I'm Ralph Schackart, internet analyst here at William Blair. Sorry. Thanks again for attending our annual growth stock conference. Really happy to have Jayme Mendal, CEO, Joseph Sanborn, the CFO here again to present. A quick intro. EverQuote is a leading marketplace for home and auto insurance. On the consumer side, if you're shopping for a quote, oftentimes you'll find in the marketplace you could actually lower your policy premiums. The company's done a really great job coming out of the hard rate cycle that they'll get into. Growth has really come back fairly vigorously. They're expanding margins, buying back stock. Doing all the right things. From our vantage point, that should hopefully continue going forward, assuming the rate cycle remains robust. I'll keep it brief.
Jayme, you're going to kick it off.
Yeah, sure.
Do a couple of slides, and then we'll jump into a Q&A format.
All right. Thank you, Ralph. Thanks, everyone, for joining. If I just press. There we go.
One more. I'm supposed to tell everybody to check our website for disclosures.
Of course.
Yeah. Thank you.
Our legal team would appreciate that, Ralph.
Come on over if you want.
All right. Thanks, all, for joining. For those who are less familiar with us, as Ralph mentioned, we're a leading online marketplace for P&C insurance. Our mission is to empower all the largest insurance carriers and thousands of local agents to grow, to compete effectively in the digital age, and gain share through more effective digital customer acquisition. Just a brief snapshot of who we are. We are a leading marketplace in a large and growing sector as insurance distribution spend increasingly moves digital. It's a bit slower to do so than a lot of other sectors, and so we've got the secular tailwind behind us as it does. We have a differentiated model that is really built around the technology and data. We've designed and built a system that's really purpose-built for acquiring insurance risk online.
We've amassed a huge amount of proprietary data over the years to help us optimize this system on behalf of carriers and agents. We have proprietary distribution relationships. We have deep, long-standing relationships, not only with all the largest carriers in the country, but also with thousands of local insurance agents, which have been built up over the years. On the financial front, we went public in 2018. Our stated financial model was to grow 20%+ per year and expand our margin one to 200 basis points per year on average. We're now seven, eight years on, and we've executed exactly to that plan. Our CAGR since IPO is 22%, 23%, added 150 basis points of margin per year on average. We've just continued to sort of execute and say what we're going to do and do as we say we will.
Last year, you can see on the bottom there, was a particularly robust year with high growth, quite a bit of margin expansion across all the lines, and now generating consistently a very high, healthy level of cash flow. We have seven of the top ten carriers active in the marketplace today. A couple more beginning to reactivate this year coming out of that hard market cycle, and thousands, as we said, of local agents who depend on us for their growth. The business model at the highest level is as follows. We look for consumers who are online with some intent to buy insurance. We drive them to EverQuote web properties, largely through paid programmatic advertising. When they arrive at one of our properties, we'll gather all the relevant underwriting data that would be needed to make an informed real-time decision about the right insurance provider for them.
We do the work to kind of classify and stratify risk, and then route the consumer to the provider that's most likely to have the right coverage for them. From the consumer's point of view, the value prop is pretty straightforward. They save time and money shopping or reshopping their insurance. From the provider's point of view, we represent a very large, highly targeted, and high return on ad spend channel for customer acquisition. Just to sort of preempt, I think, some of the questions about the market and its exposure to some of the developments in AI, I think it's important to understand that insurance is a very complex and regulated market. It doesn't quite resemble what you'd see in a lot of other markets. First and foremost, it is regulated.
More than that, it is very opaque in that the carriers really want to own that quoting and binding conversation directly with the consumer. Therefore, they go to great lengths to ensure that their rates are not exposed to the public for any type of rate comparison experience. It's an industry where the carriers are very, very targeted in terms of the specific risk that they're looking to take on. Unlike in a category, say, like travel or booking reservations or something like that, where all the data is readily available, in insurance, it's really not.
There's a role to play for a company like EverQuote who could help bridge the gap between a lot of the LLM platforms looking to help consumers shop for insurance and the carriers and the local agents who are going to be very particular about how their distribution is actually exposed into the AI market. We'll talk, I'm sure, a bit more about this. Ralph referenced it. The market has been experiencing tailwinds for the last year or two. This is coming out of a particularly challenged period for auto insurance, referred to in the industry as a hard market cycle, that occurs once every three to five years when the pricing and risk get somewhat misaligned. Last time it happened was 2017.
A typical cycle like this results in the carriers pulling back a bit on their growth, on marketing spend, while they work to reprice their risk, then they sort of re-enter the market with more advertising dollars. In that period, things sort of normalize to single-digit growth for EverQuote for a period of 6- 12 months before sort of coming back to higher growth levels. The more recent hard market cycle was more driven by COVID. It was a bit more extreme because of some of the hyperinflation that occurred coming out of COVID. For a period between roughly 2022 and 2024, combined ratios were elevated, and carriers had pulled back quite a bit on their growth efforts. Since 2024, we've been seeing sort of steady improvement in the market, we now come into 2026 with a very healthy insurance market.
Typically, carriers are looking to run at a mid to high 90s combined ratio. Anything below that is favorable, it's profitable. We come into this year now with carriers, you can see sort of the trend over the last few years, but in the kind of mid to high 80s on average, and therefore, quite intent on growing and coming into the market with a very healthy appetite for new customers. I guess in summary, we're a market leader in a high-growth sector with secular tailwinds. We have these deep, long-standing customer relationships, both with carriers and then a large distributed network of local agents. We have some differentiated proprietary data assets that will help us, I think, be more a beneficiary as AI tries to navigate its way into the insurance market.
Growing profitable business that's generating a tremendous amount of cash flow, a very healthy balance sheet, and track record of growth and profit expansion, which we intend to persist in the coming years. With that, Ralph, maybe we can turn over to questions.
Sounds good. You touched on it briefly, Jayme, carriers are obviously very profitable right now, which would be a good backdrop, maybe they're overly profitable. Maybe kind of walk through the behavior you've seen from some carriers. I think you've talked about the top 20 or 25 sort of not coming back, kind of where are you in that cycle? What sort of stage are we at right now? We'll launch off from there.
Sure.
Thanks, Ralph. Broadly, carriers are quite healthy. What we've seen the experience starting this year, just to dovetail on Jayme's comments, carriers are coming into the year with low combined ratios. What that means for those of you who are new to insurance, meaning they're at a level where they have ample room between the current spend to invest in customer acquisition to still meet their profitability target. We're in this period, and it's quite broad. The commentary we've given about the marketplace, our business, over the past year is we've seen more and more carriers coming as we've progressed through this period. If you go back to our comments in early 2025, we said that's exactly what we expect to happen.
As we start to see the industry come out of this hard market cycle, we'll see a broadening out of demand, and we're seeing that. Into Q1, we made the commentary that one of the notable things for us was the one sort of carrier who was a top 10 carrier who had not been back in the market actually came back in the marketplace. They had pulled back broadly from digital channels for a better part of three years, but they had been a top three carrier for us prior to the downtime. They came back in. That's another piece we have of the story. Again, pretty broadly healthy. You look at that dynamic for us, the other piece I would add to it is, carriers are focused on really two things, right? First, they focus on underwriting profitability. They got that.
Now that they have that, they're shifting to how do we grow policies in force? This is a period where carriers want to grow policies in force. That's the driving impetus. We're hearing that broadly from our carrier partners. We heard that, made that comment on our February call. Same dynamic is continuing into our May calls. That's the second piece. The third is how they're using digital channels. Digital channels for the carriers, as we describe the model, carriers are trying to be very precise in how they target their consumers. They make the business of on a 50 state base, if you're a national carrier, it's really 50 markets. You're trying to find the exact profile that fits the underwriting criteria you've established. Digital channels work really well. That again, that plays very well to EverQuote.
That's sort of the backdrop as we start the year. Great. Then, thinking about the drivers, you've sort of framed a billion-dollar revenue target over the next few years. Maybe sort of frame that for the audience. What are the contributors? Obviously, carriers spending coming back. Jayme, you talk a lot about product development on the calls. Maybe kind of walk us through that path, how do you get to $1 billion revenue?
Sure. For context, in our November call last, November 2025, we laid out a target of we'll be a billion-dollar business in two to three years. At the time, the model set us about $650 million for 2025. We ended up a little higher than that. What it means, when you set the target, if we did it in three years, it'd be a business that was a 14% grower on top line revenues. If it was in two years, it'd be 21%, 22%. As we keep progressing on that target, we reiterated that on both of our recent calls. What are ways we get there? First is how we think of additional budget coming from providers. On our carrier side, we have our Smart Campaigns product, which is our AI-driven.
product where carriers are able to turn over their bidding to us rather than using our platform directly. That results often in them getting better performance. One example we gave in the last call was they had a carrier who was still managing their own campaigns versus using ours. They got a 20% improvement. Those types of examples make carriers say, "Let's give more budget to us." That's one example on the carrier side. On the agent side, we have a concept of how we're going to become the one-stop growth shop for agents to grow their business. If you go back three, four years, you've known us for a long time, Ralph, we had really one product, which was leads. Helps consumers connect with agents, an online to offline connection. Over time, we've added other products.
Today, it's like 1.35, 1.4 products per agent, reflecting we've added digital marketing services, connections via calls, all those things to be the one-stop growth shop for agents. We're actually bringing the Smart Campaigns product we had for carriers to agents. We see that'll be another way we'll get more budget out of the agents as well. When you shift to the other side of the marketplace, the traffic side, we'll continue to grow traffic. As the marketplace, you've got to do both sides. We've talked about in our recent calls how we've added new traffic channels, whether it be social, CTV, other areas where we're thinking about how to drive additional traffic to drive performance for the traffic for the providers. That's a piece that's another second piece. The third piece, I think, is about our vertical strategy.
Our business today is 90% auto, 10% home, all in the P&C landscape. We look at that home business. Home we see as an area that's had some nice success for us the past couple of quarters, up 30% year-over-year. More importantly, I would say I would look at the backdrop of the industry as a whole. The P&C carrier is largely focused on auto recovery first, but some of the same factors that impact auto impacted home, coming out of COVID, supply chains, labor costs. Those rates have started to come through. If you've seen your recent home insurance bills.
Yeah.
The rates have definitely come through, unfortunately for us. It has certainly made a more favorable environment for us as a company. The last piece I would look at is just the size of the overall market for us, and home is a big driver for us, which is home is a market today that is roughly 10% of our business. 90% is auto. If you look at the broader industry, it's roughly two to one auto to home, so there's a lot of growth there. When we look at the path to billion, those would be the three. Where we're going to add additional budget from carriers. We see opportunities to drive additional traffic. The third is also on the vertical strategy.
Great. Maybe just on the product strategy, obviously your business has evolved quite a bit from certainly when William Blair and others helped take you public. Maybe kind of walk through that evolution, Jayme, and you talked about the opaqueness of insurance. If you could tie in your direct integration to the carriers and how that sort of differentiates your model within the market.
Yeah. Over the years, what we're trying to do is align the consumer with the provider that's most likely to have the right product for them and then eliminate as much friction as possible, given the sort of market structure to get that consumer to a bound policy. That's good for the consumer, it's good for the provider. I think there was a period of time shortly after the IPO where a lot of the focus was in building deeper integrations with the carriers, so that when a consumer comes to EverQuote, they can provide all their data one time, and then we can basically transmit it via integration and land the consumer on a quote or as close to that bindable quote as possible and make that truly seamless.
Again, it's a better experience for the consumer, provider benefits through higher conversion rates, and that really helped in those early years as we kind of went through the carrier landscape and built out all these integrations, helped drive performance and growth. More recently, our attention has turned over the last few years to really applying AI to that matching process. We have this product that Joseph referenced called Smart Campaigns that's really meant to take over a lot of the targeting and bidding on behalf of the carriers and agents to make sure that they're really kind of targeting the right consumers that are most likely to convert with them, and that they're paying the right price relative to the expected of a lifetime value and conversion rate of that customer so that their economics are sort of optimal.
That's been a large thrust of the focus in terms of sort of the technical and analytical product development. Then, the other piece that Joseph referenced is particularly for the local agent. I think there's also more of a sort of software and value-add service component where we've been helping them for many years grow by delivering them leads effectively. If you actually talk to an agent, they work with five to 10 different point solutions for different things, all oriented towards really just hitting their monthly numbers and growing their agency. Over the last couple of years, we've begun kind of building out a more comprehensive solution for the local agent that is really meant to be their one-stop shop to help them grow, and that's been getting some traction. We're now up to closer to two products per agent.
As we continue to introduce more into that portfolio, that notion of aggregating the agent's growth budget is very much becoming a key part of the strategy.
You quote the metric of number of products per agent or customer. Where do you see that evolving over time? Obviously no discussion would be complete without AI. Maybe if you can wrap in how you're using it on the product side and then maybe on the operational side for cost savings? Maybe kick it off, Jayme.
Yeah, sure. I think we'd like to get to a place where whatever the agent needs are as it relates to growth, so that could be digital marketing, it could be leads, it could be live calls, it could be telephony services. It's basically the whole front office of the agency. We have a product to meet their needs.
The terminal state for the average agent will be three or five different point solutions brought together with EverQuote. Maybe somewhere in that neighborhood is my guess. As it relates to AI, beginning with the product, we referenced Smart Campaigns. Smart Campaigns is all built on AI. It was machine learning driven, and we're continuing to enhance those models by introducing more data and more attributes, which is improving the sort of precision and the downstream performance for carriers. That continues to be a big focus. We've begun to introduce it into some of our telephony products. All of our, with AI voice working on behalf of customers now every day. It's beginning to extend into kind of the traffic landscape.
Integrating with some of the AI platforms to help carriers and agents access a lot of the traffic, the consumers who are starting their search now through these AI platforms. There's different ways that we do that, through content, through technical integrations, through paid advertising even, which is sort of bringing and making the AI landscape more accessible to the carrier and the agent who tend to be a little slower to adopt new technologies.
Maybe the piece I'd add on is when you think about AI, there's sort of two ways we describe it. Jayme talked about innovation for customers, helping advance the customer success and driving performance, driving better operations in an agency to drive growth. The other piece is efficiency for us. Sometimes you have both. Great example with Smart Campaigns. Smart Campaigns helped carriers grow certainly more effectively, will help agents grow more effectively. It also mean we need fewer folks to run the account management function because we get automate a lot. These are examples that sometimes hit both, but when I think an example on AI, a real simple one is, we gave the comment is through 2025, we more than doubled our business with the same cost structure.
It reflected that automation driven by AI has been going on under the coverage for some time. We continue to do that. You'll expect we'll continue to drive that efficiency. At the same time, looking for ways we're going to invest to make sure we drive the innovation for the carriers and agents.
With the new traffic channels, starting more top of funnel, maybe talk about what you're seeing in your marketplace to the extent that you could see different changes in conversion or just the change in traffic, and then as it relates to VMM, margin, sort of your thoughts around that as well, or how it may impact that.
I'll start with the portfolio traffic. Our traffic, it's quite diversified, and our largest traffic partner, not surprisingly, is Google, but that's sub 20% of the overall traffic portfolio. We operate across basically all channels wherever there's consumers online with some intent for insurance, whether it's video or social or through affiliate programs and partnerships, in addition to search and now AI search. Did I answer the question?
Yeah.
Was there a second part?
Yeah, just maybe what you're seeing from the more top of funnel traffic that's coming today.
Right.
Yeah.
Yeah. We've mentioned in recent calls that over the last couple of quarters, we've begun re-expanding into some of our higher funnel channels. Typically, when we talk about higher funnel channels, these are things like video or display, social channels where the consumer's a little earlier in their shopping journey. They're not in market searching for auto insurance now. We've had some good success. These are channels that we used to run before the hard market. When we lost some monetization during the hard market, we pulled out of these channels, because the category just couldn't really compete. Now that the monetization's back, we've begun sort of rebuilding these channels and then also stepping into some new ones like connected TV. It's been successful.
It's kind of going as planned so far and we're working hard to sort of keep pace with seems to be insatiable demand from the carriers to grow and consume traffic right now.
Can you just touch a bit on the margin profile?
Margin, yeah.
VMM, which is we run the business revenue less advertising expenses for marketing dollars. That divided by revenues is VMM margin. Our VMM margin has been sort of in the high 20s, and we think it'll stay in the high 20s, is how we're viewing it. As traffic channels scale, we think they'll get to comparable margins for us. I think it's important to remember the way we run the business, though. On a day-to-day basis, we're solving for VMD dollars, not for margin. We just over time, what our analysis is that sort of the optimal trade-off between maximum VMD dollars results in a margin in the high 20s. As we look across the different channels, as you're starting new channels, yes, like in Q4 of last year, we made a comment, which we're consciously starting several new channels at once.
We expect they'll have some downward pressure. Why does it have downward pressure? Because as you're trying to start channels and scale them and quote, "Burn them in," is you have to get some efficiency. In Q1, you actually saw the results of our VMM go back up to the high 20s, just as we expected. It did. We shared that news in our May call. I think that's how we'll see it evolve over time is our expectation.
Great. Go ahead and pause, see if there's any questions from the audience. We've got about five minutes left. Maybe just kind of by ending point, and feel free to spend some time on this, but if you're an investor in the room, anything we didn't cover today or just anything you would like to reemphasize or highlight for investors as they're thinking about the EverQuote story?
Yeah. I think we've covered a lot of it. We are a team that has performed very consistently. In spite of quite volatile market conditions, we have said what we're going to do for seven years and we continue to deliver against those commitments. The business today is dramatically healthier than it's ever been. It continues to grow at healthy rates. It's generating a tremendous amount of cash. We have a very healthy balance sheet, so we feel really well-positioned at a time when the industry itself is very focused on growth, and there's quite a bit of opportunity in the changing landscape as it relates to AI. We feel extremely well-positioned within that to play a very significant role in helping the industry adapt.
I think there's probably, judging just by how we've traded, some trepidation out there about what's going to happen to marketplaces or search or this or that. I will say, we've seen the business continuing to perform quite strong, and we're actively engaged in working through some of the opportunities that I think the changing landscape is going to present. I do expect that EverQuote will end up on the beneficiary side of the ledger as things play out over the coming years.
Since we have another minute, I cover all marketplaces, it's probably not good for job security. If you're an investor and you're looking at it on the other side in terms of a threat, what would be the one or two things you'd highlight? Certainly, insurance vertical, the pricing's opaque, just maybe if you could spend one or two minutes on that, in terms of the durability of the marketplace models in the changing landscape.
Yeah. To your point, I don't think all marketplaces are created equal. I think some are more susceptible to disruption than others. I think we're on a very far end of the spectrum where the category is going to actively resist the type of disintermediation that I think some people are concerned about. The carriers are the ones with all the market power in this industry, and I think they're going to be looking for trusted partners to help them navigate their way through this. At the end of the day, they do want all the people who are shopping for insurance in ChatGPT to end up buying a policy with them. They just don't want it to be through a process that they don't control and submits them to some kind of rate comparison experience.
For us, I think that there's an opportunity to play that trusted intermediary role where we're building both technology and relationships on both sides with the AI platforms and with the carriers and local agents themselves, to help bridge that gap in a way that works for this industry.
Alex, a question?
Can I get you to comment on similar for home and auto, or do you anticipate
I think in the U.S., it's probably more similar than different. Once you get outside of the U.S., which we don't operate outside the U.S., it's very different market structures. I think in the U.S. it's more similar than different. The key difference with homeowners is it tends to be a far more complex buying process. If you look today, there's still a lot more of the homeowners buying that happens over the phone than auto. Both still often fall off to the phone, it's especially true with home. I think that one will have even more friction or difficulty moving into a true AI native-type model.
What percentage would you say are auto policies?
Today, well, our revenue, we would classify about 90% as auto revenue. Some of that are people shopping for auto insurance who own homes who get cross-sold by the providers. Because the primary intent is on auto, we'd classify that as 90%.
Great.
I guess one of the reasons we're so bullish on home is really about the evolution. Another factor is the complexity of that sale will lend itself well to the AI evolution, where home, we think, will continue to be important through that process.
Unfortunately, we're out of time. Thanks for the interest in EverQuote. Jayme and Joseph, thanks for attending.
Thank you.
Thanks, you all.
Appreciate it.
Thanks.
Thank you.