EverQuote, Inc. (EVER) Earnings Call Transcript & Summary

Thank you. Hello everyone. Thank you for joining us and welcome to the EverQuote Second Quarter 2026 earnings call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 and 2. to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Sarah Buda, Vice President of Investor Relations. Please go ahead.

Thank you, good afternoon and welcome to EverQuote's second quarter 2026 earnings report of 2026. Overlooking statements may be identified with words and phrases such as aim, expect, believe, intend, anticipate, plan, will, may, continue, upcoming, and similar words and phrases. These statements reflect our views only as of today and should not be considered our views as subsequent date. We specifically disclaim any obligation to update or revise these forward-looking statements except as required by law. forward looking statements are subject to a variety of risks and uncertainties that could cause the actual results to differ materially from our expectations. For a discussion of those risks and uncertainties, please refer to our SEC filings, financial measures, which include adjusted EBITDA and adjusted EBITDA margin, variable marketing dollars and variable marketing margin, which we believe are helpful to investors, a reconciliation of gaps to non-GAAP measures was included in the press release we issued after the close of Market Today, which is available on the investor relations section of our website. And with that, I'll now turn the call over to Jamie. Thank you, Sarah, and thank you all for joining us today.

we continue to execute well and deliver strong results. In Q2, we grew revenue 25% year over year to $195.1 million and grew adjusted EBITDA 37% year over year to a record $30.1 million. Importantly, we achieved these results while continuing to advance our strategy, unlock new growth levers and extend our market leadership position. We continue to experience a healthy market backdrop for both auto and homeowners insurance, as carriers remain profitable and hungry for growth. Against this backdrop, carriers are turning to EverQuote as a trusted partner to help them grow policies and force. In Q2, we further broadened carrier demand, including a ramp with one major carrier that returned to the marketplace as expected. We also grew local agent demand for referrals to record high levels while increasing the number of products per agent as we advance our one-stop growth partner strategy with local agents. Both carrier and agent revenue reached record high levels in the quarter. Additionally, our home vertical continues to perform well, growing 35% year-over-year in Q2, also to record levels. While we execute on behalf of customers, we are also investing to extend our AI leadership position in the market. Our smart campaigns AI bidding solution continues to scale, supporting customers' aggressive customer acquisition goals by helping them deploy marketing budgets more effectively and efficiently. Seven of our top 10 carriers now use smart campaigns, and in Q2, the amount of revenue flowing through the product increased by over 100% versus the same period last year. Also in Q2, we released our agent-facing version of Smart Campaigns to the first cohort of local agents. As Smart Campaigns becomes our customers dominant bidding approach, we are strengthening these relationships by embedding our technology into their core workflows and achieving deeper data integrations all while helping customers achieve their growth goals. Within our walls, use of AI for everything from coding to automating operational tasks to prototyping products has reached an inflection point as our teams integrate AI into their daily workflows to drive greater productivity and velocity. We are seeing daily active use pervasive across our corporate staff, and within engineering, we are exceeding industry benchmarks with a 25% measured increase in efficiency. On a daily basis, I am impressed by yet another creative, high-value AI-derived output from an EverQuote team member. To name just a few, recent examples include AI agents designed to emulate human shopper personas and identify friction points in our web experiences. as well as upgrades to our AI traffic bidding platform, which put us on a path to increasingly agentic traffic operations. This trend of delivering innovative products at a faster pace will only increase from here. As evidenced by our financial results, our consistent, strong execution on behalf of customers has made us a trusted growth partner of choice for the largest carriers and thousands of local agents. We continue to integrate AI across our operations and our products, and are emerging as an AI leader within our industry. From this position of strength, we see an opportunity to do more to support customers while unlocking new growth vectors for the business. Initially, we will focus on two areas. One, amplifying visibility with consumers through new products that are purpose-built for AI search and agentic commerce. and two, building AI native growth solutions for carriers and agents, which allow them to derive benefits of AI without having to build and manage as much of the technology in-house. With our rich AI heritage and deep customer relationships, we are uniquely positioned to lead the P&C distribution sector through its transition into the AI era. We look forward to sharing more details of these newer developments in the coming months. I have never been more excited about where we are and where we are going. We have a unique blend of talent, market leadership, ability to innovate, trusted customer relationships, and financial strength. This positions us to build on recent progress, expand our competitive moat, and create a multi-billion dollar market leader with durable long-term growth. I will now turn the call over to Joseph, who will discuss our financial results and outlook.

Thank you, Jamie, and good afternoon, everyone. Q2 marked another positive quarter for EverQuote with strong revenue and adjusted EBITDA growth. We grew revenue 25% and adjusted EBITDA 37% year-over-year. We also drove record variable marketing dollars, or VMD, and record adjusted EBITDA, while at the same time generating strong cash flow. Now let's turn to the details of the second quarter. Total revenue grew 25% year-over-year to $195.1 million. Revenue from our auto insurance vertical increased to $172.1 million in Q2, up 23% year-over-year. We continue to benefit from our broad and differentiated distribution with growth across carriers and agents including a large carrier ramping as Jamie mentioned. We also are delivering on the operational plan we've discussed to scale beyond the auto vertical. In Q2, revenue from our home insurance vertical grew 35% to a record $23 million, as we capitalized on strong monetization across high-quality traffic sources and secured increased budget from key keyframes. carriers. VMD increased to 56.9 million in the second quarter, up 25% from the prior year period. Variable marketing margin, or VMM, was 29.2% for the quarter. Turning to operating expenses in the bottom line, in the second quarter, we grew gap net income to $19.2 million, up from $14.7 million in the prior year period. Q2 adjusted EBITDA increased 37% from the prior year period to $30.1 million, representing a 15.4% adjusted EBITDA margin. Cash operating expenses, which excludes advertising spend in certain non-cash and other charges, were $26.8 million in Q2, up slightly from Q1, as expected. We delivered strong operating cash flow of $24.3 million for the second quarter, with shares totaling $50 million. We are pleased with the results and expect our Board will revisit authorizing a new program later this year as part of our ongoing review of capital allocation. We ended the period with no debt and cash and cash equivalents of 192 million. In summary, our Q2 results reflect continued strong execution. We diversified our revenue across additional carriers in the quarter, further scaled our home vertical, and expanded our AI capabilities to drive innovation for our customers and deliver efficiencies within our own operations. Turning to guidance for the third quarter of 2026. We expect revenue to be between $198 and $208 million, representing 17% year-over-year growth at the midpoint. We expect VMD to be between 56 and 59 million, representing 15% year-over-year growth at the midpoint. And we expect the gestative EBITDA to be between 28 and 31 million, representing 18% year-over-year growth at the midpoint. Looking to the remainder of the year, we are seeing a healthy environment as carriers focus on growing policies and forests, and as they choose EverQuo to achieve their goals. We are executing well and remain confident in our ability to achieve $1 billion in annual revenues on the timeline we initially communicated to investors last November, while also generating strong cash flow. We expect to reach this goal by first, driving better performance to gain share. Second, obtaining bigger scale as we bring more provider budget and traffic onto our platform. Third, delivering a broader portfolio of solutions to our clients. And finally, achieving greater operating efficiency through investments in AI automation. As Jamie mentioned, we are increasing our focus on how to build upon our existing success and pursue incremental opportunities to propel our business beyond our $1 billion revenue target by delivering new AI-first products that add incremental value to our customers. Consistent with our prior commentary, we are making targets for our customers. investments in the second half of this year to develop and bring these new solutions to market. Additionally, we are pursuing select strategic commercial partnerships with AI-first companies to complement our own internal product development and capabilities. We look forward to providing further updates as our initiatives progress throughout the year. In conclusion, it was a positive quarter underpinned by strong fundamentals and a focused strategy. The strength of our ongoing financial performance reflects that our strategy to be a trusted growth partner for P&C insurance providers is working. We are executing amidst a favorable market backdrop as carriers continue to shift spend to digital channels. We are well positioned as an AI beneficiary as we bring both new value to customers and drive incremental efficiencies throughout our business. We remain committed to our previously stated path to $1 billion in annual revenue with strong cash flow generation. and we have built a business with strong underlying fundamentals and a fortress balance sheet that allows us to invest for the long term and capture new growth opportunities while continuing to drive value for our customers and shareholders alike. Jamie and I will now take your questions.

We will now begin the question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the question. the Q&A roster. Your first question comes from Ralph Shakart with William Blair. Ralph,.

Your line is open. Please go ahead. Great. Good afternoon. Thanks for taking the question. Jeremy, you talked about, you know, the healthy market backdrop and prepared remarks. Maybe just sort of give us an update what you're seeing with the market today versus maybe last quarter or, you know, since the business. has progressed through 2026. And then also- Yep. as you were going through sort of the AI products, you mentioned in the AI bidding part of the prepared remarks that you are sort of leaning in, I guess, with the genetic traffic operations or maybe some automation there. Maybe if you could provide a little bit more color on that and the potential impact to the business or BMD, it'd be great. Thank you.

Sure. Thanks Ralph so as it relates to the to the carrier market. The market remains healthy as it has been throughout the year so far. Get carrier combined ratios in the eighties. For the most part among the major carriers and that's true across auto and now the homeowner segment to. So I would say that the a- carriers remain. Very hungry for growth- if you're If there's one thing that we're starting to feel a bit about to persist into the back part of the year. Then to your second question as it relates to our AI bidding platform, we have automated a lot of our traffic bidding over the years. We've talked about it many times before. A lot of that was done through the application of machine learning to automate decisions as well as as it relates to bidding for traffic. And now what we're beginning to do is overlay more sort of agentic action on top of the ML bidding that has been occurring for a long time. And so this is now getting into like deeper automation of a lot of the operations. which will historically every time we do something like this, we see the benefit both in the effectiveness effectiveness of the bidding, which would flow through in VMD, but also in the efficiency, because we can sort of manage a larger traffic portfolio with less human intervention needed.

Great. That's helpful. Thanks, Jerry. Thanks, Rob. Your next question comes from Naveed Khan with B. Riley Securities. Please go ahead.

Great, thanks a lot. Couple of questions from me, maybe first on the smart campaign 3.0. I think you were rolling out a beta with the agents. and I'm wondering how that adoption is going and what the performance is for the smart campaigns with the agents. That's one. And then the second question I have is just around, your marketing channel mix in the last quarter. Have you kind of made any changes? or anything that might have countered the trend during the quarter as a result of your marketing changes, if there were any. Thank you.

Sure. So as it relates to smart campaigns, there have been a number of developments over the last quarter. You know, on the carrier side, we're continuing to evolve to our smart campaigns 3.0, which has more features built into it to improve the efficiency of our smart campaigns. of the model uh... but by the bigger change this past quarter was introducing smart campaign to agents for the first time played and they have been able to in the past but the early data that we're getting would suggest a significant convert and rate improvements for the agents who have opted into- to that fund. product so good progress on that front with respect to the marketing mix the The, I guess the change that we've been talking about since the beginning of the year is the ramp of new traffic programs and traffic channels, particularly into some of the more higher funnel areas. So that continues. say there's been any you know change that that that is material or noteworthy over the last quarter but we continue to work to broaden and expand that traffic portfolio particularly these higher funder higher funnel channels Okay, maybe just on the channel sort of topic.

maybe just maybe talk about AI overviews, if that has had any effect, positive, negative, or maybe none in the quarter? Yes, sure. So we have.

We have not experienced any direct effect to our paid search results and And you know what we, but you've got this large source of traffic growing in the LLMs, which to us represents incremental opportunity, because we have never historically invested in or had a significant amount of organic traffic to begin with. So our pay traffic remains healthy and strong. And now we've been making investments over the last year or so to really begin to access the AI search traffic more systematically and there's a number of ways that you can do that one is through more of a traditional sort of content strategy so the answers to the questions that people may pose through the LLMs and The second is through paid advertising, and you have platforms like OpenAI now opening up to paid advertising. And the third is through technical integrations. So we did, you know, we launched our chat GPT app last quarter and it's, you know, it's getting some traffic. But it's the combination of those things and how they work together to meet the needs of the LLMs that ultimately is going to allow us to start to tap into that traffic in a more material way way and could become material over time, particularly as those platforms continue to grow.

Great. Thank you, guys. Thank you. Your next question comes from Maria Ripps with Canaccord Genuity. Please go ahead.

Great. Good afternoon and thanks for taking my questions. So you talked about introducing new solutions in the back half of the year, both on the consumer side and carrier side. Can you maybe help us understand some of the opportunities here? And is it largely around sort of conversion and sort of improving, improving solutions that are within your existing models and and then secondly, maybe is there anything you can you can share in terms of contribution in terms of incremental revenue opportunity here? Sort of how should we think about that? Whether that start should start contributing later this year or next? How sort of how are you thinking about about that?.

Sure. So there's sort of two sides of this. One is more on the consumer or shopper side. One is more on the provider side. I started to get at the consumer side with my response to Nived, but we see an opportunity to really amplify our visibility with consumers through new products that are really purpose-built for AI search and agentic commerce. And so as that begins to grow, obviously a large... of insurance intent exists there. There's a number of ways to access that traffic, which I just referenced, but they all require the build of certain assets that meet the specific needs of the LLMs. And we're making investments in these assets to become a distribution point of choice for the LLMs within our vertical market. So that's the high level on that one, and we will have more specifics to share in the coming months. But then to go to the other side of the marketplace, as you look at the provider landscape, we operate in a market that is regulated, it's okay. It's nuanced in many respects. And so horizontal solutions, often don't work well for the insurance market. And we believe that within our market, we are really leading the charge with respect to the adoption of AI and understanding that With that, we see an opportunity to do more to support our customers. I think we're developing a suite of offerings which will allow them to derive benefits of AI without having to build and manage as much of the technology in-house. And so, you know, this, the basic idea is rollout products like smart campaigns, which which are consistent with our vision of helping carriers and agents grow, but really with a heightened focus on applying AI to the most relevant and impactful distribution use cases of our customers. And so that could range from marketing. You mentioned conversion. That would be in scope. Basically, anything within that distribution chain where we feel we can help our customers be more effective. Then Maria, maybe to address your point with regards to.

Yes, how do you think about revenues for these areas? We're very excited about both these areas, right? We think they're going to provide new opportunities to bring consumers in as the traffic landscapes evolve increasingly to working with large language models, even insurance, we think we're very well positioned for that, that happens over time. And we think the providers are really looking for us and are turning to actually coming to us saying, hey, how can you help us grow with new products? So we're excited by these things. In terms of near-term impact, we don't view the revenue as material for this year in these new offerings. We need a period of really testing and innovation and bringing these things to market. And really going, and particularly on the new products products for providers is a period where we're really trying to invest in spending time with them as we bring these products for, say, how do these work for you, doing the innovation. Just similar, the same way we rolled out smart campaigns, we did that with carriers and agents. You'll see a similar profile used here as well as we go to market.

Got it. That's helpful. Thank you both. Thanks, Priya. Thank you. Thank you.

Your next question comes from Gregory Peters with Raymond James. Please go ahead.

Hey, good afternoon. You know, I was curious, listening to your comments about the Smart Campaign, your new chat GPT app and your AI initiatives. how we on the outside can reconcile all of the things of these initiatives which cost money and the fact that, you know, there's stories in the marketplace about how the cost of technology and token usage, et cetera, is going up. So just trying to, you know, marry the two issues together and how it's flowing through your income.

statement. Sure. Thanks, Greg. It's Joseph here. Maybe I'd say is, you know, We're giving you details on something we foreshadowed in the start of this year, so this is very much executing as we thought we would as the year progressed. You know, we said that OpEx in the first half of the year would be relatively flat. Q1 was pretty flat to Q2, and you're seeing in our guidance for Q3 a step up of roughly a million, million and a quarter in OpEx for Q3, and you'll see probably from there, you know, probably half a million more in Q4. Again, very consistently we said at the start of the year, Xoom OpEx is relatively flat and will be a step up in the second half of the year. You know, these investments, we're now sharing the details with you. We've been planning these and working on these for some time, and that's reflected in what we sort of have out there at this point.

And I guess the only thing I'd add is, more broadly, we are also driving efficiency with a lot of the all a lot of the work that we're doing internally, right? And, you know, I think we talked about this last quarter, but we've doubled revenue over the last couple of years while keeping OpEx flat. It is coming up a bit, but we have religion around efficiency. We have good visibility on the token usage and the expenses associated with it. We have controls in place. As that ramps, we are also able to automate and manage expenses elsewhere.

Maybe, Greg, the last thing I'll ask you is just, if you think through what we said at the start of the year, we said, hey, assuming the down margins will rise roughly 100 base points this year, you know, we still are still saying the rise roughly out of base points this year because the OpEx investment we're seeing in the second half is sort of as we expect as we started the year.

And, you know, I was chuckling when I saw your slide on carrier commentary about how they're all excited to grow now. And, you know, considering where they were just a couple of years ago. And as a backdrop, I'm just curious, are you seeing the fact that they're willing to grow? Are you seeing any more, opportunities for, are they willing to pay you more for helping them to grow or, you know, or is it still, you still setting, getting sort of the same amount on a per close basis? There has been, you know, in recent years, there are certain carriers that are really leaning in heavily.

because they're feeling a tremendous amount of pressure to grow. So that's reflected in the pricing within the marketplace. We've seen that come up quite a bit. The other place we see it, Greg, is in their willingness to try new things. As an example, we are, smart campaigns is a good example. I know it's one we often use, but there is a certain amount of data sharing and trust associated with a customer adopting smart campaigns. And we've been working for years to get our customers on that product. And this year, for the first time, they they are experiencing a lot of pressure grow they are for the first time willing to willing to test it willing to provide the data and the integrations that we need to make it work. And that's been the case with that product it's been the case with a number of other products we've we've brought to market but the carriers are are just a lot more open and and comfortable collaborative in working with us to help them grow than we certainly saw during the harder years of the market.