Hagerty (HGTY) Q3 2024 earnings summary

Executive summary

• Year-to-date revenue grew 20% to $908.3M, with Q3 2024 revenue up 17% to $323.4M; written premium rose 16% YTD and 13% in Q3, and marketplace revenue surged 54% YTD and 66% in Q3.

• Net income reached $69.9M YTD (up 265%), with Q3 net income at $19M, despite $29.7M in catastrophe losses from Hurricanes Helene and Milton.

• Added 226,000 new members in the first nine months, with paid member count at 868,000 and retention at 89%.

• Net Promoter Score remained strong at 82, more than double the industry average.

• Completed warrant exchange, issuing 3.9M shares for 19.5M warrants, and acquired Drivers Edge Insurance Company to expand offerings.

Financial highlights

• Total revenue for the first nine months was $908.3M (+20% Y/Y); written premium $827.1M (+16% Y/Y); Q3 commission and fee revenue $116.2M (+13% Y/Y).

• Operating income YTD was $60.4M, up $43.5M; Q3 operating income was $10.1M, down due to catastrophe losses.

• Adjusted EBITDA YTD was $104.6M (+33% Y/Y); Q3 Adjusted EBITDA was $24.2M.

• Q3 2024 basic and diluted EPS was $0.03; YTD EPS was $0.09; Q3 Adjusted EPS was $0.05; YTD Adjusted EPS was $0.22.

• Operating cash flow for the first nine months was $190M, up 43% year-over-year.

Outlook and guidance

• 2024 revenue guidance raised to $1.18–$1.19B; written premium expected at $1.043B with 15% growth.

• Net income guidance updated to $65–$74M; Adjusted EBITDA to $110–$120M, reflecting hurricane losses.

• Management expects continued margin expansion and premium growth as investments and new products roll out.

• 2024 outlook incorporates $29.7M pre-tax catastrophe losses from Hurricanes Helene and Milton.

• Investment income may face pressure if interest rates decline, but portfolio remains investment grade.