MediaAlpha (MAX) 7 May 222022 Q1 Earnings call transcript

Good afternoon. My name is Emma and I will be your conference operator today. At this time I would like to welcome everyone to the MediaAlpha Q1 2022 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers remarks, there will be a question-and-answer session. instructions]. [Operator you. Thank of head Denise investor Garcia, relations.

begin may conference. You your

XXXX. from market MediaAlpha including future of subject letter the issued you, March forecasts, are results Anna. our press investors based management. today the financial future After expectations report guidance XX, this on our ended statements Form XX-K quarter which shareholder discussion Thank reports section assumptions, statements cause events a in the of XX-Q. available differ for closed release reflected to forward-looking the to results, the and first risks refer quarterly to discussion second or documents those on available our These today, financial These website are for XXXX on quarter in announcing Form annual today will SEC outlook and about Please discussion to our will filings referring be its on on company’s and we uncertainties forward-looking currently our our materially and business today. information could for them those include and to call are On its including and statements. that our results

uncertainties explanation no obligation based forward- to revise and fuller risks and update statements. undertakes company of XXXX the assumptions limits of a today, forward-looking those as looking applicable to For on the are and These statements May them. X or

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

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

turn I’ll a introductory Pat opening the few your before remarks Steve to to for over and call the Now call question.

with everyone. our our off quarter which adjusted value I’d and shareholder in of we Hi, to Denise. takeaways first EBITDA things line both key earnings in million like from generated the expectations. call. In Thanks, a million Welcome XXXX letter. our kick few with $XXX to quarter, in $X.X were transaction

significant the profitability insurance in face continue underwriting by work due through they related issues. P&C to our vertical spend inflation to auto headwind carriers We decreased insurance marketing as

the We of growth predict. of While a had strong insurance support recovery XX%. value quarter another the in unmatched as of market focus near-term the auto remain marketplace remains timing to to health to with confident transaction in year-over-year growth ability our insurance profitability vertical return industry’s carriers the difficult We our improves.

and in to than Medicare. over Medicare these privately Americans opting eligible older for at new vertical, XX,XXX Medicare in continue their long-term day counterparts. are are rate There outstanding higher and becoming opportunities every plans see We a online cohort shopping this Advantage particularly administered

XXXX, up result, million a enrollments to Medicare in XX expected XXXX. Advantage As surpass XX are in from million

our these its As opportunity. customers $X excited partners of look a market Medicare directly, acquire trillion to health share we’re carriers help growing insurance capture increasingly to

Pat call words With call before that, social open CHT able say the turn to I’ll we your excited And we’re leverage now we’re our to questions. over the to we’re media With of acquisition help on Lastly, announce from closed meet the better health call to we channels to carriers. X. April team growing few insurance have to board. CHT the excited a to on demand CHT, that

you, our period. the announced cooling repurchase up March, ever call Thank touch question. plan we share to I’ll few now In opening a mid-April a first off following before on items which more Steve. commenced in

our in massive opportunity priorities, to online the our of is insurance capture sales. transition first the to reinvest In priority business the industry’s policy capital created terms to by

a Second, M&A to continue and transaction second capabilities our quarter April pursue the [growth]. in closed to business transaction. on and which begin The was marketplaces great our of to a we contributing turbocharge will example grow X and CHT such will

to Third, opportunistic repurchase we an basis. cash shares on will use excess

enrollment exceeded his quick insurance quarter remarks, vertical, are unusually midpoint high guidance volume manifesting declines in from Steve XXXX. of including although momentum second Then of period in health our Outside we in in vertical, the metrics. ongoing due quarter offset extended lower our had looking highlight P&C, the mentioned expect reflects across guidance insurance to CHT, in will Turning forward, which we prices. our in year’s growth the that continued open I carrier by volume quarter, guidance results QX our the range we all P&C of to second last our spend

we and QX due the largely constraints a XXXX to and of balance to rate OpEx marketing fees. of more expect we other to lower QX levels professional be one measured $X are based continued million excluding in investment for budgets, the P&C Given compensation overhead, in planning below stock in headcount

With we expect ready and look response as the the first know premiums. As shop we for that to question. to we flexible volume with and their ready we look in And higher carriers when consumers increases, pricing And we to we do, will. increase our transparent are drive more exactly growth operator, capitalize. they in rate platform, are actions carriers while improved profitability, complete to they realize see will when don’t forward, know

[Operator instructions].

line of Kligerman question Andrew from Suisse. Credit first the today Your comes with

Your line open. is now

Because the I your level sequentially and I tough to to know color your of in happening? going sense some second and -- pricing little feel that’s cited Hey, close you to have some the that good attractive. backs of equilibrium figure in an due the kind evening. kind too due give quarter I I these spending on gotten seasonality. guidance but to are Could it’s view out be you down states starting is of and to of get transaction as companies letter could on value more why push touch of a

it So in coming still you then property pickup why XQ? in this and on And see is significant off could a secondly, you casualty shopping? do XQ think

that for point. Yes. this Andrew, reached is that, would Steve. the I question. Hey, know industry’s don’t Thanks I say the your

dynamic of higher is rate I this carriers, there’s inflationary to prolonged And costs. different you’re they a think in of been increases any to continued planned. environment. you leading And think timing taking them It’s between what take going some environment, this, different I seeing seeing cycle underwriting you’re rate a elevation carriers. claims magnitude for originally see and that like than and is are

from additional And from But positive the rate took early rate planned or who you’re that they on so or some the higher I sufficient, then cycle. took that rates weren’t carriers on some think needed. is more on the rate you signals taking carriers early hearing that initially are seeing in and hand, other taking

of will uncertain the back pivot levels. year. resume to underwriting mode I share the so overall an half of this think, we’ll overall to the see and we But growth the But start second do And environment normal that and remains I insurance fairly dynamic. industry marketing expectations in outlook improvement think [indiscernible]

that anticipated. take will than is now Our assessment likely most that longer had originally

see, I Steve.

profitable understand if That in need I right? improvement, might get maybe see not of so to half, growth mode. you So really what good a the said, second you’ll a just kind longer, take little but you

take longer heard I think that’s will right. marketplace. in than that it that original some And expectations the of I think the you

one follow on up Got it. And then just other expenses.

G&A, compensation, why mentioned up? think versus around And talk the that’s growing in through -- million going came quarter in year to $XX.X quarter. the tough for was that $XX.X and million expenses about me they was the I growth year-over-year. equity-based quarter $XX.X So of given I the kind help that was about it you Maybe my the is, looked I running I versus value? environment question $XX.X financials. you be transaction these guess last bit this little expense a can understand in at

quarter talking numbers? over Pat. Andrew, you a Yes. quarter Are And this year-over-year , is about or

yes. -- Unless Year-over-year.

Yes. XXXX happened. and late is, have mind, a in keep were well been -- would public we were went I thing always we XXX expenses in the when we we say employees that on lean Right, that’s under company and when

the so support to the And time also were quarter of out in the a of up public, $XX from as Last over mode success of a incremental kind foundations at has infrastructure of five headcount really in six taking layered we across excess that to the company we’ve we a almost public to growth of five the quarter became been we’ve lay period. in had kind of terms well period, for all million or cost get build investment as well of in year business next cycle. lot go

are you think of that we’ve saw non us, that that is come something relatively growth bit our company. year we processes those public we’re -- doing for of in year as a the to SOX a and manifest to first professional cost in trends this people the that to get the on and as hump year. last that spent a lining of watermark over rebased new both side business. QX And the of the the And us kind good over are view I overhead of QX down numbers going some course particularly was So those of fees high on

given we would growth, -- The investment not we generated we more we’re here support won’t and other guidance that experiencing to heads is And I of we market and and very where that pay used in hard but what headcount. expect to there but say P&C going minimal to that some think can just we’re revenue term think I give on the adequately firm be where conditions means, thing on forward I feel quickly. going I add think would we’re staff hesitate growth back the side like measured

Pat. Very helpful. Thanks, Steve and

you. Thank

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

Your open. now is line

taking little is I for Hi, It guys. indeed. seems bit. on the segment for the focus that a Thanks up questions. holding nicely health like

in which the marketing terms well difficult that the quarter. this year’s square try fourth some to this will of commentary has ATP, ATP. you in been ahead to pretty investment want So I which e-brokers, this with of did in from their year happen pretty the again of

marketing they’re In million year. fact, this their to call going will which was on expenses, XXX a cut saying this to cut be quote of morning that most

on some So this taking the are Medicare percent wondering year I helpful. in segment particularly that of from square themselves the very what the seeing value versus with coming strength maybe of the is the the and health the was carriers frame e-brokers be directly e-brokers. side, that help in Thank you you’re if can transaction pullback health, help you. That’d

answer quickly or Yes. and that the and brokers really well it. healthcare fairly overall. insurance just between that we’re diversified Got Medicare question I’ll overall space carriers first in health

with full well question hearing because I a under it of for marketing happen. about get and I covers look you reconcile what that really to have think not meaningful different the do their segments through our requires what it’s worked channels really one to side to how parsing that with And think to story. picture, is the them performance, regard channel, broker you’re the need on

programmatic so welcome expected certainly A different And are designed what we far than they marketplace our before closer us, and that’s channel lifetime because the optimize lifetime really the channel whole our customer marketplace, look was a And match reevaluating the platform think as I taking that accurately certainly sector effectiveness, acquisition of exactly value value. expected with that can they marketing B as did and a transparent to. for more more a to cost versus channels and so

well think getting channels that closer specific, hearing the more what online they look. you’re have from actually is even performed these brokers as enrollment I very a take

has buying fairly broker our end really the area segment, see the clicks as works as broker know, amount been has strong for of well the And our is that clicks on for so that calls you is of with focus one actually you’ll segment And that the us. both as lead. year-over-year. quick marketplace up been what But

well. with and as very on so focus kind are aren’t to what the working working channels And brokers’ what of well regard

their I marketing level into played spend. at our to back with getting us. they favor increase really might channels in closer in and think be in early on investment really pulling other the their while, taking aggregate that’s them a of and look All

your in from million? And can CHT is XX And confirm helpful. so, the That’s you revenue full it. do if much? still XQ anticipate year, guidance? of CHT near how you included if Got around just And for

adjusted CHT our at is of expect the in is relatively of say breakout QX in providing EBITDA. I CHT Yes. is which thing centric a QX. is included in $XX what gave And guidance that very -- of Medicare excess we annual last we quarter XX one the this million revenue what same Pat. that quarter. we have the business and Medicare of guidance. Dan will in in aren’t The produce to in to was business million CHT excess time -- of as and signing the a tends of pronounced $X peak The TB

quarters. of will very profile be for business that So three over updated back the us remaining the P&L

the understood. color, I for Thanks guys.

Dan. Thanks, Excellent.

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

now is line Your open.

Thanks.

I back that you is they other vertical, have? particular way. and did signs to the bidding Going start if clicks? that of notice there about How exercise all see sudden sight P&C words, You’ll that company In if of a we or for in state it they up a it can. line just think want of go to really advance are the

No.

certain I works notice our and with way weekly way -- calls biweekly think at Steve. that it checking them ample seeing they partners or turn this Meyer, when least have with is they’re and what dialog to because constant expect this the The of very the we’re states. on is

as, hey. And so simple as never it’s

turned we’re we mean, -- get on. well it sudden I of All beforehand. about hear five states a

more think That’s I helpful. lower your we can get about opening the in Okay. detail but you talked per clicks, that. if breaking comments, of number down, Eventually, going Steve, on price clicks up,

Yes.

I carriers. partners. that insurance base supply Companies great XX think what like it means we Zebra, is over of have a

consumer demand strong. means So or and I also that that it today shopping shopping is what think remains the

consumers changes So as you more specifically. It’s shop those tie when to is what as know, happens rate go effect. back prices difficult up, take

our XX%, terms stimulate rate changes usually effect. those tends mean, rate, is take take as you Our think taking states the stronger I cycle, carriers QX behavior. QX behavior of in existing or to then anything again will the what in what taking volume about to we’re digits. And shopping Anything overall talking I you’re consumer cycle happens demand that are to lead that’s kicked think see rates rate the rate many is of increases taking to this is higher what see activity you is going being a effect shopping with than I a that increase I changes the correspondingly this expected, in from what is see double if off going over of to shopping policyholders. of your what nonlinear X% that year-over-year stronger But QX in got for well that many last consumer year. then far in you in magnitude into think over and

much. Okay. Perfect. you Thank so

instructions]. [Operator

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

is now open. Your line

Thank Hey, of two-thirds think some the wanted in ask just any from in And to of I platform discussion market the that? auto. the of competitors. also comment kind your of shareholder just you the do some way two-thirds, letter the I players your if through you. space that on the other then couple thought of differentiate some of of guys. around hard we the throughout to the have I some in we’re And wondering you a things

if you those think you think some I just a I share, strengths early just discussions current can maybe this able you’ve little partners, offering being more were highlight any your environment with if with but really And to know had wondering your demand exit insights. -- of I good of don’t the better.

you if Just wondering sort of comments that. any about have

Yes, Michael. question. I Hey, appreciate the

appreciation think event, of I what understanding with of lay unprecedented think of uncertain a And still underwriting I within right. an an can cycle, think it these beginning, was the I the from root how this be. types how causes cycles

that we persist, and what up others to cycle hard what taking I been think are a last smart undershooting. we’re seen I the think coming of end, figuring more some the are number we’re or conflicting I far arc a that the And they very more typical some where rate is we’ve a or in to taking they like some you’ve where taking out, cycle think market inning as think couple goes rate the take put to to on again, end some rate what carriers, months, and more which cycle. this are really seeing hesitant carriers, rate out rate earlier, than for in overshooting, pressures are carriers I taking over inflationary is carriers signs need

layering adequacy And in times. you have so and carriers rate achieving really at different

I think so to that much cycle of positive hearing. is too of is this that And really some you’re a probably two-thirds seeing through, news more bit view that this market way the I my marketplace. in on that’s what think putting you’re or think credence that little And

In you that terms of follow to yes. Did up part? a have

to and market better maybe questions. share competitive up Well, I’d of your sort get you love that ask on kind thoughts now advantage it’s to the of follow then.

you I April run know in is in because worse okay bit should we but So just seen we’ve far what into like QX as rate little interrupt, that was basis? kind drilling sorry we that but looked that your When March to a the you April, on -- so a look letter. that mentioned at kind interpret of Or little a more when of bit. of guidance, kind

discussions it sort lot or think feel a relative sort for guidance visibility should be. of question, we of of get of based the conservative to just earlier trying not that how or a on about in way to terms So might QX and it is more that

step I it’s in Yes. the in down. took some of some pretty news we’ve was the letter what business the gotten and March, and Pat. to late stable the And, And a from some Steve’s from carriers consistent we so been carriers. Michael, would market say good is, not QX And which outlined news that that has were relatively some gotten trend dynamics And present. other I think good we’ve -- some

But for will last to you is of numbers knowledge there in we’ve And so volume the not of look the guidance that what and price. incorporated into exactly you tell balance of all we I going doesn’t what our got we’ve And it I’m thing of far. the put kind that we’ve different the as thus best out. seen assuming night tell we’re much quarter from that all that

Thanks, Pat.

tend so the you second the your additional sometimes the just market does see are are I long and really question, very efficiency past pushing industry. the answer of hard are that appreciate. for years around We get in And to look in growth, efficient in initiatives can that is that that looking all time. volume. we ending, the they on But mode mean, that over growth part when this carriers and necessarily for represent not these enough, opportunity at reason And is sidelined insurance Michael is So cycles do seen prioritize projects an us. full we’ve we think I to what you an it part profitability these what which when carriers, urgency that, a times quarters. of terms things I finished of when

so shoppers. passing, programs monetize, conversion improving And to not about converting it’s data tracking, improving

to headway can outpace in we out And I I sound fair our of the which is the to in that times really to the all this we getting allows of scaling efficiency things very through out traction supply tell of you were their in we’re it we cycle. these and these the carrier large ability achieve coming initiatives us well Something I with in our our the squeeze really primary of able influx market and online. coming that small as beneficiary that targets the that spend at scale market And while percentage think particular you of to bit cycles our but a during of with were rapidly spend. these of a -- individually, points cycle, returns programmatically really COVID you efficiency in their during partners of efficiency both allows spend aggregate, spend from we our tend their and saw oftentimes that work make to of budgets that to ability small types of several most it’s this like allows times hundreds of that to for efficiency, those up their rapidly can very and and enable tell the in hallmark hard targets. marketplace that our carriers last measurement that when cycles why granular as because to this And do carriers those and sacrifice having fund without competitors of market during marketplace that maintain

focused we’re that’s on what right now. so And

For call, analysts interesting. been us, whole very XX years can that But for an the that doing that’s plus for for I you we’ve ballgame. now. sound tell this doesn’t earnings

Steve. lot, I a Thanks the answer. appreciate Okay.

Thanks, Michael.

today’s This now you may Thank attending for disconnect. call. concludes you conference