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Hagerty, Inc. (HGTY)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue rose 19% year over year to $291.7M, with Earned Premium up 14% and Membership/Marketplace/Other revenue up 68%; Adjusted EBITDA was $19.9M (+$10.2M y/y), while Net Income was $8.4M (-6.7% y/y) .
  • Marketplace revenue surged 329% y/y to $16.0M; HDC paid members reached ~876K (+7% y/y) and retention improved to 89.0% .
  • 2025 outlook: Written Premium +13–14%, Total Revenue +12–13%, Net Income +30–40%, Adjusted EBITDA +21–29%; management flagged ~$20M elevated tech investment and ~$11M pretax wildfire impact in Q1 that temper near-term margin expansion but underpin medium-term efficiency gains .
  • Catalysts: Expansion/renewal conversion of State Farm Classic Plus (targeting 25 states in 2025; ~70K vehicles converting in initial states), continued marketplace growth, and technology replatforming (Duck Creek/Apex) to drive scalable growth in 2026–2027 .

What Went Well and What Went Wrong

What Went Well

  • Strong topline with diversified drivers: Q4 revenue +19% y/y to $291.7M; Earned Premium +14% y/y to $168.4M; Commission & fee revenue +15% y/y to $89.4M .
  • Marketplace momentum: Q4 Marketplace revenue +329% y/y to $16.0M, supporting consolidated Adjusted EBITDA of $19.9M (+$10.2M y/y) .
  • Membership and scale advantages: HDC paid members ~876K (+7% y/y); retention improved to 89.0% and vehicles in force increased 8% y/y to 2.58M, underpinning predictable recurring revenue and cash flow (FY24 operating cash flow $177M) .
  • CEO tone: “2024 was another excellent year… net income up 178% and Adjusted EBITDA up 41%,” and “we expect to more than double our policy count to three million by 2030” .

What Went Wrong

  • Loss ratio pressure from catastrophes: Q4 loss ratio 42.8% (incl. ~2.4% cat impact); FY24 loss ratio 46.4% (incl. ~5.6% cat impact) versus 41.5% prior year .
  • Net Income declined y/y in Q4: $8.4M (–$0.6M y/y) despite improved Adjusted EBITDA, reflecting cat events and year-on-year warrant-related effects in prior year; Operating Income margin decreased by 470 bps y/y in Q4 .
  • Near‑term margin headwind: ~$20M elevated tech platform spend and staffing ahead of revenue ramp; management expects margin expansion pace to slow in 2025 before accelerating with State Farm renewals and Duck Creek efficiencies in 2026–2027 .
  • Analyst concerns: potential inflation from tariffs on parts and elongated regulatory pricing cycles limit immediate pricing response .

Financial Results

Core P&L and Operating Metrics (Quarterly)

MetricQ2 2024Q3 2024Q4 2024
Total Revenue ($MM)$313.225 $323.374 $291.731
Net Income ($MM)$42.657 $19.007 $8.440
Operating Income ($MM)$38.067 $10.089 $6.038
Adjusted EBITDA ($MM)$53.113 $24.165 $19.868
Basic EPS ($)$0.09 $0.03 $0.01
Diluted EPS ($)$0.09 $0.03 $0.01
Adjusted EPS ($)$0.12 $0.05 $0.02
Loss Ratio (%)41.1% 60.0% 42.8%
Earned Premium ($MM)$157.612 $165.686 $168.407

Note: The earnings call references “Q4 operating profit of $3M,” whereas the press release reports Operating Income of $6.0M; the press release figure is used in tables .

Segment/Revenue Composition (Quarterly)

MetricQ2 2024Q3 2024Q4 2024
Commission & Fee Revenue ($MM)$128.816 $116.161 $89.423
Membership, Marketplace & Other ($MM)$26.797 $41.527 $33.901
Marketplace Revenue ($MM)$6.3 $21.6 $16.0
Membership Revenue ($MM)$14.1 $14.8 $15.2

KPIs (Quarter‑End Snapshots)

KPIQ2 2024Q3 2024Q4 2024
Policies in Force1,468,612 1,494,510 1,506,451
Policies in Force Retention (%)88.7% 88.8% 89.0%
Vehicles in Force2,510,566 2,553,589 2,576,700
HDC Paid Members853,564 867,596 875,822

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Written Premium ($000s)FY2024$1,034,000–$1,043,000 (Q2) ~$1,043,000 (Q3) Maintained at upper end
Total Revenue ($000s)FY2024$1,160,000–$1,180,000 (Q2) $1,180,000–$1,190,000 (Q3) Raised
Net Income ($000s)FY2024$76,000–$84,000 (Q2) $65,000–$74,000 (Q3) Lowered (cat losses)
Adjusted EBITDA ($000s)FY2024$130,000–$140,000 (Q2) $110,000–$120,000 (Q3) Lowered (cat losses)
Total Written Premium ($000s)FY2025N/A$1,180,000–$1,191,000 New
Total Revenue ($000s)FY2025N/A$1,344,000–$1,356,000 New
Net Income ($000s)FY2025N/A$102,000–$110,000 New
Adjusted EBITDA ($000s)FY2025N/A$150,000–$160,000 New
NotesFY2025Profit ranges include ~$20M elevated tech investments and ~$11M pretax wildfire impact

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3)Current Period (Q4)Trend
Technology platform (Duck Creek/Apex)Not highlighted in Q2/Q3 press releases; focus on margin expansion and outlook Detailed plan to replatform; ~$20M 2025 elevated spend; efficiency and segmentation gains expected 2026–2027 Increasing emphasis on tech-enabled scalability
State Farm Classic PlusNot detailed in Q2 PR; Q3 PR focused on hurricanes and outlook Expansion to 25 states in 2025; ~70K vehicle renewals in initial launch states; major ramp expected in 2026–2027 (~520K antique vehicles) Key growth lever accelerating
Marketplace growth (Broad Arrow/online)Q2: Marketplace revenue +20% y/y; Q3: +66% y/y Q4: +329% y/y Marketplace revenue; Europe build-out (Villa d’Este auction) Strong momentum; international expansion
Catastrophe losses & loss ratioQ3 loss ratio 60% incl. Helene; revised FY24 guidance Q4 loss ratio 42.8% with cat impact; 2025 outlook includes SoCal wildfire losses; combined ratio ~90% in risk entity Managing volatility; guidance incorporates cat impacts
Macro/pricing/tariffsNot discussed in Q2/Q3 PRs Tariff impacts likely gradual; regulatory cycles delay pricing actions Watch for inflationary effects over time

Management Commentary

  • CEO: “2024 was another excellent year… We are also investing to improve Hagerty and become more efficient… net income up 178% and Adjusted EBITDA up 41%.” And on long-term growth: “we expect to more than double our policy count to three million by 2030.” .
  • CEO on priorities: expand specialty insurance (modern enthusiast vehicles), integrate membership for synergies, expand marketplace (incl. Europe), and replatform via Duck Creek/Apex to lower marginal costs and improve member experience .
  • CFO: Emphasized revenue mix, margin and cash flow: Q4 Adjusted EBITDA $20M (+$10M y/y); FY24 operating cash flow $177M; investment portfolio shift to higher-yield fixed income boosted interest income .
  • Outlook tone: “2025 is on track to be another great year of results… technology investments will position us for sustained compounding profit growth” .

Q&A Highlights

  • Cross‑engagement strategy: ~80% of insurance customers buy full HDC ($70); membership drives engagement, retention, and cross-promotion into marketplace; insurance remains front door .
  • Tariffs/supply chain: Fragmented parts supply and low claim frequency make impacts gradual; regulatory approval required for pricing, elongating response cycles .
  • Consumer shopping behavior: Seasonality expected; wildfires dampened activity temporarily; transactional volume in member base increased over last 12 months .
  • Expense/margin phasing: ~$20M elevated tech/platform/license depreciation and people costs persist; scalability drives declining expense as % of revenue over time .
  • Doubling policy count drivers: State Farm vehicle conversions (~500K+), Enthusiast Plus opening underwriting aperture for modern cohorts, direct/partner channel growth, potential new partnerships .

Estimates Context

  • Wall Street consensus via S&P Global was unavailable at time of analysis due to request limits; as a result, Q4 comparisons vs EPS/revenue estimates are not included. Future updates should benchmark against SPGI consensus when accessible.

Key Takeaways for Investors

  • Resilient growth: Q4 revenue +19% y/y with strong Marketplace contribution; FY24 revenue +20% and net income +178% underscore operating leverage despite catastrophe headwinds .
  • Near‑term margin trade‑off for long‑term scalability: ~$20M elevated 2025 tech spend and staffing ahead of State Farm renewals may moderate margin expansion; efficiencies and revenue ramp expected in 2026–2027 .
  • State Farm Classic Plus is a multi‑year catalyst: 25 states targeted in 2025 and ~70K vehicles renewing in initial states; larger volume ramp in 2026–2027 .
  • Marketplace as growth vector: Sustained revenue gains and European expansion (Villa d’Este) support diversified growth and cross‑sell into financing/private party transactions .
  • Risk monitoring: Catastrophe‑driven loss ratio variability and potential tariff‑related inflation require attention; regulatory pricing cycles can delay pass‑through .
  • Balance sheet/capital: FY-end cash and availability ~$105M vs total debt ~$105M (incl. ~$30M back leverage on collector-car loan portfolio); diversified investment income supports profitability .
  • Actionable: Track 2025 quarterly progression in Written Premium, loss ratio, and Adjusted EBITDA vs outlook; monitor Duck Creek milestones and State Farm renewal conversion cadence for inflection signals .