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spk03: Good afternoon, ladies and gentlemen. Thank you for attending today's EverQuote Q2 2022 earnings call. My name is Tia, and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star one on your telephone keypad. I will now pass the conference over to your host, Brindley Johnson of the Blueprint Group. You may proceed.
spk01: Thank you. Good afternoon, and welcome to EverQuote's second quarter 2022 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 federal securities laws, including statements concerning our financial guidance for the third quarter and full year 2022. 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, our ability to maintain existing customers and acquire new customers, our expectations regarding recovery of the auto insurance industry, our recent acquisitions, our goals for integrations, and other statements regarding our plans and prospects, and the possible impact of inflation. Forward-looking statements may be identified with words and phrases such as, We expect, we believe, we intend, we anticipate, we planned, 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 our obligation to update or revise these forward-looking statements except as required by law. Forward-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 cause our actual results, please refer to those contained under the heading Risk Factors in our most recent quarterly report on Form 10Q, 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, refer to certain non-GAAP financial measures which we believe are helpful to investors. Our reconciliation of GAAP to non-GAAP measures was included in the press release we 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 you, Jamie.
spk07: Thank you, Brinley, and thank you all for joining us today. In the second quarter, we exceeded guidance expectations across our three primary financial KPIs, delivering revenue of $101.9 million dollars, variable marketing margin, or BMM, of $33.1 million, and adjusted EBITDA, a positive $1.4 million. We attribute our success in the quarter to agile management fueled by strong analytics, as our operating teams demonstrated their ability to effectively navigate continued volatility and increased headwinds in the auto insurance industry. On the consumer side of the marketplace, strong traffic volume growth helped offset lower carrier monetization, with consumer quote requests up 28% year on year. Our customer acquisition teams reacted swiftly, continuously adjusting ad spend in near real time to maximize margin amidst volatile carrier demand throughout the quarter. On the provider side of our marketplace, our agent-oriented distribution channels continue to exhibit strength and resilience in Q2, even while the direct carrier channel contracted. Local agent budget caps increased year-over-year within our marketplace. Our direct-to-consumer agency, or DTCA, continued to perform well, representing 13% of revenues in Q2 and exceeding our internal projections. Over the course of Q2, amidst a challenging auto carrier environment and a lock-in period for health and Medicare, we drove meaningful improvement in the unit economic profitability and cash efficiency of our DTCA operations as follows. One, we continued to improve advisor performance through continued coaching and tenuring of agents, as well as tech and traffic optimization. Two, we increased ancillary attach rates in health and Medicare. And three, we shifted policy mix towards higher LTV products. Meanwhile, The direct carrier channel continues to exhibit significant volatility. Throughout the quarter, carriers exited unprofitable states and segments. As a result, in Q2, direct carrier channel monetization reached new trough levels below the lows last seen in Q4 of 2021. July demand from auto carriers showed continued deterioration, and we are not expecting this dynamic to change meaningfully within Q3. We also expect to experience lower health demand in Q3, reflecting the seasonally slower lock-in period ahead of Q4's open enrollment period. Turning to the broader environment, auto carriers are now citing the uncertainty caused by surging inflation as a key factor limiting their pace of recovery. While we have seen loss in combined ratios improving for certain carriers, we believe that Q3 demand will likely remain significantly depressed and that a rebound previously expected to begin in the second half is unlikely to occur before 2023. Data that supports this outlook include, one, recent actions from a number of carriers to further limit their customer acquisition appetite and bid levels, and two, direct feedback from a large partner of ours that uncertainty around the go-forward loss environment caused by surging inflation is leading them to restrict budgets in the second half of 2022 more than previously expected. When inflation stabilizes and carriers are able to increase rates to reflect the current underwriting environment, we expect they will return to normalized levels of customer acquisition spend while driving more insurance shopping as consumers react to higher renewal rates. In closing, we are successfully navigating a very turbulent market. In Q2, we reacted quickly to changes in market conditions by managing our ad spend and altering our cost structure to deliver more revenue and profitability. we also benefited from our strategy to diversify our distribution into agent channels. We remain in an unstable market, and the actions required in the third quarter are likely to be different than the second. However, with a strategy and a team that has demonstrated its capacity to adapt quickly and execute, we are confident we will continue to deliver strong financial results through the uncertainty ahead, while continuing to make progress towards our long-term vision to become the largest online source of insurance policies by combining data, technology, and knowledgeable advisors to make insurance simpler, more affordable, and personalized. We remain laser-focused on building an industry-defining company. I continue to be incredibly proud of our team's ability to navigate changes in the industry. As auto carrier demand recovers, we expect that EverQuote will be well-positioned to return to our historic trend of strong revenue growth and expanding adjusted EBITDA. Now I'll turn the call over to John to provide more details on our financial results.
spk02: Thank you, Jamie, and good afternoon, everyone. I'll start by discussing our financial results for the second quarter and then provide guidance for the third quarter and updated guidance for the full year of 2022. Our total revenue for Q2 of $101.9 million, a decline of 3% year-over-year, exceeded our guidance range provided last quarter, as growth in consumer volume and demand from non-carrier customers partially offset reductions in monetization. The reductions in monetization were related to the industry-wide pullback in auto insurance carrier advertising that has affected demand and pricing from our direct carrier customers within our auto insurance vertical. As anticipated, our auto insurance vertical decreased 6% year over year to $81.4 million. While the auto insurance industry's challenges were evident in a significant year over year reduction in carrier revenue and pricing, we benefited from a 28% year-over-year growth in overall consumer quote requests this quarter. This reflects our success in generating consumer traffic and the potential to increase our share of insurance shopping consumers now and position us well for the time when the auto insurance carrier market challenges are overcome. Apart from our direct carrier customers, revenue from all other insurance distribution channels increased year-over-year, including DTCA, which grew over 300 percent to $13.1 million. Within our marketplace distribution, third-party local agents continue to show resilience, with revenue growing slightly year-over-year and contributing 40 percent of revenue. Revenue from our other insurance verticals, which includes home and renters, life and health insurance, grew 10% year-over-year to $20.5 million for the second quarter. These non-auto insurance verticals represented 20% of second quarter revenue, with a notable contribution from our direct-to-consumer agency within our health insurance vertical. Variable marketing margin, or VMM, defined as revenue less advertising expense, was $33.1 million for the second quarter, up slightly year-over-year and above our guidance range provided last quarter. VMM in absolute dollars and as a percentage of revenue were at near record levels due to reductions in acquisition costs and contribution from DTCA. We benefited from a competitively more favorable advertising landscape and by aggressively applying our analytical and operational advantage to lower cost per consumer quote requests by 26% year over year, also driving higher volumes. Although we had fully anticipated pricing reductions in our own monetization, the upside in our margin performance reflects rapid adjustments made by our traffic teams to uncover opportunities and efficiencies and to recalibrate our marketplace acquisition in a rapidly changing advertising environment. Turning to our bottom line, GAAP net loss was $3.8 million in the second quarter, and adjusted EBITDA was a positive $1.4 million. exceeding our guidance range provided last quarter. Our favorable VMM performance translated directly into adjusted EBITDA as we continue to manage operating expenses tightly and look for opportunities to reduce expenses. We ended the quarter with cash and cash equivalents on the balance sheet of $41.3 million. During the quarter, we consumed $3.5 million in operating cash, primarily to fund growth in DTCA. While our auto insurance vertical is facing reduced demand from carriers, we expect to continue to use cash in operations as we grow DTCA. Just after the quarter ended, we announced the renewal of our debt facility, expanding our line of credit by $10 million to $35 million, extending maturity by three years, and adding a $10 million deferred draw term loan. We have no funds drawn against this facility and believe our cash balance, combined with this facility renewal, continues to provide us sufficient liquidity. Turning to our outlook and building on Jamie's comments regarding the market conditions within the auto insurance industry, we believe carriers are cautiously forecasting continued increases in claims losses given recent reporting on inflation. As a result, carrier pricing remains down and continues to be volatile. This volatility has included recent pullbacks and pauses in marketplace bids from some carriers. We believe carriers are on a defensive footing, and we are not seeing signs of an early recovery within the auto insurance industry. As a result, we continue to manage intently to the current environment to optimize our marketplace business. As we enter the second half of the year, We anticipate that auto carrier pricing will continue to place pressure on margin and revenue as it has since Q3 of last year. Our reaction is to continue to focus on execution and opportunities to leverage our advantages. We are driving growth from distribution channels less affected by auto carrier pricing, such as third party and first party agents and our health insurance vertical. We are managing for efficiency in our advertising and operating costs, which has allowed us to remain adjusted EBITDA positive. And we are increasing our share of consumer shopping for insurance by growing consumer volumes despite a difficult market. We expect to manage in a similar manner in the second half of the year and are placing a greater focus on efficiency and bottom line results as it becomes more apparent that an auto insurance recovery will stretch into 2023. Turning to guidance for Q3, we expect revenue to be between 90 and $95 million, a year-over-year decrease of 14% at the midpoint. We expect VMM in the quarter to be between $24 and $27 million, a year-over-year decrease of 21% at the midpoint. and we expect adjusted EBITDA to be between negative six and negative $3 million. This guidance reflects depressed auto insurance carrier pricing continuing to impact our largest vertical. For the full year, we are narrowing our guidance for revenue and improving our VMM and adjusted EBITDA guidance as a result of our stronger than expected Q2 performance in our margins. We expect revenue to be between $400 and $410 million, a year-over-year decrease of 3% at the midpoint. We expect VMM to be between $116 and $122 million, a year-over-year decrease of 8% at the midpoint. And we expect adjusted EBITDA of between negative 7 and negative $1 million. In summary, we delivered results better than our guidance for the second quarter, despite continued pressure from the current auto insurance cycle, reflecting our ability to dynamically manage the economics of our marketplace and capture growth from areas of diversification and resilience. We continue to execute well in a difficult market and are poised to capitalize on areas of strategic focus and are well positioned for the time when the auto insurance carriers begin to normalize their acquisition spending. Jamie and I will now answer your questions.
spk03: We will now begin the question and answer session. If you would like to ask a question, please press star followed by 1 or your touch-tone keypad. If for any reason you would like to remove that question, please press star followed by 2. Again, to ask a question, press star 1. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking your question. We will pause here briefly to allow questions to generate in queue. The first question is from the line of Jed Kelly with Oppenheimer. You may proceed.
spk06: Great. Thanks for taking my question. Two, if I may. Just in terms of managing the back half, can you talk about how you're sort of managing the business for share gains? Because I imagine some of your other competitors are facing like a difficult challenge. And then number two, just as it comes for guidance in the back half, I mean, can you give us a sense on how conservative you're being? You know, you're saying the recovery might not start until 23. It makes sense. But I guess given where the carriers are in sort of resetting their rates and driving more profitable business, where can they go until they can start, you know, I guess resetting the rates to be profitable again? Thank you.
spk07: Thanks, Seth. So with respect to share gains, I think the data we look at, we look at kind of our insurance business relative to that of others in recent periods. And obviously we have gleaned some information from the traffic landscape as well. We do believe we're taking share during this period. We attribute that to diversification in our distribution network, which is, you know, certain assets that are more unique to EverQuote would be the size, the scale of our local agent network, which continues to demonstrate resilience and growth through this period, as well as the growth of our direct-to-consumer agency. And so, you know, we'll see... what the entirety of the landscape looks like as we come through the earnings season. But certainly, if you look back, we've managed to continue to post sort of outsized results relative to our peers in terms of our growth over the first part of this year.
spk02: And, Jed, it's John here. I'll add to that on the share gains. I'll just point out that our you know, the strength we had in traffic this quarter was also on an increase in VMM and absolute dollars and as a percentage of revenue. So, you know, that is very consistent with our management philosophy, which is to grow as fast as we can as long as we are adding traffic that is incrementally beneficial to VMM. So, it is kind of a very wholesome increase in quote request volumes this quarter. And that's why we decided to share that metric with you. In terms of the guidance on the back half of the year and the question about how conservative it is, the guidance methodology has not changed. It is always that we strive to give you guidance that shares some insight as to what we see in the business and gives you an idea of what we think is a high confidence plan. Um, in our guide, and so that has not changed what we have included in there is this idea that that the auto insurance carrier pricing, we expect to stay down through the end of the year. And that's a, that's a slight revision in terms of our outlook in terms of what was previously a slight improvement in the second half of the year. We're seeing that as kind of flat and that's how we factored that in. And so that's factored in there, but that's truly what we believe. And then I'd say this past quarter, in terms of the guidance versus the actuals, what you did see was a favorable reaction in how we could benefit from our prowess on the traffic side and also a more favorable advertising landscape. and actually provide some upside in terms of VMM and that flow down to adjusted EBITDA. So something like that is not included in the guidance because we just don't have the high confidence to say how will that play out on the landscape. But we know that what we're seeing for pricing pressure is not unique. This is an industry-wide phenomenon that's applied to all of the acquisition partners within auto insurance.
spk06: Thank you. Thanks, Jeff.
spk03: Thank you. The next question is from the line of Maniak Taran Wadnina. You may proceed.
spk04: Hey, good afternoon, guys. This is actually Kyle Peterson for MIUNC. Thanks for taking my questions. I just wanted to touch on some of the traffic and improvement from both a quote request and efficiency perspective. you know, how much of, you know, some of the gain and improvement here was due to just, you know, stronger consumer demand engagement and interest, you know, versus, you know, potential ad costs coming down. I know there's been a lot of talk on potential advertising recession and such. So I just wanted to see if you guys could tease out, you know, those two factors to the best you can.
spk07: Sure. I think it's a combination of things. We are in a, you know, typically when you're in an upward rate cycle, the increasing rates will induce shopping behavior. People get their renewal notices, their renewal premiums go up, and that will induce shopping behavior. So I think the overall landscape is benefiting from more consumer shopping behavior. But I think within that, you will see us, taking share as our sort of relative monetization, kind of going back to my answer to Jed's question, driven by the sort of continued strength and stability of some of our unique distribution channels in our direct-to-consumer agency and in our local agent network have enabled us to compete more effectively into growing, you know, basically a rising tide of consumer shopping volume.
spk04: Okay, that's helpful. And then I guess just a quick follow-up specifically on the potential M&A pipeline and scaling the DTCA piece of the business. It's great to see that growing out nicely and helping diversify the business. Are you guys seeing any potential opportunities to grow potentially inorganically in that channel to help diversify quicker? It You know, good to see the growth, but, you know, obviously still pretty sensitive to some of the auto budgets. So just, you know, any color, how our opportunities or talks, you know, progressing, you know, with potential, you know, partners or targets would be helpful.
spk07: Yeah, so we made two acquisitions in the last two years or so, the health insurance brokerage, Crosspoint, and that's health and Medicare, and then PNC brokerage, which is PolicyFuel. We spent the better part of the last year really integrating that in those acquisitions into our operations and together into a unified direct consumer agency platform, which now serves consumers across all the major personal lines of insurance. So our view is that within DTCA, we have the foundational building blocks to grow that organically the way that we would like to do so over the near term. But we are always active, just keeping an eye on the market and looking for opportunities to accelerate our strategy though I'll say that's not a high on our list of priorities in the near term.
spk04: Understood. Thanks, guys. Thanks, Kyle. Thanks, Kyle.
spk03: Thank you. The next question comes from the line of Michael Graham with Kent Court. You may proceed.
spk10: Thank you. Hey, guys, congrats on the DTCA growth. like 13% of revenue this quarter. And I'm just wondering, you know, if you see any kind of natural limit to sort of how big it could get in your revenue mix. And then I just wanted to ask, you know, relative to the, you know, kind of pushing out the rebound until 2023, have the carrier partners, you know, kind of verbalize what they would need to see to get more aggressive? And is there anything about historical seasonal patterns that you think might influence, you know, assuming a recovery does happen next year, you know, is there anything about the seasonality of spend that might influence when it happens?
spk07: I'll take this one. I'll start, Mike. I'll start with your second question first. The, you know, if you look at the carrier data, There's a number of carriers that are reporting, you know, that report their loss and combined ratios publicly at different varying cadences. But, you know, those that report more frequently, if you look at the most recent data, we do see their profitability coming in line, right? Meaning they are seeing combined ratios coming down. There are large carriers who are seeing combined ratios coming down kind of at or below their target levels. And the expectation was that as soon as that happened, that the growth spigot would open back up. And what has changed and sort of what we're hearing now is just increasing uncertainty around the overall inflationary environment is causing carriers to take a moment to really make sure they understand how to go for a loss environment before they lean back into growth. And as a result, in early Q3, we continue to see carriers sort of ebbing and flowing, but a bit more contraction than expansion on balance. And one major carrier has indicated their intent to continue to manage to a fixed budget through the end of the year as a way of mitigating risk against that uncertain inflationary backdrop. So, you know, if you're looking for some like leading indicators, the things that we watch are obviously carrier performance. But right now, beyond that, I think you kind of want to look to inflation. And, you know, you look at some of the price indices for used cars, for new vehicles, for motor vehicle parts and equipment, things like wages for automotive repairs and things like that. Those are some of the leading indicators that you'd probably take together with the carrier data that would give you some indication of, you know, of our best expectations for what's to come beyond what the carriers are telling us directly. Seasonally, we know Q3 tends to be a seasonally scenario. stronger quarter than Q4. And so you'd expect to see a bit more strength in Q3 than in Q4, which is the seasonally weakest quarter for auto insurance. Does that answer that question?
spk10: It does. Yeah, thank you. I appreciate that, Jamie. And the other quick one was just DTCA, is there any natural limit to how big that can get in the mix of your revenue?
spk02: So I'll take that one, Michael. I'll say, you know, no frustration in terms of how big that could get. It is worth noting that, you know, in terms of that business, we're very pleased with the growth. We're also making sure that we're managing that business for, you know, improved unit economics. So again, you know, this theme of we want to make sure we are scaling, we're growing that business, but doing so profitably with improved economics. So I'd say that's the bigger governor to the growth of DPCAs, making sure that we get the return on the business that we're looking to as we scale it.
spk09: Okay. Makes sense. Thank you, John. Thanks, Jamie.
spk08: Thanks, Mike.
spk03: Thank you. The next question comes from the line with William Blair. You may proceed.
spk09: Good evening. Thanks for taking the question. First question relates to, in the release, you talked about modifying your bidding strategy, you know, given the volatility. And on the call, you talked about recalibrating the acquisition teams. Just curious, you know, how much of that is short-term in nature to respond to the current environment versus, you know, things that you're doing today that will make the platform stronger when the macro environment improves? And then I have a follow-up.
spk07: Yeah, thanks, Jeff. Good question. There are elements of it which are just short-term, making sure that we're responding in real time as changes flow through. But there are also elements of changes that we are rolling out that are more structural changes with respect to how we acquire consumers. So we're doing a lot of... There's a lot of data science modeling work that's meant to predict things about consumers' shopping behavior. And we're pulling in more and more data into these predictions. We're using them to inform how we bid for customers in the acquisition landscape and how we distribute customers in the distribution landscape. And those models are improving. And I would say in the last quarter, they've taken a significant step forward It'll be a continued area of focus for us to build on that momentum as we progress through the back half of the year.
spk02: And, Ralph, I would just probably add, you know, there are certain times when the growth, when our business, the growth has been fueled by monetization. There's been times when it's been fueled by volume. If you look at those periods in which we've taken volume, we tend to hold on to that volume. So, you know, in a period like this when we're growing the business through volume, If you look, it's almost like loading up a spring. When that monetization comes back, we generally hold on to those advertising positions. And so that's why the idea of taking volume now, we think, gives us an opportunity as things start to normalize in the auto insurance industry.
spk09: Great, John. And a question for you, a follow-up here. Just in terms of the EBITDA guide, I think, you know, roughly about, you've done about $4 million or so EBITDA year-to-date for the first half, and I think the full year outlook at the midpoint calls for about minus $4 million. Just curious, are there any sort of deferred projects or that sort of pricing environment flowing through the model? Just kind of want to get a little bit more color on that. Thanks.
spk02: Yeah, that's really pricing and demand flowing through. Not so much any kind of deferred project or any type of new investments. We are still making investments in the business, but I think we've had a theme now since Q3 of making sure that we are calibrating our resources and our investments to the market that we're seeing and we're putting kind of a focus on making sure that we that we managed to bottom line. I think we came into this year looking to maintain positive EBITDA for the full year. We had to step away from that, but we're certainly making sure that we managed to bottom line. So you'd see us applying new resources very frugally to new projects. So that's mostly just pricing flowing through in the model.
spk09: Okay. Thanks, John. Thanks, Jamie. Thanks, Rob.
spk03: Thank you. The next question is from the line of Corey Carpenter with JP Morgan. You may proceed.
spk05: Hello. Thanks for the question. Just wanted to ask, outside the current card insurance market, how would you expect EverQuote to perform in a recessionary environment? It sounds like on the call, in some ways, you're benefiting with lower ad competition and higher quote requests. But just curious if you could talk to the different impacts of slowing the economy and how that may impact you guys. over time. Thank you.
spk07: Yeah, we typically think of the business as being relatively countercyclical, or at least it would perform relatively well in a down economy. The reason for that is, you know, insurance, auto insurance specifically tends to be a top three to five line items, three to five line items. of non-discretionary spend and people's personal income statement. And so as they need to look for personal savings, I think most people have been conditioned at this point to shop and save insurance. And as a result, you'd see continued growth in insurance shopping volume as consumers begin to feel more pressure. And then at the same time, you combine that with the cycle that we are in, which is one in which insurance carriers are continually increasing rates, and you kind of expect that effect to be somewhat amplified. The other consideration, particularly at this moment in time, is if you think about what's driving the profitability issues for the carriers, the predominant factor is accident severity, meaning the cost to repair and replace vehicles. And so as the economy softens, you'd expect to see some of the drivers of that subside, meaning the used car market may loosen up as interest rates go up, car payments become more expensive, people pull back on, you know, the demand for vehicles goes down. Fuel prices stay up the way that they are, right, which is somewhat associated with the weaker economy. That could have a downward impact of the downward driver off accident frequency as miles driven comes down. So there's a number of things in a soft economy that actually look like favorable contributors forever quotes business. And we'll see how things materialize both with the economy and the impact that those drivers have on the auto insurance industry over the next, you know, over the coming quarters and months.
spk00: Thank you.
spk03: Thank you. Our last question will come from the line of Aaron Kessler at Bremen James. You may proceed.
spk08: Hey guys, this is Alex Bolton on for Aaron Kessler. Maybe just a point of clarity on VMM guidance. You're not expecting carrier pressure to outweigh the favorable advertising environment. I guess I'm just asking the favorable advertising environment is not within guidance, and if it remains, it could be favorable to guidance?
spk02: Yeah, so I think when you look at the guidance and you say what is factored in there, certainly What we are seeing, and as Jamie alluded to, Q2 was as low, if not lower, in terms of carrier pricing in Q2 as compared to Q4. And we've seen some pullbacks even getting into July. So we're reflecting that in our outlook. What we saw in Q2 was a similar scenario where we saw some pullbacks and we And we were able to adjust and calibrate and maybe take advantage of some of the overall environment for advertising coming down in order to outperform our own expectations in terms of margins. That is not factored in as we look at Q3. So we're looking at Q3. We're looking at the environment that we have right now. We'll see that if As those changes ripple through and we get some additional benefit on the advertising side, that could be a source of upside in terms of margin. But again, when we look at our guidance, we are guiding to what we're confident that we can deliver. And that's how we're setting guidance now. So the monetization reduction is priced in necessarily recalibrating traffic and opportunities on the advertising side is not.
spk08: Okay, great. And then, you know, maybe you can touch on, you know, investments for annual enrollment period and 2Q and, you know, any investments that you're planning for 3Q and, you know, the hiring environment, you know, could be a head one at all.
spk02: So I think you're, you know, certainly when we look at investments in the near future, we're thinking about DTCA as we head into the AAP period in Q4 health. There, you know, we are looking at hiring as you would expect this time of year. I think our plans, though, are again, you know, kind of governed by our expectation of improving economics within The DTCA, this is really kind of our second full AEP in which we're able to plan for. Last year we had growth that we saw as very exciting and we were able to prove up the model. This year we're a little more focused on unit economics as some of the other players in this space are. And so that will temper our investments into DTCA as we go through Q3 and into Q4.
spk08: Okay, great. Appreciate the answers.
spk02: Thanks, Alex.
spk03: Thank you. There are no additional questions at this time. I will pass it back to the management team for any closing remarks.
spk07: Thanks, everyone, for joining us today. It's a challenging period for the auto insurance carriers, but we continue to benefit from our strategy to diversify our distribution channels And we're continuing to manage the business well amidst heightened levels of volatility. So as we look ahead and as auto carrier demand recovers, we expect that Everco is going to be very well positioned to return to strong revenue growth, to expanding adjusted EBITDA, as we remain laser focused here on building an industry-defining company.
spk06: Thank you all for your time.
spk03: That concludes today's conference call. Thank you. You may now disconnect your line.
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