MediaAlpha, Inc. Q3 FY2024 earnings call

• The company operates the largest insurance customer acquisition media marketplace with strong long-term partnerships. • Third quarter results were driven by momentum in Property and Casualty, with auto insurance underwriting profitability improving. • Executed a multiyear extension with Insurify, a key partner. • Health insurance is entering its seasonally strongest quarter due to Medicare and ACA enrollment periods. • TCPA one-to-one consent rules taking effect in January 2025 are expected to have minimal impact as shared leads make up only 5-6% of total transaction value.

In the third quarter, MediaAlpha's performance set new highs. The Property and Casualty vertical saw transaction value up 52% sequentially, reaching record levels. The Health vertical had a 9% year-over-year increase in transaction value. Property and Casualty contributed significantly to the overall results, with its transaction value exceeding expectations. Health, while entering its seasonally strongest quarter, faced headwinds in Medicare but still had notable performance.

• Q4 P&C transaction value is expected to be flat to slightly up compared to Q3. • Q4 Health transaction value is expected to be down mid-single digits year over year due to Medicare headwinds. • Consolidated guidance: Q4 transaction value between $470 million and $495 million (192% year-over-year increase at midpoint), revenue between $275 million and $295 million (143% year-over-year increase at midpoint), adjusted EBITDA between $29.5 million and $32.5 million (144% year-over-year increase at midpoint). • Overhead to increase sequentially by approximately $500,000 to $1 million. • Q4 adjusted EBITDA add back for legal costs, including FTC inquiry costs, expected to be similar to Q3. • Balance sheet: Ended the quarter with a net debt to adjusted EBITDA ratio of less than 2 times.

• TCPA one-to-one consent rules taking effect in January 2025, but the impact on MediaAlpha is minimal as shared leads make up only a small portion (5-6%) of total transaction value.

Q: Michael Graham asks about the 'middle innings' comment and impact of hurricanes.

A: Steve Yi responds that the 'middle innings' refers to broader carrier participation not yet fully realized and hurricanes have minimal impact on the marketplace as it's heavily skewed to auto insurance.

Q: Danny Pfeiffer asks about carriers' spend and hurricanes.

A: Steve Yi talks about carrier spend continuing to show momentum and references Progressive's investor presentation on sustainable media investments.

Q: Ben Hendrix asks about lower health transaction value.

A: Patrick Thompson responds that Medicare has headwinds with higher service utilization and some carriers tightening belts, but there's consumer shopping activity, leading to a mid-single digit year-over-year decline in transaction value.