MediaAlpha, Inc. Q4 FY2025 earnings call

• 2025 was pivotal: strong P&C vertical results, narrowed Under-65 health insurance scope, generated significant free cash flow, returned capital to shareholders via share repurchases. • Q4 results strong: adjusted EBITDA above guidance range, transaction value slightly below due to seasonality, but open marketplace demand partners drove growth. • P&C business off to strong start in 2026, expect continued momentum; carriers focusing on growing customer base, competition intensifying with rate cuts, advertising budgets expected to increase. • AI-driven search is an important starting point for insurance shopping; P&C click volume increased >20% y-o-y in Q4, expect stronger growth in Q1; embedding AI across platform to price media more precisely. • Focused on scaling underpenetrated carriers in marketplace, offering platform solutions to optimize campaigns and drive profitable policy growth. • 2025 was record year: crossed $2B transaction value, $1B revenue, $100M adjusted EBITDA; core business adjusted EBITDA grew ~55% excluding Under-65 Health. • Q4 take rate 7.6% slightly above expectations, expect Q1 take rates above Q4 levels. • Generated $99M free cash flow in 2025, ended with $47M cash; met U.S. GAAP requirements to release valuation allowance on deferred tax assets. • Board authorized $50M increase in share repurchase program to $100M, expect to complete vast majority in 2026.

In 2025, total transaction value was $2 billion, revenue was $1 billion, and adjusted EBITDA was $100 million. For Q4 2025, transaction value was $613 million, up 23% y-o-y; P&C vertical grew 38% y-o-y, health vertical declined 40%. Revenue was $291 million, down 3% y-o-y reported, but up 9% excluding Under-65 Health. Adjusted EBITDA was $30.8 million, down 16% y-o-y. Excluding Under-65 Health, core business adjusted EBITDA grew ~10%. P&C business is off to a strong start in 2026. Health vertical's Under-65 Health contributed ~$7 million in 2025, down from $41 million in 2024. P&C vertical is expected to drive growth in 2026 with carriers seeking to grow in the soft market; health vertical's Medicare Advantage is a long-term growth opportunity but expected to be a mid-single-digit percentage of total transaction value this year.

• Q1 2026 guidance: transaction value $570M - $595M, up ~23% y-o-y midpoint, P&C growing ~35% y-o-y; health vertical transaction value expected to decline ~50% y-o-y. Revenue expected $285M - $305M, up ~12% y-o-y midpoint. Adjusted EBITDA expected $29.5M - $31.5M, up ~4% midpoint. Excluding Under-65 Health, adjusted EBITDA expected to grow ~25% y-o-y midpoint. Contribution less adjusted EBITDA expected ~$500,000 - $1M higher than Q4 2025. • 2026 outlook: P&C transaction value to continue driving growth in soft market; health vertical's Medicare Advantage is long-term growth opportunity but expected to be mid-single-digit percentage of total transaction value; expect $90M - $100M free cash flow including final $11.5M FTC payment in January, with firepower for $100M share repurchase program in 2026.

• Risks related to forward-looking statements: actual results could differ materially from forward-looking statements due to risks and uncertainties in SEC filings. • AI innovation and its impact: while AI creates tailwinds, major carriers historically resist models that commoditize their product or transfer transactional control, so AI's influence on pricing accessibility through third parties like LLMs is limited. • Market competition: intensifying competition in P&C with carriers lowering rates to gain share could impact transaction value and margins. • Health vertical challenges: ongoing transformation of Under-65 Health is a process, and Medicare market backdrop is challenging in the short term with expected continued tough conditions for the next 1-2 years.

Q: Does anything functionally or financially change with your role and value proposition to carriers when a consumer starts their search with an LLM rather than through Google?

A: No, AI impact is focused on upper funnel, carriers want to maintain control over quote and binding, and we are the infrastructure facilitating the handoff between shoppers and publishers.

Q: What's different about your go-to-market strategy or sales pitch to get underpenetrated carriers to sign up?

A: Investing in platform solutions, moving beyond marketplace layer to provide hosted optimized conversion experience to optimize pre-quote conversion process for underpenetrated carriers.

Q: On P&C seasonality, are we seeing less seasonality than thought?

A: Q4 was a bit less robust than expected, Q1 a bit muted vs past years, but smaller underpenetrated carriers are leaning in.

Q: If an insurance carrier is sophisticated data-wise and offers lower cost policies, would they be more likely to test waters with LLMs?

A: Rates pulled into LLM environment would be limited to independent agency carriers, captive and direct-to-consumer carriers make up over 2/3 of ecosystem and are reluctant to have their major brand rates aggregated.

Q: On Med Advantage being a growth opportunity, why the inflection point?

A: Medicare Advantage is a large market with growing eligible and opting-in consumers, seniors aging into Medicare more likely to use Internet for shopping, but market backdrop for Medicare is challenging in short term.

Q: Do you see proprietary component of transaction value leveling out?

A: Guidance for Q1 envisions shift towards open marketplace from private, trend of smaller and midsized carriers leaning in continues, and we feel good about current trend.