MediaAlpha, Inc. (NYSE: MAX), today announced its financial results
for the first quarter ended March 31, 2024.
“We had a great start to 2024. Our first quarter
results exceeded expectations across all key financial metrics,
driven primarily by robust growth in our Property & Casualty
(P&C) vertical,” said MediaAlpha co-founder and CEO Steve Yi.
“With the auto insurance industry rebounding from a period of
unprecedented underwriting losses, we saw a sharp upswing in
carrier marketing spend, which has continued into the second
quarter. With the long-awaited P&C recovery underway, we
believe we are well positioned to capture this significant market
opportunity in 2024 and beyond.”
First Quarter
2024 Financial Results
- Revenue of $126.6 million, an
increase of 13% year over year;
- Transaction Value of $219.1
million, an increase of 13% year over year;
- Gross margin of 18.7%, compared
with 16.5% in the first quarter of 2023;
- Contribution Margin(1) of 21.9%,
compared with 19.2% in the first quarter of 2023;
- Net loss was $(1.5) million,
compared with $(14.6) million in the first quarter of 2023;
and
- Adjusted EBITDA(1) was $14.4
million, compared with $7.3 million in the first quarter of
2023.
(1)A reconciliation of GAAP to Non-GAAP
financial measures has been provided at the end of this press
release. An explanation of these measures is also included below
under the heading “Non-GAAP Financial Measures.”
Financial Outlook
Our guidance for the second quarter of 2024
reflects a continuation of the recent trends in customer
acquisition spending that we have seen in our P&C vertical. As
a result, we expect Transaction Value in our P&C insurance
vertical to be 60% to 70% higher than Q1 2024 levels. We expect
second quarter Transaction Value in our Health vertical to grow at
a high single to low double-digit rate year over year.
For the second quarter of 2024, MediaAlpha
currently expects the following:
- Transaction Value between $285
million – $300 million, representing a 132% year-over-year
increase at the midpoint of the guidance range;
- Revenue between $145 million –
$155 million, representing a 77% year-over-year increase at the
midpoint of the guidance range;
- Adjusted EBITDA between $15.5
million and $17.5 million, representing a 359% year-over-year
increase at the midpoint of the guidance range. We are projecting
Contribution less Adjusted EBITDA to be approximately $0.5 million
higher than Q1 2024 levels.
With respect to the Company’s projection of
Adjusted EBITDA under “Financial Outlook,” 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 first quarter 2024 results and its
financial outlook for the second 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 (888)
330-2022 or (646) 960-0690, with passcode 3195092. 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 statements
regarding our belief that we are well positioned to capture the
significant opportunity in the P&C insurance market in 2024 and
beyond, and our financial outlook for the second quarter of 2024.
These forward-looking statements reflect our current views with
respect to, among other things, future events and our financial
performance. These statements are often, but not always, made
through the use of words or phrases such as “may,” “should,”
“could,” “predict,” “potential,” “believe,” “will likely result,”
“expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,”
“intend,” “plan,” “projection,” “would,” and “outlook,” or the
negative version of those words or other comparable words or
phrases of a future or forward-looking nature. These
forward-looking statements are not historical facts, and are based
on current expectations, estimates and projections about our
industry, management’s beliefs and certain assumptions made by
management, many of which, by their nature, are inherently
uncertain and beyond our control. Accordingly, we caution you that
any such forward-looking statements are not guarantees of future
performance and are subject to risks, assumptions and uncertainties
that are difficult to predict. Although we believe that the
expectations reflected in these forward-looking statements are
reasonable as of the date made, actual results may prove to be
materially different from the results expressed or implied by the
forward-looking statements.
There are or will be important factors that
could cause our actual results to differ materially from those
indicated in these forward-looking statements, including those more
fully described in MediaAlpha’s filings with the Securities and
Exchange Commission (“SEC”), including the Form 10-K filed on
February 22, 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, Contribution and Contribution
Margin provide useful information to investors and others in
understanding and evaluating our operating results in the same
manner as our management team and board of directors. Each of
Transaction Value, Adjusted EBITDA, Contribution and Contribution
Margin has limitations as a financial measure and investors should
not consider it in isolation or as a substitute for analysis of our
results as reported under GAAP.
Contacts:
InvestorsDenise
GarciaHayflower
PartnersDenise@HayflowerPartners.com
|
MediaAlpha, Inc. and subsidiaries |
Consolidated Balance Sheets |
(Unaudited; in thousands, except share data and per share
amounts) |
|
|
|
March 31,2024 |
|
December 31,2023 |
Assets |
|
|
|
|
Current assets |
|
|
|
|
Cash and cash equivalents |
|
$ |
14,471 |
|
|
$ |
17,271 |
|
Accounts receivable, net of allowance for credit losses of $455 and
$537, respectively |
|
|
57,495 |
|
|
|
53,773 |
|
Prepaid expenses and other current assets |
|
|
3,661 |
|
|
|
3,529 |
|
Total current assets |
|
|
75,627 |
|
|
|
74,573 |
|
Intangible assets, net |
|
|
24,406 |
|
|
|
26,015 |
|
Goodwill |
|
|
47,739 |
|
|
|
47,739 |
|
Other assets |
|
|
5,251 |
|
|
|
5,598 |
|
Total assets |
|
$ |
153,023 |
|
|
$ |
153,925 |
|
Liabilities and stockholders' deficit |
|
|
|
|
Current liabilities |
|
|
|
|
Accounts payable |
|
$ |
53,586 |
|
|
$ |
56,279 |
|
Accrued expenses |
|
|
10,833 |
|
|
|
11,588 |
|
Current portion of long-term debt |
|
|
11,866 |
|
|
|
11,854 |
|
Total current liabilities |
|
|
76,285 |
|
|
|
79,721 |
|
Long-term debt, net of current portion |
|
|
160,234 |
|
|
|
162,445 |
|
Other long-term liabilities |
|
|
5,907 |
|
|
|
6,184 |
|
Total liabilities |
|
$ |
242,426 |
|
|
$ |
248,350 |
|
Commitments and contingencies |
|
|
|
|
Stockholders' (deficit): |
|
|
|
|
Class A common stock, $0.01 par value - 1.0 billion shares
authorized; 50.8 million and 47.4 million shares issued and
outstanding as of March 31, 2024 and December 31, 2023,
respectively |
|
|
508 |
|
|
|
474 |
|
Class B common stock, $0.01 par value - 100 million shares
authorized; 15.0 million and 18.1 million shares issued and
outstanding as of March 31, 2024 and December 31, 2023,
respectively |
|
|
150 |
|
|
|
181 |
|
Preferred stock, $0.01 par value - 50 million shares authorized; 0
shares issued and outstanding as of March 31, 2024 and
December 31, 2023 |
|
|
— |
|
|
|
— |
|
Additional paid-in capital |
|
|
503,949 |
|
|
|
511,613 |
|
Accumulated deficit |
|
|
(523,675 |
) |
|
|
(522,562 |
) |
Total stockholders' (deficit) attributable to MediaAlpha, Inc. |
|
$ |
(19,068 |
) |
|
$ |
(10,294 |
) |
Non-controlling interests |
|
|
(70,335 |
) |
|
|
(84,131 |
) |
Total stockholders' (deficit) |
|
$ |
(89,403 |
) |
|
$ |
(94,425 |
) |
Total liabilities and stockholders' deficit |
|
$ |
153,023 |
|
|
$ |
153,925 |
|
MediaAlpha, Inc. and subsidiaries |
Consolidated Statements of Operations |
(Unaudited; in thousands, except share data and per share
amounts) |
|
|
|
Three Months EndedMarch 31, |
|
|
|
2024 |
|
|
|
2023 |
|
Revenue |
|
$ |
126,649 |
|
|
$ |
111,630 |
|
Costs and operating expenses |
|
|
|
|
Cost of revenue |
|
|
102,969 |
|
|
|
93,262 |
|
Sales and marketing |
|
|
5,796 |
|
|
|
6,994 |
|
Product development |
|
|
4,363 |
|
|
|
5,168 |
|
General and administrative |
|
|
11,149 |
|
|
|
15,755 |
|
Total costs and operating expenses |
|
|
124,277 |
|
|
|
121,179 |
|
Income (loss) from operations |
|
|
2,372 |
|
|
|
(9,549 |
) |
Other (income) expense, net |
|
|
(9 |
) |
|
|
1,381 |
|
Interest expense |
|
|
3,845 |
|
|
|
3,576 |
|
Total other expense, net |
|
|
3,836 |
|
|
|
4,957 |
|
(Loss) before income taxes |
|
|
(1,464 |
) |
|
|
(14,506 |
) |
Income tax expense |
|
|
27 |
|
|
|
78 |
|
Net (loss) |
|
$ |
(1,491 |
) |
|
$ |
(14,584 |
) |
Net (loss) attributable to non-controlling interest |
|
|
(378 |
) |
|
|
(4,318 |
) |
Net (loss) attributable to MediaAlpha, Inc. |
|
$ |
(1,113 |
) |
|
$ |
(10,266 |
) |
Net (loss) per share of Class A common stock |
|
|
|
|
-Basic and diluted |
|
$ |
(0.02 |
) |
|
$ |
(0.23 |
) |
Weighted average shares of Class A common stock outstanding |
|
|
|
|
-Basic and diluted |
|
|
48,574,448 |
|
|
|
43,870,005 |
|
MediaAlpha, Inc. and subsidiaries |
Consolidated Statements of Cash Flows |
(Unaudited; in thousands) |
|
|
|
Three Months EndedMarch 31, |
|
|
|
2024 |
|
|
|
2023 |
|
Cash flows from operating activities |
|
|
|
|
Net (loss) |
|
$ |
(1,491 |
) |
|
$ |
(14,584 |
) |
Adjustments to reconcile net (loss) to net cash provided by
operating activities: |
|
|
|
|
Equity-based compensation expense |
|
|
8,634 |
|
|
|
14,341 |
|
Non-cash lease expense |
|
|
196 |
|
|
|
167 |
|
Depreciation expense on property and equipment |
|
|
61 |
|
|
|
96 |
|
Amortization of intangible assets |
|
|
1,609 |
|
|
|
1,729 |
|
Amortization of deferred debt issuance costs |
|
|
191 |
|
|
|
199 |
|
Impairment of cost method investment |
|
|
— |
|
|
|
1,406 |
|
Credit losses |
|
|
(82 |
) |
|
|
(250 |
) |
Tax receivable agreement liability adjustments |
|
|
— |
|
|
|
6 |
|
Changes in operating assets and liabilities: |
|
|
|
|
Accounts receivable |
|
|
(3,640 |
) |
|
|
17,122 |
|
Prepaid expenses and other current assets |
|
|
(147 |
) |
|
|
1,260 |
|
Other assets |
|
|
125 |
|
|
|
125 |
|
Accounts payable |
|
|
(2,693 |
) |
|
|
(7,679 |
) |
Accrued expenses |
|
|
(1,085 |
) |
|
|
(1,382 |
) |
Net cash provided by operating activities |
|
$ |
1,678 |
|
|
$ |
12,556 |
|
Cash flows from investing activities |
|
|
|
|
Purchases of property and equipment |
|
|
(34 |
) |
|
|
(30 |
) |
Net cash (used in) investing activities |
|
$ |
(34 |
) |
|
$ |
(30 |
) |
Cash flows from financing activities |
|
|
|
|
Payments made for: |
|
|
|
|
Repayments on long-term debt |
|
|
(2,375 |
) |
|
|
(2,375 |
) |
Distributions |
|
|
(113 |
) |
|
|
(1,104 |
) |
Payments pursuant to tax receivable agreement |
|
|
— |
|
|
|
(2,822 |
) |
Shares withheld for taxes on vesting of restricted stock units |
|
|
(1,956 |
) |
|
|
(1,238 |
) |
Net cash (used in) financing activities |
|
$ |
(4,444 |
) |
|
$ |
(7,539 |
) |
Net (decrease) increase in cash and cash equivalents |
|
|
(2,800 |
) |
|
|
4,987 |
|
Cash and cash equivalents, beginning of period |
|
|
17,271 |
|
|
|
14,542 |
|
Cash and cash equivalents, end of period |
|
$ |
14,471 |
|
|
$ |
19,529 |
|
|
|
|
|
|
|
|
|
|
Key business and operating metrics and
Non-GAAP financial measures
Transaction Value
We define “Transaction Value” as the total gross
dollars transacted by our partners on our platform. Transaction
Value is an operating metric not presented in accordance with GAAP,
and is a driver of revenue based on the economic relationships we
have with our partners. Our partners use our platform to transact
via Open and Private Marketplace transactions. In our Open
Marketplace model, Transaction Value is equal to revenue recognized
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 demand partner or 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
revenue and 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 months ended March 31, 2024 and
2023:
|
|
Three Months EndedMarch 31, |
(dollars in thousands) |
|
|
2024 |
|
|
|
2023 |
|
Open Marketplace transactions |
|
$ |
122,429 |
|
|
$ |
107,659 |
|
Percentage of total Transaction Value |
|
|
55.9 |
% |
|
|
55.7 |
% |
Private Marketplace transactions |
|
|
96,677 |
|
|
|
85,506 |
|
Percentage of total Transaction Value |
|
|
44.1 |
% |
|
|
44.3 |
% |
Total Transaction Value |
|
$ |
219,106 |
|
|
$ |
193,165 |
|
|
|
|
|
|
|
|
|
|
The following table presents Transaction Value
by vertical for the three months ended March 31, 2024 and 2023:
|
|
Three Months EndedMarch 31, |
(dollars in thousands) |
|
|
2024 |
|
|
|
2023 |
|
Property & Casualty insurance |
|
$ |
135,494 |
|
|
$ |
117,924 |
|
Percentage of total Transaction Value |
|
|
61.8 |
% |
|
|
61.0 |
% |
Health insurance |
|
|
69,087 |
|
|
|
59,412 |
|
Percentage of total Transaction Value |
|
|
31.5 |
% |
|
|
30.8 |
% |
Life insurance |
|
|
10,237 |
|
|
|
10,117 |
|
Percentage of total Transaction Value |
|
|
4.7 |
% |
|
|
5.2 |
% |
Other(1) |
|
|
4,288 |
|
|
|
5,712 |
|
Percentage of total Transaction Value |
|
|
2.0 |
% |
|
|
3.0 |
% |
Total Transaction Value |
|
$ |
219,106 |
|
|
$ |
193,165 |
|
(1) Our other verticals include Travel,
Education and Consumer Finance.
Contribution and Contribution
Margin
We define “Contribution” as revenue less revenue
share payments and online advertising costs, or, as reported in our
consolidated statements of operations, revenue less cost of revenue
(i.e., gross profit), as adjusted to exclude the following items
from cost of revenue: equity-based compensation; salaries, wages,
and related costs; internet and hosting costs; amortization;
depreciation; other services; and merchant-related fees. We define
“Contribution Margin” as Contribution expressed as a percentage of
revenue for the same period. Contribution and Contribution Margin
are non-GAAP financial measures that we present to supplement the
financial information we present on a GAAP basis. We use
Contribution and Contribution Margin to measure the return on our
relationships with our supply partners (excluding certain fixed
costs), the financial return on and efficacy of our online
advertising costs to drive consumers to our proprietary websites,
and our operating leverage. We do not use Contribution and
Contribution Margin as measures of overall profitability. We
present Contribution and Contribution Margin because they are used
by our management and board of directors to manage our operating
performance, including evaluating our operational performance
against budget and assessing our overall operating efficiency and
operating leverage. For example, if Contribution increases and our
headcount costs and other operating expenses remain steady, our
Adjusted EBITDA and operating leverage increase. If Contribution
Margin decreases, we may choose to re-evaluate and re-negotiate our
revenue share agreements with our supply partners, to make
optimization and pricing changes with respect to our bids for
keywords from primary traffic acquisition sources, or to change our
overall cost structure with respect to headcount, fixed costs and
other costs. Other companies may calculate Contribution and
Contribution Margin differently than we do. Contribution and
Contribution Margin have their limitations as analytical tools, and
you should not consider them in isolation or as substitutes for
analysis of our results presented in accordance with GAAP.
The following table reconciles Contribution with
gross profit, the most directly comparable financial measure
calculated and presented in accordance with GAAP, for the three
months ended March 31, 2024 and 2023:
|
|
Three Months EndedMarch 31, |
(in thousands) |
|
|
2024 |
|
|
|
2023 |
|
Revenue |
|
$ |
126,649 |
|
|
$ |
111,630 |
|
Less cost of revenue |
|
|
(102,969 |
) |
|
|
(93,262 |
) |
Gross profit |
|
|
23,680 |
|
|
|
18,368 |
|
Adjusted to exclude the following (as related to cost of
revenue): |
|
|
|
|
Equity-based compensation |
|
|
1,857 |
|
|
|
966 |
|
Salaries, wages, and related |
|
|
908 |
|
|
|
1,047 |
|
Internet and hosting |
|
|
131 |
|
|
|
150 |
|
Other expenses |
|
|
203 |
|
|
|
172 |
|
Depreciation |
|
|
5 |
|
|
|
11 |
|
Other services |
|
|
828 |
|
|
|
715 |
|
Merchant-related fees |
|
|
64 |
|
|
|
(4 |
) |
Contribution |
|
|
27,676 |
|
|
|
21,425 |
|
Gross margin |
|
|
18.7 |
% |
|
|
16.5 |
% |
Contribution Margin |
|
|
21.9 |
% |
|
|
19.2 |
% |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
We define “Adjusted EBITDA” as net income
excluding interest expense, income tax benefit (expense),
depreciation expense on property and equipment, amortization of
intangible assets, as well as equity-based compensation expense and
certain other adjustments as listed in the table below. Adjusted
EBITDA is a non-GAAP financial measure that we present to
supplement the financial information we present on a GAAP basis. We
monitor and present Adjusted EBITDA because it is a key measure
used by our management to understand and evaluate our operating
performance, to establish budgets and to develop operational goals
for managing our business. We believe that Adjusted EBITDA helps
identify underlying trends in our business that could otherwise be
masked by the effect of the expenses that we exclude in the
calculations of Adjusted EBITDA. Accordingly, we believe that
Adjusted EBITDA provides useful information to investors and others
in understanding and evaluating our operating results, enhancing
the overall understanding of our past performance and future
prospects. In addition, presenting Adjusted EBITDA provides
investors with a metric to evaluate the capital efficiency of our
business.
Adjusted EBITDA is not presented in accordance
with GAAP and should not be considered in isolation of, or as an
alternative to, measures presented in accordance with GAAP. There
are a number of limitations related to the use of Adjusted EBITDA
rather than net income, which is the most directly comparable
financial measure calculated and presented in accordance with GAAP.
These limitations include the fact that Adjusted EBITDA excludes
interest expense on debt, income tax benefit (expense),
equity-based compensation expense, depreciation and amortization,
and certain other adjustments that we consider to be useful to
investors and others in understanding and evaluating our operating
results. In addition, other companies may use other measures to
evaluate their performance, including different definitions of
“Adjusted EBITDA,” which could reduce the usefulness of our
Adjusted EBITDA as a tool for comparison.
The following table reconciles Adjusted EBITDA
with net (loss), the most directly comparable financial measure
calculated and presented in accordance with GAAP, for the three
months ended March 31, 2024 and 2023:
|
|
Three Months EndedMarch 31, |
(in thousands) |
|
|
2024 |
|
|
|
2023 |
|
Net (loss) |
|
$ |
(1,491 |
) |
|
$ |
(14,584 |
) |
Equity-based compensation expense |
|
|
8,634 |
|
|
|
14,341 |
|
Interest expense |
|
|
3,845 |
|
|
|
3,576 |
|
Income tax expense |
|
|
27 |
|
|
|
78 |
|
Depreciation expense on property and equipment |
|
|
61 |
|
|
|
96 |
|
Amortization of intangible assets |
|
|
1,609 |
|
|
|
1,729 |
|
Transaction expenses(1) |
|
|
658 |
|
|
|
294 |
|
Impairment of cost method investment |
|
|
— |
|
|
|
1,406 |
|
Changes in TRA related liability |
|
|
— |
|
|
|
6 |
|
Changes in Tax Indemnification Receivable |
|
|
(1 |
) |
|
|
(14 |
) |
Settlement of federal and state income tax refunds |
|
|
— |
|
|
|
3 |
|
Legal expenses(2) |
|
|
1,077 |
|
|
|
333 |
|
Adjusted EBITDA |
|
$ |
14,419 |
|
|
$ |
7,264 |
|
(1) Transaction expenses consist of
$0.7 million and $0.3 million of legal and accounting fees
incurred by us for the three months ended March 31, 2024 and 2023,
respectively, in connection with resale registration statements
filed with the SEC.(2) Legal expenses of $1.1 million and
$0.3 million for the three months ended March 31, 2024 and
2023, respectively, consist of legal fees incurred in connection
with the civil investigative demand received from the Federal Trade
Commission (FTC) in February 2023.
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