MediaAlpha (MAX) 12 Aug 212021 Q2 Earnings call transcript

Good day and thank you for standing by. Welcome to the MediaAlpha Second Quarter 2021 Earnings Conference 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] And pleased be advised that the conference is being recorded. like Mr. the would your over I today speaker instructions] to conference hand to [Operator Investor Garcia, Denise Relations. ahead. go Please,

Thank you, Sarah.

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

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

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

over the Steve introductory questions. to remarks call turn I'll Steve. for before few opening your to ahead, call the Now, a Go

report strong to pleased We're everyone. yet Hi, quarter. Denise. another Thanks,

the was of XXXX Our line million, transaction increase value in XX% top an second year-over-year. of quarter $XXX.X

focus largest some to the opportunity in share market world. large with the of of our continue on against wallet advertisers and We executing a increasing

Our of by continue their to as strength across driven performance insurance customer verticals, was more our investments all move online. carriers acquisition of

in to the and platform us the have which partners, science as turn drive our drives insurance data market scale. for transaction our in we enables unmatched scale, As level an digital customer by combined innovate with significant value largest industry, share That of growth our acquisition capabilities, business value. measured

market continue efforts number incremental supply As of partners. partners relationships in growth, billion-plus our we shareholder including, unlock as letter, carrier major for carriers our to a increasing with an $X we through work with opportunities our long-term in integration, technology to outlined our insurance deepen opportunity and

questions. a for progress. growth, open your barely have to on forward of runway innovation areas I surface more With sharing look tremendous of scratched up it our We and the our we'll potential that, and as to we

First from question comes line JPMorgan. from of Instructions] [Operator the Carpenter Cory

open. is line Your

question. Hi, both probably I guys. Thanks the for you had for Steve. two,

hoping P&C hoping guide. And comments you for on half changes second, MediaAlpha second could for and the Agents. letter made just your update on carrier expand informing around seeing the bit Thanks. an that's First, in you're you the how in then, a just spend

Cory. Thanks,

industry what our to will say say that, fact really too be business. would I -- in the think, And saying still some I by So, we're of early. on the seeing of concerns early impact start profitability very it's that in off the

carriers the at carriers did majority think actually of just to some were talked profitability actually this vast Or, who And too, happening could that more faster of an not of expecting. about this been wanted maintain, budgets investment mixed. seasonality. that, the or is trend, requiring whether we've number our feedback been just going on, remainder what either be posture in educate certain talk have letter to of shareholder or And this we growth different And is want partners. indicated that's course company. getting the has number about a some the the some the levels. for highlighted do from carriers mean, year. broader start their gotten transparent industry of cyclicality I their for one which to we letter, of really to we minor couple now XX that I right? thing more us newly the as adding investors. to as that perspective, it's what that a public the return we or driving still they behavior to the a in based And about case in starts an patterns expecting whether in be years. reason than really slowed, may, the early from on been been carrier it's a only we've our of reiterate have letter growth signals in definitely a normal space For that plan were to industry, of about, said that rate, while I It's direct we So, unclear We corrections, The in than of and shareholder this carrier but a was others they us they telling isolated our strong market the been or they

pullback to through us lead believe, And grown continued So to online we And The continue direct the the increased of ecosystem, to secular customer from able broader be right? our the share partners demand And, direct be in our increasingly that based based to, to carrier confidence through measurability went mix through past carrier versus market investments is ago. years will a channel past. when expect these diverse distribution. our so shift supply that acquisition our ecosystem, in market cycles do we the that again, partners spend and and few insurance a ours we acquisition the feedback there where places last of like of just is the on as customer we've well, on, have in one would this our a in which if an cycle pullback.

and and about agent expecting So We're your we've a was in in a we're agents the to we're business continuing great our initiative. question about there this foundation focused to business of this XXXX. team. building not a our this from innovation of for And product building talked second as remainder past, a invest part material the in really growth contribution strong contribution material segment make for on Really year. that just to

Thank it. I you. appreciate

Today, -- point Cory first to made. that supply question, ecosystem Steve demand bit XXXX, color greater of to QX side. this of the we a little the side And is both the have diversity diversity and your of just Tigran, to in the add on

than roughly where accounted So, XX%. revenue. demand our side, we revenue. no of of two had customers A true customer more on A supply accounted side, year And suppliers the our of the for revenue. is a on two ago single the XX% single supplier same for our ago accounted accounted XX% that for year for together XX%

on sides both really diversity and of the it's mix to great so marketplace. And the see

Thank Okay. you.

Thanks, Cory.

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

is line open. Your

question. Thanks become letter, the demand Hey. great data to partners. for taking partners of in also get shareholder the was It supply my the migration all regarding to

about questions that's exciting. had that. I think two I

become carriers to those then, you becomes take is one frame time. carrier is of ramp that don't as know mentioned And but the necessary you you what board? to first mentioned you supply The have the as level? think becoming the time I'm that of what spend And get done carriers to do your XX How offset is that typical for do that partners. what wondering, think of much long is the -- roadmap to them supply their, on people have when is XX% that a first What of data were a it the kind percentage those to rest roadmap for to does partners. integration able you a customers I some up partner supply by just of

Like but a also adopting extending companies they insurance that or in this. wish I partnership could for an Michael. Thanks new a that, programs this and in I supply very to like on or you intelligent an ecosystem. answer one. is ecosystem, act partner becoming a, just a question, demand seller clear not give advertiser tend thoughtfully Yeah. buyer the they're reality our mean, when I becoming the partner and deliberately

believe, different at to are XX-plus consumer. insurance work mentioned XX carriers past, sell as capacity, in the the serve we these so, don't a they're listings, policy And levels getting this that partners And they with easier carriers right, of parts have, the I to have comparison or a to we've in when that adoption. we in

likelihood policy. in. the want acquisition their non-converting to Now, to site is this. this really addressed intelligent type options data offset where like shoppers carriers costs to companies insurance be metric very that by who mentioned sales for really through the capabilities XX%, help expand into shoppers, on come of The ability is those right achieve is program potential with they very, comparison which our XX%, that's justifiable to right, a concern us enables low benchmark insurance The identify an a if metric customer or data have what science typically that, beyond to you that policy losing science showing to of converting insurance have that implementation, has your an XX% that required and to work of are

that from science a program pages, time. show listings, data to in it show bear carriers science their concerns buy on it's not their full. really bringing intelligently certain them going them they adopting have so in that that is data to consumer quote about the And because at then about also insurance the shoppers, to that this rate tells cases just to address the policy And also comparison capabilities help really displaying but

them is partnerships the level. that companies, And number very I out get learned two say to adoption hard that in to to they and their to carriers takes our to anything move we've that put in level, started about get really three pace. terms because own predict insurance insurance tend with as that to a at to if off, so of But years I'll it

that that. appreciate deal around I for Thanks helpful. Yeah. think I it's really the feature,

Sure. Thanks, Michael.

[Operator Instructions] Shields KBW. from line Your next the from question of comes Meyer

open. is line Your

in into insight companies are pretty actually that they late well guess we from how XXXX was back had any are have frequency in have significant in companies and you look issues aware perspective, in severity that. claims sustained a when wondering, companies do were -- how -- we the I insurance increase and of recognizing Thanks. of their do XXXX I to lot spend or some the your idea industry, you potential an of or are that pull increasing back? the frequency worsening leading other a

is great carrier of Yeah, every -- From pretty think question. well that's aware a I it.

in right? But increase this very never a is something their has i.e. And I in up, new I back actually mean, inherent are that feedback -- that. the think that because accidents a make it P&C that's carriers get pandemic-related in to is really patterns I to this -- rate to insurance mean, ago, that to of grow But is that. in that, expecting COVID-related news it's into getting we're more it's months back are with you've severity I cover some what which companies. turn is from uncertainty and forecast then majority the more economy back. remainder also continue the this was going coming And insurance They way very carriers carefully. of really, predict those to mean, they the insurance lot their I actually from, year. major saying they so certainly from a months anticipated, mixed. driving about or back And discussions aren't hadn't for that, we them people these the right? by the of going a they're some seen that, carriers come and way what in of them and and things, ago in that how that that coming requiring everyone our fact think for hadn't manner want hearing it's adjustments actually was predicted the of prices like It's to shutdown, our back coming six hard monitoring saying that, it's three leading of come they dozens the feedback to driving our exactly, then not most to understand is that direct

helpful. very you. That's Okay. Thank

we're Second with third obviously I the question the know concern and Delta thinking you seeing talking all et travel. comfortable in the I'm how are that -- of impacting about what other is I variant about about don't guess specifically the But quarter. cetera, vertical?

that leisure I very think a come is travel been for industry. about is, hadn't and And couple we And it's are is before is even and for the areas concerns travel The has that which international the levels back. pre-COVID to even travel us growing I I domestic come important, think will. about back travel driving international Certainly, for levels that the it high-margin things Delta largely that's were thing travel it really business not has of us really still variant, And reasons rebounded us. back. that note hadn't or to highlighted. business think that business though, as pre-pandemic for travel

we we're business terms -- the and come so most it's it's feedback come very we're to And going factors delta to of two say also they're And until to the CMOs aggressiveness to then is on predict those our again advertise working areas for back be coming to new happy the in try going acquire but will in related travel we'll I position the with those back variant hard that that, I'll and that, uncertainty industry how vertical very in team in, that, with in which vertical companies we're think we're with, getting and does come the of the that that with new that customers. with and that with conservative different travel have when the the that that ready market back. we're travel be the from then

you Okay, much. so perfect. Thank

Meyer. Thanks

comes [Operator Our Instructions] question last Citi. line of Daniel the from Grosslight from

open. is Your line

and taking Hi, question. the for thanks guys,

to movement market. a see to continue We the private

it's at this market transaction XX% think private around the point XX%. of around last year was this year, I in value and

market? more if Just know which value, of as with the trend transaction supply we And in are weighted XQ is Or they health, market just the market? private probably is that open towards curious, they more smaller going market is forward towards increasingly should private total I are market. more think growing share come partners sticking transaction? online, as about But open going to private

Hey, Daniel Steve. it's

private we it which question, The partners. The product for said of partners the those really take not is that differently. that, our crack newer which medium-sized expect call who is from mean have at out Let those sorry, well seller marketplace marketplace and for what and a smaller or see types all -- supply are demand traditional who product not larger I the we demand i.e. directly. are product, jumping very exchange in first pointed is are acquisition should your really for want meant of I their small with from partners time, now me question, as you the growth growth types coming It's our first private ones as writers lot newer is ecosystem supply for agency direct some demand into newer smaller right the or really things. who partners. those ideally largest supply do to meant partners, partners partners to to of of And but customer suited more

large service carriers, I quarter focus who given that then supply one ideally impact start metric we suited if that, in of quarter supply in meaningfully don't large pretty and insurance for want new in seller any on supply supply working any is or or really is metric large mix. this and this given around that in don't the mean to worry But obviously exchange your that the the is about we in without to constantly transaction seller below exchange nature revenue two large team really transaction on addition direction see again any to near this a is one is month this just the And this could open just mix So mix could consideration And are partnership. much right to or I exchange partner on another. somewhere that the get to partner that or directly really a this -- work will all described with now, we our is the partnership question, loop partnership product, partner how much. but supply to to still we there's because why And bring we to reasons one behind in why think focus equilibrium term, where point we fluctuate the best right? value the we for value And so

for as step big That's look a in sequential increase to and due driving Is value other your basis XQ? I guidance Okay. helpful. revenue AEP And from implied pretty both Or XQ, for at are Medicare? that a for there XQ. up mostly what's in that sequential that are transaction in things it's

you've I the seasonal Medicare a a larger which of we business value with really Daniel, tend And a that's got due health growth be in think right, because verticals months. those transaction over of higher concentrated mix websites story to and to component expect operated in that right, and couple AEP our open and QX, QX owned mix. marketplace of are OEP shift the the is,

is well O&O we from really revenue that value. you're as tends And terms higher value revenue a driving in it seeing expect transaction component percentage that's a there, seasonality step-up margin that to of a of perspective. as that contribution Because be transaction and the so, pattern out it's from here

from last had right this of saw allocations in through flows contribution budget. value muted as don't So you a of investment have allocations We those if transaction P&C. was yet EBITDA. revenue The impact year year into We QX more that last we visibility into because trend QX. in really types down outsized remember, well, little in

seasonality that reflected what's So, QX to that is normalized pattern expect today return a we'd QX. from to

Thanks Very guys. helpful.

Thanks, Daniel.

There this call. questions no time. This Thank for today's further participating. concludes are you at conference

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