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EI

EverQuote, Inc. (EVER)·Q3 2024 Earnings Summary

Executive Summary

  • Record Q3 performance: revenue $144.5M (+163% YoY), VMM $43.9M (+127% YoY), adjusted EBITDA $18.8M; GAAP net income $11.6M with strong cash from operations $23.6M .
  • Auto vertical reaccelerated to $130.0M (+202% YoY), Home & Renters $14.1M (+30% YoY); enterprise carrier spend increased sharply as auto underwriting profitability improved .
  • Q4 2024 guidance: revenue $131–$136M, VMM $38–$40M, adjusted EBITDA $14–$16M; management anticipates typical seasonal sequential decline Q3→Q4 and modest VMM margin pressure as FCC one-to-one consent preparation begins .
  • Key stock narrative catalysts: accelerating carrier reentry and budget restoration, AI-powered bidding and agent platform rollout, regulatory TCPA/FCC transition in Q1 2025 (short-term headwinds, quality uplift), and potential upside as larger states (e.g., California) regain rate adequacy in 2025 .

What Went Well and What Went Wrong

What Went Well

  • Record results exceeded high-end guidance for revenue, VMM, and adjusted EBITDA; management cites auto industry recovery, strong execution, and AI-powered bidding as drivers .
  • Enterprise carrier spend increased over 40% sequentially and nearly 8x YoY, with VMM margin at 30.4% and adjusted EBITDA margin at 13% demonstrating operating leverage .
  • Cash strength and cost discipline: operating cash flow $23.6M; cash and equivalents $82.8M (up 36% vs Q2), with annualized rent expenses expected to fall ~40% in 2025 after office footprint changes .

What Went Wrong

  • Anticipated modest downward pressure on VMM margin amid a more competitive ad environment and regulatory testing tied to FCC one-to-one consent changes .
  • Hurricanes Helene and Milton caused temporary regional spend pauses late Q3/early Q4; while carriers resumed quickly, this introduces near-term unpredictability .
  • Q4 guidance implies seasonal sequential decline from Q3 to Q4; without FCC impacts, auto would be closer to flat sequentially, but management still expects down Q/q due to holiday seasonality and carrier behavior .

Financial Results

Consolidated Financials vs Prior Year and Prior Quarter

MetricQ3 2023Q2 2024Q3 2024
Revenue ($USD Millions)$55.0 $117.1 $144.5
GAAP Net Income ($USD Millions)$(29.2) $6.4 $11.6
Diluted EPS ($USD)$(0.87) $0.17 $0.31
Variable Marketing Margin ($USD Millions)$19.4 $36.5 $43.9
Adjusted EBITDA ($USD Millions)$(1.9) $12.9 $18.8
Operating Income ($USD Millions)$(29.4) $6.3 $11.7
Cash from Operations ($USD Millions)$(4.1) $12.4 $23.6
Cash & Equivalents ($USD Millions, end of period)$39.0 (incl. restricted) $60.9 $82.8

Margins

MarginQ3 2023Q2 2024Q3 2024
VMM Margin %N/A31% 30.4%
Adjusted EBITDA Margin %N/A11% 13%

Segment Revenue Breakdown

Segment ($USD Millions)Q3 2023Q2 2024Q3 2024
Automotive$43.1 $102.6 $130.0
Home & Renters$10.9 $13.9 $14.1
Other$1.0 $0.6 $0.4
Total$55.0 $117.1 $144.5

KPIs and Operating Metrics

KPIQ3 2023Q2 2024Q3 2024
Enterprise carrier spend commentary-+42% seq.; >3x YoY +40% seq.; ~8x YoY
Agent channel revenue YoY-+ (Strong performance) +30% YoY
Home/Renters revenue YoY$10.9 $13.9 (+29% YoY) $14.1 (+30% YoY)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)Q4 2024N/A$131.0 – $136.0 New
Variable Marketing Margin ($USD Millions)Q4 2024N/A$38.0 – $40.0 New
Adjusted EBITDA ($USD Millions)Q4 2024N/A$14.0 – $16.0 New

Management context: expects typical seasonal sequential decline Q3→Q4 and modest VMM margin pressure due to FCC preparation; adjusted EBITDA margin moderating to near Q2 levels .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2024)Current Period (Q3 2024)Trend
AI/ML bidding & tech platformMigration to ML-powered bidding; streamlining platforms; agent platform progress AI-powered bidding credited for maintaining VMM; major release of new agent platform; site platform transition complete Execution accelerating; tech moat strengthening
Auto carrier recoveryFront-loaded recovery; carriers reactivating campaigns, restoring budgets, states reopening; peak auto levels implied in Q2 guide Recovery broadening; enterprise spend +40% seq.; carriers reentering, expanding footprints; hurricanes caused brief pauses Sustained recovery; near-term pauses manageable
Regulatory (FCC TCPA one-to-one consent)Identified change effective Jan 2025; affects 25–30% of business (agent/telephonic); testing underway; likely lower volume, higher monetization Transition in progress; expect muted Q4→Q1 seasonal step-up; short-term unpredictability; agents pay more for higher-quality leads Short-term headwind; quality uplift; net neutral to positive medium term
State rate adequacy (e.g., CA)Large states timing TBD; some may be 2025 Expect CA more meaningfully in 2025; NY showing early movement 2025 catalyst
Agent channelQ1/Q2: subsidies returning; strong growth; independent agent focus Double-digit growth; approaching record revenue; captive carriers encouraging growth Strengthening
Home/RentersRecord home revenue Q1; strong Q2 despite elevated cat losses +30% YoY; balanced traffic and monetization; underlying combined ratios improving Improving backdrop; steady execution
Cash and capital allocationCash build; considering selective M&A aligned to P&C, focus on FCF Continued cash build; future M&A optionality amid private market dislocation Optionality increasing

Management Commentary

  • “We delivered record third quarter results for revenue, Variable Marketing Margin, or VMM, and Adjusted EBITDA that once again exceeded the high-end of our guidance range… optimize our traffic operations, improve our AI-powered bidding solutions, and roll-out our next generation agent technology platform.” — CEO Jayme Mendal .
  • “We produced a record level of revenue and net income as well as a record level of adjusted EBITDA and operating cash flow… due to continued strong execution… against an increasingly favorable auto carrier landscape.” — CFO Joseph Sanborn .
  • “VMM… remained strong at 30.4%… we expect modest downward pressure on VMM as a percentage of revenues.” — CFO .
  • “We are in the process of implementing… one-to-one consent… expect to complete the process by… January 2025.” — CEO .

Q&A Highlights

  • FCC TCPA impact: ~25–30% of business (agent/offline leads) exposed; expect lower lead volumes but higher pricing due to better performance/quality; Q4→Q1 step-up muted; VMM margin may see early-year pressure before normalizing mid-2025 .
  • Carrier recovery breadth and duration: recovery driven by a limited number of carriers so far; more carriers and geographies expected to expand in 2025, with CA a notable 2025 catalyst; management views recovery mid-to-late innings .
  • Technology platforms: ML-based bidding now drives majority of traffic bidding; new agent platform released to thousands of agents with integrations into agent management systems; accelerates feature rollout .
  • Cash build/use: business is cash-flow positive; considering selective M&A to accelerate P&C strategy amid private market dislocation; disciplined ROI and FCF focus .
  • Q4 seasonality and FCC prep: absent FCC, Q3→Q4 would be closer to flat; holiday seasonality and carrier pullbacks drive typical sequential down; select carriers increasing spend offset some declines .

Estimates Context

  • Wall Street consensus (S&P Global) for Q3 2024 EPS and revenue was unavailable due to SPGI daily request limits; therefore, explicit beat/miss vs consensus cannot be determined at this time. We attempted to retrieve “Primary EPS Consensus Mean” and “Revenue Consensus Mean” for Q3 2024 and prior periods, but SPGI returned a “Daily Request Limit Exceeded” error. Values could not be fetched from S&P Global.
  • Given record results and management’s statement that results exceeded high-end guidance, sell-side estimates may need to revise upward for Q4 and 2025 on revenue, VMM, and EBITDA trajectory, while modeling modest VMM margin pressure tied to FCC changes in early 2025 .

Key Takeaways for Investors

  • Strong operational leverage: Record Q3 with adjusted EBITDA margin at 13% and VMM margin at 30.4%; cash generation robust, supporting optionality for investment/M&A .
  • Auto recovery remains the core driver, with enterprise spend up sharply; breadth of carrier participation likely to expand in 2025 as rate adequacy improves in large states (e.g., CA) .
  • Near-term headwinds from FCC one-to-one consent: expect muted Q4→Q1 seasonal step-up and modest VMM margin pressure; medium-term product quality and monetization improve, benefiting agents and marketplace economics .
  • AI/ML-powered bidding and new agent platform create a durable tech moat, enabling sustained VMM margin resilience despite a competitive ad environment .
  • Home & Renters vertical shows consistent execution with improving underwriting backdrop; potential secondary growth lever alongside auto .
  • Seasonality matters: Q4 typically sequentially down due to holidays and carrier behavior; management’s Q4 guide aligns with historical patterns and internal FCC preparation timeline .
  • Watch catalysts: additional carrier reactivation/footprint expansions, hurricane/cat loss impacts, FCC changeover execution, and any strategic M&A aligned to P&C focus .