MediaAlpha, Inc. Q4 FY2024 earnings call

• 2024 financial results were outstanding with transaction value up over 150% and adjusted EBITDA up over 200% year-over-year. • Ended 2024 strongly with record fourth quarter results across key metrics in the P&C vertical. • Believes the auto insurance advertising market is well-positioned for sustained growth as carrier financials improve and market share competition intensifies. • Health insurance vertical faced challenges in Medicare Advantage and under-65 demand in the fourth quarter, but long-term growth opportunity exists in the nascent Medicare Advantage online advertising space. • TCPA one-to-ones consent rules were determined by a federal appellate court to exceed FCC's authority and are not expected to be implemented soon, with minimal impact as only 7% of 2024 transaction value was from leads. • Actively engaged in discussions with FTC staff regarding the under-65 health insurance business, takes compliance seriously, and disagrees with FTC's allegations. • Fourth quarter adjusted EBITDA exceeded guidance ranges, with $9 million add backs related to the FTC matter, including $2 million in legal expenses and a $7 million reserve.

In 2024, MediaAlpha's financial results were exceptional. Transaction value grew by over 150% and adjusted EBITDA by more than 200% year-over-year. For the P&C insurance vertical, transaction value saw significant growth, with record fourth quarter results. Regarding the health insurance vertical, in 2024, it contributed $270 million to transaction value, which is 18% of the total. In the fourth quarter, P&C transaction value increased sequentially and exceeded normal seasonality, while the health vertical's transaction value decreased by 8% year-over-year, affected by headwinds in Medicare Advantage and softening demand in the under-65 segment.

• For Q1, P&C transaction value is expected to grow approximately 170% year-over-year, with a high single digit sequential decline. • In the health vertical, Q1 transaction value is expected to decline by a high-teens percentage year-over-year. • Consolidated Q1 guidance: transaction value is between $415 million and $440 million (midpoint up 95% year-over-year), revenue is between $225 million and $245 million (midpoint up 86% year-over-year), adjusted EBITDA is between $24.5 million and $26.5 million (midpoint up 77% year-over-year). • Overhead is expected to increase sequentially by approximately $500,000 to $1 million as headcount is selectively added to support growth.

• TCPA one-to-ones consent rules: A federal appellate court ruled they exceeded the FCC's authority and are not likely to be implemented in the foreseeable future, with minimal impact as only 7% of 2024 transaction value was from leads. • FTC complaint: Received a draft complaint and initial settlement demand from the FTC related to the under-65 health insurance business; actively in discussions with FTC staff, takes compliance seriously, and disputes the FTC's allegations.

Q: Could you provide color on the FTC situation and why $7 million was the right number for an accrual?

A: Steve Yi stated they are in ongoing discussions with the FTC staff and it's hard to comment beyond filings. Pat Thompson explained the $7 million reserve was based on U.S. GAAP ASC 450, meeting the criteria of probable loss and estimability, with the estimate corresponding to the lower end of reasonably estimated losses.

Q: Could you expand on P&C market trends?

A: Steve Yi said carriers ended 2024 strongly, rate actions are slowing, leading to more competition, and Q4 to Q1 dynamics are growth market dynamics.

Q: Update on key initiatives to broaden platform appeal?

A: Steve Yi mentioned focus on P&C and Medicare, investing in the agent business and data science.

Q: Talk about the trend and cost to acquire traffic?

A: Steve Yi said the business model doesn't have a strong owned and operated presence, so cost to acquire traffic doesn't significantly impact the P&C side.

Q: Provide more detail on 1Q guidance assumptions for the health vertical?

A: Pat Thompson said the health vertical in Q1 is expected to decline by a high-teens percentage year-over-year, with Medicare Advantage headwinds continuing from Q4 and under-65 softening persisting.