Neptune Insurance Holdings Inc. Q1 FY2026 earnings call

• Trevor emphasized the power of AI at Neptune, starting with hiring engineers in 2018 with a focus on technology over humans. Atlas Plus, an agentic assistant, was launched in beta, with strong early feedback. The company's proprietary data is a key advantage, processing tens of millions of quotes and over a million policies. • Matt discussed technology advancements: Atlas+ as an AI layer in the platform, Neptune application in ChatGPT for property owners, and Proteus, an AI software developer helping engineers focus on critical work. Also, program renewals increased a program's size and added new reinsurers, and distribution growth with over 45,000 agents signing up for direct access. • Jim highlighted the strong first quarter execution with revenue growth, high retention, sustained profitability. Adjusted EBITDA margin in Q1 was 57.1% but full-year margins are expected in 60%-61% range. The model is asset-light, tracking employee metrics as key indicators. The balance sheet was strengthened with a revolving credit facility, and capital allocation focuses on the platform, share buybacks, and RSU-related stock retirement.

In the first quarter of 2026, Neptune had revenue of $37.8 million, a 29% year-over-year increase. Net income was $7.3 million with adjusted net income of $13.4 million. Adjusted EBITDA was $21.6 million, a 26% growth. Written premium was $86.7 million, driving 32% year-over-year premium growth. Premium in force reached approximately $389 million at quarter end. On a trailing 12-month basis, revenue per employee was 2.8 million and adjusted EBITDA per employee was 1.7 million, both record levels. Neptune operates as an asset-light MGA with no balance sheet risk.

• For full year 2026, revenue is expected to be $195 million and adjusted EBITDA margin between 60-61%. • The first quarter's strong performance increased confidence in the outlook, and the revenue guidance increase is based on current trends. The margin guidance remains in the 60-61% range, with the first quarter's lower margin due to seasonality and audit costs being a timing dynamic.

• Risks related to forward-looking statements and their potential divergence from actual results due to uncertainties. • Uncertainties around government policy and weather-related activity, such as the impact of storm seasons on business performance. • Competition in the flood insurance market, with potential new startups facing challenges during major storms. • The slow real estate market, which can impact new business sales in the flood insurance sector.

Q: Rob Cox asked about Atlas, its current impact and near-term expectations.

A: Atlas Plus is a chat interface helping agents with various tasks, with live impact and exciting upcoming upgrades.

Q: Rob Cox followed up on guidance, revenue increase reason and margin timing.

A: Revenue increase is due to current trends, margin first quarter lower due to seasonality and audit costs but full-year expected in 60-61%.

Q: Josh Shankar asked about Milton Helene comparisons and Neptune's role in other markets.

A: Milton Helene comparisons not impacting future, Neptune running beta test on earthquakes.

Q: Gregory Peters asked about competition and real estate market impact.

A: Neptune sees competition not impacting business, real estate market uptick would be a tailwind.

Q: David Motemaden asked about policy retention, FEMA Advisory Council.

A: Policy retention stable, no new info on FEMA Advisory Council but prepared for capacity changes.

Q: Tommy McJoy asked about loss ratio, ChatGPT product.

A: Loss ratio to be announced end of second quarter, ChatGPT product has no counterparty compensation owed.

Q: Andrew Kligerman asked about FEMA, ChatGPT distribution.

A: No new FEMA info, ChatGPT direct binding not possible currently.

Q: Pablo Simpson asked about new business growth trend, impact of agents pivoting.

A: New business growth strong, agents pivoting to sell more helps Neptune as flood is ancillary product.

Q: Yaron Kumar asked about hurricane season impact on guidance, capital deployment.

A: Guidance not assuming extremely active season, capital deployment includes share buybacks and RSU tax settlement.

Q: Cave Montazeri asked about debt framework, in-house vs third-party technology.

A: Target debt to EBITDA below 2.5 times, core functionality built in-house, ancillary software may be purchased externally.