MediaAlpha (MAX) 27 Feb 222021 Q4 Earnings call transcript

Ladies and gentlemen, thank you for standing by. My name is Brent and I will be your conference operator today. At this time, I would like to welcome everyone to the MediaAlpha Q4 and Full Year 2021 Earnings Conference Call. [Operator Instructions] Thank you. It is now my pleasure to turn today’s call over to Denise Garcia, Investor Relations. ahead. go Please

These After be press Brent. the closed MediaAlpha call. website XX, today, quarter Investors in Thank of to section and the them shareholder a our XXXX. December ended release full we for are letter issued available and the will you, and year market documents referring announcing fourth this results on

XX-K to for our the forward-looking information materially outlook those will These quarter forecasts, discussion include statements our could to about differ subject financial Please including XX, company’s risks refer on based or business as assumptions, including forward-looking today statements and statements forward-looking are fuller which explanation guidance February obligation future the of for from annual currently XXXX, cause of undertakes the to report on These uncertainties and assumptions the first financial of XX-Q no applicable forward-looking a events update in management. on are and and and that revise to reflected company quarterly statements. results, Our for SEC XXXX results our future are risks available its them. those based its to limits and today, those expectations or filings, uncertainties reports statements. and Form on to Form

financial accordance measures GAAP. a shareholder letter considered substitute our metrics. in Reconciliations measures actual In we of of order Non-GAAP financial and be most include financial for metrics release your projected and today. understanding certain we in measures comparable to press or of measures EBITDA, addition, directly present the be performance. metrics non-GAAP margin call, and that contribution GAAP financial to to and them today’s are non-GAAP our to These on referring with issued superior and adjusted these MediaAlpha not are in calculated will assessment available as supplement contribution should

is website the that on be available being recorded of like made a this investors.mediaalpha.com. and remind would call for company’s to replay at I Finally, section everyone link Investors via will the

turn I Pat questions. the the and Steve call a will introductory to before Now, few call opening to your remarks over for

Thanks, I’d Denise. key things kick our XXXX to with a our year and fourth quarter to full takeaways call. like Hi, earnings everyone. from letter. off shareholder Welcome few

we an First, a increase new in and year-over-year. transaction XXXX $X challenges I’m the property in reached vertical. particularly value, current and XX% exceeding this of milestone of casualty exciting proud given insurance billion the in achievement by

had and carrier insurance we our in spend segments. record Under Second, both our vertical, health quarter strongest driven our in by XX ever Medicare insurance

is insurance shift despite acquisition. believe challenges its Lastly, towards that firmly secular P&C the the in direct online industry continuing we the customer vertical, powerful

leader to the our in recovers. our when to to a industry, growth are As accelerate be ready continuing we invest market

lead us introduce pleasure a made I of I His Now December. across to who Thompson, in through analytics Pat a back And our and complementary joined SG&A, the our help great breadth partner next can’t experience more of development, have strategy us CFO corporate candidate. better, growth. think as to standout phase him the new of

I’ll that, pass before with to questions. call Pat few a to open we So words the it to your say

of was I since CFO, joining the warm Steve. December. on first for Expedia, I’ve team be industry, one company from you, thank the great my call like XX spent in early joined the in MediaAlpha’s Thank It’s online to which to where move Great. online. entire I MediaAlpha here as the to I’d industries travel the welcome years and received

financial like other of digital, online sold, of industries like in advertising purchase industry analytics capitalize believe in to investing media. line apps to allocate improving company I spent sites allocating insurance I budgets online products, I better which Credit opportunity. the and Karma and overall are roughly their heavily currently finance their the while As menu Insurify to more marketing Personal to insurance this yet their is with than of the how adding is innings are have insurance are budgets consumers’ early digital believe that only comparison approximately gaining on two-thirds are channels of transition. in Zebra is adoption. with digital about growth is been time similar their and a XX% learning MediaAlpha ad no Carriers experiences. positioned we Price bought

plus online becoming gained organically XXXX, that have marketplace market time largest $X is the share billion platform the every industry. in We a ad our inception in over since horizon insurance

our platform, two-sided for advertisers and of access focused is outcomes More we to Suppliers MediaAlpha flywheel our M&A extending improve objectives our stakeholders. want the are and as driving this market long-term possible. to all a growth better want granular organic Essentially, through many any gains while EBITDA shoppers. ecosystem, Advertisers enables powerful. data access share this more the grow segmentation. scale most both by My improve As attractive part as to accelerate of remaining or on as primary at growth.

gains platform. are continue Given market recovers make partners position as our the ramp customer acquisition to we planning will significant believe digital investments us to our our these on we accelerate which market and P&C investments to this themes, year their share insurance

which are due our carrier $XX achievement over is complementary X plus next and broker to the CHT’s on financials. M&A nonoverlapping additional channels, close investment and owned revenue We shopping our X and on expands and asset U.S. cash up particularly the administered a on population, impact to will Advantage from and Medicare video will greater business CHT cohorts, of to social of or weeks highly Medicare the in are we the and Medicare the partnerships $XX targets next profitability down Medicare is doubling our one our popularity short-form media of that new for anticipate years. Helper online to and announce QX a have million CHT’s today, million We based benefit advertising. Medicare to strategic deal an acquire With Team stands focus excited CHT agreement CHT, Customer increasing business, among which privately on aging plans. minimal operated

For are is industry the our operator, and the $XX our XXXX CHT insurance market we and we the competitive contribute closing, to its for of excess Media EBITDA. opportunity. we of In excited million Alpha’s are extend first grow advantage. and revenue to following of digital With adjusted and The the share ready I still early stages of question. be in transformation, platform $X investing that, balance million about long-term expect in growth more of conclusion, couldn’t

comes Lederer Charlie Research. Wolfe first [Operator question the from Instructions] of line Your with

open. Your line is

Hi, going your environment good think guide question afternoon. is the there with I is that’s in there? where auto long as some first of about as Thanks. kind we guess XQ as expect the your seasonality headwinds in, margin in margins or should be my we to EBITDA

that on the Yes that quite elaborated say play on of the the I P&C now and I say for would the downturn QX on margin the thank there the we have bit. a think would it question. that are for you it. I And I’m midst we’re of at forces in And business. kick right number to in thing off happy a

the I continue trends the we balance view that is quarter. those think are and of continuing, believe our through they will

thing I margin public also growth. the I trends, probably on from out And is in you at going as to think SOX that the company the that. look continue terms adding the can you so would power and business the see that SG&A call to IPO for people standpoint business both side fee from time. our to of And we our an invest being One a first standpoint in the a to process through support in professional

somewhat I We our expect would they depressed believe more EBITDA to start the we look the start improve as margins something view is think like margins levels. historical moment. are see to to definitely to at recovers, – business –

That’s more your how Thanks. the and a And healthcare fits then about? on can expand deal it you helpful. acquisition, that bit guess, little how into came ecosystem I just

I Well, acquisition us I outlook the think – Medicare our was vertical. for of Yes, super with because on the one, attractive, start will for that.

overall every at seniors older a cohorts of levels are opting the of Internet Advantage in higher secular in trends consumers, numbers space that in Medicare meaning starting larger well believers these to in exhibited Medicare of general cohorts with big cohorts just in newer aging level shopping year, as We’re they newer as and savviness their online. by increasingly the experiences that research

consumers. Medicare what we been about social order love addition specific is to business do strong been which high-quality that inquiries media quite customer to to haven’t honestly, in channels, leverage In that able generate area, they’ve is we an social media to CHT, from marketing, that, traditionally in, what to

our also And was in myself, factor. of started we For a do as can in social energy this their fresh of vast, a innovative which it important They us, calls company appetite media for certainly that what in a injection the the we spirits, entrepreneur is are marketplace seeing to into a Medicare company. we carriers to is our to really Very ability can seeing scale, them looking that from channel, making and team. business good And for growing really really relate cultural generally. here. tap a a I’ll say having the welcome am and one vertical I getting of spirit as is our really fit ourselves. integrated entrepreneurial our culture well to both that are strong funding really we we what we the owned thing, and it operated more other this and as as forward saw ways, by fit really health company insurance the looked as I which overall entrepreneurial self-funded lot fresh

I it’s close, piece revenue as add financially basis. $X so expect stated million EBITDA, other attractive post the believe XXXX on balance of we’ve of And of probably just of we think excess would I and $XX a XX-month that million And for the be, well. in roughly would we that

at growth to potential to business. So the is and the we we’re of the attractive believe relative relative multiple where

the Thanks for answers.

Thank you.

KBW. Meyer the Your next Shields question from line comes of with

open. Your is line

of was I brokers, whether want can, is other health could Great. lot to in to ton churn quarter. and you if through was level for a hoping churn estimation In the expectations likely the of a I a value on continue? your the and of lifetime insurance for Thanks. public words, side. that that pretty I start, impacts difficult talk it how quarter

step a was and this those big from in demand take very in diversified last you’ve We first Listen, been I question. who that back. mean, I that for churn of believers about still are When I them, us Medicare, and a it about think this about in With really have about a strong are we foremost, us, talked year. the think trends we mean, space, let’s hearing for advertisers. the companies to of some or base performer we partners respect some secular

allows specific customer respect fair to online and from can’t brokers customer gradually in mix, at that acquisition. rates and that just channel was one overall of from And looking towards match advertisers a more assess customer on really as that the carriers, really pretty is what towards carriers we really of the us, a then Medicare one direct of lifetime XX the spending on ability both of because welcome based direct that for at to well carriers cost. acquisition for granularly evidence level the the that both because through, value trends record customer brokers hallmarks well who lifetime that the Under are value And quarter, our split really ability past on as moving basis With to between do as to While trend this of secular publisher levels a that renewal is very closely advertisers our disclose the and spending assess was we for as being marketplace. by are with it’s granular the carriers do the publisher for carriers us. coming

efforts welcome value. a to well bearing their carriers lifetime really on we as expected get And better as in brokers so

your question anything answers I So you. if more don’t there is know tell can Meyer, or I that if specific

I it what through I to does. want think if think can. it’s helpful. said, A No, you but think follow-up, I I

I give about Just companies how like sort of switching cohort? were hoping their on bunch could a spend. that the was XX increasing quarter, or top of that some update to talked you you still was that update us P&C, there in last

underwriting through back environment, It’s has last persisted as step how quarter. with we you dynamic Sure. I super give that generally have why outlook severity mean we is our don’t just inflationary pressures particularly all to and a still market changed the ‘XX. right? doing, everyone because outlook Not just know, with since that on we shared much respect

the to we with good and back others the that. than things when carriers layer competitive. exact that’s rate about early are of progress states. timing all, carriers increases complicated I less take – multiple each these situation of are take open right? the slightly more across of pricing But increases that basic actually states some first peel rate making talking dozens carriers actually who a they is You generally carrier’s rate And predict with approvals that And the think increases. of them of allowing, bit the think understand types right? recovery, are really of all different that, to you states, second have Now seeking correct. of you become addition are have the who when in start I increases, I of little a to to issue perspectives, having rate pretty dozens to half have mean, you carriers a agree directionally In being

conversion go everyone than higher else’s. for the so is that their rates price And simple now down fact their

rate so each in more happened to start of have improve one increases hallmarks really of right? factors, a vary take can based down thing of when profitability, the quickly consider right, know Difficulty] growth return really I it’s offline stay hundreds this to how you experience right? hard suit each sometimes, carriers of is advertising online. that in acceleration follow actually actions all [Technical This do XX-month supply think the can earn underwriting about during the the the the carrier And in And they dollars is migration programmatic COVID, then turns. partners first had by effect, rate like that conversion through has because during turns, on that more of our sudden we rapidly massive last mean, the market when industry, carriers specific to start taken, the we a and cycle. these normal that is renewal really When rates happened carriers to with policies, marketing of levels our when carrier market investment. upon marketplace themselves. how and have of these until you market mix to the The so will will exactly when been those unique to X And pricing when take

to And a in so, steepness experience, positive. kind our speed it’s the very can been too, it’s and be this environment growth that of But obviously, the hard to case, also predict. of turn

thank much. very Okay, you

question the with next Grosslight from line of Citi. comes Your Daniel

is Your line open.

they mentioned specifically. exposure segment I’d guess really health go you concerned Hi, growth, down I in like a But taking from the around folks be for the AEP. for XX%, guys. really to know around I XX% what and are market to to even if at which challenges traded the titrating so XX%, I’m XXXX would the the question. Thanks e-brokers. the drop XX%, said, have e-broker channel back pretty your consumption AEP out more you in dramatic break you publicly given XXXX look can’t lead growth to

of are that and So Under curious value you pressures XX% growth for we XX AEP? if XXXX. direct to that next bit consumption consumption a those I’m in to range in offset partner see a deceleration just able growth can maintain for be year’s think kind your you’ll and carrier of transaction little Or your going

in that with we’re It’s this a with I of year-over-year can the spend but early, expecting Well, from slowdown carriers Medicare off both up I well year. not you being to XXXX Dan. what Medicare our as segment strong brokers. is our we’re tell Thanks, start business a Medicare mean, as

really lot with their sources and closer of de-averaging brokers and our expected I at think, granular a their Medicare because the a each of are marketing in to, marketing built is earlier value So sources was to of to and taking I answer, marketplace an respect mean, look with something look the lifetime type exactly I the that welcome as that what enable. that. alluded taking that’s that we Again, development from

within right? hundreds policy as supply partners. channel of our on really gone – de-averaging space value And expected segments acquired consumer is, how these And through in P&C then across the like smart lifetime cycles carriers we’ve of applying the that’s value about have so really the refine these types are what de-average to gotten of what granular then they basis for very different bidding a

are higher the to from ones of they the which we’ve now, again, which a are the we’re pretty continue and And from ones. less investment reassess, maintained efficient to thus spend, of efficient this very I’ll year. of brokers as the point or carriers to built same brokers really we’re think both Medicare so a seeing is what either level marketing early, I again, a as but well what as the right, support far well And Medicare channels level strong lot again,

Okay. CHT, out break percent carriers brokers? of their to third-party on done has That’s then with versus business directly are helpful. able the you And what the

at happy I’m And one, take we’re not Dan. is this something Yes. this disclosing time. That to

you. Got

Okay.

Okay. And for then one me. last

pick revenue, of much that out XXXX wanes? break travel up the the expectations and pandemic in how any to On due travel is you other as can to for

And particular. seeing that growth and thing COVID that the seen today. we’ve say for XXXX, also Yes. the and chunk services, of in versus break that is hard we’re And take the much business really three in one, all hit but don’t education the us of travel Dan. market bottom of I it’s out how financial vast is I majority a it are And off but still versus on overall. We the can travel none would some

the but so are gets And to normalizes. growth off rates of back business as pretty of a will time what tell pretty it’s base. market think that low a it And it’s fully travel I good, kind the

it. Got the Appreciate Thanks, color. guys.

from [Operator next JPMorgan. Instructions] question with Your Cory of the Carpenter line comes

open. is line Your

my it’s for taking Hi, Cory. on Bryan question. Smilek Thanks for

year? mentioned in going potential parse do see the Can agents You just growth are further And specifically, business? shaping up about what next that key you year. be M&A the priorities then ‘XX your steps to new the for out into what is scaling health, an are investment thinking forward? Thanks. just you And

Thanks. Yes.

So first always investing I’ll about have where people where We our we’re in first technology, X. say, and question day – we’re foremost, from your investing. so and right?

close the through the long-term long-term the in a now We continue in lot while to bring, hearing very will and us be P&C types from of having of about these right, is this decade in in in vertical. an again, going near-term, to overwhelming of what you’ve do happens is a – for if before. you’re what confidence these that now. trends cycles what of the predict I to easy But what that types know lies just difficult to predict business are the to been the markets, uncertainty how near-term been

And invest our us, lot products a about and serve partners. best really so to for is people, of continuing technology the our investment the in to really

and get our inorganically, operated on specific, see Now with really organically, investing CHT. And to capabilities. owned this of you obviously, acquisition more our we’re enhancing

rate-based is consumer carriers new lot for a which are who but partners, experiences across their to looking offer product consumer of shopping customers. who health marketing, in integrations, to and also now consumer in a we’re on particular with have who experience from support supply are to We’re of better building investing our lot investing And improved integrated also always focus a insurance down-funnel deeper increasingly partners, life capabilities newer of need also for partners development better in funnel both would but partnership a direct carrier benefit solutions. for down more P&C a to carrier

bit leads We we shift continue in directly based over working business, that me what really the as long-term, this our see let on we’ve we’re We’ve marketplace talk this them still i.e., certainly business. little learned over about marketplace to We and the bit interesting still narrowed see the what the a to and agent a and invest. focus with opportunity, here past seeing Now sell from agents calls. agent a year. and

market the core this put our carrier laying foundation I right. we’re before, importantly, the core ourselves super position position, the environment, think the seen current the a share more and we’ve market return to on because foundation, market upon our really accelerate just business of and in the focused business, our in of right, right, to competitive gains improving

We we that that past this We and the types to recommendations types integrations to cycles. have know of have carriers open now. done that in make, before we’re right, investments of

is busy going to really the the market in foundation this the spend, market where we’re growth-oriented investment middle returning so be we And normal of cycle. greatest carriers of really see from right ultimately, And just because of their all now that the levels the laying right? to when growth turns, that’s area

Great. I in And M&A on the hop portion. can

perspective. bit just we’ve that of generally. largest Historically, a price a third purchase little to M&A regarding always you And the we’ve so give color M&A. from high had has deal very done MediaAlpha ever how the the is we’re a deal one CHT and bar done thinking about on And

is for long time have the generated buy I that of thing being would that and have returns experience it. M&A bar understand, companies that say our is things of and we so have say company like high think from a that add I And a lot value also will can high seen we we destroyed significant I we like would also and from and remain will a it at that that that value.

that at that good that’s find our go it. after we going strategy And going won’t us, assets. them can are to the we finding that to businesses we’re hard be attractive, attractive into those financially price buy those we meets we’re to hard if that So and so criteria, anything an fit complementary that not extent at

right the we see we will will out pursuing and over kind we’re time. on of think plays how I it be path now, so And

questions. taking for Thanks my

Thank you.

There participation are on call. today’s and questions conference time. no for at call. you today’s further thank your concludes now Ladies gentlemen, this This

may now disconnect. You