EverQuote, Inc. Q2 FY2025 earnings call

• Achieved strong results in Q2, growing 34% year-over-year and delivering record adjusted EBITDA margin and net income. - Carrier demand remained stable with some carriers showing growth, others adjusting budgets, and some planning to reactivate in the second half. - Made progress in using data advantage and AI, such as ML-driven smart campaigns driving 20% spend efficiency improvement for a major carrier. - Agent and captive carrier demand remained strong with multiproduct adoption increasing, paid products per agent up over 15% and over 1/3 of agent base using multiple products. - Consumer acquisition teams drove 25% year-over-year VMD growth despite competitive pressure, and are investing in scaling incremental customer acquisition channels. - Focused on increasing operating efficiency and productivity with AI-driven applications in engineering, call centers, and operational tasks, and stood up a dedicated AI team.

Total revenues in the second quarter grew 34% year-over-year to $156.6 million. Revenue growth was primarily driven by stronger enterprise carrier spend, which was up over 61% from the comparable period last year. Revenue from the auto insurance vertical increased to $139.6 million in Q2, up 36% year-over-year, contributing a significant portion to total revenue. Revenue from the home and renters insurance vertical increased to $17 million in Q2, up 23% both year-over-year and sequentially. The auto insurance vertical accounted for a large revenue contribution, while the home and renters insurance vertical showed solid growth as well.

• Expect revenue for the third quarter of 2025 to be between $163 million and $169 million, representing 15% year-over-year growth at the midpoint. - Expect VMD to be between $47 million and $50 million, representing 10% year-over-year growth at the midpoint. - Expect adjusted EBITDA to be between $22 million and $24 million, representing 22% year-over-year growth at the midpoint.

Forward-looking statements are subject to a variety of risks and uncertainties that could cause the actual results to differ materially from our expectations. These include risks related to the impact of tariffs, competitive pressures in the advertising landscape, and uncertainties in the adoption and impact of AI technologies.

Q: Given the uncertainty around tariffs and the potential impact on carrier profitability in the back half of the year, could you give a sense of how committed your budgets are in the second half of this year based on your conversations with carriers?

A: While we don't have a committed spend model, all signs point to a very healthy carrier landscape right now. Carrier demand has been stable and building so far this year, and we don't anticipate encountering any budget constraints or pullback over the back part of the year.

Q: How to think about sort of the ongoing shift sort of in AI-powered search impacting your traffic acquisition strategy down the line?

A: Search and shopping for everything will evolve over time. We believe we're well positioned to engage with LLM-based traffic. We've started building LLM-based conversational workflows in our call center operations and will work our way down the funnel to facilitate more of that buying experience.

Q: Do you think tariffs impacted carrier budgets in 2Q? And are you incorporating any potential impact from that in 3Q?

A: For carriers, the early part of Q2 was a bit of uncertainty with tariffs, but from the point of view of carriers, they had very healthy combined ratios in underwriting margins throughout the period. We don't have specific incorporation of tariff impact in 3Q guidance yet but saw carriers step up in the latter part of Q2.

Q: Any interesting M&A that you're considering at this juncture?

A: We'll continue to look selectively at M&A, particularly as it accelerates what we're trying to do in our core markets of P&C and accelerates our long-term position to be the leader in that space.

Q: Seen any greater competition for leads, and does that create more volatility or pressure on VMM?

A: Have seen some competitive pressure in the advertising landscape as carriers step into the more open advertising market, but we've continued to execute well, drove 25% VMD growth, and increased VMM margin from 28% to 29%.

Q: Seasonality thoughts around top line, VMD, and EBITDA leverage?

A: Q3 to Q4 tends to be down low single-digit percent, VMD targeting high 20s, and EBITDA margins at or near current levels.

Q: Thoughts on M&A and using cash balance to fund additional growth?

A: M&A is focused on helping P&C carriers and agents be successful, and we believe we win by our customers winning.

Q: Color on auto versus home revenue dynamic?

A: Home vertical had nice performance in Q2 with 23% growth year-on-year and sequentially, reflecting a more stable underwriting environment compared to Q1.

Q: Quarterly cadence of the inaugural share repurchase program?

A: It's going to be opportunistic and based on market conditions.