Good afternoon. My name is Mariama, and I’ll be your conference operator today. At this time, I would like to welcome everyone to the EverQuote Second Quarter 2019 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there’ll be a question-and-answer session. [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.

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 this call this afternoon is Seth Birnbaum, EverQuote’s Chief Executive Officer and Co-Founder; 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 interests 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 was included in our press release 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.

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. We 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 inclusive 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 budgets, increasing 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 the adjusted EBITDA, while aggressively investing in the business to capitalize on a large and growing market opportunity. Based on our strong second quarter results, the momentum, we are increasing our guidance for the full year 2019, which John will detail in a moment, after I cover progress in our growth levers and key initiatives. We saw a very strong Variable Marketing Margin growth in the quarter. This was a result of successful execution of priorities we set last quarter for our consumer traffic teams. Excessive consumer traffic drove not only increased variable marketing dollars, but also an increase in unit economics as reflected by expansion of Variable Marketing Margin. In addition to growing insurance shopping consumer volume, we expanded our insurance provider network while deepening 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…

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 the 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 a VMM as a percentage of revenue that was nearly equal to that of the autos vertical. This reflected improved unit economics attributed to reduced costs 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 add an improved Variable Marketing Margin. Overall, our strong revenue growth in Q2 was driven by progress in attracting consumers…

[Operator Instructions] Your first question comes from Michael Graham with Canaccord. Your line is open.

Hey, guys. Thanks for the question and 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 the 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 more depth about how your new verticals are going, and sort of when you do think you’ll start to see some more meaningful revenue from some of the new verticals you’ve announced last quarter?

So 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’re so excited about it, because we think it’s a class of products that EverQuote can participate in we’re providing sort of risk insight and safety or help 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, and doesn’t just provide consumers with 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 – used case of that. So we’re very bullish on the long-term opportunity for that.

Okay. Thanks for that.

Your next question comes from Ron Josey with JMP Securities. Your line is open.

Great. Thanks for taking the question. John, just want to see if I can get some additional insight. I think you talked about home and life in 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. Please help us to understand what happened 1Q – sorry in 2Q that, that saw that dip? I think that’d the helpful. And then on quote request, just more insights around the visibility and sustainability of what you saw in 2Q, clearly a great quarter in terms of quote request growth. Just thinking about like longer term how you see that? Thank you.

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 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 rarely 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 trend toward growth and maximizing variable marketing dollars through growth. And what we have seen so far in this quarter is growth within those other verticals, 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 the 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.

And Ron, just – it’s Seth. Just to give a little additional color, we saw a 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 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 and team building, and it flowed through Q2.

Thank you, Seth. Thank you, John.

Thanks.

Your next question comes from Mayank Tandon from Needham and Company. Your line is open.

Good evening. This is actually Kyle Peterson on for Mayank. Thanks for taking the question. Just want to start on kind of pricing, now you guys, the volume has obviously been very impressive, kind as stated, I mean, the revenue progress still a little below last year. Just want to see what would it take to get that kind of pop back maybe toward last year’s levels? Is it signing on more partners, whether it’d be carriers and agents? Or is it just gaining more wallet share with existing partners, just wanted to see if you guys get any color on that?

Sure, Kyle. Maybe I’ll step through the gate and then Wag will bring us – so John will bring us home on it. So at a very high level, remember, we operate the business through a Variable Marketing Margin dollar. So if we can generate incremental consumer demand that drives up variable marketing dollars, we ought to do so, our teams will make those investments and our options 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 day long. And that’s what we saw in the quarter. And John, maybe want to dig in on some of the auction dynamics.

Sure. So we all can use revenue per quote request as kind of a proxy for pricing. But really, when you break down revenue per quote request, there are the two components that go into 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 – is generally determined by the carriers and the price they bid in our auctions. The other component is the number of referrals per quote request. So of those two components, within the quarter, we did actually see the pricing component, the price per referral increased 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 request still stayed fairly stable in the phase 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 maximum 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 get back to those levels, we probably would see a combination of our coverage side of our marketplace increasing and generally that’s what we managed the business in terms of supply and demand. We grow both volume in terms of consumer traffic and then we also grow coverage in terms of our distribution, our carriers and our agents. And so we try to do those in tandem, but at times, one more outgrow the other. And if that happens, provided that we are maximizing variable marketing dollars, we welcome that.

We sure do. I mean, one of the ways I think about it, Kyle, is you think about it as not just share, but the 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.

All right. That’s helpful color. And then just one follow up for me. I know, you guys have talked about the in-bound calls, launch of that. And it seems like it’s been positive so far. I just want to see if you guys could gives any more color, update in just kind of how it’s improving conversion rates or reaching a little bit different cohort to customers, or just any color you can provide be helpful.

Yes. So I mean, I think two levels. One, all right, it definitely reaches a set of consumers who 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 swath of consumers or 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.

All right. That’s helpful. Thanks guys. Nice quarter.

Thank you, Kyle.

Your next question comes from Doug Anmuth with JPMorgan. Your line is open.

Hey, this is Dae Lee on for Doug. Thanks for taking our questions, and congrats on the quarter. So just want to talk about automotive vertical a real quick. So you saw a really strong acceleration there, and you talked about our favorable market conditions there. Could you talk about like what’s happening there versus expectations going into 2Q, and if those conditions are sustainable? And then as a follow up, you talked about the majority of your customers not flowing through 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?

Sure. So with regards to the automotive vertical, market conditions, the carriers and providers in general the agents are having very good obviously underwriting profitability, or that’s our view of the marketplace. There’s 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’re well positioned for growth and providers are using data and technology are really making a lot of progress in momentum, especially with EverQuote doing sourcing the personalized referrals. Consumers has given them a lot of obviously fuel for growth. And so we’re excited about that. And I’d expect that to continue that. That sort of market condition can persist in the auto insurance vertical for years and so. So obviously we’re bullish on that. With regards to the partial integration, I think we reported, we did 11 sort of new partial and one 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 that typically results in higher customer satisfaction. And so it’s a virtuous cycle for the consumers, as we go deeper down these integrations, you’ll 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 the steady progress we’ve made. The other obvious sort of extension or advancing 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.

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’ve 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’ve guided to, it is a – it is kind of a momentum guide in terms of both a stronger seasonal quarter, but some really nice trends in strength within auto coming through in the guide for both Q3 as well as for the full year.

Great. Thank you.

Your next question comes from Ralph Schackart with William Blair. Your line is open.

Good afternoon. 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 at the midpoint. Just curious what’s implied in the stronger outlook, and there’s any contribution from new verticals that are contemplated? And then Seth, on the call you talked about improvements in consumer conversion rates, getting close to that one click buying to book quote and lowering friction. Just curious, what are the primary factors you’re seeing are achieving to drive those improvements and conversion rates? And was there anything significant in the quarter that you’d call out driving the conversion rate or just a combination of factors come together? Thank you.

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 there, their contribution that’s factored in as generally relatively modest. Remember, we’re very pleased to launch 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 [technical difficulty] new verticals is relatively modest in what we’ve factored.

Ralph, in terms of your question that the conversion rate was a combination of multiple factors, and sort of two 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 only 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, from obviously traffic performance as well was strong. The other sort of note I think is – valuable takeaway is, now over two thirds of our referrals are actually has 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 one click or one call away from a quote for all consumers or for all referrals. So really good progress in the quarter on that, but it is a steady march.

Great. Thanks, Seth. Thanks, John.

Thanks, Ralph.

Your next question comes from Jed Kelly with Oppenheimer. Your line is open.

Great. Thanks for taking my question. A couple, if I may. Do you have any sense on how much VMM uplift you’re seeing from repeat 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 [indiscernible] platform?

So John, you want to take the second question, and I’ll take the first.

Sure. So – I mean, in terms of how much VMM is from return visits, we don’t break out, obviously, through all 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 sort of 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 up lift and expansion in VMM has 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 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.

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 the agents that have multiple producers that are able to take large swaths 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.

Yes. We see 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 enter in through the enterprise side of the business. And so it gives them more flexibility.

Thank you.

Your next question comes from Aaron Kessler with Raymond James. Your line is open.

Great. Thanks, guys. 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 a change in creative expansion to get an update there. Then on the healthcare side, if you can just 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 one to two years as that product develops? Thank you.

Sure. Creative rotation process 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 resulting 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 healthcare, obviously we’re extremely bullish on that over the next year or two. And we don’t break it out, but from my perspective, I think it can grow very successfully and we are – we will update you as we make progress through the vertical.

Great. Thank you.

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

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.

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