EverQuote (EVER) The 44th Annual William Blair Growth Stock Conference summary

Industry environment and recovery

• Auto insurance carriers experienced windfall profitability in 2020 due to reduced accidents, followed by historic losses in 2021 as costs to repair and replace vehicles soared.

• Carriers responded by raising rates and pulling back on new customer acquisition, impacting customer delivery businesses for several years.

• Underwriting profitability has broadly improved, with combined ratios 10-20 points better than last year, and spend is returning to the market.

• Cost drivers like used car prices and labor indices have stabilized, supporting a more sustainable recovery.

• Recovery accelerated in early 2024, with another step-up expected in 2025 as large states like California and New York re-enter the market.

Business model and operational changes

• Strategic realignment in June 2023 included exiting the health vertical and first-party distribution, reducing workforce by 30% and costs by 20%.

• Refocused on an asset-light, tech- and data-driven P&C marketplace, leveraging deep experience in auto and home insurance.

• The agent network, with 6,500 local agents, proved resilient and provides consumers access to a broad range of insurance options.

• Achieved record Adjusted EBITDA and net income in Q1, returning to cash flow positive and surpassing pre-downturn margin levels.

• Committed to maintaining Adjusted EBITDA margins above 6% in 2024, with potential for double-digit margins in strong quarters.

Financial outlook and margin structure

• Adjusted EBITDA margin expected to expand to 7-9% in 2025, with a long-term target of ~20% top-line growth.

• VMM (Variable Marketing Margin) margins are higher in the agency business than in the carrier channel, reflecting different cost structures.

• VMM margin normalized to low 30s% in 2024, up from 29-30% at the start of 2023, with ongoing focus on both margin and incremental VMM dollars.