• Transaction Value: Record level of $451.8 million, up 52% sequentially in P&C vertical.

• Adjusted EBITDA: Record $26.3 million, representing over 600% growth year over year.

• Revenue Guidance for Q4: Expected between $275 million and $295 million, a year over year increase of 143% at the midpoint.

• Transaction Value Guidance for Q4: Expected between $470 million and $495 million, a year over year increase of 192% at the midpoint.

• Adjusted EBITDA Guidance for Q4: Expected between $29.5 million and $32.5 million, a year over year increase of 144% at the midpoint.

• Net Debt to Adjusted EBITDA Ratio: Less than two times.

• Overhead: Expected to increase by approximately $500,000 to $1 million in Q4.

• Warning! GuruFocus has detected 5 Warning Signs with MAX.

Release Date: October 30, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• MediaAlpha Inc (NYSE:MAX) achieved record transaction value and adjusted EBITDA in the third quarter, exceeding the high end of their guidance.

• The company operates the largest insurance customer acquisition media marketplace, providing a competitive advantage and strong long-term partnerships.

• Momentum in the property and casualty vertical was a key driver of success, with a 52% sequential increase in transaction value.

• MediaAlpha Inc (NYSE:MAX) executed a multi-year extension with Insurify, reflecting their market leadership position.

• The company expects high conversion rates of adjusted EBITDA into cash due to operating efficiencies, including minimal capital expenditures and low working capital needs.

Negative Points

• The upcoming TCPA 1 to 1 consent rules may limit the volume of shared leads sold, although the impact on MediaAlpha Inc (NYSE:MAX) is expected to be minimal.

• Transaction value growth in the health vertical is expected to be down mid-single digits year over year due to headwinds in the Medicare payer space.

• Take rates were somewhat lower as the business continued to mix to property and casualty, which is more private exchange-based.

• Overhead is expected to increase sequentially by approximately $500,000 to $1 million as the company adds headcount to support growth.

• The Medicare payer space faces challenges such as higher service utilization and lower star ratings, leading to tightened marketing budgets by some carriers.

Q & A Highlights

Q: Can you provide more context on the "middle innings" comment regarding carrier participation and any impact from hurricanes in the southeast? A: Steven Yi, CEO, explained that the "middle innings" comment refers to the recovery being driven by a few large carriers, with many still on the sidelines. Progress is being made, but several large carriers are not yet fully participating. Geographically, states like California, New York, and New Jersey are not at normal levels due to pending rate increases. Regarding hurricanes, these events are typically non-events for MediaAlpha's marketplace, as they are heavily skewed towards auto insurance, which sees minimal disruption.