MediaAlpha (MAX)·Q4 2025 Earnings Summary

MediaAlpha Q4 2025: Record P&C Drives Stock 9% Higher After Hours

February 23, 2026 · by Fintool AI Agent

MediaAlpha (NYSE: MAX) delivered a tale of two verticals in Q4 2025: Property & Casualty insurance surged to record levels while Health insurance continued its steep decline. Revenue fell 3% YoY to $291M, but the company's core P&C business hit an all-time high Transaction Value of $552M (+38% YoY) . The stock jumped 9% in after-hours trading to $8.50 as investors focused on the P&C strength and a doubled share repurchase authorization.

Did MediaAlpha Beat Earnings?

Results were mixed — P&C exceeded expectations while Health disappointed:

The headline net income surge is primarily due to a $138M income tax benefit from deferred tax assets . Excluding one-time items, Adjusted EBITDA declined 16% YoY, though the company notes that excluding the under-65 Health contribution, Adjusted EBITDA grew approximately 10% .

What Did Management Say About AI and LLMs?

CEO Steve Yi addressed the impact of AI-driven search on MediaAlpha's business in detail during the Q&A. Key takeaways:

AI as a Tailwind:

"Against the backdrop of accelerating LLM-driven traffic growth, we increased P&C click volume by more than 20% year-over-year in the fourth quarter, and we expect even stronger growth in Q1."

Why Major Carriers Won't Expose Rates to LLMs:

Management explained that the largest auto insurance carriers — representing over two-thirds of the market — have historically resisted any model that commoditizes their pricing:

"Major carriers invest billions each year in their brands, underwriting, and distribution. They have historically resisted any model that commoditizes their product into a side-by-side price comparison or transfers transactional control to a third-party technology platform."

Steve Yi emphasized that quoting and binding require integration with proprietary carrier rating systems, and carriers are "highly protective about how and where their rates are displayed" .

LLMs as Traffic Source, Not Competitor:

When asked whether LLMs would become supply partners directly, Yi indicated the more likely scenario is that LLMs become a traffic source for existing publishers:

"Anecdotally, our supply partners are telling us that somewhere in the mid to high single digits of their traffic is coming from the LLMs, and this is in the early stages."

Management expects the LLM advertising ecosystem to evolve similarly to Google's model, benefiting MediaAlpha's existing supply partner relationships.

What Changed From Last Quarter?

The strategic mix shift accelerated dramatically. P&C insurance now represents 91% of revenue (up from 78% a year ago), while Health insurance collapsed to just 7% .

Transaction Value by Vertical:

The P&C surge is particularly impressive given the challenging comp — Q4 2024 was already a strong quarter. Management called out "strong carrier demand and continued share gains" as key drivers .

What Did Management Guide?

Q1 2026 guidance implies continued P&C momentum offsetting Health headwinds:

Management expects P&C Transaction Value growth of ~35% YoY in Q1, while Health Transaction Value is expected to decline approximately 50% YoY "driven primarily by under-65 health" .

Full Year 2026 Framework:

While not providing formal annual guidance, CFO Pat Thompson shared key directional commentary:

• Free Cash Flow: $90-100M for 2026 (including $11.5M final FTC payment made in January). Excluding the FTC payment, free cash flow would be $101-111M
• Health Vertical: Expected to be a "mid-single digit %" of total Transaction Value for the full year
• Cash Taxes: Mid-single digit millions TRA payment going out in Q1
• Q1 Take Rates: Expected to be above Q4 levels, driven by favorable Open Marketplace mix

Guidance vs. Consensus: The Q1 2026 revenue guidance midpoint of $295M is roughly in-line with Street expectations of ~$296M, suggesting the guide didn't disappoint.*

How Did the Stock React?

MAX shares closed at $7.77 on the regular session, but jumped 9% to $8.50 in after-hours trading. The stock is down approximately 44% from its 52-week high of $13.92, and the after-hours move suggests investors are encouraged by:

1. Record P&C transaction value momentum
2. Doubled share repurchase ($100M total authorization)
3. Management's confidence in sustained P&C growth

The market cap at the close was approximately $510M, meaning the $86M remaining buyback authorization represents roughly 17% of the company's equity value.

What Did Management Say?

CEO Steve Yi struck an optimistic tone on the strategic positioning:

"2025 was a record year for MediaAlpha, driven by strong momentum in P&C and continued market share gains, reinforcing our role as the leading customer acquisition infrastructure for insurance carriers. Looking ahead, we are excited about the potential of AI to expand our opportunity to help carriers acquire new customers more efficiently, and at unprecedented scale, through our marketplace."

CFO Pat Thompson emphasized capital return:

"Based on our strong and growing free cash flow outlook, our Board has authorized a $50 million increase in our share repurchase program to $100 million. The $86 million currently outstanding under the program would represent approximately 15% of our outstanding shares at current prices, and we expect to complete the vast majority of this program by the end of 2026."

Full Year 2025 Highlights

The annual numbers underscore the transformation:

P&C Transaction Value grew 65% YoY for the full year to $1.94B, while Health declined 32% to $183M .

Q&A Highlights: Under-Penetrated Carriers and Platform Solutions

One key theme from the earnings call Q&A was MediaAlpha's strategy to scale under-penetrated carriers in its marketplace. CEO Steve Yi explained the platform solutions approach:

"We're moving beyond just creating a marketplace layer for the media that's transacted, and really working directly with these carriers who've been, again, historically underpenetrated in our channel, to provide more of a platform where we own parts of the pre-quote conversion process so that we can optimize more of that conversion funnel for them."

CFO Pat Thompson noted that smaller and mid-sized carriers have been "really leaning in so far in Q1" while some larger carriers have "taken their foot off the gas just a tiny bit" . This dynamic is driving the mix shift toward the Open Marketplace.

Medicare Advantage: Long-Term Bullish, Short-Term Cautious

When asked about the health vertical outlook, Thompson acknowledged ongoing challenges but highlighted the long-term opportunity:

"In terms of total spend on Medicare Advantage premiums, it's a bigger market than personal auto, and it's a market that has the wind at its back in terms of seniors aging into Medicare... much more likely to look to the internet either as part of their shopping journey or their first port of call when it comes to shopping."

However, management expects challenging conditions to continue: "Looking at the crystal ball, I think early signs point to next year being challenging as well, given some of the reimbursement news that's out there."

Key Risks and Concerns

Several factors warrant attention:

1. Health vertical collapse: Under-65 Health continues to pressure results. Q1 2026 guidance implies another 50% YoY decline .

2. Margin compression: Gross margin fell to 15.0% for FY 2025 vs 16.6% in FY 2024, reflecting the mix shift toward lower-margin P&C .

3. FTC Matter: The company increased its loss reserve by $38M in 2025 related to an ongoing FTC investigation, bringing total legal expenses to $42.4M .

4. P&C concentration: With 91% of revenue now from P&C, the company is increasingly exposed to auto insurance market cycles.

Balance Sheet and Cash Flow

The significant jump in Total Assets is primarily driven by a $149.7M increase in deferred tax assets .

Forward Catalysts

Key events to watch:

• Q1 2026 earnings (expected May 2026): Will P&C momentum continue above 30% growth?
• Buyback execution: Management targeting completion of "vast majority" by end of 2026
• FTC resolution: Settlement or conclusion of investigation could remove an overhang
• AI initiatives: Management flagged AI as a potential growth driver — watch for product announcements

Bottom Line

MediaAlpha delivered exactly what the P&C insurance vertical needed — record transaction value and clear momentum — while acknowledging the Health business is in structural decline. The 9% after-hours pop reflects investor relief that the core business is thriving despite headline revenue weakness. The doubled buyback signals management confidence in the outlook, though margin compression and the FTC matter remain concerns. With P&C now 91% of the business, MediaAlpha's fate is increasingly tied to the auto insurance demand cycle.

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*Values retrieved from S&P Global

Related:

• MediaAlpha Company Profile
• Q4 2025 Earnings Call Transcript
• Q3 2025 Earnings Analysis