EverQuote, Inc.

Good afternoon. Thank you for joining us for the first quarter 2021 EverQuote earnings call. With me today is Jamie Mendel, CEO of EverQuote, and John Wagner, CFO of EverQuote. During the call, we will make statements related to our business that may be considered forward-looking statements under federal securities laws, including statements concerning our financial guidance for the second quarter and full year 2021, our growth strategy, our plans to execute on our growth strategy, Key initiatives are investments in the business, the growth levers we expect to drive our business, our ability to maintain existing and acquire new customers, our recent acquisition, and interest or ability to acquire other companies, our goals for integration, and other statements regarding our plans and prospects. Forward-looking statements may be identified with words and phrases such as we expect, we believe, we intend, we anticipate, we plan, may, upcoming, and similar words and phrases. These statements reflect our views only as of today and should not be considered our views as of any other subsequent date. We specifically disclaim any obligation to update or revise these forward-looking statements except as required by law. Poor booking statements are not promises or guarantees of future performance and are subject to a variety of risks and uncertainties that could cause the actual results to differ materially from our expectations. For discussion of material risk and other important factors that could affect our actual results, please refer to the material risk and other important factors under the heading risk factors in our most recent annual report on Form 10-K, which is on file with the Securities and Exchange Commission and available on our investor relations section of our website at investor.everquote.com and on the SEC's website at sec.gov. With that, I'll turn the call over to Jamie Mendel, CEO of EverQuote.

Thank you, Brindley, and thank you everyone for joining us today. As I reflect on my first full quarter as CEO, I would first like to say that I am grateful for our team who, in spite of an unexpected leadership transition and ongoing challenging circumstances in the pandemic, has continued to execute so well. I'm grateful for our late founder and friend, Seth Birnbaum, who imparted in me a clear sense of what's possible given the enormity of the market opportunity in front of us. and who prepared me to lead EverQuote's remarkable team in building what I'm increasingly confident will become an industry-changing company over the long term. EverQuote's vision is to become the largest online source of insurance policies by using data and technology to make insurance simpler, more affordable, and personalized. My confidence continues to grow in our ability to realize our vision as our team executes consistently against our long-term plan. Nearly a year after drafting and several quarters into executing this plan, I'm encouraged by our ability to balance consistent operational execution quarter after quarter with methodical investments and new growth platforms like our verified partner network on the consumer side of the marketplace and our direct to consumer agency on the distribution side. Turning to the quarter, we delivered favorable results across all key metrics in Q1. we achieved year-over-year growth in revenue and variable marketing margin, or VMM, of 28% and 32% respectively, and generated expanding adjusted EBITDA while continuing to invest in strategic initiatives. We are proud of this performance, especially in the context of the strong first quarter of 2020. Let me provide you an update on each of our four growth levers, which include, number one, attracting more shoppers, number two, growing insurance provider coverage and budget. Number three, optimizing and deepening consumer provider engagement. And number four, expanding non-auto verticals. So let me begin with our first growth lever, attracting more shoppers. As a reminder, on the traffic or consumer side of the marketplace, we have two platforms. First, our owned and operated first party performance marketing platform, And second, our fast-growing third-party traffic platform, referred to as the Verified Partner Network, or VPN, through which we provide third parties access to our insurance provider network. Investments in our traffic platforms continue to grow the volume of high-intent insurance shoppers to our marketplace. In our performance marketing platform, we invested in expanding both offline and digital channels, improving our ability to target high-intent insurance shoppers. In our VPN platform, we launched new products that enable third-party websites and media companies to access our extensive insurance provider network in a variety of innovative ways. Under one recently launched offering, we already have 13 verified partners who are ramping up quickly, and we have developed a robust pipeline of additional partners to be added over the balance of the year, increasing our confidence in VPN as a reliable pillar of continued traffic growth moving forward. Next, we had success in growing provider coverage and budget. We continued to add third-party marketplace providers and expand relationships with existing carriers and agents. One trend worth highlighting is the continued growth and strength of InsurTech digital carriers, which have emerged as a significant segment within the marketplace. With shared DNA for using technology and data to improve the insurance shopping experience, They have been fast to adopt the full range of consumer targeting and deep integration capabilities offered by EverQuote. As a result, they are finding EverQuote to be an effective customer acquisition partner with whom to grow their business. We continue to have success growing with this segment and in Q1, digital carriers increased their spending on our platform by over 200% year over year. The third growth lever is optimizing and deepening consumer provider engagement. We are implementing a number of initiatives that reduce friction from the shopping experience and improve performance for providers. One key focus has been on the connection of online shoppers to local third-party agents. We are investing in new products which enable us to control the online to offline connection on behalf of local agents. This solves for a pain point felt by both consumers and agents. For consumers, we can deliver a more unified shopping experience and better control the outreach to them. For providers, we can deliver better performance by applying best practices and technology to optimize the process of getting a consumer quoted. In Q1, 11% of active third-party agents were enrolled in our new online to offline connection offering, indicating that we have significant room for growth within our existing client base. Finally, we continue to expand non-auto verticals. In Q1, our non-auto verticals continued growing fast with revenues increasing 41% year over year. In our home vertical, we are seeing greater efficiency as we scale and leverage bundling opportunities, leading to a VMM percent for home that is comparable to auto insurance, our largest vertical. Within our life and health verticals, we continue to be pleased with the strong performance of CrossPoint health insurance agency that we acquired last fall. After delivering another strong quarter in which they exceeded their operating plan, we unified the leadership of our life and health direct-to-consumer agency operations with the CrossPoint founders, who have become integral members of our leadership team. This change will accelerate our ability to operate as a single pool of agent capacity across multiple verticals that can better respond to surges in consumer demand, such as around the open enrollment period in Q4. This change will also enable us to invest in more highly leveraged shared technology, analytics, and reporting infrastructure to drive better performance across our now unified health and life direct-to-consumer agency as it grows. Looking ahead, we remain excited about the opportunity to expand our non-auto verticals and feel confident that over time, we can grow non-auto verticals to 50% or more of our revenue. In summary, we are pleased with our Q1 performance and remain bullish on the road ahead. With continued execution to our plan, including targeted investments in our team, technology, experiences, and operational platform, We believe that EverQuote is well positioned to become an industry defining company as the $2 trillion insurance industry moves into the digital age. I'm energized by our progress, by the challenging work ahead, and by the privilege to pursue our vision with the amazing team that we've assembled. Thank you all again for your time. Now we'll turn the call over to John to provide more details on our financial results.

Thank you, Jamie, and good afternoon, everyone. I'll start by discussing our financial results for the first quarter and then provide guidance for the second quarter and updated guidance for our full year 2021. We're pleased to report solid first quarter 2021 results with performance at the high end or above our guidance range for all our key financial metrics. Our revenue for the quarter was $103.8 million, an increase of 28% year over year, and building on last year's strong growth in the comparable period. Revenue in our auto insurance vertical increased to $84.5 million, a growth rate of 25% year over year, reflecting our continued strong performance in a healthy auto insurance market. Revenue from our other insurance verticals, which includes home and renters, life, health, and commercial insurance, increased to $19.3 million, a growth rate of 41% year-over-year and representing 19% of revenue. Though still small in scale, our growth rate in the health vertical led the pack, reflecting the integration benefits of our CrossPoint direct-to-consumer agency acquisition. Overall, we continue to see strong demand from our insurance providers. As we emerge from COVID, carrier participation in the marketplace has continued without any notable reduction in advertising spend. Revenue from agents also continues to grow, counting for at least 35% of total revenue for the past five quarters, reflecting the growing participation of agents in the marketplace. In consumer acquisition, we focused on attracting increased volumes of high intent consumers, which drove significant monetization expansion. Revenue per quote request increased 22%, while quote requests grew 4% year over year to 7.7 million. In Q1, our focus continued to be on delivering in-market consumers with a high propensity to shop and purchase insurance. Our emphasis on the quality of our referrals, which our providers reflect in their premium bids, is captured in our strong growth in revenue per quote request. We delivered first quarter variable marketing margin, or VMM, which we define as revenue less advertising expense, of $31.4 million, an increase of 32% year over year, which was at the high end of the guidance range provided last quarter. As a percentage of revenue, first quarter VMM expanded to 30%, up from 29% in Q1 of last year. Though we managed for VMM in absolute dollars and not as a percentage of revenue, we did benefit from favorable revenue per quote request, only partially offset by higher traffic costs as the market for insurance-related search advertising tightened. We anticipate VMM as a percentage of revenue at similar levels in the next couple of quarters before expanding in Q4 with the influence of open enrollment within our health direct-to-consumer agency. Turning to profitability, gap net loss was $3.8 million, a loss of 13 cents per share based on 28.4 million weighted average shares outstanding. We delivered adjusted EBITDA of $4.8 million, or 4.6% of revenue for the first quarter, which was at the high end of the guidance range provided last quarter. Operating expenses were largely as forecasted and reflected the continued investment begun in 2020 in developing our direct-to-consumer agency and expanding our offerings in our verified partner network. On the balance sheet, we ended the quarter with $46.9 million in cash and cash equivalents, reflecting $3.5 million of positive operating cash flow during the quarter. Turning to our outlook for Q2 and the balance of the year, we anticipate an increased revenue growth rate in Q2, and we have reflected this in our Q2 guidance as follows. We expect revenue to be between $101 and $130 million, a year-over-year increase of 30% at the midpoint. We expect variable marketing margin to be between $31 and $32 million, a year-over-year increase of 34% at the midpoint. And we expect adjusted EBITDA to be between $5 and $6 million, a year-over-year improvement of 38% at the midpoint. Our first quarter performance reflects that we are executing and tracking well against our full-year guidance. As a result, we are raising our full-year revenue guidance and increasing the low end of our VMM and adjusted EBITDA guidance as follows. We expect revenue to be between $434 and $442 million, a year-over-year increase of 26% at the midpoint and an increase from our prior guidance of between $430 and $440 million. We expect variable marketing margin to be between $136 and $140 million, a year-over-year increase of 27% at the midpoint, and an increase from our prior guidance of between $135 and $140 million. and we expect adjusted EBITDA of between $26 and $30 million, a year-over-year increase of 52% at the midpoint, and an increase from our previous guidance of between $25 and $30 million. In summary, we delivered solid first quarter financial results and have commenced 2021 executing well against our plan. We are focused on our growth levers, and our early performance has positioned us well for continued growth in 2021. And with that, Jamie and I look forward to answering your questions.