Ladies and gentlemen, thank you for standing by and welcome to the EverQuote JMP Fireside Chat. This time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Ronald Josey at JMP Securities.
You may begin.
Great. Thank you, Lindsey, and welcome everybody. So I'm Ron Josey. I cover the Internet sector here at JMP Securities. I'm happy to have on with us this morning, EverQuote's Co Founder and CEO, Seth Birnbaum and CFO, John Wagner.
I'm gonna read a few compliance disclosures off first. Actually, we're gonna start with Brinley reading a disclosure, then I'll read one, and then we'll we'll get into some questions. So, Brinley, I'll hand it off to you.
Good morning, everyone. 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 of 2020, our growth strategy and our plans to execute on our growth strategy, key initiatives, our investments in the business, the growth levers we expect to drive our business, our ability to maintain existing and acquire new customers, our risk acquisition and our interest or ability to acquire other companies, our goals for integrations and our 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 our obligation to update or revise these forward looking statements Please session.
Please please refer note to note those contained under the heading Risk that Factors in our most recent quarterly report on Form 10 Q, 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, we refer to certain non GAAP financial measures, which we believe are helpful to investors. Reconciliation of GAAP to non GAAP measures is available on the investor's earnings section of our website at investors.quote. With that, I'll turn it back to Ron. Thanks, guys.
Great. Thanks, Brinley. And I've got two more from our compliance. Just to read the disclaimer, JMP Securities currently makes a market in the security of EverQuote Inc, and JMP Securities expects to receive or intends to receive compensation for investment banking services from EverQuote Inc. In the next three months, I guess.
So one more housekeeping note. We'll open up the call for questions here in a bit, but always feel free to e mail questions if that's easier, and Lindsay will tell us how to ask over the phone. But if easier, feel free to e mail me rjozy, rjosuy,@jmpsecurities.com. So okay, with that, Seth, John, welcome. Thank you for joining the call today.
I wanted to start this call off with some word associations. But first off, you know, Seth, how are you? John, how are you?
Great, Ron. Thanks for having us. And, we keep trucking during these extraordinary times, and I appreciate you and everybody joining us from wherever they are in these days. So appreciate it.
Great. So so we'll get into some some more detail questions. But just to break the ice, Ward Association, Seth, John, first thing that comes to mind, auto and home insurance is and if you can just fill in the blank first thing that comes to mind.
Someone can't sure. I'll go ahead. You go, Seth. I'll go first. Yeah.
I would say that it's it's been resilient largely because it's not discretionary purchases, continuing to trend strongly, and we'll we'll get into some of those details And just really beginning to pick up steam in the shift of sort of insurance shopping for sure from offline to online. And now I'll let John go.
And I would just add that it is still an area that is, you know, unlike shopping for other things online is still somewhat complex and and consultative in nature. And that's why it does lend itself well to kind of online exploration as well as being supported by offline agents and experts as well as people shop for that.
Right on. Okay. That's a lot of one word, but I I very helpful for backdrop. That's gonna help save time later on. Okay.
Newer products launch. So direct to consumer. DTC is blank. One word, Seth. One word.
Well,
choice. Choice. Okay. Improved or increasing consumer choice.
Good. Okay. And I
And then Rod, I would say, if I'm playing by the rules now, I would say, I'll give you two words, an exciting opportunity.
That's yep. Great. Okay. Tech integrations are?
Progressing well, let me just say this, increasing monetization.
Got it. Okay. Bundling is an opportunity that?
Improves customer experience.
Got it. Okay. And now this maybe more fun one. Peloton.
Fantastic product.
Yeah. Okay. John, anything there?
Never been on one.
Not surprised. Helpful. Yeah. And then and then last last one, and this one will get into some questions here. Just profitability?
Increasing.
Okay. Perfect. Okay. So that's really helpful to just broader understanding and setting the stage here. So we have a bunch of questions, set up, and I definitely want to get into direct to consumer and bundling and the core biz.
But Seth, I wanted to kick off just starting about we ended the quarter last we heard with 2Q results. QR growth was impacted a little bit with some social unrest. July, I think you said rebounded. Can you talk about what you're seeing sort of thus far, not just in QR growth, but if possible, anything overall in the business? Would be great.
Sure, Ron. Happy to. So July's momentum continued through August. So we've seen sequential consumer volume growth as well as year on year growth in consumer quote request volume. And that's actually been combined with sequential and year on year increase in monetization or or revenue per quote request, which has also been quite strong.
And so now, you know, even though we're performing well against some some strong, you know, prior year comps, we are also growing in excess of our long term model. You know, we continue to gain share versus the overall shift of the insurance spend online. And it's important to remember for our business that we're focused on driving both revenue and VMM and that our marketplace drives top line growth through volume and monetization. And that monetization is a combination of both provider coverage and pricing. And this will play out, I think in our discussions today around DTC, you know, expected and as we said into q three, certainly through August, we've seen a more balance between consumer quote request growth as well as expanding monetization or RPQR this quarter.
And we've also been successful at continuing to drive higher converting traffic, which we expect will further increase our provider coverage and support that reoccurring revenue we see, from carriers as well as the overall efficiency of our average advertising spend. And again, so for us, what's exciting while the comps are significantly higher in the back half of the year, the prior year comps, q three, I think last year was up nearly 80%. We are seeing both a strong increase in consumer volume and monetization in, you know, through July and August this year. And that balanced combination isn't just driving strong revenue. It's also driving strong variable marketing margin dollar growth and delivering strong unit economics, which is reflected in our VMM percent operating point, which is trending above both q one and q two of this year through July and August '3.
And we do expect monetization to continue to stay strong, driven by elevated provider demand, progress of integrations, which, again, we'll we'll dive into, I'm sure, in the next few questions, And some of our growth initiatives that we've discussed, the agent calls and increased targeting services like smart campaign and enhanced bids. So the team continues to execute well and and despite a sort of difficult external environment, we're making good progress in both quote request and monetization, giving us a lot of confidence in our guidance and a strong back half despite not just the external environment, but also elevated ad spend in an election year. And finally for us, right, what's exciting is an investment shareholder perspective, our market data and research indicates that we're really at the early days for both consumer demand and provider budget and coverage with multiple with basically a multiple of upside for consumer volume in autos, which as you know, is sort of our our our longest tenured vertical as well as our newer verticals from where we operate today. So a lot of upside is going to continue for us to be an execution story and really excited about continued progress we've made since our last call.
Got it. So there's a lot to unpack there and great to see the momentum I think that you so I think you said July's momentum continues into August. And let's talk about consumer volumes up sequentially and year over year. Maybe can you talk about seasonality and is that something I feel like 3Q should all has at least the last several years been up sequentially. So maybe if you could provide just a little more details, just given the magnitude of the comp here on just the QR side of it in terms of, okay, you saw a little bit of dip in the May, early June, you said July and August better.
Should it be better anyway sequentially? Like how should we think about that relative to sort of what the Historically, business
sure. And that's why I think the year on year comp is also important. So typically, we see, especially in autos, historical seasonality dips a bit in q two and then q three is is stronger in q four, at least for autos is more modest. That being said, we have bucked those trends from year to year just based on secular growth and execution in the industry. And I think, again, what what what's exciting for us is we've seen, sequential growth in volume and monetization and also year on year increase in volume and monetization, for July and August.
I'm sorry. So year over year increase in revenue per quote request as well? Yes. Exactly. Okay.
And and just maybe, John, on the guidance, I think the guidance for revenue per quote request was up sequentially. Is that a fair comment? So maybe a little bit better because up sequentially, you didn't necessarily need to grow that year over year. Is that a fair comment?
Yes. I think we gave commentary that the quarter we expected to be kind of a blend between increases in revenue per quote request and as well as volume. I'd say revenue per quote request has continued to expand going through August. So I I would say, you know, given a little extra time, that's where we we're seeing a little strength in the business revenue per quote request. Some of those some of that increase can be you can start to link that to some of the work we've done on integrations as well as the strong carrier backdrop that we're operating in.
But what we are seeing that play through. So we have good confidence in the quarter and we're gaining confidence on the year the out year as well.
Okay. That's helpful. So I was going to go in and talk about DTC and cross point and bundling. I want to stick on just sort of the core business, if that's okay, for now. And I guess I'm getting some questions here.
We definitely have a guidance range that you provide. We're not are you updating guidance here? Or just the trends are continuing to be positive, think. Is that correct? Yes.
Just giving a little we gave some view into the quarter at the time we gave guidance that we've seen good momentum in July. Really, we're just continuing to see that really play out in August. I would say, consistent with that, it's really we've seen it really on the revenue per quote request side, which we expected, but it's that's trended a little better than even we expected. So that's where we are really on the quarter.
Okay. That's very helpful. So Seth and John, you mentioned quite a bit just what are things that are driving this improvement really throughout the year, but here specifically in the shorter term or at least more recent history. So integration was one that was mentioned several times and we've been tracking that. And I think in 2Q, the comment was 66% of partners are now deeply integrated.
Just any insights on conversion rates, maybe carrier receptivity of just the deep integrations that that have now been learned, we're call it nine months, eight months into this 66% penetrated. Tell us about what you've learned and how the carriers are adapting.
Sure. So our data indicates that for a deeply integrated partner, we will expect to see, call it, if you want, monetization improve anywhere from five to 10%. What's just as important, right, you're also improving that customer experience. And we have seen, certainly on-site conversion rate trend upwards over time as well. And so one of the more exciting things we have to report, Ron, probably the first time we've shared it is we've consistently focused on deep integrations, obviously, by carrier volume, by by the higher volume of referrals we're making to particular partners.
And as a result, what we're seeing now is roughly 80% of our referrals by volume are going to carriers via deep integration and getting that incremental lift in conversion rate and that's monetization and bid rate. Right? If that conversion rate flows through, you'd expect to see a proportional increase in in RPQR. And again, we believe that's what's contributing that that 80% referral by volume that are roughly 80% that are going out through these deep integrations are contributing to that strong RPQR, that continued strength in monetization.
Got it. So we're seeing better conversion as a deeply integrated. And talk about the hurdles historically you've been seeing with integration. I'm assuming you're well on your way of getting that 100% bogey that you talked about earlier in the year. But but are there any, barriers to getting that a 100%?
I mean, now you have, full on data saying how things are going with integration. Is there a tech any anything that could sort of interrupt this progress?
No. It's just that I I mean, for us, it's it's it's just a matter of timing, and it's a foregone conclusion. These are IT projects. I mean, again, because of our scale, I mean, I I think over time, it does become a competitive moat because literally every provider we work with is either integrating with us or wants to, and that's relatively rare. I don't know that there's many companies that are getting this level and depth and breadth of integration.
And again right? So so we do have some smaller carriers who are stragglers, but they wanna do it. And it's literally about just giving them the tech support, the engineering and integration support to get it done. But what we have achieved is that 80% by volume. So by sequencing and prioritizing the larger referral volume partners, and making sure we shepherd them to the process, we basically have been able to maximize benefits to customers and the benefit to cover to EverQuote, to cover us, over time, so maximally, if you will.
Got it. Okay. That that's very helpful. We'll we'll come back to integrations. But those who we carry
on every single carrier on the platform is want to do it working through it, and it's it's in our queue and plan to execute again. Yeah.
That makes a lot I mean, it it makes a lot of intuitive sense and great to see the progress here. Let's see. So I wanted we'll come back to carriers and definitely quote requests and whatnot as we go on. I wanted to make sure that we touch earlier on in this call, if you will, on just the direct to consumer opportunity and Crosspoint. And specifically, maybe talk to us higher level about why EverQuote is focused on D2C?
And then secondly, on the acquisition, what are you getting with Crosspoint? I know it's on the health side, but why does an acquisition make sense versus building up organically, which I think the team has done with life. So maybe just talk bigger picture, what is the DTC opportunity now that Crosspoint is closed, insights on what the business is and how you view it going forward?
Sure. During work, I sort of feel like I have to queue a little bit the word association. Ultimately for us, DTC is about consumer choice. We bring all these consumers we attract and we have a ton of technology and expertise to do that to attract consumers to our marketplace. But we don't have enough products for them to choose them.
Basically, it compresses monetization, right, because they're they're able to purchase a policy through us. So there's a benefit to the consumer from DTC in so far as for certain segments like health and such as life. You can actually increase choice by being appointed directly with carriers and then you can still provide by the way, a bulk of our agents will remain and we expect to remain partnered agents, contracting agents. Right? Won't be employees of EverQuote.
They'll still be IAs and partners through our marketplace. We still will be an asset like that and tech company. But by increasing product selection for the DCC area, think of it, Ron, as it's just putting products into our shelves for folks who are already coming through and increasing provider participation. We actually drive a better customer experience. Right?
So there's more selection, more choice, higher probability of the consumer being able to buy a policy. We drive higher monetization. I'll give you a couple of data highlights on this that I think are just incredibly exciting for the initiative. And in the vertical and vertical segments where we have DCCA, we, by nature, support this very same integration you were talking about. We support full click to quote or bind or policy purchase both online or offline in these DTCA experiences.
And so what we've seen in our life data, which you've mentioned we built out organically, is a three x increase. So a three times increase in RPQR, for the segments that the DTCA, life products basically represent. So when we have a consumer that matches to one of these DTCA products, we derive three x RPQR essentially from the DTCA experience versus just the referral experience. And we do expect similar performance via our integration of Crosspoint. So the acquisition includes, for example, direct relationships.
This is a Crosspoint had built over years. And these carrier relationships do take time as we demonstrate this product, where we knew we have 19 of the top 20, but that took us years to develop. So the the acquisition of Crosspoint and the integration includes direct relationships with UnitedHealthcare, Anthem, and Humana, and and essentially expands our direct health carrier coverage by more than 10 x. And so, again, in our life, vertical, we saw RPQR expand dramatically for the direct to consumer agency we're serving, we do expect or we believe that that the Crosspoint integration will give us that same monetization improvement in the health vertical. And so we do you know, we think that we're very well positioned with an improved experience, higher RPQR going into open enrollment, and we will also diversify and grow the company's revenues by accessing the commission, you know, another access point for that $130,000,000,000 of commission, that is a component of our TAM.
This is, yeah, very helpful as we get more information. Maybe, Seth, if you can logistically just walk us through, you know, how this might work. I love the comment around we have enough product to choose. We don't have enough product to choose from DT to CA DTCA, I guess, helps to bridge that gap. So I thought this might be more for underserved or unserved, folks, but maybe talk about just the logistics of how how this might work if you're from a consumer perspective.
Sure. Consumer comes in and I'll use this sort of maybe the simplest example from health care. A consumer comes in looking for Medicare Supplement or similar. Consumer comes in looking for a simplified issue final expense product or a guaranteed term. Those are both life insurance products that have lower face value, great products, a lot of consumer demand.
And, essentially, we will be able to connect the consumer with agents in our platform represent the product. We'll be able to quote and in some cases, find online or offline with that agent assist. And those partner agents connect with us seamlessly. That is the consumer is handed off through an EverQuote interface. They have the all the product training to provide sort of represent those Medicare or life products, and they can close those products basically in our platform, and we will derive the commission revenue.
Now we will still partner by and large with agents to do this sort of what what we're calling an on demand agency network, but we will have very tight integration with the product. We'll be able to quote and perhaps find online. The offline handoff to the agent will be seamless. They'll be well well sort of burst in the product to assist customers to complete their purchase. And, yes, ultimately, right, we're covering segments like life simplified issue, guaranteed issue products that are very underserved in a lot of markets.
Got it. Okay. That that that's very helpful. And then on Crosspoint and and by the way, we'll open this up to questions here shortly. I I think maybe, Lindsey, can you remind everyone how to ask a question?
Is it star one? And Seth will get back into the flow here in a second. I just realized I don't think we gave instructions first.
Certainly.
Great. And so we'll break for questions in a second. Just as a quick follow-up, Seth, very helpful to understand the consumer flow a little bit more. Talk about Crosspoint, if you will, now that the acquisition is closed. Why Crosspoint?
Maybe talk about just the headcount here. The feedback we get all the time is, is this a pivot on asset light versus not? Just talk a little bit more about why, why the acquisition and how you how you see it playing out.
Well, first of all, these are the the data driven agency. They cover a broad range of health care products for, you know, we had, I would say, a fair portion of we were able to successfully drive health traffic in our last OEP. And we saw again that we had a lot of underserved or what we call sort of non serve segments of our health traffic and Crosspoint breadth of product coverage, was really, dramatic, right? That's how come they're bringing so many carriers to bear, as we connect them up in our marketplace, right? Again, that 10 x expansion of health care coverage, was really dramatic.
The other thing is they're high integrity. They have good cultural fit, data driven. They're tenacious. They largely built their agency, bootstrapped and we fully expect to remain asset light. I mean, of the nice things is the the DTCA initiative we built out in life, supports largely IA and partner agents.
Right? We we expect that more into the independent agents, independent contractors on the platform over time as it scales than employees. And it's a tech and data platform that enables that flow of, hey. You're a particular type of consumer that matches with these specific products. Let's hand you off seamlessly to a partnered agent even if it's under EverQuote's, you know, agency of record, right?
Even it's under our our our appointments. And and the agents can really come in and we can increase that provider inclusion. It is not some sort we're not pivoting the model or transitioning to we're we're not thousands of of of employee agents. It really is using the technology, we believe we can actually bring that same platform we're using in life agency to bear on the health agents as we scale across quote. So what they really did was pull forward our access to great products, industry know how.
They're incredibly high integrity representatives for the health care industry. We knew them because they were a long term customer of ours, built that relationship over time. And I think ultimately that cultural fit, that resonance between data driven, tenacious, bootstrapping team plugged into our marketplace platform with our traffic, accelerating that revenue per quote request, allowing us to build these more integrated experiences and help with full integration to to purchase a policy and create that agency support with all the all the carrier appointments, I think will be a game changer, at least for will significantly accelerate our health care vertical. And it was a really nice fit. Everything they did, we didn't do and vice versa.
And finally, I do I do wanna emphasize, Ron, because it's important. We fully expect to be asset light and use the same on demand agency technology that we used in life insurance to to scale the health vertical, not just add employees. That's really helpful. Maybe one last comment. We'll move on and
and open the floor to questions. Did you expect more acquisitions like Crosspoint as you go through different verticals? Or or is it something let's let's see this and then and then figure it out as we move on?
Well, mean, I I I think we're gonna be very consistent. What's important for us, right, is that we we are confident we can achieve our long term business model growth to organic and M and A will continue or we'll look to accelerate our opportunity. So from that perspective, again, Crosspoint was perfect insofar as, you know, it takes n amount of years to build these deep relationships with health carriers. They've built them and now together we can scale the health vertical in the marketplace. We're not going to give again any specific detail on what our plans are.
We will stay disciplined. We'll learn as much as we can through this acquisition and work on making it as successful as possible. But we will look to M and A to accelerate our growth levels, right? So we'll look for traffic or consumer demand, you know, deepening consumer provider engagement. Certainly, Crosspoint helped us doing that.
And distribution, expanding distribution, which Crosspoint also did. So certainly hit two of our three levers and we will continue to look for M and A opportunities to accelerate any one of those three levers for sure.
Got it. Okay. That's very helpful. Lindsey, are there any questions on the line?
We do have a question from the line of Andrew Boone. Please state your company. Your line is now open.
Hey, Seth. Hope you're doing well. This is, Andrew at JMP. I just had a question just in terms of you guys talked about 80% of volumes now having deep integration. I'm just hoping to kind of isolate autos as we think through that.
And can you talk about kind of the monetization level on auto specifically and kinda how that's trended to help us better understand kind of the the the benefit of increased integrations kind of on the platform? Does that make sense? So that I'm just gonna Sure. Yeah. Behind that question, right, is that the mix shift to to newer verticals, I'm assuming, would be a headwind to monetization.
And so if I just think about autos particularly, does does that does that monetization provide kind of better transparency into the benefit of integration?
Yeah. And we we tend not to break out by vertical, but I will give some color. So hi, Andrew. Thanks obviously for joining and, doing great. Appreciate the question.
Hope you're well. And so let me answer it. I think if we just open up that aperture and think about variable marketing margin, which is which is are the unique economics that reflects both the the efficiency or the advertising efficiency of the marketplace, but also monetization. You know, autos is running at a higher VMM percentage, not just dollar volume, but percentage than our newer verticals. But we do expect our newer verticals through both monetization and improvement in product experience, conversion rate, more products as we've seen with the Crosspoint acquisition to drive our PQR revenue per call request up.
So through the levers of growth, we do expect the new, not all of the newer non auto verticals to continue to make progress. Now I will also say this, autos is not yet at our terminal margin of 40%, and we have some of our sort of call them longer tenured new verticals like home and life are coming up that curve of expanding the percentage as they grow. And so we're very encouraged by the progress of autos, and it builds confidence in that 40% long term variable marketing margin over time.
That's great. Thank you, Seth. I think, Lindsay, I think there might be are there any other questions or should we continue?
We do have another question from the line of Frederick Shepherd with Philadelphia Financial. Your line is now open.
Hey, guys. Thanks for taking my question and trends seem to be going to be going in the right direction. Could you maybe talk a little bit more about ad spend trends on the carrier side during parts of the cycle where pricing is decreasing? Our carriers like Progressive spending more in an effort to grow. I'd be interested to hear your thoughts there.
So, you know hi, Eric. Thanks for the question. So what we've seen is provider demand is exceptionally strong and particularly, in auto and home, and that's driven by lower losses with very good profitability, typically, at least in terms of our comprehension. Right? So when with reduced driving, especially the carriers have seen, you know, much lower underwriting losses and much higher profitability, and that keeps them leaned in, on on demand side.
And so that is another contributing factor for the strong monetization. By the way, we do expect that certainly to continue into next year at this point.
Okay. That's great. So
And sorry. One more
Go ahead, Fred.
Quick question, and I don't know if you can answer this or not. But, a number of auto insurance carriers have offered rebates to their customers. And I I think in the second quarter, a number of customers maybe hadn't received those rebates yet or weren't aware that they were getting refunds. Have you seen any trends in consumer shopping, in the third quarter now that these refunds have either fully earned through?
Fred, I think we dropped out. Hello?
I can hear you still here, Seth. Fred, you still on?
Yeah. Can you hear me?
Sorry, Fred.
Yes. I I was just wondering about, any trends you're seeing from consumer shopping, given the refunds or rebates that the auto carriers have given.
So nothing in particular that we could draw a line to in terms of the rebates. Know, again, one of the important aspects of our marketplace, Fred, is that we do you know, we see revenue both on a a a net new shopper or a switching shopper as well as renewal shoppers. So we haven't seen anything either in our marketplace or in the advertising landscape. Again, we we have seen sort of strong sequential growth in consumer demand. I don't know if any of that is related to the rebates.
But typically, when the large carriers do things like rebates, which, you know, from our view approximate a marketing program or a retention program, it increases consumer demand on balance. Same with advertising on TV tends to drive up shopping demand. Perfect. Thanks.
And with that, I think if there's are any other questions, please feel free to hit star one. I'll continue here as we potentially load up the queue with more. Seth, maybe another question on the core business. I think you mentioned several levers of growth last quarter. One of them is just attracting more customers to EverQuote and clearly we just got the update that QR is up sequentially and year over year as I guess we would have expected.
But just talk about how are you attracting more customers to the marketplace? Any insight on the plans here to this core level lever of growth?
Sure. I mean, we expect to continue to expand in some of our sort of longer tenured marketing channels. So you think of things like search, display for marketing retargeting. We also have plans to expand in social, which is still relatively modest for for overall, but it's got a huge upside opportunity. Ditto for things like not not just content marketing, but, you know, referrals via things like a logged in user experience also, will increase visits certainly and quote requests in the marketplace.
And I'm sure we'll get to that run. And then there's even an opportunity for things like targeted TV, OTT, targeted direct TV, which we really have have just begun to scratch the surface. And then finally, you know, I believe we're very modest in terms of the the opportunity for immediate partnerships, insurance adjacent partnerships. These are partners like Quicken or or Liberty Tax. So there's just a ton because and we don't talk about it a lot, but because we've invested in really broad provider coverage, which is good for the consumer in the form of choice in which DTC increases even further by bringing net new products to our marketplace shelf.
Because we've invested so heavily in broad provider participation and being in a marketplace of choice, not just for consumers, but for providers, it gives us the strength to create these insurance shopping experiences for partners. And so we really do feel that, you know, expanding our media and partnership program is another growth lever. So really from my perspective, and we've said it a bunch of times, we believe we have we're at some, you know, there's a multiple of growth left in the tank in terms of expanding quote request and consumer volume in our marketplace. And those are just maybe sort of five of the marketing channels that are
Sure.
Relatively modest still in our marketplace and that we expect to grow over time.
Got it. Okay. That's very helpful. I did just get an email question. They had some issues accessing the webcast.
But the question was around your partner with Progressive. I think its spend from Progressive was down sequentially in the last quarter. Any insights on that? Was that seasonality or any insights as to why Progressive spend was down sequentially would be helpful.
Sure. I I you know, Progressive usually bounces between, I think, the 20 to 24% mark. And remember, in our marketplace, we have very broad, not just carrier participation, but we have over 8,000 insurance agencies who are in our platform sourcing consumers. And just based on the competitiveness of bids, how the auction plays out, we do expect that share to fluctuate. And for us having that very deep and diverse array of carrier partnerships is the strength of the marketplace.
And so again, it's well within the historical pattern of Progressive and they continue to be a wonderful partner.
Got it. And so
Ron, maybe worth just mentioning also that Progressive participates with us on the auto side. Q2 is a seasonally weaker quarter for auto, which we did see play out. So Progressive decreasing share going from Q1 to Q2 would be in line with that since they don't participate in some of the other verticals and those other verticals also had outsized growth during Q2. So largely consistent with that.
Got it. That is helpful. Thank you, John. Thank you, Seth. So on maybe similar in line with that question, Seth, can you talk about the your relationship with agents on to the platform and agency relationships?
I think in 2Q, accounted for about a little bit more than the third, maybe just under 40% of total revenue. So just talk about how that has progressed, how you think about that longer term. As we think about the TAM, we've been attacking or EverQuote has been attacking the advertising side, but the commission side is something interesting as well. So just talk about the investments and the progress here from the agents and agency side, that would be helpful.
Yeah. I mean, I think, you know, in in during word association, John actually kicked off with a lot, and it's not just true of autos. A lot of insurance shopping, even though it starts online, I think 80%, well over, especially if you include other verticals outside of auto, well over 90%, 95% of it still closes offline or with some assist from an agent. So we really do see them as a critical part of the distribution landscape and have made significant investments. So I, you know, I rattled off some of the stats, but, we saw very strong demand, from the agents in our marketplace in q two as of the last call.
We do expect continued strong demand from agents. We now have more than 8,000 agents on the platform. But in terms of TAM, the ability to add sort of third party agencies, there's a 100,000 or more than a hundred thousand third party agencies in The US. And so we expect a strong growth in the agency side of our more the agency component of our marketplace. I I believe we could triple it from where we're at today in terms of of the scale of that.
And that it also increases not just sort of raw revenue, but the coverage that consumers get. Now when you layer on things like the on demand agents, the partnered agents, or the independent agents and the contractor agents that can come in through our direct to consumer agency experiences, we see just a ton of upside in the agency sides of our marketplace and an enduring role for agents in the distribution of insurance moving forward. I think, the the comparison to travel is not accurate, and the demise of insurance agents is probably a little bit overstated. And those investments not just strengthen our consumer experience. Right?
Because agents bring more product choice. They drive increasing our PQR either through referral pricing or incremental coverage. And they they do drive a lot of the experience. I mean, the number one reason folks say they need to speak to an agent is they just lack the expertise to make a policy decision or what are my coverages. So really providing that connective tissue between the Internet and agents isn't just critical for for for the agents themselves.
It's also important for consumer experience.
And and would you say and and by the way, you can comment, I think you had a you hired a new head of agency sales and customer success back in June, in in in addition to some other new hires you've had, recently. But just do do you think, I think you you made a comment, this could triple from now, but you and you also talked about a 100,000 more agencies. Is it growth from agencies or agents both? How how can we think about that and how Okay.
You can think about it. So the way is sort of we're talking about it internally, and I'm happy to share as you think of increasing agencies, the the spend per agency. And now with the direct to consumer that this on demand platform, the increase of partnered agents or independent agents who can just come directly into the EverQuote platform and get the consumers, the tech, the integrations, and the products all available, and they can just press the button and start selling.
Got it. And and the new hire here with I think it was Mike Connolly. Just talk about how
Mike Connolly out of Carter. Yeah.
Yeah.
I mean, he's fantastic. And and with you know, at the risk of of sort of, I know, ringing the bell too much. I mean, you you see the the the agency team in general. There's there's another leader at the company, Nick Ram. So Nick Ram and Mike and the entire agency team is just working their butts off, not just to grow the business, but to to to enhance our products to make it easier for agents to sell and connect with online consumers.
And they've just done great work. I mean, really the entire team. And and they're looking at things like, for example, call to agents. So instead of connecting with the consumer via, you know, a lead based referral, they literally can get the consumer can click or the agent can click and get connected to a live consumer relatively seamlessly. And we call that that's part of our agency calls program.
And I do want I would shout out another leader. So we brought a very senior leader, out of Amazon to build up our our internal or organic life agency technology platform. And that's sort of we're referring to as the on demand agency. They bring those independent and partner agents in a sort of one at a time into the platform. And that's not only going gangbusters, but we're really bullish on what that team is doing to bring in products, bring in agents and attach them to the marketplace in a way that's good for consumers.
It's definitely good for the carriers who participate and it's very good for our business growth.
Got it. That's very helpful. So as we wrap up your wind down, of course, if there's any questions, we'll get to them. Feel free to go into Q Star one. But I did want to talk about bundling.
You know, I think coming out of the 2Q call, there were some really interesting sort of levers of growth here. But but talk about, you know, what a login experience could do for consumers and just the opportunity around bundling products. So thinking about bigger picture, the vision here, what a login experience looks like? And again, what what could that mean for for someone like myself or anyone who's looking for auto and all of sudden ends up with home and auto and life and everything else?
Sure. So so maybe we'll start with the vision and then we'll wind through bundling and then back to log in. You sort of, put you around. There's a lot to unpack there. So our vision obviously is is is to be an insurance store.
Right? That EverQuote's logged in user experience is gonna be an important element of of of of the site experience, of the mobile experience to help shoppers purchase policies from different companies, check their coverages, renew, find replacements, and in in the case of some of these newer policies, check plan usage. And and we expect that over time, these experiences are gonna unify shoppers data for the shoppers securely to to basically enable them to to come to EverQuote just like it's an insurance store for both, not just consumers, but also insurance partners. And for us, the bundling, right, creates an opportunity for customers to get better coverage and get you your discounts, get you better prices, and also create that affinity. Say, hey.
I came to EverQuote. I found a, you know, a bundled option. I got my 10% off, and now here's a logged in user experience consistent with that bundle. That let me let me manage the policy. There's also an opportunity to manage multiple lines.
So you'd have auto and home with us and health and life with us. And so that's really a step both bundling and the logged in user experience to to sort of renew service, pick up new ancillary products is that first step in creating that true insurance store, that we wanna be.
That makes a lot of sense.
And I can give you a guide there's because you always ask, right, so how are we doing with it? So so far, right, since we launched bundling, we've delivered nearly 50,000 bundled consumer referrals via these experiences that literally, you know, just launched. I think it was the last call we talked about it. And and the bundling for us, right? What does it do for the company from a shareholder perspective, right?
It fuels our flywheel. It increases RPQR because these are typically more valuable customers. It enables us to invest in more consumer acquisition, which drives up, obviously volume, but it also lets us reduce CPQR through ad spend. Because you're coming back in, to to shop or come back in through a logged in experience. And by pairing bundled consumers with a more complete complement of providers that that have bundled products, you can basically better compete or enable the providers to better compete for that bundled high affinity consumer marketplace, which further drives RPQR.
So it really does help power our flywheel both bundling and logged in user experience.
Got it. Yep. That that's helpful. And that that's expected to launch sometime in April?
Yep. Our first consumer logged in experience will launch in q four in our health vertical, and that'll include the integration of the cross product suite and, a wide range of carrier relationships. And it'll really start with the enabling the shoppers to review and access their health policy purchase information and renew or add ancillary products, and it'll all be secure, personalized, logged in user experience. Ultimately, we wanna create that single source or wallet for all consumer policies.
Got it. Okay. I got two more questions on email, and we'll be wrapping this up soon enough, I think. One was, you know, with the with the if if there's any impact or insights on how newer insurance companies like Lemonade, which are just, you know, very AI and chatbot specific, has any sort of impact to EverQuote. And then, and then maybe I'll see if there's a question on the queue.
If not, I got an email with it. So one is Lemonade's impact on EverQuote.
So so maybe sort of breaking it up. Companies like so Lemonade is a is a partner and a great partner and a growing partner of ours. And another one that's I think coming up is is the is the auto's version called Root. They really represent for us net new budget. They have the capabilities to do deep integration.
And so for us and they typically, right, they have products for a specific segment of, you know, a good product fit for a segment of the population. These aren't huge scaled up, you know, super broad product companies. And so for us, it's basically net new great customers in the marketplace with all the capabilities to do these deep or even, you know, integrations to to quote and buying that we we wanna do for the consumer, and they're wonderful partners. And I think on balance as more come into the market, this is something that we wanna be very explicit. We are not a carrier.
We are not becoming a big insurance provider. We really wanna be that insurance store, that interface for the lemonade and the roots. And they're just fantastic. And so that's you know, for us, it's a net positive increasing budget, good integrated partners that will drive revenue per quote request and great product selection for our customers. The other part of this from my perspective is they're cool.
Right? They're building really innovative new insurance experiences. And even if today it only serves a small segment of the population, right, USAA, which is a big insurance company, great products for military families, just announced that by 2023, their entire claims process will be, you know, sort of touchless digital quicker for customers. So I I don't wanna just you know, it's not just the InsurTech you just mentioned. But I think for us, the the sort of innovation in insurance customer experience from acquisition through claims is just going to be great and it will drive more budget into our marketplace, richer experiences through our marketplace and long term a fantastic trend.
And we are huge fans of these partners.
Got it. That's very helpful. And as we wrap up here, Lindsay, any other questions in the queue? Otherwise, we'll have maybe one or two left.
There are no questions in queue at this time.
Okay. So maybe two questions and we'll wrap it up and give it back to you Seth. But John, bigger picture, as we think about EverQuote is now EBITDA profitable, you have about $40,000,000 post Crosspoint plus a warehouse or at least I think a revolver. Just how do you think about M and A and uses of cash going forward into the business, John?
Yes. So first, our organic plans really, because as you say, we're now operating on adjusted EBITDA positive basis. And adjusted EBITDA is a pretty good proxy for cash flow. So our organic plans really don't have any other, cash requirements to them. I think if you look at and that obviously leaves the balance sheet then really as a tool for M and A.
If you look at, how we approach M and A, it's it's very much by focusing on our organic growth levers and and asking the questions, is there ways that we can accelerate or jump start any of those organic levers? I think actually with Crosspoint, you saw a really good example of that, right? Because you saw us have an organic opportunity within life that we developed internally. And that's we've been developing and investing in that. And we talk about the fact that we see leverage in the business, but some of those dollars go back into investing for growth.
Our efforts around Life DTC agency is a good example of that. We started making those investments in the business organically and starting to scale those efforts. When you look instead at Crosspoint, that's an example of something that we identified, a company that was a great cultural fit could give us a really significant jump start into something that we wanted to do on our own anyways. And so I think that is that's around the color that you should look to us to be able to complete in the future. Things that are not inconsistent with our organic growth levers that give us some sort of a bit of a jump start or an advantage to entering a new vertical or new traffic areas, something like that.
Got it. That's great. And Seth, as we wrap it up here, any final thoughts? I did get one email come in here just now from a client that's asking, can you just repeat some of the traffic trends that you're seeing and then the ability to acquire customers that meet carrier and agent quality thresholds was sort of a one two part question. And instead, if you want to sort of wrap it up as we reach into the hour, that would be very helpful.
Sure. Ron, I assume the question refers to the trends that we're seeing in the business? Overall market trends. Yes. So the trends in the businesses, we've seen both sequential and year on year increase in in quote request volume and strong growth in in the verticals as well as strong progress in unit economics.
So, you know, via variable marketing margin percentage and variable marketing margin dollars, up over both q one and q two this year for July and August.
So strong trends in the business continue.
Got it. And and and you got it. And and this this person might have come on late, and you also said comments on RPQR being better as well.
Yes. I thought it was just traffic, but, yeah, so monetization is up, up up sequentially, which which, you know, typically when you have sequential increase in monetization, I'm not sure we've also said that it's year on year, but now we're also seeing in the July and August data monetization or RPQRs also up year on year for July and August.
That's helpful. Great. Well, with that, Seth, any last comments or anything No, as we wrap this
Ron, it's always a pleasure. It's been a blast. We could have done it for another hour, but I understand even you have limits. I do wanna thank everybody for joining us during these extraordinary times. We we really appreciate all, you know, not not just you and everyone at JMP, but but the investors who are along for this incredible ride as insurance moves online, and we're just, happy to be part of leading the charge.
So thanks to everybody.
Perfect. Well, Seth, John, thank you, Brinley. Thank you very much for the time and looking forward to catching you up soon. Have a great day. Stay safe, of course.
Likewise, Mr. Thanks again. Thanks. Bye, everyone.
This concludes today's conference call. You may now disconnect.