Key Points
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EverQuote is benefiting from an insurance carrier recovery. CFO Joseph Sanborn said property and casualty insurers have largely regained “rate adequacy” and are shifting from price hikes to growth, which is driving more carrier participation in digital channels.
The company still sees a path to $1 billion in annual revenue. Sanborn said EverQuote remains on a two- to three-year timeline for that target, with a needed growth rate of roughly 13% to 20%, supported by a large and still-underpenetrated digital insurance ad market.
EverQuote is leaning into AI, home insurance, and capital returns. The company is expanding AI tools like Smart Campaigns, home insurance is now about 10% of revenue and growing quickly, and management is continuing share repurchases while maintaining a strong cash position.
EverQuote (NASDAQ:EVER) Chief Financial Officer Joseph Sanborn said the online insurance marketplace is benefiting from a healthier property and casualty insurance industry as carriers shift from restoring underwriting profitability to pursuing policy growth.
Speaking with Needham & Company analyst Mayank Tandon at the Needham Technology, Media, & Consumer Conference, Sanborn said EverQuote’s mission is to help auto and home insurance carriers and agents acquire consumers in the digital age. He said carriers have spent the past several years raising rates after the post-COVID period disrupted supply chains and pushed up costs, but many now have achieved “rate adequacy” and are turning attention to growth.
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“They’re shifting to the second thing a CEO of a carrier worries about, which is, how do you grow your business?” Sanborn said. He added that industry combined ratios, a measure of underwriting health, are “quite favorable,” giving carriers room to invest in digital channels and gain share.
Carrier Demand Broadens as Market Recovers
Sanborn said the company is seeing broader carrier participation as the insurance cycle progresses. He cited a top-five carrier that had been largely absent from digital channels before returning in the first quarter and becoming more active in the second quarter.
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He said most states are “pretty back to normal,” with California about 90% recovered, though he framed state-by-state activity less as a question of new rates and more as one of carrier prioritization.
Sanborn reiterated that about 80% of EverQuote’s top 25 carriers are not back to peak spending levels. However, he said that figure should be viewed in the context of EverQuote’s auction-based marketplace, where carriers may bid more or less aggressively in any given quarter. He described the first quarter as heavily driven by pricing, with more carriers participating but some losing share in the auction to more aggressive competitors.
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Asked about a potential downturn or renewed inflationary pressure, Sanborn said carriers are in a much better position than they were in 2022 because combined ratios leave room to absorb higher repair or total-loss costs. He also noted that higher gasoline prices can lead consumers to drive fewer miles, which can reduce accident frequency. In a belt-tightening environment, consumers may also shop more for insurance, potentially supporting volume.
Large Market Opportunity and Revenue Target
Sanborn described EverQuote’s addressable market as large, beginning with roughly $8 billion in digital advertising spending by property and casualty insurers. He said that market is expected to grow at a low double-digit to mid-teens rate over the next three to five years. He contrasted that with broader insurance advertising spending of about $17 billion to $18 billion, noting that digital remains below 50% of the total, unlike industries such as financial services and travel.
He also pointed to about $110 billion in broader distribution spending, largely agent commissions, as another long-term opportunity as more carriers build direct-to-consumer capabilities and allocate more resources to customer acquisition.
Sanborn said EverQuote still feels it is operating within the two- to three-year timeframe it previously outlined for reaching $1 billion in annual revenue. He said the company continues to view the required growth range as roughly 13% to 20%, depending on timing. He cautioned that carriers provide directional insight into near-term plans but do not map out every quarter in detail.
On profitability, Sanborn said EverQuote expects adjusted EBITDA margin to improve by about 100 basis points this year, after stronger gains in prior years. He said first-quarter adjusted EBITDA margin was 15.3%, and the second-quarter guide implied a margin closer to 15%, with the full year averaging around 14.6% if targets are achieved. He said first-quarter revenue grew 15%, while adjusted EBITDA dollars rose 30%.
AI Initiatives and Search Risk
Sanborn said EverQuote is “very excited” about artificial intelligence, but added that AI is not new to the company because its business has long been built around data, technology and machine learning. He cited the company’s traffic bidding platform and Smart Campaigns, a predictive AI tool that automates bidding for carriers using disposition data. He said a majority of carriers use Smart Campaigns today.
He pushed back on the idea that AI-driven search poses the same risk to insurance that it may pose to travel. Sanborn said EverQuote receives only about 1% to 2% of its traffic from organic search, limiting exposure. He also said insurance is different from travel because pricing data is opaque, the industry is regulated at the state level and carriers make highly targeted and dynamic underwriting decisions.
Sanborn outlined three potential AI-related opportunities for EverQuote:
large language models becoming another performance advertising channel;
API-based integrations with AI platforms;
curated search experiences that could use community expertise, including EverQuote’s network of about 6,000 local agents.
Internally, he said EverQuote is training employees to become “AI fluent,” rolling out AI agents across general and administrative functions, and using automation to make employees more effective rather than simply reducing headcount.
Competition, Home Insurance and Capital Allocation
On competition, Sanborn said EverQuote has a “healthy respect” for rivals but believes its focus on property and casualty insurance has helped it gain traction. He said carriers provide scorecards that give EverQuote feedback on performance, and he said the company has benefited in some instances when competitors have lost carriers.
Sanborn said EverQuote’s home insurance vertical represents roughly 10% of revenue and generated about $18.5 million last quarter. He said the home business grew 30% year over year in both the first quarter and fourth quarter, though he did not say that pace would continue every quarter. He said home could grow faster than auto over the medium term, given the gap between its current share of EverQuote revenue and the broader premium mix in property and casualty insurance.
He also said EverQuote may evaluate other P&C areas over time, including small business commercial insurance, RVs and boats.
On the balance sheet, Sanborn said EverQuote ended the period with about $180 million in cash and views a “fortress balance sheet” as a priority. He said the company has used share repurchases as part of capital allocation, including more than $20 million in the third quarter last year and about $20 million in open-market purchases in the first quarter, with continued buying in the second quarter. He said repurchases are likely offsetting about 8% to 8.5% dilution from employee equity issuance.
Sanborn said M&A is not required for EverQuote to reach $1 billion in revenue, but he sees more opportunities among private companies, including potential acquisitions involving products for agents and carriers, new data sources, vertical expansion or talent.
About EverQuote (NASDAQ:EVER)
EverQuote, Inc operates an online insurance marketplace that connects consumers with insurance providers across the United States. Founded in 2011 and headquartered in Cambridge, Massachusetts, the company leverages proprietary technology to match individuals seeking coverage with insurers offering competitive rates. Since its initial public offering in 2020, EverQuote has focused on expanding its digital platform and enhancing the efficiency of its lead-generation processes.
The company’s core business centers on a quote-comparison engine for personal auto, home, and health insurance products.
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The article “EverQuote Sees Insurance Carrier Comeback Fueling Growth Toward $1B Revenue” was originally published by MarketBeat.
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