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Hippo Holdings Inc. (HIPO)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered strong top-line growth with revenue up 30% YoY to $110.3M, driven by a 91% YoY surge in Insurance-as-a-Service (IaaS) and higher premium retention; however, catastrophic losses from the Los Angeles wildfires masked underlying profitability improvements .
  • Consolidated gross loss ratio rose to 95% and net loss ratio to 106% in Q1 (vs. 59% and 87% in Q1 2024), largely due to LA wildfire impacts of ~$45M; HHIP gross loss ratio reached 121% (56pp attributable to LA fires) while non-PCS improved to 53% YoY, evidencing portfolio remediation .
  • Management reiterated 2025 targets: revenue $465–$475M, adjusted EBITDA loss $(35)–$(39)M, full-year net loss $(65)–$(69)M, and net income profitability in Q4 2025; Investor Day scheduled for June 12, 2025 and $50M surplus note signed to support Spinnaker growth (approx. 9.5% rate) pending regulatory approval .
  • Versus S&P Global consensus, Q1 revenue beat ($110.3M vs. $106.7M*) while EPS missed (−$1.91 vs. −$1.405*), with the EPS shortfall primarily tied to wildfire losses and FAIR Plan assessments (some recoupment expected later) .
  • Operating leverage improved materially: fixed expenses (S&M, T&D, G&A) fell $7M YoY as revenue rose $25M, reducing fixed costs to 30% of revenue (from 48% in Q1 2024), a trend management expects to persist with automation and infrastructure investments .

What Went Well and What Went Wrong

What Went Well

  • Premium growth and mix: Revenue +30% YoY to $110.3M; IaaS revenue +91% YoY to $39M driven by higher gross earned premium and retention; HHIP revenue +12% YoY on improved reinsurance structure lifting net earned premium to 85% of gross earned premium .
  • Portfolio quality: HHIP non-PCS loss ratio improved 6pp YoY to 53% due to pricing, coverage changes, and underwriting actions implemented in 2024; new homes channel was resilient and unaffected by LA fires .
  • Operating efficiency: Fixed expenses (S&M, T&D, G&A) declined $7M YoY and fell to 30% of revenue, demonstrating improving scalability; management highlighted continued investments in automation to sustain leverage .

What Went Wrong

  • Catastrophe impact: LA wildfires drove a $45M expense, pushing consolidated net loss ratio to 106% and HHIP gross loss ratio to 121%; adjusted EBITDA loss widened to $(41.1)M (wildfires contributed $45M) .
  • Net loss widened: Net loss attributable to Hippo increased $12M YoY to $(47.7)M, though management emphasized underlying improvement excluding wildfires (+$33M YoY) .
  • Elevated PCS losses: Consolidated PCS losses surged (gross: 54% of GLR; net: 61% of NLR), indicating outsized catastrophe drag despite attritional improvements .

Financial Results

Revenue, EPS, and Margins — Prior Periods and Estimates

MetricQ3 2024Q4 2024Q1 2025YoY (Q1 2024 → Q1 2025)
Revenue ($USD Millions)$95.0 $102.0 $110.3 $85.1 → $110.3 (+30%)
Diluted EPS ($USD)1.71*−1.91 −1.47 → −1.91
Consolidated Gross Loss Ratio (%)50%45%95%59% → 95%
Consolidated Net Loss Ratio (%)106%87% → 106%

Note: Starred values (*) retrieved from S&P Global.

Actual vs Consensus – Q1 2025

MetricConsensusActualSurprise
Revenue ($USD Millions)106.7*110.3 +3.6% (beat)
EPS ($USD)−1.405*−1.91 −36% (miss)

Values marked with * retrieved from S&P Global.

Segment Revenue Breakdown

Segment Revenue ($USD Millions)Q1 2024Q1 2025
Services$11.4$11.7
Insurance-as-a-Service (IaaS)$20.4$38.9
Hippo Home Insurance Program (HHIP)$55.1$61.9
Eliminations$(1.8)$(2.2)
Total Revenue$85.1 $110.3

KPIs and Profitability

KPI ($USD Millions unless noted)Q1 2024Q1 2025
Gross Written Premium$194.7 $210.9
Total Revenue$85.1 $110.3
Net Loss Attributable to Hippo$(35.7) $(47.7)
Adjusted EBITDA$(19.8)$(41.1)
Gross Loss Ratio (%)59% 95%
Net Loss Ratio (%)87% 106%

HHIP Loss Ratio Detail (Q1 2025)

MetricQ1 2024Q1 2025
HHIP Gross Loss Ratio (%)80%121%
Contribution – LA Wildfires (pp)56pp
HHIP non-PCS loss ratio (%)59%53%
HHIP PCS loss ratio (%)21%68%
HHIP Net Loss Ratio (%)100% (implied prior-year trend)133% (+33pp YoY; 57pp fires)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025$465M (raised from $420–$450M at Q4’24) $465M–$475M Raised (added upper bound)
Adjusted EBITDAFY 2025N/A$(35)M to $(39)M New metric provided
Net Income (Full Year)FY 2025Net income positive in Q4’25; full-year not specified $(65)M to $(69)M net loss full-year; net income positive in Q4’25 Clarified full-year loss; Q4 profitability maintained
Annual Run-Rate RevenueQ4 2025 exit>$500M >$500M Maintained
Loss Ratio Assumptions (HHIP)FY 2025Q4’25 HHIP PCS ~15%; HHIP net loss ratio <67% PCS peaks in Q2, trends lower; non-PCS improving; fixed expenses consistent with Q1 Seasonal pattern reiterated

Earnings Call Themes & Trends

TopicQ3 2024 (Prior-2)Q4 2024 (Prior-1)Q1 2025 (Current)Trend
New Homes resilienceFocus on New Homes program; HHIP non-PCS improvement Portfolio remediation largely complete; New Homes unaffected by fires New Homes channel +35% GWP YoY; unaffected by LA fires Strengthening
Diversification via SpinnakerServices/IaaS driving TGP; pipeline strong Fronting growth; disciplined program vetting IaaS +91% YoY; surplus note to fund Spinnaker participation Accelerating
Cat exposure/seasonalityContinued mix shift reduces cat volatility XOL layers intact post-January fires; limited tower impact PCS peaks Q2, lowers thereafter; HHIP cat load assumptions reiterated Managed seasonality
Tariffs/material inflation——Coverage A and premiums adjusted at renewal; tech enables near-real-time updates Mitigated via pricing mechanics
Capital & ratings—Strong cash/investments; Spinnaker surplus up $50M surplus note (~9.5% rate) pending regulatory approval Strengthening capital
Operating leverage/AIEfficiency gains cited Fixed costs down materially YoY Fixed costs down $7M YoY; automation supports scalability Improving

Management Commentary

  • CEO: “We proactively supported customers [after LA wildfires] and further advanced the key drivers of long-term value… New homes… were not impacted by the fires” .
  • CFO: “Revenue grew 30% YoY to $110 million… IaaS revenue grew 91% YoY… HHIP revenue grew 12% YoY… [and] net earned premium as % of gross earned premium to 85%” .
  • Strategy: “Signed an agreement to raise a $50 million surplus note… to support growth… without diluting our consolidated equity base” .
  • Profitability path: “We remain on track to generate net profit by the end of the year… annual run-rate by Q4’25 of >$500M revenue” .

Q&A Highlights

  • Surplus note economics: Approx. 9.5% rate; proceeds to fund Spinnaker risk participation and maintain AM Best rating; supports HHIP growth without equity dilution .
  • FAIR Plan assessment: Included in the $45M wildfire impact; company expects future recoupment from policyholders (not recorded yet) .
  • EBITDA/Net income trajectory: Adjusted EBITDA profitability expected in Q4’25; excluding LA wildfires, FY’25 would have been adjusted EBITDA positive per management .
  • Tariffs/material inflation: Coverage A and premiums adjust automatically at renewal; technology enables timely adjustments without regulatory delays .
  • Reinsurance protection: Hippo’s program losses “barely” entered first XOL layer; corporate cat across HHIP and Spinnaker programs deemed ample .

Estimates Context

  • Q1 2025 actuals vs consensus: Revenue beat (110.3M vs 106.7M*), EPS miss (−1.91 vs −1.405*); # of estimates limited (Revenue: 3, EPS: 2), which can amplify realized variance. EPS miss driven by LA wildfire costs including FAIR Plan assessments (recoupment expected later) .
  • Implications: Street models likely adjust for seasonal PCS loads (peak in Q2), improved non-PCS loss ratios, and operating leverage; FY’25 guidance ranges provide explicit anchors for revenue and profitability cadence .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Top-line momentum intact with revenue +30% YoY and IaaS +91% YoY; mix shift and higher retention are durable drivers into 2H’25 .
  • Cat losses were transitory and concentrated in legacy HHIP; non-PCS loss ratio improvements validate underwriting actions and portfolio pruning .
  • Capital plan supports growth: $50M surplus note (~9.5% rate) enhances Spinnaker participation in high-quality programs without equity dilution; a catalyst for diversification and ROE leverage .
  • Guidance credible and granular: FY’25 revenue $465–$475M, Q4’25 net income positive, with explicit PCS seasonality assumptions and fixed cost discipline; watch Q2 PCS peak and trajectory into Q3/Q4 .
  • Operating leverage trend is a differentiator: fixed costs as % of revenue down to 30%; ongoing automation suggests further scale benefits .
  • Near-term trading: Expect sensitivity to catastrophe headlines (Q2 PCS peak) and regulatory approval of surplus note; Investor Day (June 12) is a narrative catalyst on long-term targets .
  • Medium-term thesis: Diversification via Spinnaker hybrid fronting and New Homes channel resilience underpin loss ratio normalization and path to sustained profitability; estimate revisions likely reflect improving non-PCS trends and maintained cost discipline .