EverQuote, Inc.

Good afternoon, and thank you for joining the EverQuote first quarter 2023 earnings call. My name is Kate, and I will be the 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. I would now like to pass the call over to our host, Brinley Johnson of the Blue Shirt Group. You may proceed.

Thank you. Good afternoon, and welcome to EverQuote's first quarter 2023 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 law, including statements concerning our financial guidance to the second quarter of 2023, 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, ability to maintain existing and acquire new customers, our expectations regarding recovery of the auto insurance industry, 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. 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 to differ materially from our expectations, please refer to those contained under the heading Risk Factors in our most recent quarterly report on Form 10Q or annual report on Form 10K that 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 referred to certain non-GAAP financial measures which we believe are helpful to investors. A reconciliation of GAAP to non-GAAP measures is 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 Jamie.

Thank you, Brindley, and thank you all for joining us today. EverQuote exceeded expectations across our three primary financial KPIs in the first quarter. We produced revenue of $109.2 million, variable marketing margin, or VMM, of $35.6 million, and and adjusted EBITDA of $5.4 million. We achieved a strong VMM as a percentage of revenue of 32.6% and an adjusted EBITDA margin of 4.9%, both representing levels which we last achieved before the auto insurance industry downturn. Our progress in Q1 was broad-based, and as the industry normalizes, we will be well-positioned to grow the business significantly and profitably. As has occurred several times in the current period of auto insurance market instability, our growing momentum in Q1 was met with strong industry headwinds. Entering Q2, a major carrier partner significantly reduced its customer acquisition budget due to their unexpectedly challenged underwriting results. We are also seeing targeted reductions in marketing subsidies for captive agents, which could impact our local agent demand for the remainder of this year. Based on the persistent uncertainty in the auto insurance carrier market, we have decided to withdraw our previously provided full year 2023 guidance. While we maintain conviction in an auto insurance recovery driving significant growth for EverQuote, the exact timing remains difficult to predict. Focusing on what we can control, we continue to drive efficiency throughout our operations while accelerating diversification into stable parts of the business. Highlights from Q1 include strong performance in our local agent network, where continued resilience drove record levels of local agent budget. We continue to have a commanding leadership position in this market, with data suggesting EverQuote maintains the highest market share and performance in the industry. In our direct-to-consumer agency, we had a strong open enrollment period, with health and Medicare generating historically high levels of profitability and cash efficiency. And our property and casualty, or P&C lines, continue to make considerable progress expanding our product offerings and increasing the rate at which we bundle auto policies with homeowners and other ancillary products. Our direct-to-consumer agency now represents 50 carriers across our combined P&C and health and Medicare offering. As we continue to expand our carrier and product coverage, we continue to build the foundation of our one-stop insurance shop. With the auto insurance carriers continuing to adjust rates to the changing loss environment, we began shifting more resources into non-auto verticals late in 2022. In Q1, we return to revenue growth in our home vertical and expect to continue that trend as carrier budgets and agent demand shifts from auto into homeowners' products. In Q2, we are replicating the playbook used to reignite growth in the home vertical to our life, health, and Medicare marketplaces. We are moving aggressively to restore growth in these non-auto verticals over the balance of the year after a period of contraction following reduction in DTC Medicare agent headcount as part of our broader expense management efforts. Progress in agent channels and non-auto verticals enable EverQuote to diversify further from the auto carrier direct channel. In addition, we continue to drive efficiency throughout the business. We achieved a near record high VMM margin in Q1 as we rolled out new bidding technology which leverages machine learning to optimize bids at more granular levels than ever before, enabling our traffic operations to benefit from greater ad spend efficiency. We also produced a return to pre-downturn levels of adjusted EBITDA well ahead of a full auto insurance recovery, thanks to continued discipline and management of our operating expenses. We remain steadfast in our belief that we can create an industry defining company as we continue working to redefine the 170 plus billion dollar insurance distribution and advertising market for the digital age. We have assembled a one of a kind combination of insurance distribution assets which provides consumers access to a comprehensive set of insurance products across major personal lines resulting in each consumer being more likely to find the right product for them delivered in their preferred manner. We will focus increasingly on leveraging these assets to build a differentiated insurance shopping destination for consumers through which they can access the industry's widest set of insurance products across major personal lines, receive personalized recommendations on the right products for them, and easily access advice from knowledgeable experts as needed. EverQuote's long-term value continues to compound as we amass more insurance distribution data which we are using increasingly to deploy machine learning and artificial intelligence across aspects of our business, ranging from traffic bidding to experience personalization to product recommendations. With our deep roots in data and technology, we believe we will lead the insurance industry in the adoption of AI technology as it proliferates. As AI applications become more accessible, EverQuote is embracing its potential, quickly finding use cases where it can drive meaningfully greater productivity and or enable entirely new products, services, or ways of doing things. Our mission is to make it easy for customers to protect life's most important assets, their family, health, property, and future. Our vision is to become the largest online source of insurance policies by using data, technology, and knowledgeable advisors to make insurance simpler, more affordable, and personalized. While we have much work left to do and require a period of industry stabilization to fully realize that vision, we continue to drive operational excellence in this difficult time. We believe that Everquote is the only company with the assets, team, and conviction to deliver the insurance shopping experience that the industry's carriers, agents, and consumers ultimately need to bring the full potential of the digital age to insurance buying and selling. Our incredible team remains passionate about achieving our vision, which we believe, when realized, will deliver compelling value for our consumers, insurance provider partners, and shareholders. Now I'll turn it over to John to discuss our financial results.