MediaAlpha, Inc. (MAX)·Q3 2025 Earnings Summary

Executive Summary

• Q3 delivered strong topline and profitability: revenue $306.5M (+18% y/y), Adjusted EBITDA $29.1M (+11% y/y), net income $17.6M; Transaction Value (TV) reached $589.3M (+30% y/y), with P&C TV up 41% to $548.2M .
• Results beat Wall Street consensus: revenue $306.5M vs $283.4M est; Primary EPS 0.404 vs 0.202 est (S&P Global). Management exceeded the high end of its Q3 guidance and authorized a new $50M share repurchase, after buying back 3.2M shares for $32.9M in September .
• Mix and margins: Gross margin 14.2% (vs 15.1% y/y) and Contribution Margin 14.9% (vs 16.0%) on higher Private Marketplace mix and lower under‑65 health; Adjusted EBITDA margin 9.5% (vs 10.1% y/y) .
• Q4 guide: TV $620–$645M (+27% y/y midpoint), revenue $280–$300M (~4% y/y decline midpoint) and Adjusted EBITDA $27.5–$29.5M (~22% y/y decline midpoint) as under‑65 health remains a headwind; take rate expected ~7% with Private Marketplace ~54% of TV .
• Stock catalysts: continued broadening of P&C carrier demand (potential mix shift back to Open Marketplace), stabilization in health and any signs of take-rate inflection above ~7% in 2026, plus capital returns via the $50M buyback authorization .

What Went Well and What Went Wrong

• What Went Well

  • P&C momentum: P&C TV +41% y/y to $548.2M; management sees early stages of a multi‑year soft market with robust carrier growth budgets and expects continued gains .
  • Beat vs consensus and guidance: Revenue and EPS exceeded S&P Global consensus; Q3 results exceeded high end of company guidance; management highlighted stronger demand and share gains .
  • Capital Rolling capital return and strong cash generation: Free cash flow $23.6M in Q3 (81% of Adjusted EBITDA per letter) with net debt/Adj. EBITDA <1x; new $50M repurchase authorization after $32.9M repurchase in Sept .
  • Management quote: “We delivered record third quarter results… More auto insurance carriers are focusing on growth… We expect sustained growth in our P&C vertical…” — Steve Yi, CEO .

• What Went Wrong

  • Mix pressure on margins: Gross margin fell to 14.2% (15.1% y/y) and Contribution Margin to 14.9% (16.0% y/y) on lower under‑65 and higher Private Marketplace mix in P&C, compressing take rates .
  • Health vertical down: Health TV fell 40% y/y to $33.5M; under‑65 health expected to contribute only $1–$2M in Q4 and remain mid‑single‑digit million annually near-term after FTC‑driven compliance reset .
  • Q4 guide implies margin pressure: Despite TV growth (+27% y/y midpoint), revenue guided down ~4% and Adjusted EBITDA down ~22% y/y (midpoints), reflecting mix shift and under‑65 drag; take rate guided ~7% .

Financial Results

Summary metrics (GAAP unless noted)

Consensus vs Actual (S&P Global)

*Values retrieved from S&P Global.

Segment details

• Revenue by Vertical (Q3 2025)

• Transaction Value by Vertical

Key KPIs

Notes:

• P&C revenue rose 31% y/y to $287.8M; Health revenue fell 61% to $12.9M; Life +7% to $5.6M .
• Management cited take-rate pressure from greater Private Marketplace mix and under‑65 health declines; Open Marketplace take rates remained relatively stable .

Guidance Changes

Additional corporate action: New $50M share repurchase authorization (expected completion by end of 2026; may be altered/discontinued). Repurchased ~3.2M shares for $32.9M in September ($10.17/sh) .

Earnings Call Themes & Trends

Management Commentary

• Strategic positioning: “We delivered record third quarter results… We expect sustained growth in our P&C vertical as these increases continue, with broader participation in our marketplace having a positive effect on our profitability.” — Steve Yi, CEO .
• Soft-market dynamics: “Peak underwriting profitability… tells us we’re just kicking off the heart of the soft market cycle… soft market cycles historically have been five to seven years on average.” — Steve Yi .
• Take rate outlook: “We expect our Q4 take rate to be approximately 7%, with Private Marketplace transactions representing ~54% of total transaction value.” — Pat Thompson, CFO .
• Health under‑65 baseline: “It’s a business that should make us $1 or $2 million in Q4, and we believe it’ll be a mid‑single‑digit million‑dollar contribution business for us next year.” — Pat Thompson .
• AI commentary: “AI may disrupt traffic patterns… Because our marketplace spans hundreds of publishers… we expect our ecosystem to adapt well… We’re also leveraging AI to enhance productivity.” — Steve Yi .

Q&A Highlights

• Sustainability of carrier profitability and spend: Management sees peak margins as the beginning of a multi‑year soft market, not a peak in advertising; expects broader carrier participation in 2026; cited 13 carriers spending >$1M/month, an all-time high for MAX .
• Take rate and mix: Near-term take rate ~7% as Private Marketplace (~54% of TV) remains elevated; as more carriers ramp (especially outside top few), spend should shift to Open Marketplace, improving take rate over time .
• Health trajectory: Under‑65 materially re‑based; $1–$2M Contribution in Q4; compliance framework includes AI-based monitoring; longer-term opportunity centered on Medicare Advantage as the market normalizes .
• Capital allocation: Completed $32.9M buyback; new $50M authorization; flexibility to invest organically/inorganically while maintaining conservative leverage .
• Visibility into Q4/2026: Encouraging 2026 budget discussions with broader carrier participation; Q4 guide based on strong momentum and mix assumptions (54% Private) .

Estimates Context

• Q3 2025 results vs S&P Global consensus: revenue $306.5M vs $283.4M est; Primary EPS 0.404 vs 0.202 est — both beats (S&P Global). Management’s Q4 revenue and EBITDA guidance suggest analysts may raise P&C volume assumptions but temper margin/take-rate trajectories given Private mix and under‑65 drag .
• Note: S&P “Primary EPS” differs in methodology from GAAP diluted EPS ($0.26 GAAP in Q3); use caution when comparing across definitions .

Values marked with an asterisk are retrieved from S&P Global.

Key Takeaways for Investors

• P&C strength remains the core driver; TV +41% y/y with multi‑year soft-market tailwinds and broader carrier participation expected in 2026, positioning for sustained growth .
• Near-term margin pressure is mix-driven: higher Private Marketplace share and under‑65 declines compress take rate and margins; management guides Q4 take rate ~7% with ~54% Private mix .
• Health under‑65 headwind largely re‑based; Q4 Contribution $1–$2M and mid‑single‑digit million annually thereafter, reducing volatility; Medicare remains a long-term opportunity as digital adoption rises .
• Strong cash generation and balance sheet flexibility: FCF conversion solid; net debt/Adj. EBITDA <1x; capital returns via a $50M repurchase authorization offer downside support .
• Watch for catalysts: (1) evidence of demand broadening beyond top carriers, (2) shift back toward Open Marketplace, (3) take-rate inflection above ~7%, (4) improving Medicare demand into future AEP cycles .
• Guidance setup: Q4 TV growth (+27% y/y midpoint) but revenue/EBITDA guide down y/y underscores mix headwinds; upside if Open mix increases faster-than-expected or under‑65 stabilizes sooner .
• Legal overhang resolved: FTC settlement substantially behind the company; minimal Q3 legal expense and payments scheduled, improving clarity on forward earnings quality .

Additional Materials Read

• Q3 2025 press release and 8‑K with exhibits (including shareholder letter) .
• Q3 2025 earnings call transcript (full) .
• Prior quarters for trend analysis: Q2 2025 press release and call ; Q1 2025 8‑K and call .
• Other relevant press release in period: “MediaAlpha To Report Third Quarter Financial Results on October 29, 2025” .