• MediaAlpha Announces Third Quarter 2024 Financial Results

    Источник: Nasdaq GlobeNewswire / 30 окт 2024 15:05:01   America/Chicago

    • Revenue of $259 million, up 247% year over year
    • Transaction Value of $452 million, up 314% year over year
      • Transaction Value from Property & Casualty up 766% year over year to $387 million
      • Transaction Value from Health up 9% year over year to $56 million

    LOS ANGELES, Oct. 30, 2024 (GLOBE NEWSWIRE) -- MediaAlpha, Inc. (NYSE: MAX), today announced its financial results for the third quarter ended September 30, 2024.

    “Our third-quarter performance was excellent, as we achieved record results across all key metrics.” said MediaAlpha co-founder and CEO Steve Yi. “Our P&C insurance vertical once again exceeded our expectations as select carriers increasingly leveraged our marketplace to drive growth. Looking ahead, we are well positioned to deliver sustainable long-term growth and market share gains as the largest and most trusted customer acquisition partner in the insurance industry."

    Third Quarter 2024 Financial Results

    • Revenue of $259.1 million, an increase of 247% year over year;
    • Transaction Value of $451.8 million, an increase of 314% year over year;
    • Gross margin of 15.1%, compared with 16.5% in the third quarter of 2023;
    • Contribution Margin(1) of 16.0%, compared with 20.2% in the third quarter of 2023;
    • Net income was $11.9 million, compared with a net loss of $(18.7) million in the third quarter of 2023; and
    • Adjusted EBITDA(1) was $26.3 million, compared with $3.6 million in the third 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 fourth quarter of 2024 reflects a continuation of the recent trends in customer acquisition spending that we have seen in our P&C insurance vertical. As a result, we expect Transaction Value in our P&C insurance vertical to be flat to slightly up as compared to Q3 2024 levels, stronger than typical seasonal trends. We expect fourth quarter Transaction Value in our Health insurance vertical to be down mid-single digits year over year due to headwinds in Medicare.

    For the fourth quarter of 2024, MediaAlpha currently expects the following:

    • Transaction Value between $470 million - $495 million, representing a 192% year-over-year increase at the midpoint of the guidance range;
    • Revenue between $275 million - $295 million, representing a 143% year-over-year increase at the midpoint of the guidance range;
    • Adjusted EBITDA between $29.5 million and $32.5 million, representing a 144% year-over-year increase at the midpoint of the guidance range. We are projecting Contribution less Adjusted EBITDA to be approximately $0.5 - $1.0 million higher than in Q3 2024.

    With respect to the Company’s projection of Adjusted EBITDA under “Financial Outlook,” MediaAlpha is not providing a reconciliation of Adjusted EBITDA to net income (loss) because the Company is unable to predict with reasonable certainty the reconciling items that may affect net income (loss) without unreasonable effort, including equity-based compensation, transaction expenses and income tax expense. These reconciling items are uncertain, depend on various factors and could significantly impact, either individually or in the aggregate, the corresponding GAAP measures for the applicable period.

    For a detailed explanation of the Company’s non-GAAP measures, please refer to the appendix section of this press release.

    Conference Call Information

    MediaAlpha will host a Q&A conference call today to discuss the Company's third quarter 2024 results and its financial outlook for the fourth quarter of 2024 at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). A live audio webcast of the call will be available on the MediaAlpha Investor Relations website at https://investors.mediaalpha.com. To register for the webcast, click here. Participants may also dial-in, toll-free, at (800) 715-9871 or (646) 307-1963, with passcode 2616289. An audio replay of the conference call will be available following the call and available on the MediaAlpha Investor Relations website at https://investors.mediaalpha.com.

    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 our statement that we are well positioned to deliver sustainable long-term growth and market share gains as the largest and most trusted customer acquisition partner in the insurance industry, and our financial outlook for the fourth 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 Securities and Exchange Commission (“SEC”), including the Form 10-K filed on February 22, 2024 and the Forms 10-Q filed on May 2, 2024 and August 1, 2024, and to be filed on or about October 31, 2024. These factors should not be construed as exhaustive. MediaAlpha disclaims any obligation to update any forward-looking statements to reflect events or circumstances that occur after the date of this press release.

    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 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 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.

    About MediaAlpha
    We believe we are the insurance industry’s leading programmatic customer acquisition platform. With more than 1,200 active partners, we connect insurance carriers with online shoppers and generated more than 99 million consumer referrals in 2023. Our programmatic advertising technology over the last twelve months powered $1.2 billion in spend on brand, comparison, and metasearch sites across property & casualty insurance, health insurance, life insurance, and other industries. For more information, please visit www.mediaalpha.com.

    Contacts:
    Investors
    Denise Garcia
    Hayflower Partners
    Denise@HayflowerPartners.com

    MediaAlpha, Inc. and subsidiaries
    Consolidated Balance Sheets
    (Unaudited; in thousands, except share data and per share amounts)
     
     September 30,
    2024
     December 31,
    2023
    Assets   
    Current assets   
    Cash and cash equivalents$32,304  $17,271 
    Accounts receivable, net of allowance for credit losses of $1,027 and $537, respectively 126,814   53,773 
    Prepaid expenses and other current assets 2,936   3,529 
    Total current assets 162,054   74,573 
    Intangible assets, net 21,588   26,015 
    Goodwill 47,739   47,739 
    Other assets 4,729   5,598 
    Total assets$236,110  $153,925 
    Liabilities and stockholders' deficit   
    Current liabilities   
    Accounts payable$109,577  $56,279 
    Accrued expenses 14,202   11,588 
    Current portion of long-term debt 8,839   11,854 
    Total current liabilities 132,618   79,721 
    Long-term debt, net of current portion 155,811   162,445 
    Other long-term liabilities 7,302   6,184 
    Total liabilities$295,731  $248,350 
    Commitments and contingencies   
    Stockholders' (deficit)   
    Class A common stock, $0.01 par value - 1.0 billion shares authorized; 55.1 million and 47.4 million shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively 551   474 
    Class B common stock, $0.01 par value - 100 million shares authorized; 11.6 million and 18.1 million shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively 116   181 
    Preferred stock, $0.01 par value - 50 million shares authorized; 0 shares issued and outstanding as of September 30, 2024 and December 31, 2023     
    Additional paid-in capital 501,543   511,613 
    Accumulated deficit (510,573)  (522,562)
    Total stockholders' (deficit) attributable to MediaAlpha, Inc.$(8,363) $(10,294)
    Non-controlling interest (51,258)  (84,131)
    Total stockholders' (deficit)$(59,621) $(94,425)
    Total liabilities and stockholders' deficit$236,110  $153,925 
     


    MediaAlpha, Inc. and subsidiaries
    Consolidated Statements of Operations
    (Unaudited; in thousands, except share data and per share amounts)
     
     Three Months Ended
    September 30,
     Nine Months Ended
    September 30,
      2024   2023   2024   2023 
    Revenue$259,133  $74,573  $564,056  $270,975 
    Costs and operating expenses       
    Cost of revenue 219,907   62,277   469,465   226,545 
    Sales and marketing 6,496   6,101   18,608   19,802 
    Product development 5,328   4,296   14,743   14,525 
    General and administrative 11,794   16,648   36,767   50,473 
    Total costs and operating expenses 243,525   89,322   539,583   311,345 
    Income (loss) from operations 15,608   (14,749)  24,473   (40,370)
    Other (income) expense, net (154)  (100)  (1,971)  1,165 
    Interest expense 3,562   3,947   11,158   11,397 
    Total other expense, net 3,408   3,847   9,187   12,562 
    Income (loss) before income taxes 12,200   (18,596)  15,286   (52,932)
    Income tax expense 312   102   469   330 
    Net income (loss)$11,888  $(18,698) $14,817  $(53,262)
    Net income (loss) attributable to non-controlling interest 2,406   (5,196)  2,828   (15,208)
    Net income (loss) attributable to MediaAlpha, Inc.$9,482  $(13,502) $11,989  $(38,054)
    Net income (loss) per share of Class A common stock       
    -Basic$0.17  $(0.29) $0.23  $(0.84)
    -Diluted$0.17  $(0.29) $0.22  $(0.84)
    Weighted average shares of Class A common stock outstanding       
    -Basic 54,909,772   46,229,672   52,293,622   45,095,417 
    -Diluted 54,909,772   46,229,672   66,087,041   45,095,417 
                    


    MediaAlpha, Inc. and subsidiaries
    Consolidated Statements of Cash Flows
    (Unaudited; in thousands)
     
     Nine Months Ended
    September 30,
      2024   2023 
    Cash flows from operating activities   
    Net income (loss)$14,817  $(53,262)
    Adjustments to reconcile net income (loss) to net cash provided by operating activities:   
    Equity-based compensation expense 26,452   43,943 
    Non-cash lease expense 596   508 
    Depreciation expense on property and equipment 191   275 
    Amortization of intangible assets 4,827   5,188 
    Amortization of deferred debt issuance costs 569   597 
    Impairment of cost method investment    1,406 
    Credit losses 519   (220)
    Tax receivable agreement liability adjustments    6 
    Changes in operating assets and liabilities:   
    Accounts receivable (73,560)  27,167 
    Prepaid expenses and other current assets 547   3,059 
    Other assets 375   375 
    Accounts payable 53,298   (15,243)
    Accrued expenses 2,712   1,138 
    Net cash provided by operating activities$31,343  $14,937 
    Cash flows from investing activities   
    Purchases of property and equipment (207)  (60)
    Acquisition of intangible assets (400)   
    Net cash (used in) investing activities$(607) $(60)
    Cash flows from financing activities   
    Payments made for / proceeds received from:   
    Repayments on long-term debt (10,172)  (7,125)
    Contributions from QLH’s members 756   196 
    Distributions (1,111)  (1,572)
    Payments pursuant to tax receivable agreement    (2,822)
    Shares withheld for taxes on vesting of restricted stock units (5,176)  (2,900)
    Net cash (used in) financing activities$(15,703) $(14,223)
    Net increase in cash and cash equivalents 15,033   654 
    Cash and cash equivalents, beginning of period 17,271   14,542 
    Cash and cash equivalents, end of period$32,304  $15,196 
     

    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 Private Marketplace transactions. In our Open Marketplace model, revenue recognized represents the fees paid by our Demand Partners for Consumer Referrals sold and is equal to the Transaction Value and revenue share payments to our Supply Partners represent costs of revenue. In our Private Marketplace model, revenue recognized represents a platform fee billed to the Supply Partner based on an agreed-upon percentage of the Transaction Value for the Consumer Referrals transacted, and accordingly there are no associated costs of revenue. We utilize Transaction Value to assess the overall level of transaction activity through our platform. We believe it is useful to investors to assess the overall level of activity on our platform and to better understand the sources of our revenue across our different transaction models and verticals.

    The following table presents Transaction Value by platform model for the three and nine months ended September 30, 2024 and 2023:

     
      Three Months Ended
    September 30,
     Nine Months Ended
    September 30,
    (dollars in thousands)  2024   2023   2024   2023 
    Open Marketplace transactions $253,016  $73,053  $546,949  $263,568 
    Percentage of total Transaction Value  56.0%  67.0%  55.1%  61.6%
    Private Marketplace transactions  198,759   35,963   445,742   164,524 
    Percentage of total Transaction Value  44.0%  33.0%  44.9%  38.4%
    Total Transaction Value $451,775  $109,016  $992,691  $428,092 
     

    The following table presents Transaction Value by vertical for the three and nine months ended September 30, 2024 and 2023:

     
      Three Months Ended
    September 30,
     Nine Months Ended
    September 30,
    (dollars in thousands)  2024   2023   2024   2023 
    Property & Casualty insurance $387,451  $44,715  $777,521  $223,305 
    Percentage of total Transaction Value  85.8%  41.0%  78.3%  52.2%
    Health insurance  55,615   51,210   179,980   161,450 
    Percentage of total Transaction Value  12.3%  47.0%  18.1%  37.7%
    Life insurance  6,261   7,566   24,384   26,042 
    Percentage of total Transaction Value  1.4%  6.9%  2.5%  6.1%
    Other(1)  2,448   5,525   10,806   17,295 
    Percentage of total Transaction Value  0.5%  5.1%  1.1%  4.0%
    Total Transaction Value $451,775  $109,016  $992,691  $428,092 
     
    (1) Our other verticals include Travel 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 and nine months ended September 30, 2024 and 2023:

      Three Months Ended
    September 30,
     Nine Months Ended
    September 30,
    (in thousands)  2024   2023   2024   2023 
    Revenue $259,133  $74,573  $564,056  $270,975 
    Less cost of revenue  (219,907)  (62,277)  (469,465)  (226,545)
    Gross profit $39,226  $12,296  $94,591  $44,430 
    Adjusted to exclude the following (as related to cost of revenue):        
    Equity-based compensation  405   1,012   2,654   2,959 
    Salaries, wages, and related  907   878   2,474   2,832 
    Internet and hosting  145   138   402   418 
    Other expenses  170   179   539   513 
    Depreciation  5   9   15   30 
    Other services  549   514   2,008   1,795 
    Merchant-related fees  75   11   217   14 
    Contribution $41,482  $15,037  $102,900  $52,991 
    Gross margin  15.1%  16.5%  16.8%  16.4%
    Contribution Margin  16.0%  20.2%  18.2%  19.6%
     

    Adjusted EBITDA

    We define “Adjusted EBITDA” as net income (loss) 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 income (loss), the most directly comparable financial measure calculated and presented in accordance with GAAP, for the three and nine months ended September 30, 2024 and 2023:

     
      Three Months Ended
    September 30,
     Nine Months Ended
    September 30,
    (in thousands)  2024   2023   2024   2023 
    Net income (loss) $11,888  $(18,698) $14,817  $(53,262)
    Equity-based compensation expense  8,597   14,454   26,452   43,943 
    Interest expense  3,562   3,947   11,158   11,397 
    Income tax expense  312   102   469   330 
    Depreciation expense on property and equipment  65   87   191   275 
    Amortization of intangible assets  1,609   1,730   4,827   5,188 
    Transaction expenses(1)  (45)  5   1,172   553 
    Impairment of cost method investment           1,406 
    Contract settlement(2)        (1,725)   
    Changes in TRA related liability           6 
    Changes in Tax Indemnification Receivable  (84)  (20)  (86)  (48)
    Settlement of federal and state income tax refunds           3 
    Legal expenses(3)  367   1,979   2,155   3,418 
    Reduction in force costs (4)           1,233 
    Adjusted EBITDA $26,271  $3,586  $59,430  $14,442 
     
    (1) Transaction expenses consist of immaterial expenses and $1.2 million of legal and accounting fees incurred by us for the three and nine months ended September 30, 2024, respectively, in connection with resale registration statements filed with the SEC. For the three and nine months ended September 30, 2023, transaction expenses consist of immaterial expenses and $0.6 million of legal and accounting fees, respectively, in connection with the amendment to the 2021 Credit Facilities, the tender offer filed by the Company's largest shareholder in May 2023, and a resale registration statement filed with the SEC.
    (2) Contract settlement consists of $1.7 million of income for the nine months ended September 30, 2024 recorded in connection with a one-time contract termination fee received from one of our supply partners in the Health and Life insurance verticals that ceased operations during the nine months ended September 30, 2024.
    (3) Legal expenses of $0.4 million and $2.2 million for the three and nine months ended September 30, 2024, respectively, and $2.0 million and $3.4 million for the three and nine months ended September 30, 2023, respectively, consist of legal fees incurred in connection with the civil investigative demand received from the Federal Trade Commission in February 2023 and costs associated with a legal settlement unrelated to our core operations during the nine months ended September 30, 2023.
    (4) Reduction in force costs for the nine months ended September 30, 2023 consist of $1.2 million of severance benefits provided to the terminated employees in connection with the RIF Plan. Additionally, equity-based compensation expense includes $0.3 million of charges related to the RIF Plan for the nine months ended September 30, 2023.
     

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