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Edited Transcript of EVER.O earnings conference call or presentation 5-Aug-19 8:30pm GMT

Q2 2019 EverQuote Inc Earnings Call

CAMBRIDGE Aug 9, 2019 (Thomson StreetEvents) -- Edited Transcript of EverQuote Inc earnings conference call or presentation Monday, August 5, 2019 at 8:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* John Brandon Wagner

EverQuote, Inc. - CFO & Treasurer

* Seth N. Birnbaum

EverQuote, Inc. - Co-Founder, President, CEO & Director

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Conference Call Participants

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* Aaron Michael Kessler

Raymond James & Associates, Inc., Research Division - Senior Internet Analyst

* Dae K. Lee

JP Morgan Chase & Co, Research Division - Analyst

* Jed Kelly

Oppenheimer & Co. Inc., Research Division - Director and Senior Analyst

* Kyle David Peterson

Needham & Company, LLC, Research Division - Associate

* Michael Patrick Graham

Canaccord Genuity Corp., Research Division - MD & Senior Equity Analyst

* Ralph Edward Schackart

William Blair & Company L.L.C., Research Division - Partner & Technology Analyst

* Ronald Victor Josey

JMP Securities LLC, Research Division - MD and Senior Research Analyst

* Brinlea Johnson;The Blueshirt Group

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Presentation

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Operator [1]

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Good afternoon. My name is Mary Emma, and I will be your conference operator today. At this time, I would like to welcome everyone to the EverQuote Second Quarter 2019 Earnings Call. (Operator Instructions).

Thank you. I would now like to turn the call over to Brinlea Johnson of The Blueshirt Group. You may begin your conference.

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Brinlea Johnson;The Blueshirt Group, [2]

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Thank you. Good afternoon, and welcome to EverQuote's Second Quarter 2019 Earnings Call. We'll be discussing the results announced in our press release issued today after the market closed.

With me on the call this afternoon is, Seth Birnbaum, EverQuote's Chief Executive Officer and Cofounder; and John Wagner, Chief Financial Officer of EverQuote.

During the call, we will make statements related to our business that may be considered forward-looking statements under the federal securities laws, including statements concerning our financial guidance for the third quarter and full year 2019, our growth strategy and our plans to execute on our growth strategy, key initiatives, the growth levers we expect to drive our business, our ability to maintain existing and acquire new customers, our interest or ability to acquire other companies, our planned expansion into international markets, and other statements regarding our plans and prospects.

Forward-looking statements may be identified with words and phrases such as we expect, we believe, we intend, we anticipate, we plan, may, upcoming and similar words and phrases. These statements reflect our views only as of today, and should not be considered our views as of any subsequent date. We specifically disclaim any obligation to update or revise these forward-looking statements except as required by law.

Forward-looking statements are not promises or guarantees of future performance and are subject to a variety of risks and uncertainties that could cause the actual results to differ materially from our expectations.

For a discussion of material risks and other important factors that could affect our actual results, please refer to those contained under the heading, Risk Factors, in our most recent quarterly report on Form 10-Q, which is on file with the Securities and Exchange Commission and available on the Investor Relations section of our website at investors.everquote.com and on the SEC's website at sec.gov.

Finally, during the course of today's call, we will refer to certain non-GAAP financial measures, which we believe are helpful to investors. A reconciliation of GAAP to non-GAAP measures is included in our press release we issued after the close of market today, which is available on the Investor Relations section of our website at investors.everquote.com.

With that, I'll turn the call over to Seth.

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Seth N. Birnbaum, EverQuote, Inc. - Co-Founder, President, CEO & Director [3]

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Thank you, Brinlea. Good afternoon, and thank you, everyone for joining us today. We are pleased to report a strong second quarter across all our key financial metrics.

Revenue, Variable Marketing Margin and adjusted EBITDA. These delivered revenue growth of 35% year-over-year and strong Variable Marketing Margin growth of 38%. Our success continues to derive from the strength of our data-driven marketplace and commitments to serving a [balanced] consumer and [include this provider] approach.

We continue to focus on strong organic growth as we scale while simultaneously making steady progress towards profitability. In the second quarter and first half of 2019, we delivered positive adjusted EBITDA, while executing our key growth levers: expanding consumer demand; growing provider budget; increase consumer-provider engagement; and adding new verticals, including the successful launch of [renters] and health insurance in the quarter. We expect to continue to expand adjusted EBITDA while aggressively investing in the business to capitalize in a large and growing market opportunity.

Based on our strong second quarter results and momentum, we are increasing our guidance for the full year 2019, which John will be telling in a moment, after I cover the progress in our growth levers and key initiatives.

We saw a very strong Variable Marketing Margin growth in the quarter. This was the result of successful execution of priorities we set last quarter for our consumer traffic teams. Success in consumer traffic drove not only increased Variable Marketing dollars, but also it increased [in unit] economics as reflected by expansion of Variable Marketing Margin.

In addition to growing interim shopping consumer volume, we expanded our insurance provider network, while weakening consumer-provider engagement with additional partial provider integration. Growth in consumer demand and insurance provider spend in our marketplace was broad-based in the quarter and also benefited from favorable market conditions in insurance broadly and the autos verticals, specifically.

We expanded our non-autos verticals with an emphasis on Variable Marketing Margin dollar growth to achieve near Variable Marketing Margin parity across our vertical offerings as a percentage of revenue. We are laser focused on our growth levers, key initiatives and our mission to make EverQuote the destination for insurance shopping. We continue to make progress on our goal to be the largest source of insurance policies online by expanding the value we deliver to consumers and providers via new and improved product experiences.

We are excited and energized by our vision to use technology and data to help consumers to protect themselves, their families and their life's most important assets.

Now turning to a deeper discussion on our growth levers and key initiatives. Attracting more consumers to our marketplace. This quarter, we increased investment in our marketing teams and expanded marketing channels and verticals to reach more consumers. We also saw a success from tech investments in automation and machine learning to further leverage our growing data and human capital advantages.

Leveraging data and technology to grow existing sources and add new sources, delivered a 50% increase in consumer quote request volumes year-over-year, while cost per quote requests climbed 8%, demonstrating strong consumer demand for insurance online as well as leverage in our consumer traffic and advertising operations.

Data and technology is core to our platform advantage. We accumulate millions of data points per day, which leverages our ability to optimize and automate consumer acquisitions. Notably, we've seen multiple wins with the application of our proprietary data and machine learning algorithms contributing to the expansion of sources in the quarter. Our new inbound call service, that helps provide quotes for consumers who would prefer to contact us by phone rather than online, expanded in Q2. While still modest, this has been a very popular product offering with provider partners, and we're confident this program gives us significant upside in consumer volume in 2019 and beyond.

During the quarter, we launched ventures in healthcare. We're excited about the addition of these newer verticals and expect to make steady investments to increasingly diversify and grow our consumer traffic, revenue and business, while providing consumers more great insurance options in our marketplace.

Increasing provider coverage. We continue to add more providers and expand budget with current providers to grow overall revenue and revenue per quote request. Two priority growth initiatives for providers that we covered in our last call include our accelerated growth program for larger insurance agents and our verified partner program to enable third-party partners to participate with providers in our marketplace. Both are succeeding, scaling and have been very well received by our insurance provider partners.

The accelerated growth program is growing and now accounts for more than 30% of our agency revenue. As traffic growth outpaced provider coverage growth in Q2, we saw some natural compression in revenue per quote requests, but price or a bid for referral increased those year-on-year and sequentially demonstrated strength in provider-side demand, solid performance of our traffic for our provider partners as well as matching and referral personalization capability for consumers in our marketplace.

Additionally, we are pleased that the accelerated growth program for agents increases both coverage and coverage elasticity, so while we saw a much higher consumer volume through our marketplace, we believe accelerated growth program helped keep coverage compression model, playing a role in driving increasing Variable Marketing Margin dollars, both sequentially and year-on-year with higher variable Marketing Margin levels than the prior quarter. We remain focused on continually ramping provider coverage, which is a steady long-term [march] as the industry continues to shift to spend online.

As a highlight, the (inaudible) agencies out of Texas are a testament to the potential impact of the accelerated growth program around 6 agencies in the Dallas Metro area and have been accelerated growth program partners since 2018. Large, sophisticated agencies like [their's] need business partners that will provide deep [sight] analytics and insights to drive their business.

According to these owners, EverQuote service is second to none. And they add that their AGP, dedicated business consultant, understands the marketplace and understands their goals.

Since joining, [we] Accelerated Growth Program, the (inaudible) agencies have shifted their entire online spend to EverQuote and they've seen rapid growth as a result.

Deepening consumer provider engagement and reducing the friction of getting quotes by expanding provider integrations. In Q2, we continued to optimize conversion rates in our consumer shopping funnel, which our internal metrics indicate an increase in the rates at which consumers join the policy.

We also continued to expand provider integrations with the majority of referrals going through a partial integration experience today as we work towards the goal of getting each consumer 1-plus or 1 call away from a findable quote. For consumers all this work translates into real savings. In our most recent survey, consumer shopping for auto insurance through EverQuote saves an average of $610 a year, which we're thrilled with, that's a significant saving.

We expect and are excited to deliver benefit to consumers across all our verticals by leveraging the breadth of our provider network, and we continue to focus on reducing friction, making the right personalized recommendations and increasing consumer choice through the insurance shopping journey. Further, as we secure deeper integrations, we believe we can also help our providers maximize their results through the use of our real-time and machine-learning bid capabilities. These capabilities allow insurance providers in our marketplace and optimize their campaign bidding based on their prime rates in near real time. During the quarter, we continued expanding the portfolio of carriers using our machine learning and real-time bidding campaigns to more efficiently reach prospective policyholders. And early results have been promising with our carrier partners seeing much higher LTV efficiency and stronger performance across their KPIs. Our largest partner using these new products is seeing a 52% increase in referrals from our marketplace at their desired ROI target.

These carrier are continually [confined] and grow their budget in our marketplace. We are confident continued expansion of our machine-learning and real-time bidding capabilities will allow our partners to efficiently grow their advertising spend with EverQuote, while achieving even better ROI for campaigns in our marketplace.

Our EverDrive program has continued to expand its insurance offer coverage with our current partner, up from 12 states to 24 since our last call. We have succeeded in our efforts to expand the EverDrive team, most recently adding a Senior Product Manager with extensive experience in consumer facing mobile applications and assigning additional resources to drive acquisition activity and our audience [growth] . Work is also underway on additional features that will facilitate in-apps floating and binding, while also enabling new user engagement features in the coming quarters and beyond.

We are excited by the continued expansion of telematics-based insurance program in the industry and EverDrive's unique position in helping users become safer drivers and connect with great insurance products and discounts.

Finally, having new verticals. We launched 2 new insurance verticals in our marketplace and are bullish on long-term prospects for both increasing our overall marketplace diversity and TAM. As we are clearly seeing the benefits in our results, we plan to continue investing in both EverQuote and EverDrive consumer experiences in 2019, and we are focused on greater consumer satisfaction, loyalty and lifetime value.

We are also pleased with our ability to expand our team with talented and experienced hires during the quarter. These team members had near-term impacts on the business, and we are looking forward to recruiting additional help to manage key initiatives in the quarters to come.

In summary, we had a strong Q2 with solid execution combined with positive insurance market trends and strong momentum into Q3, reaffirming our uses of business, TAM and EverQuote's future, for executing well on our growth levers, key initiatives and mission. We delivered positive adjusted EBITDA, balance of strong growth in the quarter and year-to-date. We're confident in our long-term model and continue to progress towards profitability as the business scales. We are pleased with the progress we have made thus far in 2019, and we look forward to finishing this year strong and setting the stage for continued growth in 2020.

Now I'll turn the call over to John.

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John Brandon Wagner, EverQuote, Inc. - CFO & Treasurer [4]

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Thank you, Seth, and good afternoon, everyone. I'll start by discussing our financial results for the second quarter of 2019, and then provide third quarter 2019 guidance and our increased guidance for a full year 2019.

We're very pleased to report second quarter revenue of $55.7 million, up 35% year-over-year and above our revenue guidance provided last quarter.

Revenue in our auto insurance vertical increased to $49.8 million, reflecting an accelerated growth rate of 40% year-over-year. Revenue from our other verticals, which now includes health and renters in addition to home and life increased to $5.9 million.

In Q2, our auto insurance vertical benefited from strong demand from our carriers and from our success in delivering significantly more consumer traffic to our marketplace. Our traffic growth in autos reinforced the continued opportunity for growth across all insurance verticals using our technology and data-centric approach to consumer advertising.

In our other verticals, which was comprised nearly entirely of home and life, we focused on Variable Marketing Margin growth over revenue growth.

As a result, we grew VMM in our other verticals faster than our overall 38% VMM growth rate. And the change in VMM as a percentage of revenue that was nearly equal to that of the auto's vertical. This reflected improved unit economics attributed to reduced cost and improved revenue per quote request as compared to the prior year's quarter.

Having the improved Variable Marketing Margin, we began again to focus on revenue growth in our other verticals going into Q3. So far in Q3, revenue from our other verticals has grown at a rate more consistent with the growth rate of those verticals in Q1 2019, but also at an improved Variable Marketing Margin.

Overall, our strong revenue growth in Q2 was driven by progress and attracting consumers to our insurance marketplace coupled with stable to improved unit economics.

Consumer quote request increased an impressive 50% over the prior year period to $4.5 million, while the average cost per quote request declined 10%, reflecting efficiencies in consumer advertising. Throughout the quarter, carrier demand remained strong as reflected in an increase in the average price per referral that helped mitigate the overall reduction in revenue per quote request.

Our 50% increase in quote request volume resulted in only a modest decrease in revenue per quote request of 10% year-over-year to $12.32.

With respect to our options in general, as we increased consumer traffic, we can sometimes see reductions in the number of referrals per quote request since the supply of quote requests can outpace provider coverage in our auctions.

In addition, we also try to balance consumer traffic with provider demand to align pricing and optimize Variable Marketing Margin dollars.

Overall, our gains in consumer volume this quarter significantly outpaced the reduction and monetization and resulted in much higher Variable Marketing Margin.

We're pleased with the resiliency of our marketplace and that we significantly increased consumer volume while maintaining strong unit economics and a lower cost per quote request.

In all verticals, we continue to target the maximum VMM through a combination of traffic growth balanced with unit economics. Effectively, we seek to grow consumer traffic, provided such growth does not drive up costs or drive down monetization in our auction to the point of incrementally lower Variable Marketing Margin.

VMM was $16.7 million for the per quarter, an increase of 38% year-over-year from $12.1 million. As a percentage of revenue, VMM was 30%, up 3.5 points sequentially from Q1 2019, and an increase from 29.6% in 2Q 2018.

Turning to our profitability. As Seth mentioned, we're very excited to report positive adjusted EBITDA for both the second quarter and first half of 2019. Adjusted EBITDA for the second quarter was $1.6 million favorable to our guidance range due to our better-than-expected VMM performance and disciplined operating expense management.

We achieved faster than anticipated [in that] greater scale, a positive adjusted EBITDA is consistent with our stated goal of growing the business through investments in operations while also improving profitability over the long term.

Second quarter GAAP net loss was $2 million or a net loss of $0.08 per share based on approximately $25.6 million weighted-average shares outstanding.

Stock-based compensation excluded from adjusted EBITDA was $3.2 million, trending towards the high end of our previously stated expectation for a full year 2019 stock-based compensation in the range of $11.5 million to $12.5 million.

We ended the quarter with $37.1 million in cash and cash equivalents, down slightly from Q1 2019. Due, in part, to our improved profitability profile, operating cash flow for the quarter was nearly breakeven at a negative $0.4 million and our ending working capital balance improved $1.5 million over Q1 2019.

Overall, second quarter results exceeded our guidance on revenue, VMM and adjusted EBITDA. Our performance gives us confidence in our updated guidance, which reflects, I believe, that while we anticipate Q4 as a seasonally slower quarter compared to Q3, we will continue our strong performance [in] the balance of 2019.

Additionally, we are now targeting positive adjusted EBITDA for the full year 2019 and in future years.

We expect our momentum from Q2 to carry over into Q3, which is typically a slightly stronger seasonal quarter. Reflecting our momentum in these seasonal trends, our Q3 2019 guidance is as follows: we expect revenue to be between $57 million and $59 million; we expect Variable Marketing Margin to be between $17 million and $18 million; and we expect positive adjusted EBITDA to be between $1 million and $2 million.

Similarly, we anticipate a stronger full year 2019, and we are raising our guidance as follows: we expect revenue to be between $215 million and $219 million, an increase from our previous full year guidance of between $197 million and $203 million; we expect Variable Marketing Margin to be between $62.5 million and $64.5 million, an increase from our previous full year guidance of between $55.5 million and $58.5 million; and we expect positive adjusted EBITDA of between $1 million and $2.5 million, an improvement from our previous range of a loss of between $3 million and $1 million.

In summary, we had an outstanding second quarter, and we look forward to continuing our performance in the balance of 2019. We are excited about our growth and revenue in Variable Marketing Margin fueled by strong increases in consumer traffic. We're pleased to reflect [these offering] improvement in our increased full year guidance.

And with that, Seth and I look forward to answering your questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Your first question comes from Michael Graham from Canaccord.

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Michael Patrick Graham, Canaccord Genuity Corp., Research Division - MD & Senior Equity Analyst [2]

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Congrats on a solid quarter. I just wanted to ask one thing on EverDrive, which is do you see the opportunity to take, sort of, consumer-based data like that where you can, sort of, drive better value for the consumer and spread that out across some of your other verticals? Is there a way to kind of take that concept and spread it out?

And then I just wanted to get a little bit more depth about how your new verticals are going and, sort of, when do you think you'll start to see some more meaningful revenue from some of the new verticals you announced last quarter?

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Seth N. Birnbaum, EverQuote, Inc. - Co-Founder, President, CEO & Director [3]

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Maybe I'll take those -- this is Seth, Michael. Thanks a lot. I'll take those questions in reverse order.

To your second question, we are very pleased that we launched the new verticals on time. The team did an excellent job executing that, and we're actually generating, albeit very modest, revenue in those verticals. Obviously, as we make progress in the new verticals, we look forward to updating you on future calls, and we'll do that.

With regards to EverDrive, it's precisely why we are so excited about it because we think it's a class of product that EverQuote can participate in where we're providing, sort of, risk insight and safety or health making consumers safer at the same time connecting them with providers who give them incremental discounts for safe behaviors.

We think it's applicable to life insurance, to home insurance, with things like smart devices. So again, over the long term we see it as a class of devices or applications that EverQuote can build. It doesn't just provide a consumer's [lift] discounts on insurance, but actually helps make them safer and plug into the, sort of, proliferating set of devices that are going into cars and homes and [connected] cars and your smartwatch, so there's a whole class of opportunity for us. And EverDrive is, obviously, just the first case really, use case of that. So we're very bullish on the long-term opportunity for that.

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Operator [4]

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Your next question comes from Ron Josey with JMP Securities.

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Ronald Victor Josey, JMP Securities LLC, Research Division - MD and Senior Research Analyst [5]

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John, I just wanted to see if I can get some additional insight. I think you talked about home and life and other verticals. In 2Q, growth [decelerated] quite a bit but I think in your commentary, you talked about growth coming back here to 1Q levels.

Can you just help us understand what happened in 1Q? Sorry, in 2Q. That's all. That [color] I think will be helpful.

And then on quote requested, just more insights around the visibility and sustainability, what you saw in 2Q, clearly a great quarter in terms of quote requests growth. Just thinking about like longer term, how you see that?

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John Brandon Wagner, EverQuote, Inc. - CFO & Treasurer [6]

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Sure. Thanks, Ron. So with regard to our other verticals, primarily home and life in the quarter, what we -- what the difference really there was in the quarter is that we were managing for a variable marketing dollar growth within the quarter.

This quarter we had the opportunity to see the margins within those other verticals get to the point where they were nearly at the same level as our autos vertical.

So given the choice we will always manage for variable marketing growth, and that's really fairly consistent, it just happened that this quarter it really came through in VMD with just very modest growth in revenue. What we -- what I said in the prepared remarks is that going into Q3 with that margin operating point, operating at a very healthy level, we were able to turn toward growth and maximize variable marketing dollars through growth. And what we have seen so far in this quarter is growth within those other verticals is very similar to what we saw in Q1. So we really think of Q2 as a time that we were able to make progress within variable marketing margin in those other verticals, and we're still very excited and very bullish about the growth coming out of those verticals.

With regard to kind of overall traffic growth, obviously, a really great quarter this year. This quarter for traffic growth, we had mentioned on the call last time that we felt in 2019 that majority of our growth was going to come from quote request growth, we continue to see that going forward. So we are continuing to project most of our growth as we model the business coming through quote request volume right through the end of the year.

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Seth N. Birnbaum, EverQuote, Inc. - Co-Founder, President, CEO & Director [7]

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And Ron, just -- it's Seth. Just to give a little additional color, we saw really strong performance from the teams, obviously, the leadership that we added to the teams as well. We saw really great execution across the traffic teams up for the quarter, and obviously, are bullish on that through the year. And it was compounded by the fact that consumer demand and the marketplace dynamics are favorable as well. So really just a great result. A lot of that work, obviously, was start to sort of set in Q1 with our priorities in teambuilding and flowed through Q2.

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Operator [8]

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Your next question comes from Mayank Tandon from Needham & Company.

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Kyle David Peterson, Needham & Company, LLC, Research Division - Associate [9]

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This is actually Kyle Peterson on for Mayank. Just want to start on pricing. I know you guys -- the volume has obviously been very impressive, kind of as stated the revenue per quote request still a little bit below last year. Just wanted to see what would it take to get that to kind of pop back maybe towards the last year's levels? Is it signing on some more partners or there'd be carriers and agents? Or is it just gaining more wallet share with existing partners? I just wanted to see if you guys can give any color on that.

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Seth N. Birnbaum, EverQuote, Inc. - Co-Founder, President, CEO & Director [10]

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Sure. Kyle, maybe I'll step through the gate and then [Wagner] will bring us or John will bring us home on it. So at a very high level, remember, we operate the business for Variable Marketing Margin dollar. So if we can generate incremental consumer demand that drives up variable marketing dollars, we ought to do so, and our teams will make those investments and our auctions will support that. Now obviously, with the pace of consumer demand growth, we cannot outpace our provider coverage and that's what we saw in Q2. And again, as long as we're generating incremental VMD, we'll do that all the [more] and that's what we saw in the quarter. And John, maybe wants to dig in on some of auction dynamics and.

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John Brandon Wagner, EverQuote, Inc. - CFO & Treasurer [11]

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Sure. So we often revenue per quote as kind of a proxy for pricing, but really when you break down revenue per quote request, there are the 2 components that are going to it. One is the price per referral, since a quote request can have multiple referrals, each of those referrals is priced separately and that's -- it's generally determined by the carriers in our -- and the price they bid in our auctions. The other component is the number of referrals per quote request. So of those 2 components within the quarter, we did actually see the pricing component, the price per referral increase during the quarter, and that's really indicative of a strong demand coming from our carriers, especially. And then, again, against the backdrop of 50% quote request volume, we were fairly pleased with the fact that revenue per quote requests still stayed fairly stable in the face of that kind of volume. Just to add, going back to kind of previous years where revenue per quote request was higher, again, we will always manage to maximize variable marketing dollars to the degree that we can. So we really provide things like quote request, cost per quote request, revenue per quote request as kind of a way to be able to speak about the business and give insight into the business, but we're really not managing for those as a particular outcome. And I say, -- I would think that to back to those levels, we probably would see a combination of our coverage side of our marketplace increasing and generally that's what we manage the business in terms of supply and demand. We grew both volume in terms of consumer traffic and then we also grew coverage in terms of our distribution, our carriers and our agents. And so we tried to do those in tandem. But at times, one will outgrow the other. And if that happens, provided that we are maximizing variable dollars, we welcome that.

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Seth N. Birnbaum, EverQuote, Inc. - Co-Founder, President, CEO & Director [12]

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We sure do. I mean one of the ways I think about it, Kyle, is, you think about it as not just share but gas in the tank. So we can build out provider coverage and provider budgets against that growth in consumer demand. So really a great leading indicator.

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Kyle David Peterson, Needham & Company, LLC, Research Division - Associate [13]

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All right. That's helpful color. And then just one follow up-for me, I know you guys have talked about the inbound calls, launch of that, and it seems like it's been positive so far. Just wanted to see if you guys could give any more color update in just kind of how it's improving conversion rates or reaching a little bit different cohort of customers? Or just any other color you could provide would be helpful.

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Seth N. Birnbaum, EverQuote, Inc. - Co-Founder, President, CEO & Director [14]

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Yes. So I mean, I think 2 levels. One, all right, it definitely reaches a set of consumers who we may not even originate online beyond they want to click a phone number on a mobile workflow or they want to get connected with an agent on a website. So we're really sort of bullish on it, that it covers a broader slot of consumers through a different consumer demographic. The conversion rates on inbound calls are very good across the spectrum, but it is still modest. Now while it's modest it did grow a significant amount in the quarter. But again, it's still a very modest amount of our overall quote request volume. We do expect it to grow over 2019 and in the years out, and we see a ton of opportunity to grow that inbound calls program.

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Operator [15]

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Your next question comes from Doug Anmuth with from JPMorgan.

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Dae K. Lee, JP Morgan Chase & Co, Research Division - Analyst [16]

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This is Dae Lee on for Doug. Congrats on the quarter. Just wanted to talk about automotive vertical really quick. So you saw a really strong acceleration there, you talked about favorable market conditions there. Could you talk about like what's happening there versus sort of your expectation going into 2Q and if those conditions are sustainable? And then as a follow-up, you talked about majority of your customers now flowing through a partial integration, but could you talk about how user experience has changed prior -- from before and how discussions are going in terms of getting a more full integration?

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Seth N. Birnbaum, EverQuote, Inc. - Co-Founder, President, CEO & Director [17]

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Sure. So with regards to the automotive vertical, market conditions, the carriers and providers in general, the agents are -- they're having very good, obviously, underwriting profitability or that's our view of the marketplace is demand for growth. I mean from my perspective, again, or from our perspective, we'd expect that to continue, right? They're well priced, they are well positioned for growth. And providers for using data and technology are really making a lot of progress and momentum, especially with EverQuote doing -- sourcing the personalized referrals, consumers from us have given them a lot of, obviously, fuel for growth. And -- so we're excited about. And I'd expect that to continue -- that sort of market condition can persist in the auto insurance vertical for years. And -- so obviously, we're bullish on that. With regards to the partial integration, I think we've reported we did 11, sort of, new partials and 1 deeper integration. And obviously today, as we do those, we do see typically the conversion rate for consumers increase. When a consumer purchases a policy through the marketplace, it typically results in higher customer satisfaction. And so there's a virtuous cycle for the consumers as we go deeper down these integrations, you actually get more bound policies, higher consumer satisfaction so that's a powerful lever for consumers. At the same time, the performance rises for providers and for EverQuote. So it's sort of a virtuous cycle all the way around. But that's a steady progress we've made. The other obvious, sort of, extension or advance in consumer experience is adding the new verticals. Right? So having more product options in the marketplace improves consumer experience when they visit everquote.com. So we're excited about that as well.

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John Brandon Wagner, EverQuote, Inc. - CFO & Treasurer [18]

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And then, Dae, I would just add that going back to your, kind of, automotive question, we're seeing a number of things that are very strong within the quarter and within the year and they have generally been an increasing trend. We've seen strong carrier demand, we've seen really good traffic performance, and we've really reflected all of these within our guidance. So Q3 is seasonally a stronger quarter, but if you look at what we guided to, it is a -- it is kind of a momentum guide in terms of both stronger seasonal quarter but some really nice trends and strengths within auto coming through in the guide for both Q3 as well as for the full year.

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Operator [19]

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Your next question comes from Ralph Schackart with William Blair.

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Ralph Edward Schackart, William Blair & Company L.L.C., Research Division - Partner & Technology Analyst [20]

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Two questions, if I could. First, just looking at the quarter and the guide, it looks like you beat the quarter at the midpoint by about $5 million, raised the outlook by roughly $17 million or so to midpoint. Just curious what's implied in the stronger outlook and if there's any contribution from new verticals or [contemplated] ?

And then, Seth, on the call, you talked about improvements and consumer conversion rates getting closer to that 1 click bindable quote on lowering friction. Just curious what are the primary factors you're seeing or achieving to drive those improvements in conversion rates? And was there anything significant in the quarter that you'd call out driving this conversation rate or just a combination of factors came together?

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John Brandon Wagner, EverQuote, Inc. - CFO & Treasurer [21]

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So Ralph, I'll comment first on the guidance. Again, at the -- with regard to both Q3 and the full year, the full year we've raised it -- to growth at 33% revenue growth at the midpoint, for the quarter, 39% revenue growth at the midpoint. So what we are really reflecting is kind of this momentum that has been a building pattern through this -- through the year. In terms of the other verticals and specifically the new aspects of the other verticals, their contribution that's factored in is generally relatively modest. Remember, we're very pleased to have launched the verticals, we generally will test into the verticals, we'll develop knowledge about the traffic pattern about distribution. So for the balance of the year, the contribution there from the brand-new verticals is relatively modest than what we have factored.

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Seth N. Birnbaum, EverQuote, Inc. - Co-Founder, President, CEO & Director [22]

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Ralph, in terms of your question, the conversion rate was a combination of multiple factors, sort of 2 that are good to highlight. Obviously, progress with these partial integrations or these integrations in general improve consumer conversion rate through the funnels. So that was a contributing factor. Another one is just the continuous A/B testing that we do to improve the funnel experience for consumers to increase conversion rate, not on our website, but downstream with our provider partners also yielded some benefits in the quarter. So again, it's just -- it's a combination of factors, obviously traffic performance as well was strong.

The other sort of note, I think it's valuable take away is, now over 2/3 of our referrals are -- actually have some form of partial integration. So we have more than 10 smaller partners who are fully integrated to either a click to quote or a call to quote. So we're making steady progress with our provider partners against that goal of getting 1 click or 1 call away from a quote for all consumers so -- or for all referrals. So really good progress in the quarter on that. But it is a steady march.

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Operator [23]

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Your next question comes from Jed Kelly with Oppenheimer.

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Jed Kelly, Oppenheimer & Co. Inc., Research Division - Director and Senior Analyst [24]

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Couple, if I may. You have any sense on how much VMM uplift you're seeing from 3P customers? And then my second question is just around the accelerated agent opportunity. Can you give us a sense on how many agents are participating versus the total number of individual agents buying the leads on your platform?

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John Brandon Wagner, EverQuote, Inc. - CFO & Treasurer [25]

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You want to take the second question and I'll take the first and...

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Seth N. Birnbaum, EverQuote, Inc. - Co-Founder, President, CEO & Director [26]

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Sure. I mean in terms of how much VMM is from return visits, we don't break out, obviously, sort of all of the different visits. One of the things, Jed, that I was most enthusiastic about in the quarter, I mentioned on the call a number of times, beyond return visits is successes across many of our traffic sources with some of our machine-learning algorithms and specifically the proprietary. So data and technology that we've applied to consumer acquisition. So we've seen steady uplift, obviously, from return visits historically, but some of the newer uplifts in expansion VMM as a contributing factor to some of these machine-learning and data-technology tools that we've applied to traffic that we're seeing now consistently work. So we're going to continue to make investments, not only in consumer experience to increase return visits because, obviously high margin in arrivals, but also in data sciences to increase these machine-learning tools because we're really seeing a steady uplift in contribution from them. So multiple factors contributing to expansion of Variable Marketing Margin in the quarter.

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John Brandon Wagner, EverQuote, Inc. - CFO & Treasurer [27]

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And -- so, Jed, with regard to the accelerated growth program, the program that we launched a couple of quarters ago that really focuses on our agents with, kind of, larger ability to contribute and take both quote requests referrals as well as expand coverage for us. So really the program is focused on agents that have multiple producers that are able to take large [chunks] of geography. And for that, they get a higher level of service, they get certain discounts that are made available to them. And these are aimed at larger agents within our agent network. That program we're very pleased with the results, so far. We have been expanding it fairly aggressively. It's now making up a pretty good chunk of our agent revenue because these are often some of our largest producers on the agent side of the business. So still fairly early days, but the number of agents participating is right up in the early triple digits there.

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Seth N. Birnbaum, EverQuote, Inc. - Co-Founder, President, CEO & Director [28]

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Now -- and we seeing now over 30% of our agency revenue is coming from the accelerated growth program. So really very successful. It gives the agents more of a dynamic environment, similar to what the carrier providers entering through enterprise side of the business. And so it gives them more flexibility.

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Operator [29]

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Your next question comes from Aaron Kessler from Raymond James.

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Aaron Michael Kessler, Raymond James & Associates, Inc., Research Division - Senior Internet Analyst [30]

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A couple of questions. First, just a couple of quarters ago, we talked about kind of changes maybe in traffic sources as well as kind of changing ad creatives, would be interested in to get an update there. Then in the health care side, if you guys can talk about maybe some of the competition you would [expect] to see in the market as well as how we should expect timing over the next maybe 1 on to 2 years as that product develops?

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Seth N. Birnbaum, EverQuote, Inc. - Co-Founder, President, CEO & Director [31]

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Sure. It creates a rotation process, sort of, continues to succeed obviously, becoming -- sort of my view is, even more robust. And again, you just can see the results in the execution by the traffic team and the result in consumer volume growth with that sort of concomitant reduction in cost per quote request. So really great leverage coming to the marketplace and that's people, it's technology, it's the marketing process, it is that -- creative processes one of the elements that's contributing to that success. So it's just a great ask.

With regards to health care, obviously, we're extremely bullish on that over the next year or 2. We don't break it out, but from my perspective, I think it can grow very successfully and where we will update you as we make progress through the vertical.

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Operator [32]

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There are no further questions at this time. I will now turn the call back over to Seth for closing remarks.

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Seth N. Birnbaum, EverQuote, Inc. - Co-Founder, President, CEO & Director [33]

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I just wanted to thank everybody for joining us. Obviously, I'm very excited about the quarter and the year and look forward to our next call. Thank you, everyone.

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Operator [34]

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This concludes today's conference call. You may now disconnect.