MediaAlpha Announces First Quarter 2024 Financial Results
- Revenue of
$127 million , up 13% year over year - Transaction Value of
$219 million , up 13% year over year- Transaction Value from Property & Casualty up 15% year over year to
$135 million - Transaction Value from Health up 16% year over year to
$69 million
- Transaction Value from Property & Casualty up 15% year over year to
“We had a great start to 2024. Our first quarter results exceeded expectations across all key financial metrics, driven primarily by robust growth in our Property & Casualty (P&C) vertical,” said
First Quarter 2024 Financial Results
- Revenue of
$126.6 million , an increase of 13% year over year; - Transaction Value of
$219.1 million , an increase of 13% year over year; - Gross margin of 18.7%, compared with 16.5% in the first quarter of 2023;
- Contribution Margin(1) of 21.9%, compared with 19.2% in the first quarter of 2023;
- Net loss was
$(1.5) million , compared with$(14.6) million in the first quarter of 2023; and - Adjusted EBITDA(1) was
$14.4 million , compared with$7.3 million in the first quarter of 2023.
(1)A reconciliation of GAAP to Non-GAAP financial measures has been provided at the end of this press release. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.”
Financial Outlook
Our guidance for the second quarter of 2024 reflects a continuation of the recent trends in customer acquisition spending that we have seen in our P&C vertical. As a result, we expect Transaction Value in our P&C insurance vertical to be 60% to 70% higher than Q1 2024 levels. We expect second quarter Transaction Value in our Health vertical to grow at a high single to low double-digit rate year over year.
For the second quarter of 2024,
- Transaction Value between
$285 million –$300 million , representing a 132% year-over-year increase at the midpoint of the guidance range; - Revenue between
$145 million –$155 million , representing a 77% year-over-year increase at the midpoint of the guidance range; - Adjusted EBITDA between
$15.5 million and$17.5 million , representing a 359% year-over-year increase at the midpoint of the guidance range. We are projecting Contribution less Adjusted EBITDA to be approximately$0.5 million higher than Q1 2024 levels.
With respect to the Company’s projection of Adjusted EBITDA under “Financial Outlook,”
For a detailed explanation of the Company’s non-GAAP measures, please refer to the appendix section of this press release.
Conference Call Information
We have also posted to our investor relations website a letter to shareholders. We have used, and intend to continue to use, our investor relations website at https://investors.mediaalpha.com as a means of disclosing material nonpublic information and for complying with our disclosure obligations under Regulation FD.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including without limitation statements regarding our belief that we are well positioned to capture the significant opportunity in the P&C insurance market in 2024 and beyond, and our financial outlook for the second quarter of 2024. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “would,” and “outlook,” or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements.
There are or will be important factors that could cause our actual results to differ materially from those indicated in these forward-looking statements, including those more fully described in MediaAlpha’s filings with the
Non-GAAP Financial Measures and Operating Metrics
This press release includes Adjusted EBITDA, Contribution and Contribution Margin, which are non-GAAP financial measures. The Company also presents Transaction Value, which is an operating metric not presented in accordance with GAAP. See the appendix for definitions of Adjusted EBITDA, Contribution, Contribution Margin and Transaction Value, as well as reconciliations to the corresponding GAAP financial metrics, as applicable.
We present Transaction Value, Adjusted EBITDA, Contribution and Contribution Margin because they are used extensively by our management and board of directors to manage our operating performance, including evaluating our operational performance against budget and assessing our overall operating efficiency and operating leverage. Accordingly, we believe that Transaction Value, Adjusted EBITDA, Contribution and Contribution Margin provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management team and board of directors. Each of Transaction Value, Adjusted EBITDA, Contribution and Contribution Margin has limitations as a financial measure and investors should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP.
Contacts:
Investors
[email protected]
| Consolidated Balance Sheets | ||||||||
| (Unaudited; in thousands, except share data and per share amounts) | ||||||||
2024 |
2023 |
|||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 14,471 | $ | 17,271 | ||||
| Accounts receivable, net of allowance for credit losses of |
57,495 | 53,773 | ||||||
| Prepaid expenses and other current assets | 3,661 | 3,529 | ||||||
| Total current assets | 75,627 | 74,573 | ||||||
| Intangible assets, net | 24,406 | 26,015 | ||||||
| 47,739 | 47,739 | |||||||
| Other assets | 5,251 | 5,598 | ||||||
| Total assets | $ | 153,023 | $ | 153,925 | ||||
| Liabilities and stockholders' deficit | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 53,586 | $ | 56,279 | ||||
| Accrued expenses | 10,833 | 11,588 | ||||||
| Current portion of long-term debt | 11,866 | 11,854 | ||||||
| Total current liabilities | 76,285 | 79,721 | ||||||
| Long-term debt, net of current portion | 160,234 | 162,445 | ||||||
| Other long-term liabilities | 5,907 | 6,184 | ||||||
| Total liabilities | $ | 242,426 | $ | 248,350 | ||||
| Commitments and contingencies | ||||||||
| Stockholders' (deficit): | ||||||||
| Class A common stock, |
508 | 474 | ||||||
| Class B common stock, |
150 | 181 | ||||||
| Preferred stock, |
— | — | ||||||
| Additional paid-in capital | 503,949 | 511,613 | ||||||
| Accumulated deficit | (523,675 | ) | (522,562 | ) | ||||
| Total stockholders' (deficit) attributable to |
$ | (19,068 | ) | $ | (10,294 | ) | ||
| Non-controlling interests | (70,335 | ) | (84,131 | ) | ||||
| Total stockholders' (deficit) | $ | (89,403 | ) | $ | (94,425 | ) | ||
| Total liabilities and stockholders' deficit | $ | 153,023 | $ | 153,925 | ||||
| Consolidated Statements of Operations | ||||||||
| (Unaudited; in thousands, except share data and per share amounts) | ||||||||
| Three Months Ended |
||||||||
| 2024 | 2023 | |||||||
| Revenue | $ | 126,649 | $ | 111,630 | ||||
| Costs and operating expenses | ||||||||
| Cost of revenue | 102,969 | 93,262 | ||||||
| Sales and marketing | 5,796 | 6,994 | ||||||
| Product development | 4,363 | 5,168 | ||||||
| General and administrative | 11,149 | 15,755 | ||||||
| Total costs and operating expenses | 124,277 | 121,179 | ||||||
| Income (loss) from operations | 2,372 | (9,549 | ) | |||||
| Other (income) expense, net | (9 | ) | 1,381 | |||||
| Interest expense | 3,845 | 3,576 | ||||||
| Total other expense, net | 3,836 | 4,957 | ||||||
| (Loss) before income taxes | (1,464 | ) | (14,506 | ) | ||||
| Income tax expense | 27 | 78 | ||||||
| Net (loss) | $ | (1,491 | ) | $ | (14,584 | ) | ||
| Net (loss) attributable to non-controlling interest | (378 | ) | (4,318 | ) | ||||
| Net (loss) attributable to |
$ | (1,113 | ) | $ | (10,266 | ) | ||
| Net (loss) per share of Class A common stock | ||||||||
| -Basic and diluted | $ | (0.02 | ) | $ | (0.23 | ) | ||
| Weighted average shares of Class A common stock outstanding | ||||||||
| -Basic and diluted | 48,574,448 | 43,870,005 | ||||||
| Consolidated Statements of Cash Flows | ||||||||
| (Unaudited; in thousands) | ||||||||
| Three Months Ended |
||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities | ||||||||
| Net (loss) | $ | (1,491 | ) | $ | (14,584 | ) | ||
| Adjustments to reconcile net (loss) to net cash provided by operating activities: | ||||||||
| Equity-based compensation expense | 8,634 | 14,341 | ||||||
| Non-cash lease expense | 196 | 167 | ||||||
| Depreciation expense on property and equipment | 61 | 96 | ||||||
| Amortization of intangible assets | 1,609 | 1,729 | ||||||
| Amortization of deferred debt issuance costs | 191 | 199 | ||||||
| Impairment of cost method investment | — | 1,406 | ||||||
| Credit losses | (82 | ) | (250 | ) | ||||
| Tax receivable agreement liability adjustments | — | 6 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (3,640 | ) | 17,122 | |||||
| Prepaid expenses and other current assets | (147 | ) | 1,260 | |||||
| Other assets | 125 | 125 | ||||||
| Accounts payable | (2,693 | ) | (7,679 | ) | ||||
| Accrued expenses | (1,085 | ) | (1,382 | ) | ||||
| Net cash provided by operating activities | $ | 1,678 | $ | 12,556 | ||||
| Cash flows from investing activities | ||||||||
| Purchases of property and equipment | (34 | ) | (30 | ) | ||||
| Net cash (used in) investing activities | $ | (34 | ) | $ | (30 | ) | ||
| Cash flows from financing activities | ||||||||
| Payments made for: | ||||||||
| Repayments on long-term debt | (2,375 | ) | (2,375 | ) | ||||
| Distributions | (113 | ) | (1,104 | ) | ||||
| Payments pursuant to tax receivable agreement | — | (2,822 | ) | |||||
| Shares withheld for taxes on vesting of restricted stock units | (1,956 | ) | (1,238 | ) | ||||
| Net cash (used in) financing activities | $ | (4,444 | ) | $ | (7,539 | ) | ||
| Net (decrease) increase in cash and cash equivalents | (2,800 | ) | 4,987 | |||||
| Cash and cash equivalents, beginning of period | 17,271 | 14,542 | ||||||
| Cash and cash equivalents, end of period | $ | 14,471 | $ | 19,529 | ||||
Key business and operating metrics and Non-GAAP financial measures
Transaction Value
We define “Transaction Value” as the total gross dollars transacted by our partners on our platform. Transaction Value is an operating metric not presented in accordance with GAAP, and is a driver of revenue based on the economic relationships we have with our partners. Our partners use our platform to transact via Open and
The following table presents Transaction Value by platform model for the three months ended
| Three Months Ended |
||||||||
| (dollars in thousands) | 2024 | 2023 | ||||||
| $ | 122,429 | $ | 107,659 | |||||
| Percentage of total Transaction Value | 55.9 | % | 55.7 | % | ||||
| 96,677 | 85,506 | |||||||
| Percentage of total Transaction Value | 44.1 | % | 44.3 | % | ||||
| Total Transaction Value | $ | 219,106 | $ | 193,165 | ||||
The following table presents Transaction Value by vertical for the three months ended
| Three Months Ended |
||||||||
| (dollars in thousands) | 2024 | 2023 | ||||||
| Property & Casualty insurance | $ | 135,494 | $ | 117,924 | ||||
| Percentage of total Transaction Value | 61.8 | % | 61.0 | % | ||||
| Health insurance | 69,087 | 59,412 | ||||||
| Percentage of total Transaction Value | 31.5 | % | 30.8 | % | ||||
| Life insurance | 10,237 | 10,117 | ||||||
| Percentage of total Transaction Value | 4.7 | % | 5.2 | % | ||||
| Other(1) | 4,288 | 5,712 | ||||||
| Percentage of total Transaction Value | 2.0 | % | 3.0 | % | ||||
| Total Transaction Value | $ | 219,106 | $ | 193,165 | ||||
(1) Our other verticals include Travel, Education and Consumer Finance.
Contribution and Contribution Margin
We define “Contribution” as revenue less revenue share payments and online advertising costs, or, as reported in our consolidated statements of operations, revenue less cost of revenue (i.e., gross profit), as adjusted to exclude the following items from cost of revenue: equity-based compensation; salaries, wages, and related costs; internet and hosting costs; amortization; depreciation; other services; and merchant-related fees. We define “Contribution Margin” as Contribution expressed as a percentage of revenue for the same period. Contribution and Contribution Margin are non-GAAP financial measures that we present to supplement the financial information we present on a GAAP basis. We use Contribution and Contribution Margin to measure the return on our relationships with our supply partners (excluding certain fixed costs), the financial return on and efficacy of our online advertising costs to drive consumers to our proprietary websites, and our operating leverage. We do not use Contribution and Contribution Margin as measures of overall profitability. We present Contribution and Contribution Margin because they are used by our management and board of directors to manage our operating performance, including evaluating our operational performance against budget and assessing our overall operating efficiency and operating leverage. For example, if Contribution increases and our headcount costs and other operating expenses remain steady, our Adjusted EBITDA and operating leverage increase. If Contribution Margin decreases, we may choose to re-evaluate and re-negotiate our revenue share agreements with our supply partners, to make optimization and pricing changes with respect to our bids for keywords from primary traffic acquisition sources, or to change our overall cost structure with respect to headcount, fixed costs and other costs. Other companies may calculate Contribution and Contribution Margin differently than we do. Contribution and Contribution Margin have their limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results presented in accordance with GAAP.
The following table reconciles Contribution with gross profit, the most directly comparable financial measure calculated and presented in accordance with GAAP, for the three months ended
| Three Months Ended |
||||||||
| (in thousands) | 2024 | 2023 | ||||||
| Revenue | $ | 126,649 | $ | 111,630 | ||||
| Less cost of revenue | (102,969 | ) | (93,262 | ) | ||||
| Gross profit | 23,680 | 18,368 | ||||||
| Adjusted to exclude the following (as related to cost of revenue): | ||||||||
| Equity-based compensation | 1,857 | 966 | ||||||
| Salaries, wages, and related | 908 | 1,047 | ||||||
| Internet and hosting | 131 | 150 | ||||||
| Other expenses | 203 | 172 | ||||||
| Depreciation | 5 | 11 | ||||||
| Other services | 828 | 715 | ||||||
| Merchant-related fees | 64 | (4 | ) | |||||
| Contribution | 27,676 | 21,425 | ||||||
| Gross margin | 18.7 | % | 16.5 | % | ||||
| Contribution Margin | 21.9 | % | 19.2 | % | ||||
Adjusted EBITDA
We define “Adjusted EBITDA” as net income excluding interest expense, income tax benefit (expense), depreciation expense on property and equipment, amortization of intangible assets, as well as equity-based compensation expense and certain other adjustments as listed in the table below. Adjusted EBITDA is a non-GAAP financial measure that we present to supplement the financial information we present on a GAAP basis. We monitor and present Adjusted EBITDA because it is a key measure used by our management to understand and evaluate our operating performance, to establish budgets and to develop operational goals for managing our business. We believe that Adjusted EBITDA helps identify underlying trends in our business that could otherwise be masked by the effect of the expenses that we exclude in the calculations of Adjusted EBITDA. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects. In addition, presenting Adjusted EBITDA provides investors with a metric to evaluate the capital efficiency of our business.
Adjusted EBITDA is not presented in accordance with GAAP and should not be considered in isolation of, or as an alternative to, measures presented in accordance with GAAP. There are a number of limitations related to the use of Adjusted EBITDA rather than net income, which is the most directly comparable financial measure calculated and presented in accordance with GAAP. These limitations include the fact that Adjusted EBITDA excludes interest expense on debt, income tax benefit (expense), equity-based compensation expense, depreciation and amortization, and certain other adjustments that we consider to be useful to investors and others in understanding and evaluating our operating results. In addition, other companies may use other measures to evaluate their performance, including different definitions of “Adjusted EBITDA,” which could reduce the usefulness of our Adjusted EBITDA as a tool for comparison.
The following table reconciles Adjusted EBITDA with net (loss), the most directly comparable financial measure calculated and presented in accordance with GAAP, for the three months ended
| Three Months Ended |
||||||||
| (in thousands) | 2024 | 2023 | ||||||
| Net (loss) | $ | (1,491 | ) | $ | (14,584 | ) | ||
| Equity-based compensation expense | 8,634 | 14,341 | ||||||
| Interest expense | 3,845 | 3,576 | ||||||
| Income tax expense | 27 | 78 | ||||||
| Depreciation expense on property and equipment | 61 | 96 | ||||||
| Amortization of intangible assets | 1,609 | 1,729 | ||||||
| Transaction expenses(1) | 658 | 294 | ||||||
| Impairment of cost method investment | — | 1,406 | ||||||
| Changes in TRA related liability | — | 6 | ||||||
| Changes in Tax Indemnification Receivable | (1 | ) | (14 | ) | ||||
| Settlement of federal and state income tax refunds | — | 3 | ||||||
| Legal expenses(2) | 1,077 | 333 | ||||||
| Adjusted EBITDA | $ | 14,419 | $ | 7,264 | ||||
(1) Transaction expenses consist of
(2) Legal expenses of
Source:
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