Good morning, everyone. I'm Greg Peters, I'm honored to be here at the Raymond James Institutional Investors Conference. It's our 47th one. I wasn't here at the first one, but been here for a number of years now. This is day three of the conference, historically, day three of the conference has been, you know, a little lighter on the attendance. The good news is that we have a record number of companies participating this year. Normally, we come in around 300 companies participating over a three-day period. I think we're approaching 350 this year. Suffice it to say, I'm gonna have a busy day today here.
I've got a bunch of companies presenting, so hopefully it's a productive use of time for everyone here in the room and at the conference. Inside my coverage, I follow traditional non-life insurance companies, the auto insurance companies. I follow the insurance brokers, and I follow some insurance technology companies. I like the crossover because I feel like it provides some unique perspective on what's going on in market trends. That's why I really like our coverage of EverQuote because it has a direct correlation into our coverage of the auto insurance marketplace and all of the evolving trends there. Really pleased that EverQuote's here with us today and back at the conference this year. From management today, we have Joseph Sanborn, who's the Chief Financial Officer.
obviously, for the next 28 minutes and seven seconds, we're supposed to have a fireside chat. Before I start with that, I wanted to provide Joseph with an opportunity to provide some setup. You just came off an outstanding year for the company in terms of results, in terms of achievement and revenue. I thought it'd be a good backdrop to start off setting up the table, and then we can delve into some questions.
Perfect. Thank you, Greg. It's great to be here. I was not here for the 47th either, but I've been here for many years, and we've always enjoyed our partnership. Thank you for the invitation again this year. 2025 was a record year for EverQuote. For those of you who aren't familiar with our business, we're an online insurance marketplace. We help insurance carriers and agents in the property and casualty space find consumers online in the digital world. That has been our business since we started, and we continue to go at that very aggressively. Last year was, as I said, a record year. We had 38% growth top line in revenue, but 62% growth in EBITDA. EBITDA is very high cash converting, over 100% last year.
That's the business we have created, and we're on this journey that has been really exciting. As we enter this sort of next phase of the world, you know, we'll talk a lot about AI, I'm sure, in our questions. What I'd say is we're very excited by this time in our journey for a simple reason, which is our heritage is data and technology. We're not a software business. We've been focused on AI, thinking about how to leverage our proprietary data since our inception. We're an MIT-founded startup. As you fast-forward to what we're doing now, you know, I made this comment to some investors the other day, which is we've had a lot of discussion about how AI is creating efficiencies in business.
In our case, where we've been at it for quite some time, past couple years, we doubled revenues and actually cash operating expenses were flat because we continue to drive innovation automation.
you know, what is noteworthy to me in the universe of companies I cover is that for a company to generate that type of double-digit revenue growth usually is associated with M&A. In your case, it was all organic, which I think makes it a differentiating feature in the marketplace. One of the things that we've been observing is just the cyclicality of the auto insurance market. A couple years ago, clearly, probably once-in-a-generation profitability challenges for auto insurance companies, and they dialed back on their ad spend, they dialed back on customer acquisition. Last year, they're producing some outstanding results. In fact, State Farm, which is, you know, probably the largest insurance company of auto and home in the country, produced an underwriting profit. It is noteworthy.
They don't generate underwriting profits. They usually generate an underwriting loss and make up for their losses in investment income. We hear from the public companies, but some of the customers, like State Farm, are not public companies. Maybe you can give us a setup on how the different companies are responding to the market conditions, which happen to be quite positive at the moment, this moment in time.
Sure. I guess to your point, Greg, you know, it is a very healthy backdrop for the carriers, and it's very broad-based. You know, whether it's what's the direct carrier landscape, the captive carriers, we're seeing this broad view of our customers who are looking into 2026 as a year to grow and continue to drive growth. One of the differences we're observing is just you'd say, "Well, geez, they've been growing the past few years. How-- what's different now?" I think one of the differences we're observing is past few years about getting rate restoration, underwriting profitability. In that context, you know, maintaining market share was a second-order concern for many of them. It wasn't a primary concern.
As we've gone into this dynamic after multiple years of rate increases, you're seeing this mindset of how do I maintain and grow policies in force? That soft market dynamic, as the insurance industry refers to it as, is a very healthy backdrop for us. Why? Because carriers want to think about how to grow their business in a, in a way that's very efficient, and digital channels work very well in that regard.
Yeah. I can speak from the perspective of following these companies. Finding qualified leads that convert to new policies is the biggest challenge for them, and the more efficient they are at it, the better off they are in terms of growing what's an important metric to them as policies in force. Maybe you can spend a minute and talk to us about, you know, the process that you guys have to find these qualified leads that are so valuable to the insurance market?
Sure. Our heritage as a company has all been about how do we acquire consumers online using data and technology. You know, if our founders were in the room, they would tell you they knew nothing about insurance when we started the business over a decade ago. What they knew was that insurance was a market where it was very highly fragmented in terms of the carrier population, and also it was opaque to the consumer about how you, how you think about pricing and those things. In that backdrop, you also had insurances, relatively speaking, a laggard online, and continues to be the case, actually.
Interestingly, like broader financial service, you look at stats, broader financial services versus the insurance space, P&C insurance space, probably, you know, a third slower, a third less consumers are online in this, in the insurance space. That backdrop of, you know, carriers looking for customers in the online world has been a key thing we've served. What has really differentiate us is how we've found them online. It started with, you know, if you look at our company, it's, you know, 350 folks. Most of them are a big chunk of them are engineers, product folks, analysts. We think about how do we use data in our large language models to acquire consumers across all kinds of online sources and then bring them into the marketplace.
We go through this process as you bring a consumer through the funnel, how are you constantly testing different approaches, how are you bringing other data sources to help, you know, fine-tune that customer journey. The key is how do you get the right carrier to the right consumer to the right carrier. That matching concept has been the secret to our success. As we've grown the business, you know, we've continued to expand that data set. As we've expanded that data set, we've also overlaid increasing sophistication in terms of how we analyze that data to help be more targeted for carriers, and that's really been our secret sauce for years.
He made an interesting comment in that answer because he talked about how trying to find the right customers for each of the carriers, and I think one comment or concept that gets lost in the marketplace is, each of the carriers have their own cadence, their own appetite for different customer segments. While there is a big chunk of the market that's focused on the standard or Non-standard market, which has a tendency to be more shopping-oriented, there's other areas of the market that are a lot more sticky and a lot less likely to shop at all. You know, at one end of the spectrum, you'd have Non-standard customers or standard customers that Progressive serves.
On the other end of the spectrum, you'd have high net worth customers like a Chubb serves. My sense is that the activity for your company is coming more at the area of the market that's serving the standard and non-standard market versus the ultra preferred. Maybe you could give us some. Then, by the way, use that also as a springboard to talk about how it's different state by state in terms of demand.
When you think about the backdrop of insurance, I think it's you hit a very good point, which is key, and it's actually why a marketplace works so well, consumers are very different. It's not like travel where, say, if we want to fly from here to New York City, you know, each Delta doesn't care which one of us buys the ticket. They're happy to sell it to us for the same price. With insurance, it's all about your individual risk profile, and then you overlay carriers at any given time may have a different preference for that profile based in different states. You know, 'cause when you think about this, we talk about it as if it's one national market. It's really fifty individual markets, and within those 50 individual markets, you further have segmentation by profile consumers.
In some states, they may be leaning into a premium preferred, other states they may be leaning into a standard, other cases it may be a non-standard, and that can change state to state by carrier by carrier based on what's going on, and even carriers themselves can change their preferences based on underwriting to issues that come up, right? That's the backdrop. That actually lends itself very well to our marketplace model because we can allow carriers to calibrate precisely the profile consumers they want at that moment, and it changes frequently. That's a big part of it. To your question, as you think about the profile consumer from the non-standard all the way up to sort of the ultra-premium, I think you're right to say the ultra-premium consumer is today not the typical online shopper.
If you go back 10 years, you would've had more of a non-standard, a very heavy non-standard skew. It's been evolving. You're seeing more and more shop online. Why is that? To my earlier point, insurance has been a laggard going online relative... a lot of others say like financial services. Even financial services has broadly come online for a wide range of segments of consumers and may have started, you know, at one end. It's broadened out over time. You're seeing the same thing happen in insurance. We're not yet the ultra-premium shopping experience. What's interesting, I... you know, auto insurance a top five expenditure for the average American family, and, you know, it's typically not the top five expense for the average investor family. I was at an investor conference last year, and I was very interested.
I said, "I'm gonna take a note of how many investors bring it up," 'cause there was an article in The Wall Street Journal that morning, in my 13 meetings it came up five times. You know how much my rates have gone up?
When you see investors recognizing auto insurance going, increasing in price, maybe it's going up that spectrum.
Yeah. That's a fun analogy. Yeah, it's one of the... I'm gonna pivot to AI for a second, and I know you talked about a little bit. It's quite fascinating to watch the rhetoric in the marketplace, really AI take all the oxygen out of the room in terms of investor concern, investor opportunity. What one less known fact is that Google actually started an online distribution mechanism over 10 years ago, and it was called Google Compare. They were deploying all the technology that Google had at the time in an effort to try and bring distribution of auto insurance in an early AI type of environment. They shut it down, and they wound up selling the business. It wasn't an effective use of time for that company.
Now let's pivot to AI and its interface with you. You spoke about how you're procuring customers, and you're spending all this money on engineers and scientists and all that stuff. Instead of AI replacing your business, I look at it from the standpoint, well, if AI is out there, do you need all these employees? Can you use AI to replace some of the workforce and harvest some savings that way? Maybe let's approach the AI from what's the opportunity set for your company, not only with customer growth, but internally with cost management.
Sure. I think the comparison to Google and AI is interesting. Google Compare years ago, and it's something that gets lost sight of. We can talk a little more how on the search landscape, if you're interested in AI, which we'll touch on that topic. In terms of efficiency, you know, we've been very proud as a company that we've been, you know, we've been focused maniacally on driving efficiency in the business through automation. The past two years, the business has, you know, more than doubled. As I mentioned at the outset, we've kept operating expenses flat. People say, "Well, you're just not, you're not investing much." Actually, quite the opposite. If you look under the covers, the composition of that $97 million for the past two years dramatically changed, constantly changing.
I'll give you examples. In our traffic bidding pillar, you know, we had traffic segments where we had, you know, 12, 14 people running them before. We now have three or four running them because we've automated them with the large language models. Driving efficiency. What's interesting, though, in our efficiency example, it's also driving innovation because we can actually be more efficient in our traffic acquisition, which is also helping our carriers as well. When I think about efficiency for us, you know, we did a talk within the company, probably six months ago on AI, and I put up some funny slides. They made fun of me at the time. We have, we talked about employees becoming sort of super employees with AI, and we really see that opportunity emerging.
As we've been adding employees to the company, we've been very conscious, think about, like, are they AI first kind of thinking? They have that mindset, and that's been an important part of it. When I think about the opportunities to continue to drive efficiencies, certainly they exist in our business. As we're doing that, we're also gonna say, how do we take that money and invest it in more data scientists? You know, AI tool usage was a big thing with the token costs. How do we think about driving new product innovation for our customers? That's been our mindset. I think for our employees, it's actually been, I think, created a lot of opportunities for our employees. Our employees have had a chance...
Certainly that has impacted, it will impact every company. It's really this idea of how do you take your employees and make them that much more productive to take away the busy work, have them focus on driving value for your customers. When you look at our employee workforce, you know, our employee workforce is highly, very highly educated, you know, knowledge workers. How do we make them more effective and have them focus their time on the things that are gonna drive the greatest value for our customers? That's been the real power for us with AI on the efficiency side. It's making the employees able to do more to drive results.
When I think about what your answer and using AI to improve efficiency, I'm reminded of a phrase, that you have to meet people where they are. You have to meet your customers where they are. In your case, you have to meet the insurance companies where they are. What I'm thinking about is where they are on their technological journey. You, you can come to the market with some of the best technologically innovative solutions, but if it isn't successful in integrating with these legacy systems by insurance companies, it's gonna be not as valuable to them as you might imagine.
You know, before we launch into the financials of the company and the outlook for the financials, maybe just spend a minute and talk about your customers and my perception is that they're lagging on that AI journey and technology journey all in. Talk to me about how, what your perspective is on where your customers are on their technology journey and how your company interacts with their technology?
Sure. It's a great question, actually. I'd say I think you characterize the industry as, you know, it's evolving in technology, right? Very different customers have to meet at different spots in their journey. It's sometimes within the same customer, one part of the customer is much more advanced in their thinking than others. How do you help the person who's the champion for innovation, new technology? How do you help them make the case internally? We're dealing with a very large carrier right now on that exact topic. I think it comes back to what are our roots? Our roots have not been to revolutionize the insurance industry. It's helped the carriers and agents evolve in the digital age and help them do that in the way that's right for them. That means meeting them where they are.
Some of our carriers have much further along on that journey, others are much earlier. Our job is to help to match our teams and our capabilities with what's right for that carrier at that time and educate them as we go. I mean, a really good example of this is, we have a product called Smart Campaigns we've talked about. Smart Campaigns, those of you who aren't familiar with it, is our large language model on the distribution side for carriers. Carriers who have a desire to use our platform can have their own digital teams put in their preferences, you know. We have this capability called Smart Campaigns, where you can say, "Listen, you turn over your budget, our large language models will...
You tell us your preferences, we'll actually do all the work for you, and then we'll come back to you with results for and get deliver those consumers." The results of Smart Campaigns, it's probably five years in, is the majority of our carriers now use it. When we started that, you know, four or five years ago, what would carriers say to us? "We're gonna give you our disposition data? Are you, like, crazy? Like, you know, you must be out there." You evolve. What do we do? We won someone over, we helped them realize the benefits, we went to the next carrier and said, "Hey, see what this guy did? That helped them," we just keep doing that. That has been our mindset.
You know, one of the things that the insurance industry teaches you if you're serving it is one must be patient, and one must be relentless and follow up and not give up. That has been the mindset, in how we built the business.
Yeah. You're spot on that statement, that's for sure, having spent a life, looking at the industry. Yes. Well, great. You know, we have about 10 minutes left, and I just wanna remind the audience that, you know, you're welcome to ask a question if you want. Otherwise, I'll just continue on. I feel like I could talk for hours about this stuff. Let's pivot to the financials for the company. You talked about the successful results that you guys generated last year. I think you've laid out a revenue target for over a couple year period of time. So could you remind everyone what your, you know, like, their two-three-year plan vision of the company is and how you anticipate getting there?
What Greg is referencing is in our November earnings call, which we reiterated last week, is our path to $1 billion in revenue. We ended last year, you know, just shy of $700 million in revenues, and we said we'll be billion-dollar business in two-three years. What does that imply for top line growth? If it takes three years, it's like 13-14% growth per year. If it takes two years, it's like 21% growth, you know. What we've said is it'll be in that range. You know, we are very bullish in the industry. It's funny, in our November call, the reason we put that target out is for a long time, from 2024 through 2025, as we talked about our business, people didn't wanna talk about the future.
They said, "Well, tell me about next quarter," like, 'cause they were worried about... We started putting that in November, the reason we did it was very simple, which is we've had this plan. It wasn't like something we just sort of said, "Oh, let's put out a path to $1 billion." We've had this plan for some time. We've been executing against that plan since the summer of '24 is the plan was put together. We've been executing pretty relentlessly against that. The vision of $1 billion in revenue is all organic, to be clear. That's one point I wanna put on it.
Thank you.
The second part is it's balancing growth and profitability. For us, growth in and of itself is not sufficient. How do we continue to drive EBITDA expansion? In our model, for example, we've talked about EBITDA margins. We were a little over 13.5 last year. We'll still add 100 basis points probably this year. It's typically 150 we target. Last year we added 200, so this year it's 100. You'll see expanding EBITDA dollars. Let's just take the most conservative view of that two-three. It takes 13% growth for this year. Not to say that's our target. We haven't given annual guidance.
If it was 13%, based on the comments of expanding EBITDA margins, that would be 20% growth in adjusted EBITDA dollars. When you look at that's your conservative case, quote unquote. As you think about going faster towards 20%, you'll see more EBITDA dollars. You also will see more investment as well in our, on our cash OpEx. We've been very effective at how we manage our cash operating expenses. As I mentioned, the past two years it's been flat. Underneath the covers, a lot has changed. Then you'll see quarter-to-quarter fluctuations because we do a lot of short-term projects with our time folks, and that's been one of our tools.
We're very bullish on that path, and we think, as investors start to appreciate that is real, we hope they'll reflect it better in our stock price.
Yes. Well, hope springs eternal. There's a lot to unpack in that answer. I'm gonna start. First of all, I appreciate the comments of doing it organically versus inorganically. I think that's a valuable perspective. As we sit on the outside and measure your performance, I know there is a tendency for people to look at one quarter and use that as a benchmark for the next eight quarters. So I guess the first question in response to your target is, you know, how should we think about the volatility that may happen from quarter to quarter, you know? If there's a quarter that's a little softer than where maybe the street is, you know, what would be some of the reasons that might happen?
Conversely, what would be some of the reasons why you might do better in a quarter on revenue as you go on this journey to the billion dollars?
Sure. You're in a good topic, which is we are not a locomotive going at the exact same speed from just January first to December thirty-first. It evolves based on the industry. What we can control, we control in a maniacal way, which is our cash operating expenses and how we manage our traffic acquisition. We do that in a maniacal way, and I think quite effectively. What we don't control is exactly how the customers will do things in a quarter. Why can a quarter be higher? A quarter can be higher because carriers all of a sudden felt more bullish about something, or they saw an opportunity in the stake because they got a rate increase. They said, "Let's not wait till next quarter.
Let's lean in." We may not have been told that because they didn't know that was gonna happen until the second half of the quarter, and so let's jump on it now. Conversely, what could have it move slower? Carriers, something in the environment makes them say, "Let's slow down a bit. Let's be a little more measured versus a little more aggressive." These things can happen with large carriers on short notice. Now it has become less common, you know, relative to a few years ago, but the same dynamics exist in the industry. At the end of the day, customers are focusing on growing the business broadly across all 50 states. Imagine 50 different markets with different customer profiles. Sometimes you'll get spikes that change those dynamics. Those are things I'd say put one into the other in the course of a current year.
As I think to a path to $1 billion, one of the things we do control is how we're rolling out new products, right? We've done this on the agent side. We've talked about going from basically one product to our 6,000 local agents to now having, like, 1.4 products. You'll see us bringing more products out to carriers and agents on our path to $1 billion. That'll really be leveraging our core expertise of how do we help them grow and leverage data to do it. As we do that'll give us, I think, you know, as you think about the ups and down, that'll, I think, will give us more resiliency through the middle.
Excellent. I wanna pivot to the margin side of the equation. Joseph remembers this, several years ago when I marched up to his office, to listen to what was going on at the company, you know, at that moment in time, their EBITDA margins were, you know, in the single digit range. I'm like, you know... one of the just objective statements I made to you guys, and I know you remember this, is you need to get to, you know, a double digit, 10%, you know, minimum threshold. One of the things I'm, you know, proudest about your accomplishments is you've done that and then some. More importantly, you've mapped out a pathway to get even more margin expansion. You said 100 basis points this year.
Talk to us, you know, in the couple minutes remaining about some of the levers you have here to drive margin. Obviously, organic revenue growth is gonna be a critical piece, but what are some of the operational expense levers you have to drive that margin expansion that I think is so valuable to your company?
Sure. There's a couple pieces I'd touch on. I guess before I'll touch on, the story you tell, Greg visited us. The previous year we had lost money. We had negative EBITDA margins.
Yeah.
We just had a quarter we had just broken positive. I mean barely positive. Greg is like, "It'd be nice to have double digit." I think it was March of 2022 you brought it on this stage.
Yes. Yeah, yeah.
We've made a lot of progress since then, and we brought that back up. Greg goes, "It'd be nice to be a double-digit." We're like, "We haven't talked about that." We got there and then some. I think what's driven is a couple things. I think first is we think about continuing to drive automation in the business. That is the number one thing that is gonna help us and continue to drive margins. As we get that top line growth, we have strong operating leverage. We'll continue to build their operating leverage. Why? Not because we're slow, we're trying to pull back growth. We're actually continuing to invest in growth, but we're doing it through automation and leveraging our data.
We're doing that in multiple ways, whether it's on our traffic platforms we're investing to be more efficient how we do acquisition of traffic, and that keeps our VMM margin at in the high 20s. If you look at the operating expense side, we're taking teams that may have done, taken much larger numbers of folks to do the work, reducing the size of that team, but we're actually giving them automation and letting the team do more things for customers. That drives more growth as well. You look at on our distribution side, our customer coverage side, like in our agency business. I talked about multiple products. If you go back a few years, we basically have one product for our local agents. You know, we're now at 1.4 products.
If you think about the operating leverage of selling an incremental product to the same customer, that's meaningful, right? You put those together. Those are three examples. We go through each of those ones. Those are not just sound bites I'm giving to you. Each one of those has a plan, and the teams have been executing against those plans since we had that single-digit EBITDA. You know, that's been all part of our thinking.
Yeah. We just have a little over a minute left, and I think it's important to pivot to the balance sheet and uses of capital. One of the unique features about your company that I find really appealing is the lack of debt and the positive free cash flow position. Talk to us about your balance sheet and how you guys are thinking about capital and free cash flow.
Sure. We're proud of our balance sheet. It's come a long ways in the past three years and made a lot of changes. Today it's a business we had at the end of last year, last year at $171 million in cash. We had no debt, to your point. Importantly, our business is highly cash generating. Our EBITDA is a very close proxy for operating cash flow in a quarter, you know, just give or take 30 days with, you know, working capital dynamics. We expect that to continue. Last year we had actually cash conversion from EBITDA to operating cash a little over 100%, just speaking to that type of efficiency. It's really impressive, and we expect that to continue that model. We look at how will we use our balance sheet.
There's three ways we use it. One is we believe in having a fortress balance sheet, right? This is something that some people say, you know, "Sanborn, like, you're just a little too conservative." I say, "No, fortress balance sheet is so what's gonna make sure in cycles that go up and down, we will be there." This is a massive market. We wanna make sure we're at the other end of it a long time from now. Playing to win is having a fortress balance sheet. That's one. Two is buybacks. We put our first buyback, our inaugural buyback program in place last year. It was a $50 million program we launched in, we announced in August or August earnings call. You know, we did $21 million last year. We did another $9 million since the start of this year through our earnings call.
We have, you know, about $20 million left between now and July. You'll see us, you know, using that up, buyback program.
Yeah.
I think buyback program is another lever for us for two reasons. One is our stock is very attractively priced right now. It's a good message. Two is it also helps, you know, offset some of the dilution from the stock issues we have with employees. Then the third is on M&A, right? You know, we as a business believe in strong organic growth, and we think we have that business well-organized to that. We believe M&A is an opportunity. As Greg knows, I was an M&A banker for a long time before I became a company guy.
You know, as we look across the landscape of Insurtech, there's a lot of really interesting companies out there who are not gonna get to that next level and have some really good talent and team, and it may help us in AI and some other areas. We're talking to those folks and they're saying, "Hey, this could be part of a winning player who's gonna play this space long term." We think those opportunities will come as well.
Excellent. Well, that's an excellent summary of the industry and your business, and thank you. We're at the 30-minute mark. Just for everyone here, please be aware that we're gonna take management down to the breakout session. We'll have another 30-minute conversation in breakout. Thank you everyone for being here, and Joseph, thank you for coming this year. We appreciate it.
Thank you, Greg. Our pleasure. Thank you.