Hagerty (HGTY) Q2 2024 earnings summary

Executive summary

• Total revenue for Q2 2024 rose 20% year-over-year to $313.2 million, with year-to-date revenue up 22% to $584.9 million, driven by strong growth in commission, fee, and earned premium revenue.

• Written premium increased 18% in the first half of 2024, with 148,000 new customers added and policy retention at 89%.

• Net income for Q2 2024 was $42.7 million, up 174.5% year-over-year; year-to-date net income reached $50.9 million, up $50.3 million.

• Adjusted EBITDA for Q2 was $53.1 million, up $18.7 million; year-to-date Adjusted EBITDA was $80.4 million, up $39.4 million.

• Completed a warrant exchange, issuing 3.9 million shares for 19.5 million warrants, simplifying the capital structure.

Financial highlights

• Commission and fee revenue for Q2 increased 17% year-over-year to $128.8 million; year-to-date up 18% to $217.7 million.

• Earned premium for Q2 rose 24% year-over-year to $157.6 million; year-to-date up 26% to $309.2 million.

• Membership, marketplace, and other revenue for Q2 increased 14% year-over-year to $26.8 million; year-to-date up 16% to $58.0 million.

• Operating income for Q2 was $38.1 million, up $20.8 million; year-to-date operating income was $50.3 million, up $49.5 million.

• Operating cash flow for the first half rose to $122.3 million; unrestricted cash at quarter-end was $121 million.

Outlook and guidance

• Full-year 2024 revenue and written premium expected between $1.16–$1.18 billion.

• Net income guidance raised to $76–$84 million, up from prior $61–$70 million.

• Adjusted EBITDA expected at $130–$140 million, representing 47–59% growth year-over-year.

• Anticipates 11–12% adjusted EBITDA margins for 2024, with incremental margins of 30%+ from 2022 to 2024.

• Continued margin expansion expected, targeting high teens to near 20% operating profit margin in 2–3 years.