MediaAlpha (MAX) 14 May 212021 Q1 Earnings call transcript

Greetings. Thank you for standing by, and welcome to the MediaAlpha Q1 2021 Earnings Call. At this time all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator instructions] Pleased be advised that today's conference is being recorded. now today, hand Denise would to conference I speaker your Garcia, instructions] like the to over [Operator Investor Relations. ahead. go Please

Thank operator. you,

discussion assumptions, for our and forward-looking future shareholder guidance. website, Our risks cause full year posted and letter as disclosure. a second differ are information information include Form These we our to limits are the and Relations the public the will to risks for based information the explanation investors we which outlook important section today's available on could quarter forward-looking statements may and materially of post to that to will and events non-exclusionary statements and financial expectations, manner fair the guidance routinely with use Investor financial MediaAlpha about subject including XXXX, for refer forecasts, the earnings results, future management. X-K today our purposes the material those or to uncertainties disclosing results investors.mediaalpha.com, filed to forward-looking release website that of for Please statements. of website uncertainties the IR SEC's from the this to and fuller applicable a currently means broad, we regulation be on today of on in to the our a SEC

supplement substitute calculated metrics measures, projected margin, your metrics to addition, accordance measures to of should The directly MediaAlpha, our to with in include financial In superior and available contribution GAAP those release. reconciliations them contribution, measures to in or first-quarter not certain non-GAAP are for performance. financial EBITDA, financial comparable are the measures, GAAP and assessment be earnings as GAAP. most considered well of as present as Non-GAAP and and in of referring non-GAAP we will our measures. adjusted be which understanding actual we financial order These a measures

session. As a we'll on to our reminder, a this that website, shareholder letter IR we've published and Q&A refer during

turn to I'll call over Steve. the Now,

pleased record-breaking yet another OK. Denise. Hi, everyone. We're Thanks, to report quarter.

top-line high was $XXX.X Our the our XX% of value million, guidance end above year quarter an of year of first over and range. the transaction increase XXXX in

was strength vertical, we achieved which year-over-year saw continued of well performance our vertical, driven as outstanding insurance year-over-year growth. excellent Our growth, by P&C momentum where our XX% as health in XX%

we was unmistakable discussed are shareholder model As our our our signs and industry-leading in growth operating working. scale, letter, that rate, leverage

open marketing as full-year for science. through in to of to this its opportunities of a still enabling industries. markets questions. increased of us. up to our as effects increasing and and spent XX% economics across are insurance data we all online insurance in growth how the advantages the in channels, superior partners, insurance distribution sector's scale dollars continued market adoption us we'll We're Moreover, see marketers XX% to offer continue compared saw pleased we're With when reflected it we with look positioned both the capture only In with to online guidance. core strong Our that, to accelerate greenfield year industry forward XXXX, our XXXX opportunity efficiencies our COVID-XX of well ahead your

go question Carpenter first Please instructions] comes Morgan. line J.P. [Operator ahead. And your the of Cory with from

Tigran have you're year? but follow-up to And And economy then a normalize. thanks. particular, to But off. there. seeing what's in for just starts as opens, to confidence carrier the giving start the driven about Hi, at maybe you this point in you raise I'll guide I well, with strong in questions. spend? miles the Clearly, for the just the what stop the seeing as it what Could Thanks talk quarter. you're remained Maybe, Steve,

carrier the talked same our in of carriers, things bit call, spend is a particularly the that we last extent based we still see numbers. about importantly you Yes. to employment P&C Cory, the auto which employment expect knows on space, the still terms insurance back. that in continue numbers with aren't that are to think but is not up, in And I would driven that. commuting everyone Miles miles up,

see then And have year, so is miles expect levels this revert our of seeing commuting our diverging normal. not half above and second And insurance and carrier whether frequency we're normal the these come to in from to partners, what loss partners, at and to insurance back will on opinions things some you that they from the remain think ratios. start hearing will that or back I

my expectations our as getting to had second think that mean, this frequency certainly below that our think levels going he in are stand and as of back I half I great stay think hence, mean, to to a where going below on I'm strong normal CEO, makes this the in historical less report because just – frequency Adam be case this an workplace. historical I of But will perspective, miles the is where – I levels. change. a normal industry insurance year. going this, about back I of will more commuting working things And of a just others I you driving sorry, to down continue offices from person expectations the talking about behavior see and changing levels then

then stay year and year. hence, is bet miles will the my still exactly of hearing from commuting and partners on soft start that's our into well. continue But And as high. carrier view it stay that's insurance our market the that profitability – next through down we're so will what will certainly that's to this that and And end

longer Tigran, you're term? mix to the shift us That's helpful. what's maybe marketplace. it with you and think driving you. maybe you just to Thank more just Could And for then the of business the expecting like how that about private looks help

enable going private platform do built That's of larger question. in Cory. deployment our a first place. partners to via key what the select with the validation a really We And Sure, that's great platform our advertisers. direct see some was of

what point and I'd measure so The perspective, to And But a end via that that growth. increase number gauge right? it a pace and value. we of right, coming to the exactly of longer-term this equilibrium at with right. move. rate platform, dollars, you there's believe QX some can value transaction GAAP of to private be partners is bringing performance, flow the in down top for see where From kind value And increased and shareholders revenue you value will we're net to our while transaction keep here, range the contribution at see hard on transaction an that point

at see demand-side transactions the in As ramp and new open going P&C soft increased increase. demand carrier we're market take play continued advantage with marketplace here referrals, partners to for and of dynamics consumer

a open see you and clip meaningful we nicely in so the increasing shareholder partners are marketplace year partners cohort with as that are the smaller And of over statistic in available but where XX% actual of well. letter year supply a growing number the made that of at

Thank Great. you.

from your RBC the Markets. of Capital question And with comes next Frank Morgan line

one was Actually, point. Tigran, That I'll stay my of that on questions.

really market And greater that called period are over out? there at take grow? $X those value. see of out, actually Looking where open time a million – what than – I those them to transactions think does those size eventually do transaction How of you tap those is it long

No.

grow I you with think those partners demand. see market

you that XXXX so as well. the And grow from sequentially seen QX those And cohort. you we've partners older at quarter look see cohorts as quarter over back

see And those choose happening Some of it's of those others. a really partners direct scale. to that carriers. scale than we scaling unless partner very But massive get are significant with don't very, to better at some go that may

in was kind management? Anything of Got like question, anything just a fairly or you. in I noticeable reduction of patterns cash, it about drop noticed sort capital that an would normal a that? seasonal the fairly for Is big out looks and And sequential working you that unusual just accounting call payables. there

our It's payments. by seasonal we really patterns, driven release supplier of the timing so normal when

see the can large of of in So basis, when On normalized payments. changed supplier the working lumpiness released we in outflow our quarter. that to effect from nothing's capital timing really just really you some quarter a cycle,

is QX is that So a outflow in And offset kind there the note cycle, QX. seasonal million collection good right, And peak we a $XX see a for about side. receivables right. of the on us,

out, some very nothing there And of trends. build But call They're and so for receivables in quarters. future start nothing that concern. cycle you to me QX on normal much up collect to

we business to good, would guess, to confirmation. we health call of next Thanks. before year on the down a – on you back get normal you. the want how your over observations just to again? growth another went? the I Got I the of expect solid insurance couple business, AEP Should that we that seasonal side And of year-end given get of But about that side? just quarters Or insurance there. know OEP to, pattern anything business Or slow health the any the out

had Frank, strong… a we

sorry. – Yes

Let greater carriers – yes, health me OEP. make see did spend we And a comment from as about well. have just during we period special insurance a enrollment the did then a strong

enrollment years up, partners of from health lot or periods. carrier three so past two were know, a under-XX And of outside times, you the space insurance open our in times past

were And to that. so happy we see

upcoming open the period. I'll rest answer of enrollment let we the good But So about your feel Tigran question.

seasonal QX And there. again the period, extended great but QX performance in we've With through open and trends in special it before Steve QX. enrollment, head think Yeah. take you spike will hold the see I nice that on hit enrollment seen

Thanks. Okay.

Citi. of [Operator line Instructions] Daniel from next comes go Please with ahead. Grosslight Your

as was rates shift open the market on then it open conversion the I'll greatest guys. rest value, basis. look year divided like to on values, this about private If was for if basis P&C in the I taking that more on delta by a wondering to call into conversion P&C the maybe specific quarter I shift mean and for by transaction private, was year. out just the market in Hi, at Thanks this health. from for of think will what there segment to sequential looks a followed that's from question. and revenue we focus the next anything

with respect Daniel, which I'll P&C. there's I is, take to call think to out mean, anything that don't specific I first,

think year, P&C of of I that adoption during play at last the direct-to-consumer really the of is vertical, we rapid growth carriers by because had COVID. in insurance dynamics part during the the acceleration in

of with from so from the that. supply They influx scaled the And demand, benefited had partners that. existing that we think very I nicely

through carriers then if can where they to model private so be they choose, flexible enough working our partners can directly with a start supply is insurance or shift able to really then they a scale, they And partnership as deploy marketplace up. set to

so to supply natural factor that the carriers is gating only are insurance partners. with there larger And directly willing work

of partners they of And together. so these as these threshold last some essentially can so partners for insurance as that more supply scale directly insurance nicely year, did them qualified some and – met that carriers work like the

pointed demand continue ago, out, very supply the supply partners, biggest years mind, like in now attracts and ago. we two our smaller really nice of partners, And some partners of Tigran them in to years were growth partners nicely. exchange that As right and the influx small have seeing we're also to three then grow open keep new within expect we

able And scale, we're within ecosystem. these model. designed because who've in them work And of partners with under private continue in that's happy this, to model and part our our to partners for these marketplace grow so is part, be our successful enabling to really been to

online and seems you'll makes just like And you'll right. Got these then a and interpreting guidance, QX. I and then influx Am That of see the the private smaller QX is shift partners continue sense. medium-sized come it at to looking assumption XQ, correctly? it. All see that to the for in

a and the Dan, you can by seasonality large, And that's little on of flow-through. by right. the of also there right. it got also bit impact and that's impacted But optics have an

it. Got

you go can us ahead. And That in segment, remind sense. makes – the Okay. then sorry, health

by our want that sure make marketplace as the Dan, partners. to they in. just Sorry, private we that's And that a I is and on transaction let value, with model, shift do reason scale because focus right, to working they we me jump design. this love

on overly not, term, we're given mix that's in and concerned private then at And down so terms focus contribution. And line next the of open. we in near about any versus the value time of why transaction overall the

new side there the wanted do marketplace expect there's partners limited. be to pointed a of on that of But that point to come we're just term a of we really model I partners value clear is demand so willingness end at number to and in and the expect And check some to as because equilibrium directly that shifts near the transaction make the above day, why with in. their the that work natural as the the out, Tigran long-term, we being over all. private see to And focused

Yes. That makes sense.

the remind value Okay. on from of us health IFP And can or transaction versus you is the XX what segment, under Medicare? percent

Under XX is value. XX%, transaction XX% the roughly of

Okay. And that more in you and down XXXX? is the because trend year weighted that of this to SAP expect

That's right.

see we have others in growth think accelerating seen. as I Medicare

And a so toward see naturally, shift mix I think Medicare. you'll

it. Got

strategy and seeing me. last uptake one you're then And Okay. one for update there? the on Any agent

Yes.

had marketplace that to that carriers how trend essentially dollars – have of toward Typically, world it dollars to to to What the some working their some their with on opportunities test technologies that What this the them some ours out with carriers to can efforts, use we we've we've to refer seeing give support more carriers because starting there. right, marketing and some about with they're of agents product centralize real these we're increasing or seeing do dollars worked we and product will last marketing these innovations Dan, marketing best putting help say engaged we're right, they're And mentioned happy offering. we way the in like support. efforts. I agents. As allowances the things lead giving they notably that one these is put focused technology can to to their to be that these of to agents, that with very buy with are the of centralize to in manage a And data that the an insurance is people distributing that And of, top then their from that are discussions to marketplace. co-op to starting to the agent-based sometimes from that we results this, Allstates been innovation some quarter, in starting their other is buy is agents, buying science, which based more continue centralize marketing agents the then because agent buy calls, programmatic and consumer buying intelligently. lot of the are you of simply; agents. benefits we're agents, that starting leads, based or call on use see co-marketing some there's to centralizing those on start

and us to business talking efficiency model the what exactly that on doesn't. being been You really overall you feedback calls what's you one issues fundamental can centralized our the carrier and end business of is basis, a how agents, model. at by the problem know our media or with the is and which you've has working about purchased loop And our know intractable if solve heard never it, that of

And this acquire come the we agency-based in trend that so helping trend something very customers, to as a that see see to their to is that these of centralize starting their good carriers we extent and us. to agents where marketplace starting efforts

funding of up you connection the their media in the business buying agency to make lot more actually a that being been believe that that and start to beefing see with carriers by trend. we've agents. centralizing because very direct-to-consumer, behalf that it's accelerated We of bolstering of so their that do direct-to-consumer easy And to they're is on trend trend. We happy get an agree also active benefits that these when

and to end see year then toward really of up toward that. yes, the that a next end on side. seeing, on so sales been innovating And team, this for right updated the certainly innovating new you'll year. keep start to really focus we've of on year, you the us that's and But on development this the the now, of our I agents more reramping out the think then And remains platform side, reach aggressively recruitment product

color. Got it. Appreciate the Thanks, guys.

Sure.

question next Canaccord. the Michael line comes of Your Graham ahead. Go with from

please, questions, we're you to is the overall impacts think kind insurance in industry that XX% its the parity I like guys. see ask Two could please you up a the is One something on charges all a that evolving advertising spends in question Can XX% comment just then a GAAP if kind Thanks. give It to the wanted getting is with And looks on I color where of mentioned market do of EPS. you which some pretty GAAP see aware ads there areas Yes. could letter little some there of, natural this inflection straight line? shareholder little only digital other versus channels quarter. over just to this overall. you like an the were you do point? be on of us to of Or like

talk Just us if you through that? could wondered

are and spend. I not in industry companies, the more higher of I close Hey, XX%. one going those their of you closer And spend you of close, I terms likely XX%, levels, right? I of allocation certainly see digital-native than think see companies it technology acquisition is a natively see levels. than Michael, the not so and anywhere question. marketing insurtech think mean, that the their normal if which is lot XX% to you that that. to that They're It customer great the when gets to say become it's Yes, whether reasons pretty

marketing. those allocating levels one there'll so now, of more years from spend six five that sign years And digital to carriers be that's now, from

Now, how be. will that in of transition smooth like terms

sense are that would large say the P&C that the Within space. there the advertisers little might a it I lumpy within be in P&C space,

turn as to in start invest and so they start And to some in some increase these start then of carriers their might that you spikes investments see really to really area. in direct-to-consumer, on as force

that could otherwise, would be have But over be I reason so that where a lumpy. tell a increases of And year. bit me it are don't one steady any information year little the growth wouldn't more that

on to charges GAAP Thanks. any comments And then EPS? the

Michael. Thanks, Yes.

taking number were to the us executing gets of back know, completed all EPS you million, the really million of of expenses There that follow-on net $X.X related net or services we offering. in income roughly offering. So quarter, income $X professional and to first quarter our roughly And $X.X million adding as for of the that $X.XX.

And one-time so by it's of execution to charges primarily related those the offering driven in QX. that

That's helpful. much. Thank you both very

Michael. Thanks,

concludes And that call. our for that questions for call. you Thank participation. And today's concludes today's conference your

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