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spk09: Good day and thank you for standing by. Welcome to the Evercloat third quarter 2021 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Brinley Johnson of the Blue Shirt Group. Please go ahead.
spk08: Thank you. Good afternoon, and welcome to EverQuote's third quarter 2021 earnings call. We'll be discussing the results announced in our press release issued today after the market closed. With me on the call this afternoon is Jamie Mendel, EverQuote's chief executive officer, and John Wagner, chief financial officer of EverQuote. During the call, we will make statements related to our business that may be considered forward-looking statements under the federal securities law, including statements concerning our financial guidance for the fourth quarter and full year 2021, our growth strategy and our plans to execute on our growth strategy, key initiatives, including our direct-to-consumer agency, our investments in the business, the growth levers we expect to drive our business, the impact of COVID on our business and the insurance industry, our ability to maintain existing and acquire new customers, Our recent and planned acquisitions and interest or ability to acquire other companies, our goals for integrations 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 subsequent date. We specifically disclaim any obligation to update or revise these forward-looking statements except as required by law. Floor-looking 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 risks and other important factors that could affect our actual results, please refer to those contained under the heading Risk Factors in our most recent quarterly report on Form 10-Q and our annual report on Form 10-K, which is on file with the Securities and Exchange Commission and available on the Investor Relations section of our website at investor.everquote.com and on the SEC's website at sec.gov. Finally, during the course of today's call, we refer to certain non-GAAP financial measures, which we believe are helpful to investors. A reconciliation of GAAP to non-GAAP measures was included in the press release issued after the close of Market Today, which is available on the investor relations section of our website at investors.everquote.com. And with that, I'll turn it over to Jamie.
spk04: Thank you, Brindley, and thank you, everyone, for joining us today. On October 18, we announced preliminary results for our third quarter and addressed current challenges in the auto insurance market. Several key carrier customers experienced higher-than-expected claims losses, resulting in a sudden pullback in their marketing spend in the second half of the quarter as they attempted to restore their target levels of profitability. Based on carrier feedback, higher-than-expected claims losses were primarily attributable to a higher loss severity or cost per claim driven by two factors. First, vehicle replacement value and cost of vehicle repair rose significantly, stemming from supply chain and labor shortages. Second, liability or medical costs increased due to a larger-than-expected number of accidents with serious injuries or fatalities, as well as overall medical inflation. In addition, claims associated with extreme weather, including Hurricane Ida, placed further strains on carrier profitability. We believe these industry dynamics are isolated to our auto insurance vertical, temporary in nature, and will correct in the coming quarters as carriers adjust their pricing to a new underwriting environment before restoring higher levels of customer acquisition spend. During our decade serving auto carriers, we have seen similar challenges, from which EverQuote has re-accelerated growth following a period of pricing correction by the carriers. In an effort to align our cost structure to the current auto insurance environment, we implemented an approximate 10% structural reduction in non-marketing operating expenses, excluding non-cash items. As part of reducing operating expenses, we did an extensive review of our business, which resulted in making organizational changes to consolidate leadership and streamline decision-making, which we believe will better position EverQuote for strong growth when the auto insurance industry rebounds. We remain steadfast in building towards our long-term vision of becoming the largest online source of insurance policies by using data and technology to make insurance simpler, more affordable, and personalized. At the beginning of 2021, I outlined four levers of our growth strategy, including 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. Here's an update on progress in the context of these growth levers. During the quarter, we reported strong traffic growth as we successfully attracted more consumers to our marketplace, resulting in a reacceleration of quote request growth to 21% year over year. This quarter, we closed our previously announced acquisition of PolicyFuel, and we are pleased with the early performance and how the team has integrated into our broader direct-to-consumer agency, or DTC agency, operations. The acquisition of PolicyFuel is consistent with the strategy we first announced last year to begin building a multi-vertical, tech and data-enabled DTC agency platform, which enables EverQuote to capture a larger portion of the economic value of each transaction, while giving us a path to directly access the lion's share of the $150 billion addressable market. And at the same time, it brings us closer to our customers, enabling us to develop more seamless buying experiences and deeper relationships with consumers. In addition to our successful integration of PolicyFuel, we continued making foundational investments in our health and Medicare DTC agency platform in Q3. We grew the team, improved many business processes, and built new technology to support a steep ramp in health and Medicare agent capacity in advance of the annual and open enrollment periods in Q4. We now have approximately three times the number of agents in our health and Medicare DTC agency compared to last year, and we remain confident that we will deliver strong Q4 performance in our health insurance vertical and further solidify this foundational pillar of future growth. On the provider side of the marketplace, our diversified distribution model benefited us in the third quarter. As carriers moved to quickly reduce their direct marketing expenses in response to higher than expected claims losses, our third-party local agent demand and DTC agency operations have experienced significantly less impact from the current headwinds in the auto insurance markets. As we continue to build EverQuote, we are guided by serving customers on both sides of our marketplace. consumers seeking a more streamlined shopping experience with personalized coverage options, and insurance providers seeking more profitable policies in the age of digital insurance shopping. We are executing on our strategy and we are increasingly well positioned to deliver on our customer promises. We believe EverQuote occupies a unique position in the industry as the only player at scale with marketplace and agency operations across major personal lines of insurance. We have assembled a distinctive combination of data, technology, and operational assets that can be leveraged to generate advantages in areas like bidding for traffic, expanding customer LTV via multi-line customer relationships, and designing innovative experiences to own and manage a customer's insurance life in ways that do not exist today. While the current auto insurance market dynamic presents a temporary setback, it is indeed temporary. I truly believe EverQuote will be better positioned than ever before to emerge as a powerful player in the $150 billion insurance distribution market. Now, I'll turn the call over to John to provide more details on our financial results.
spk01: Thank you, Jamie, and good afternoon, everyone. I'll start by discussing our financial results for the third quarter and conclude with guidance for the fourth quarter and our updated guidance for the full year. Our revenue for the quarter was $107.6 million, an increase of 20% year over year. Revenue in our auto insurance vertical increased to $89.7 million, a growth rate of 20% year over year. Revenue from our other insurance verticals, which includes home and renters, life, health, and commercial insurance, increased to $17.9 million, a growth rate of 18% year-over-year, representing 17% of revenue within the quarter. Our revenue growth in the third quarter was driven by a 21% increase in the volume of quote requests in our marketplace, offset by a 1% year-over-year reduction in revenue per quote request. As Jamie outlined, the performance of our auto insurance vertical in the third quarter was impacted by some carriers reducing their marketing spend in an effort to manage to their profitability targets, given a sudden spike in their claims losses. Though increases in claims frequency were largely anticipated by carriers, as miles driven have continued to approach pre-pandemic levels, claims severity was significantly greater than expected. This led certain carriers to abruptly and dramatically reduce their advertising spend in our marketplace late in the quarter and in a manner that we had not anticipated. This pullback in demand directly impacted our marketplace monetization through lower revenue per quote requests. We believe these higher claims losses will continue to impact carriers' profitability in the near term. which in turn impacts their willingness to spend on marketing and new consumer acquisition. Having begun in Q3, the full extent of reduced carrier spend will impact us in Q4, and it is likely to take multiple quarters for auto insurance carriers to fully reprice their insurance book of business to current trends and for their marketing spend to completely recover. That said, our marketplace remains healthy, and increasing auto insurance rate environment will likely drive more consumer shopping over the same period. We expect continued growth in quote requests in Q4 at rates similar to those that we achieved in Q3 on a year-over-year basis, while reduced demand as a result of insurance industry factors will cause both sequential and year-over-year reductions in revenue per quote request. In Q3, we delivered variable marketing margin, or VMM, which we define as revenue less advertising expense of $32.4 million, an increase of 10% year over year. As a percentage of revenue, third quarter VMM was 30%, down from 33% in Q3 of last year. Though partially offset by lower advertising cost per quote request, VMM was directly impacted by the decline in marketplace monetization and carrier demand. As we look forward to Q4, we expect the dynamics of the auto insurance market will continue to put pressure on VMM within our auto insurance vertical. But as our advertising cost structure is highly variable, we will seek to calibrate our advertising spend to optimize VMM in absolute dollars. Apart from our auto insurance vertical, we expect VMM to benefit from strong revenue growth within our health direct-to-consumer agency during the annual health open enrollment period in Q4. This is expected to drive an improvement in VMM operating point for the business overall in Q4 versus Q3, despite the downward pressure in the auto insurance vertical. Our DTC agency within our health, life, and auto insurance verticals operates with a considerably higher revenue per quote request and VMM, which demonstrates the financial benefit of guiding our marketplace consumers through the complete insurance coverage journey through to purchase. The changing dynamics within our business, namely higher engagement, higher take rate, and higher lifetime value within our DTC agency are not consistently captured within a traditional marketplace volume metric like quote requests. And we intend to review how we may evolve our quarterly metrics to better capture our new initiatives in 2022. As Jamie mentioned, we implemented an approximate 10% structural reduction in cash non-marketing expenses in an effort to realign our cost structure and streamline and focus our organization. As this action took place in Q4, the cost reductions will partially impact Q4 with the full reductions captured in expense run rates entering 2022. We believe this will position us to continue to target operating at positive adjusted EBITDA for as long as carrier demand remains constrained and will allow us to quickly return to higher levels of profitability when the auto insurance carriers return to their normal pattern of acquiring consumers through digital channels. Turning to profitability. Gap net loss increased to $5.3 million, or a loss of 18 cents per share based on 29.3 million weighted average shares outstanding. Gap net loss included a tax benefit of $2.5 million from a one-time partial release of our NOL valuation allowance associated with the policy fuel acquisition. We delivered adjusted EBITDA of $2.7 million, or 2.5% of revenue for the third quarter. lower VMM from our auto insurance vertical, and higher expense associated with the closing of the policy fuel acquisition earlier than planned within the quarter both impacted adjusted EBITDA this quarter. Positive operating cash flow of $2.8 million within the quarter tracked closely to adjusted EBITDA and resulted in $41.8 million of cash and cash equivalents on the balance sheet at the end of the quarter, net of the $16 million in cash paid at the closing of the policy fuel acquisition. Historically, cash flow from operations has tracked closely to adjusted EBITDA, as it did in Q3. As we anticipate policy sales commissions to contribute more significantly to Q4 revenue, we also expect that operating cash flow will trail adjusted EBITDA in Q4 as we collect most policy sales commissions over the expected lifetime of the policy sold, which stretches into future periods. On August 16th, we announced that we closed the acquisition of PolicyFuel. We have been pleased with the integration and ramp so far and now expect PolicyFuel to perform above our previously stated expectations for Q4. Similar to our non-auto insurance verticals and our health and life DTC agency, we expect PolicyFuel's policy sales as a service business model will not be significantly impacted by carrier marketing reductions and will provide us with revenue diversity during a challenging period for our auto insurance marketplace. Turning to guidance, our Q4 guidance is significantly impacted by industry factors affecting our auto insurance vertical in the near term. For the quarter, we expect revenue to be between $93.5 and $98.5 million, variable marketing margin to be between $30.5 and $33.5 million, and adjusted EBITDA to be between negative $1.5 and positive $1.5 million. Consequently, we are lowering our full-year 2021 guidance for revenue, VMM, and adjusted EBITDA as follows. We expect revenue to be between $410 and $415 million, a year-over-year increase of 19% at the midpoint, and a decrease from our prior guidance of between $440 and $446 million. We expect variable marketing margin to be between $127 and $130 million, a year-over-year increase of 18% at the midpoint and a decrease from our prior guidance of between $138 and $141 million. and we expect adjusted EBITDA of between $12.5 and $15.5 million, a year-over-year decrease of 24% at the midpoint, and a decrease from our prior guidance of between $23 and $26 million. in summary though we foresee near-term headwinds we remain confident in our ability to manage our business during this period and to return to performance consistent with our long-term model of high growth and increasing profitability as industry demand normalizes looking beyond the temporary conditions driving auto insurance industry demand we believe our direct to consumer agency is poised for a breakout performance in q4 validating our strategy Jamie and I look forward to answering your questions.
spk09: As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. The first response is from Michael Graham of Canaccord. Please go ahead.
spk05: Thanks a lot. Hey, guys, and thanks for all the information and the color. I just wanted to ask a little bit more about the, you know, what you see as the potential duration of some of the softness in auto. I remember at the time of your IPO, you were just sort of coming off of a flat year, you know, for similar circumstances, you know, claims going up and margins compressing and I believe it took, you know, a couple quarters after that, you know, at that time, just wondering, you know, if you could maybe put a little more color around, you know, sort of the timing you expect to see unfold here. And, you know, maybe if I could just add on to that, you've got sort of a, you know, standard growth ambition of around 20% per year and just wondering how you're thinking about that as we, you know, finish up this year and head into next.
spk04: Hey, Mike. Thanks for the question, Jamie. So we have a couple of data points to draw on in terms of the expectations around timing and duration. Obviously, we don't have perfect information, but the first thing we can draw on is historical experience. I think you're right. It was around 2016 and 2017, last time we experienced something like this. And then the second data point is just the feedback we're getting from carriers, right? And so, you know, the playbook that they deploy is they draw down market expense to solve for two things, really. The first is in-period profitability, be in-quarter or in-year profitability. The second is to stop acquiring policyholders they now know to be unprofitable. Step two to address that second piece is they, you know, the carriers will refile their rates with state departments of insurance. And that's a process that will take several months. And then once they feel good about their rates, they'll reengage and resume sort of normalized levels of marketing spend. So that's what we saw in the previous time we went through this. That's what we expect to see happen this time. It's the guidance we've been given by carriers. In terms of how long we expect it to persist, the best information we have right now suggests that we'll find the trough, we'll find the bottom in Q4, likely to see a step up in Q1, and then somewhat gradual recovery over the course of next year. And I think different carriers sort of are affected in different ways and will respond with different approaches or at least levels of speed. That's been our experience. So we expect to see somewhat of a phased-in approach over the course of next year, ultimately having us exit next year back to normalized levels of spend.
spk01: And then, Michael, I would just add to that, with regard to the second part of your question, that also implies that we would exit next year back on our long-term growth model, right? Our long-term growth model is still an appropriate, you know, long-term growth model to use. Obviously, what we're seeing in this next number of quarters is something, you know, that is tied to the industry and tied to some of the macro trends for the industry. But we are confident that we will emerge into 2023 back on our long-term model of growth and profitability growth.
spk05: Okay. Sounds good. Thanks, Jamie. Thanks, John. Thanks, Michael.
spk09: Thank you. Your next response is from Raph Skackert with William Blair. Please go ahead.
spk07: Good afternoon. Thanks for taking the question. Jamie, kind of circling back off of Michael's question, I know you've seen these changes before, particularly at the IPO, and they did correct, but I guess what's similar with what we're seeing today versus last cycle, which I believe last cycle related to more technology in cars and pushing up claims costs, but then you also have you know, some added cross-currents here with supply chain issues, and then, you know, getting people to go back to work. So just love your perspective on sort of the compare-contrast.
spk04: Yeah. Thanks, Ralph. So there are – there's a confluence of the factors that are occurring this time, which are – distinctive. The underlying drivers are different than the last time around. One difference is the fact that the carriers have another rep under their belts, and I think are better positioned this time to respond quickly, having learned some lessons from the last time this occurred, and we are hearing some of that. The second is just the underlying drivers. In this case, You've got this confluence of events, number one being miles driven coming back to almost pre-COVID levels. I think we're at about 96% of 19 levels of miles driven. And so accident frequency is going up as a result. What we hear from the carriers, this was largely anticipated, right? And so perhaps not a driving factor relative to expectations. But number two is increases in levels of severity. And this was not completely expected. So they're seeing more serious accidents and more bodily injury expenses associated with that. And they're seeing, as you mentioned, supply chain shortages, labor shortages, which are making the cost of repairing and replacing vehicles more expensive. And then you layer on top of that, Hurricane Ida came through. Again, not an unexpected event for a hurricane to land in Louisiana, but for that hurricane to proceed and flood a good chunk of the northeastern United States wasn't expected, right? It is higher frequency plus higher severity plus catastrophe all coming together at the same time, some of which was unexpected, which is making this a particularly sort of sudden shock to the system. But, you know, back to my first point, I do think the carriers this time around are at least better prepared, right? The playbooks are pretty well understood at this point. And so they go through the motions and, you know, they'll all, we anticipate they emerge kind of back to where we started once rates have been normalized.
spk07: That's helpful perspective. Just maybe one more clarifying question. I guess just in terms of what's driving the claim severity, maybe if you could flesh that out a little bit. Is that something that has, I guess, you know, continued through, I guess, Q4 or what would sort of, I guess, slow down or neuter, so to speak, or neutralize the severity part of what's going on?
spk04: Well, again, the two factors driving the severity are more serious accidents, and so, you know, greater bodily injury expenses and healthcare costs associated with that. And then number two is the supply chain and labor shortages. Now, when the carriers address those issues, it can be addressed in one of two ways. One is they sort of resolve themselves, as I think you're sort of inquiring about. Number two is they just update pricing to reflect what is now a new normal. And I think it is the latter tact that they are taking. They are assuming that this is a new normal, and they are revising pricing to reflect that. Over time, you know, one could certainly see at least the supply chain shortage and labor shortages, you know, resolving. And who knows, that could lead to a period of time where the carriers experience higher levels of profitability. But right now, as far as we can tell, they're really just focused on correcting pricing in response to what has emerged as a new normal. Okay, that's helpful. Thank you, Jim.
spk09: Thank you. Your next response is from Jed Kelly of Oppenheimer. Please go ahead.
spk02: Great. Thanks for taking my question. Just on the marketing recovery, we still see a lot of insurance TV commercials. So when the carriers are bringing back their marketing spend, how does it work with the branded channels like television relative to the affiliate marketplaces like yourself?
spk01: Hi, Jed. I'll take that one. So, I guess we think that all marketing spend for the carriers will be affected. Clearly, there's a difference in terms of commitments and lead times on certain types of spend. So, we think we felt this as soon as the carriers did and as soon as the carriers made the decision to calibrate their models toward trying to reach those profitability goals. So I think that's sudden for us. I think over time, as some of those commitments to mass media roll through, that's when other advertising sources will see reductions. And that also might be a little bit of a tailwind for us going into 2022 in terms of carrier demand. So I think the carriers are faster to react with a marketplace like ours. But over the medium term, Our marketplace also offers the carriers a more targeted level of spend that is highly attributable. And so I think we do better in the medium term as they, say, recalibrate or rebalance against other marketing and acquisition sources, those that have longer commitment cycles, and that we get, you know, proportionally more spend as our performance is increased. is worthy of. So I think you'll see roll through, Jed, but we're going to get hit, you know, first, but I think we may do better in the medium term.
spk02: And then you mentioned, you know, next year getting back to your growth targets. Would that be 20% growth or would that actually be a higher level of growth? You'd actually think compounding the 20% growth relative to 2019. How should we think about that growth rate next year?
spk01: yeah i i think for you know we will certainly give uh guidance uh next quarter and give more thoughts on what 2022 will look like you know i think we know that we are looking at something in terms of care demand that is multi-quarters in in its length um we're confident really in emerging from 2022 back on that long-term growth uh path So, with regard to 2022, you know, we're not making any statements about where we are. With regard to emerging out of 2022, we'll be back on that long-term growth model. If you look in terms of, you know, how the company might emerge, I mean, you can go back and look at periods like, you know, 2018. There were periods in which we were able to grow, especially consumers, the marketplace volumes much more successfully coming out of the slowdown. So that may give some indication. But right now, I think we're committed to the fact that the long-term model is still the right model for us and that we'll be back on track as soon as these carrier demand and profitability issues normalize.
spk02: All right. And then just one more for me, I guess. Ben, how does this make you rethink your direct-to-consumer initiative? I mean, potentially finding a way to accelerate the process, it seems – If you're able to get more agents, get more commissions, that part of the business is much less cyclical.
spk04: Yeah, it's a good question, Jed. So one of the interesting observations we've had through this period has been that while the sort of carrier direct business was affected suddenly and substantially, our agency distribution was largely unaffected, and that's both our third-party marketplace, third-party agents, as well as the direct-to-consumer agency. And so to your point, I think it certainly instills high confidence that we're heading down the right path and I think emboldens us to consider how we can be a bit more aggressive and moving faster down that path as we go. I'll pause there. Does that answer your question?
spk02: Yeah, thank you.
spk09: Thank you. Your next response is from Corey Comforter with J.P. Morgan. Please go ahead.
spk06: Thanks for the questions. Just curious how broad-based the cuts were across your network versus isolated to a certain type of carriers, and maybe kind of getting at any notable difference in cuts from traditional agencies versus direct consumer carriers or insurtechs. And the second question, just with policy fuel, you mentioned it's running ahead of expectations. So I'm hoping you could talk to what's worked well or some of the early lessons learned from the integration. Thanks.
spk04: Sure. You know, the industry effects are relatively broad-based, Corey. But I would say, you know, to my earlier point, we're seeing them affect us more directly on the sort of more direct-to-consumer-oriented carriers that would buy referrals directly from us. So that would include the sort of DTC carriers. It might include some of the more like InsurTech carriers, as you would classify them. seem to be, you know, responding in our marketplace more aggressively. The second, remind me the second part of your question, Corey, please. Policy fuel. Yep. Policy fuel. Policy fuel. Yeah, so we're, you know, we're a couple months in now on policy fuel. Just to kind of reorient you to how it fits into the big picture. We first began down this direct-to-consumer agency path with the launch of our life insurance agency in early 2020. We accelerated down that path with the acquisition of Crosspoint in the health and Medicare space in the sort of mid to late 2020. And then we've accelerated once again with the acquisition of PolicyFuel. And with the acquisition of PolicyFuel, we now have this direct-to-consumer agency operating across all major personal lines of insurance. So we're excited to have closed the deal. The team is well-integrated. And we're off to a good start. It's still quite early, so there's a lot of focus on the integration and ensuring we maintain the plan we laid out for the team. But all signs are positive so far, and we're excited to have them on board.
spk09: Thank you. As a reminder, to ask a question, please press star 1 on your telephone keypad. Again, that is star 1 to ask your question. Your next response is from Mayak Tandon of Needham. Please go ahead.
spk03: Hey, good evening. It's actually Kyle Peterson from IOC. Thanks for taking the questions. I just wanted to touch a little bit on some of the emerging verticals I noticed that both as a percentage of revenue and on the absolute dollar basis, sequentially, that dipped a little bit. Were you guys seeing some of the same challenges you guys were seeing in auto in some areas, kind of like home and life, or just wanted to see if you could provide any additional color on some of the emerging verticals?
spk04: The emerging verticals have not been affected by the same industry dynamics that the auto market has been. And we would expect to see the emerging, the non-auto verticals accelerating into Q4. It wasn't really a catalyst for outsized growth in Q3. I think they were sort of kept pace with auto but didn't exceed it. As you recall, we have been investing quite heavily over the course of this year to get ready for the annual and open enrollment periods in health and Medicare. and that's included a 3X-ing of the number of advisors in that agency business and all the infrastructure and team to support them. So as we progress here through Q4, it's still very early in the enrollment period, but the signs are positive, and we do expect that to be a large catalyst to reaccelerate non-autos growth this quarter.
spk03: Okay, that's helpful. And then I guess just maybe a follow-up on obviously some moving pieces between carrier demand and then obviously there's some expense reductions and rationalizations, but how should we think about, is there anything in that 10% cut to cash expenses that would impact the pace of your ability to grow Basically, when the demand environment improves, or how should we think about the puts and takes between some of these cost initiatives and kind of how you guys are prepared to re-accelerate growth as demand improves?
spk04: Yeah, it's a great question. So as we approach the expense reduction, you know, we're weighing a couple of different things. On the one hand, you know, we're trying to model out effectively different scenarios with respect to how deep the direct auto dip would be and how long it would last and, you know, be diligent in managing expenses to sort of preserve profitability through that period of time. On the other hand, if you just take the direct auto business and set it aside, and I know it's a big thing to set aside, but if you can do that and you look at the rest of the business, we're actually feeling very good about the investments that we've made and starting to see them pay off, right? So we've been talking a lot this year about the verified partner network on the consumer acquisition side of the business. We've been launching new products into that, and that's beginning to take hold. The direct-to-consumer agency strategy is our progress is accelerating. And as we move into the open enrollment period and as we acquire policy fuel, the marketplace agency business is healthy. And so a lot of the investments we've been making are really building some momentum right now. And we want to be very thoughtful not to – not to disrupt the momentum that is building in other parts of the business. So as we approached it, we were balancing those two things, and we feel the level of expense reduction we got to was responsible in the context of what's going on in the auto business, but didn't necessarily slow down the momentum we were building or make any sacrifices that we couldn't live with in terms of slowing progress on the other parts of the business. And it came with some organizational changes that we think will just help us move more efficiently. So, you know, my personal sentiment is we're in a good position. We have some tough things going on around us right now, but it will pass is our expectation. And we believe that as it does, we'll be really well positioned to keep growing and getting back to our, you know, to our, trajectory that we were on before.
spk03: Makes sense. Thanks, Gus. Thanks, Kyle.
spk09: This now concludes the Q&A for our call. I will turn the call back over to Jamie Mendel, the CEO.
spk04: Thank you, and thank you all for joining us today. The market presents near-term headwinds for our business, but we are confident that these issues are temporary in nature and and will correct as carriers adjust their pricing strategies to the new underwriting environment. As we mentioned, we are executing well against our strategy. We believe EverQuote will emerge from this period even better positioned to be a powerful player in the $150 billion insurance distribution market. Thank you all, and have a great evening.
spk09: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.
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