .
2024 initial view: Revenue $1.38–$1.42B, Adjusted EBITDA $320–$335M, FCF $170–$200M; underscores confidence in medium‑term trajectory .

Estimates Context

S&P Global consensus data was unavailable due to a mapping constraint for BRP in our SPGI/CIQ company map; as a result, we cannot provide official S&P consensus comparisons for Q3 2023.
Third‑party coverage indicated adjusted EPS consensus ~$0.28 and revenue ~$303.2M, versus reported $0.29 and $306.3M, implying a modest beat on both lines .

Key Takeaways for Investors

Mix shift benefits: Strong execution in UCTS/MIS and MGA product momentum support top‑line growth and margin accretion even as IAS faces macro‑driven headwinds .
Near‑term drag, long‑term optionality: Juniper Re start‑up costs temper Q4/FY23 Adjusted EBITDA, but reinsurance capability broadens platform and potential earnings power in UCTS .
Cash discipline and leverage improvement: Free cash flow generation and EBITDA growth reduced leverage to ~4.8x; revolver availability of $276M provides flexibility for earnouts and investment .
Interest-rate exposure contained: Higher interest expense is a headwind; caps mitigate variability on $1.5B notional through 2025, but rates will continue to affect GAAP earnings .
Watch Q4 one‑timers and contingents: Earnout compensation accounting neutrality and conservative contingent assumptions are key to interpreting Q4 Adjusted EBITDA trajectory .
2024 setup: Initial view (revenue $1.38–$1.42B; Adjusted EBITDA $320–$335M) suggests continued double‑digit organic growth and margin expansion potential if IAS headwinds moderate and UCTS/MIS momentum persists .

Notes and sources:

Q3 2023 8‑K press release and exhibits (financial statements, non‑GAAP reconciliations, liquidity/capital resources) .
Q3 2023 10‑Q (segment details, MD&A, interest rate caps, subsequent events) .
Q2 2023 and Q1 2023 8‑Ks (trend analysis) .
Earnings call transcript PDF and IR press release (guidance updates, segment organic metrics, IAS commentary, Juniper Re) .

Baldwin Insurance Group, Inc. (BRP)·Q3 2023 Earnings Summary