MediaAlpha, Inc. (MAX) Earnings Call Transcript & Summary

Thank you for standing by. My name is [indiscernible] I would like to welcome everyone to the MediaAlpha First Quarter 2025 Earnings Conference Call. [Operator Instructions] I will now turn the call over to Alex Liloia, Investor Relations. Please go ahead.

Thanks, Carmen. Good afternoon, and thank you for joining us. With me are Co-Founder and CEO, Steve Yi; and CFO, Pat Thomson. On today's call, we'll make forward-looking statements relating to our business and outlook for future financial results, including our financial guidance for the second quarter of 2025. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially. Please refer to our SEC filings, including our annual report on Form 10-K and quarterly reports on Form 10-Q for a fuller explanation of those risks and uncertainties and the limits applicable to forward-looking statements. All the forward-looking statements we made on this call reflect our assumptions and beliefs as of today, and we disclaim any obligation to update such statements, except as required by law. Today's discussion will include non-GAAP financial measures, which are not a substitute for GAAP results. Reconciliations of these non-GAAP financial measures to the corresponding GAAP measures can be found in our press release and shareholder letter issued today, which are available on the Investor Relations section of our website. I'll now turn the call over to Steve.

Thanks, Alex. Hi, everyone. Thank you for joining us. 2025 is off to an outstanding start as we delivered record first quarter financial results that exceeded our guidance across all key performance metrics. Our strong results were driven by continued strength in our P&C insurance vertical, supported by robust growth investment from several carriers and a solid underlying profitability in the personal auto insurance sector. While automotive tariff developments may put pressure on profitability as the year progresses, we anticipate continued near-term momentum and another strong quarter for our core P&C business. In our Health insurance vertical, our first quarter performance was in line with expectations. Going forward, we've made the strategic decision to scale back certain areas of our under-65 business as we continue to shift our focus to Medicare Advantage, a large and growing market where we believe we have a strong competitive position. With regard to the FTC matter, we continue to engage in constructive dialogue with the FTC staff in an effort to work towards a reasonable resolution. In connection with these evolving discussions, we increased our reserve related to this matter by $5 million, bringing the total reserve to $12 million at the end of the quarter. While we cannot predict the outcome, we remain committed to resolving the FTC's claims in a manner that's in the best long-term interest of our shareholders. Looking ahead, we remain bullish on our near-term outlook for auto insurance advertising spend. While the upcoming automotive tariffs has the potential to negatively affect the industry, carriers by and large are highly profitable at this time and are ready to react quickly by adjusting rates if needed. We're staying closely connected with our partners and remain focused on delivering high returns on advertising spend, and providing performance-driven marketing solutions that help them succeed through different macroeconomic conditions. With that, I'll hand it over to Pat for a deeper dive into our first quarter performance and second quarter guidance.

Thanks, Steve. I'll start by walking through the drivers of our Q1 results, which beat expectations. Transaction value for Q1 was $473 million, up 116% year-over-year, driven by 200% year-over-year growth in our P&C vertical. P&C transaction value was up sequentially, above expectations, as several carriers meaningfully increased marketing investments in March. Transaction value in our Health vertical was down 17% year-over-year, in line with expectations. Q1 adjusted EBITDA doubled year-over-year to $29.4 million, representing 67% of contribution, up from 52% in the prior year. Q1 adjusted EBITDA included $6.9 million of add-backs related to the FTC matter. These consisted of $1.9 million of legal expenses, along with an additional $5 million reserve recorded in accordance with U.S. GAAP requirements. We also recognized the $13.4 million charge to write off certain intangible assets acquired as part of the DHT acquisition. Additionally, we have decided to exit the travel vertical by the end of the second quarter, which contributed approximately $1 million of transaction value and $100,000 of profit in Q1. Looking forward to Q2, we have seen continued strength in P&C carrier marketing investments, particularly among those maintaining profit margins at or above their target levels. Accordingly, we expect P&C transaction value levels to grow approximately 65% to 75% year-over-year. In our Health vertical, we expect transaction value to be down 25% to 30% year-over-year, is improving trends in Medicare, were more than offset by a significant decline in under-65 as we scale back parts of that business. We expect Medicare to account for over 40% of our Health verticals transaction value for the quarter. Moving to our consolidated financial guidance. We expect Q2 transaction value to be between $470 million and $495 million, a year-over-year increase of 50% at the midpoint. We expect revenue to be between $235 million and $255 million, a year-over-year increase of 37% at the midpoint. We expect adjusted EBITDA to be between $25 million and $27 million, a year-over-year increase of 39% at the midpoint. We expect overhead to increase sequentially by approximately $500,000 to $1 million as we continue to selectively add head count to support and drive growth. We generated significant cash flow and made solid progress in deleveraging our balance sheet during the quarter. Cash flow was $20 million, and we ended the quarter with approximately $64 million of cash, and a net debt to adjusted EBITDA ratio of less than 1x. Moving forward, we expect to convert a significant portion of adjusted EBITDA into unlevered free cash flow due to the operating efficiencies in our business, including minimal capital expenditures and low working capital needs. With that, operator, we are ready for the first question.

Your first question comes from Maria Ripps with Canaccord.

Congrats on the strong quarter. Well, thanks for all the color on the P&C vertical in the shareholder letter, and it looks like the strength is continuing in Q2. I know you're not providing full year guidance, but any additional color maybe you can share on how carrier spend may play out in the second half of the year, especially given tariffs? I guess is there anything sort of you're seeing in carrier behavior that gives you any early, maybe, indications? Or what are some sort of maybe considerations here to keep in mind?

Maria, it's Steve. Thanks for your question. I think -- I think we continue to believe that overall, the auto insurance marketplace remains very well positioned for a period of sustained growth. I mean, I think, that our optimism for this space, right, it really goes back to the underlying profitability that we continue to see remaining very strong in the auto sector, right? You know, there's certain carriers who are not just at good profitability rates. I think they have some carriers who are even above, or better, than their long-term profitability goals. And I think that really bodes well right, for -- what the upcoming quarters will bring in terms of the investment from these carriers into growth and customer acquisition. We do see, I think, quarter-by-quarter, the market is gradually entering into a period of heightened competition. We are seeing new carriers, I think, every quarter who are really shifting from rate taking and profitability focus to gross customer acquisition focus, right? And so you're seeing the recovery and the participation on the demand side in our marketplace, becoming more broad-based, I think, every quarter. I think one thing that bodes well for longer-term growth as the year progresses, is that with everything that I've just said, there's still top 10 carriers who we really don't believe are punching nearly where they should be in terms of the rest in this channel, whether you measure that based on the historical levels of spend, or just their overall market position. But with that said, I think all of these carriers -- I mean, we're really happy with where we are with our partnerships with these carriers because of the level of integration that we have with them, I think the level of sophistication that they have with the internal marketing teams and their knowledge of this channel. And the product development discussions that were happening with them, I think, positions them very well to be able to grow through the remainder of this year and next year as they continue the secular shift to emphasizing direct-to-consumer distribution, whether in place of agent-based distribution, or in addition to agent-based distribution. So now, I think the only sort of dark lining I think, in the silver cloud is the potential for these automotive tariffs to put some headwinds in carrier profitability in the second half of this year and next year. And so I think you're already hearing from the carriers who are focused on this issue, right. That it's a little bit too early to tell exactly what the impact is going to be. But I think you're also seeing a consensus on a couple of things. One is that a lot of the carriers are in pretty good [ state ] right now. And so they have a bit of buffer for loss rates to actually go up. I think the second thing that you're seeing, and hearing, is that the impact of these automotive tariffs will be relatively moderate. And I think what we're seeing is estimates of between low to mid-single digits, right, that we expect to see layering in the second half of this year. And we believe that the carriers are pretty well positioned to react quickly to these rate increases -- or I'm sorry, to these loss cost increases, by filing for rate increases, I think, pretty early in the cycle. And I say that because the carriers are all coming from a period of sustained unprofitability and I think remain very acutely aware of the need to react quickly to address any profitability concerns that start to pop up. And so I think for all of these reasons, we think that impact of automotive tariffs that we expect to see in the back half of this year, and in 2026, will generally be manageable by the overall industry, and that the industry is going to continue to invest in customer acquisition and growth during this period. But it's something that we'll obviously keep a very close eye on and continue to update with you in upcoming quarters.

Great. That's very helpful. And then just a quick follow-up. Can you maybe refresh us on key dynamics across your open and private marketplaces? And maybe just talk about kind of the reasons of benefits, or maybe the use case is a carrier would opt to use a private marketplace?

Yes. And so I think with the private marketplaces, I think that's a product offering that we have that's primarily designed for our largest publishers and their ability to work directly with our largest advertisers. So it really covers the minority of the relationships that we create through our marketplace as we get a broader base of demand, and I think a broader base of supply coming into the marketplace, as the current, I think, growth cycle continues. I think you're going to see more and more transactions really move from the seller exchange -- or that move from the seller exchange. So are you going to see more of these transactions really happen in the open exchange. Because, again, the seller exchange product that we have, where parties can contract directly and pay us a platform fee for making that connection to our marketplace is really meant for large publishers connecting directly with large advertisers.

And this is Pat. I just wanted to add one thing to what Steve said there which is that, I think, if you think about the open to private mix in our business, it's important to think about the vertical mix that we have as well. And so for us, historically, P&C is -- had a higher mix of private marketplace than has held. And one of the things that we have seen is that, for instance, if we were -- if we win a big partner, that partner may be relatively more private and can shift the numbers a little bit in one direction. And so I think everything Steve said is correct, which, over time, we would expect to see -- we would expect to see more of the business going open in the short term. I wouldn't be surprised if it went a little bit more private.

Your next question comes from the line of Cory Carpenter with JPMorgan.

I had two. Maybe the first is sticking on [ TMT ]. Steve you said last quarter that pricing was down to start the year. It sounds like that picked back up again in March. Just curious what you can change specifically in March? And then secondly, on the Health business. Could you just talk more about your decision to scale back the under-65 business? How much of that is kind of due to business conditions? Or could that have also perhaps be relating to some of the FTC changes?

Cory, I'll address the first part of that question, which is -- I don't know that anything really, I think, changed in March. I think what we saw was, I think, strong demand from carriers as the quarter progressed, really manifesting itself in terms of having greater budget, right, access to greater budget as the quarter progressed. I think the reason for this is really just what we pointed to in the last quarter, which is less of a change in the underlying, I think, economics and the growth demand that we're seeing from carriers. It was really just, I think, the conservatism that we saw from carriers as the year started coming on the heels, I think, of a Q4 where there was a heavy amount of spend in customer acquisition. And as we alluded to, because the numbers were coming in so strongly for most carriers, I think there was a bit of more aggressive customer acquisition spend as we saw Q4 closed out. And I think as a result of that, a lot of carriers took a bit of a more conservative position to start out the year. And I think the fact that we got allocated more budget and we saw great participation from carriers as the quarter progressed, was really that in beginning of your conservatism really starting to wear off and we've certainly seen the strength that we saw in March really continue into Q2, which is embedded in our forecast.

And Cory, this is Pat. I can address the second part of the question. So I would say, as a company, we've already -- we've always prioritized compliance as kind of a core part of how we operate, and we're -- we are regularly reviewing and enhancing our compliance programs to try to stay ahead of regulations as they evolve and to kind of help drive industry best practices. And I would say that kind of as part of these efforts, we are proactively implementing some additional measures. And a couple of things we've done. We've updated our partner code of conduct to reinforce the expectations on what partners can and cannot do. And we've expanded proactive monitoring of calls to ensure ongoing compliance with said code of conduct. And so I think our view is this is the kind of behavior we've demonstrated over years and years for us. And it's -- our focus really remains on having a great product, one that is transparent and accurate and it ultimately links up consumers with the right brokers, carriers, agents that can help them get their needs met.

Your next question comes from the line of Tom McJoynt with KBW.

Staying on the subject of the under-65 segment. Can you just kind of clarify exactly what you mean by scale back? Does that mean a wind down? And then when you think about the revenue, or transaction value, or I guess that would be kind of earnings mix of that under-65 segment within health, anything you can share to disclose around that?

Yes. Sorry, I was on mute there. So I would -- so Tommy, I would say on that, with the Health business -- or the under-65 business, we said we were scaling down that business. And so I would not read that as being an exit. Rather, we are going to be taking a partial step backwards in it. And I think we gave guidance for the upcoming quarter that we thought the health vertical as a whole would be down 25% to 30%, and we thought Medicare would be improving overall. So hopefully, that can get you to a spot where you can start to kind of contextualize what is happening there to the business. And so we have -- we believe that business, we're going to be kind of rebaselining that business over the coming quarters.

Okay. Got it. And then staying within the Health side, looking at the Medicare Advantage, can you share what you guys see in terms of the health of that market? It seems like we've seen some sort of mixed reviews from some of the health care providers in some of the recent quarterly reports. So it would be helpful to hear your commentary.

Certainly. So Pat again. The Medicare Advantage market is one that is in a temporary hard market cycle. And I think our view is that actually relatively similar to some of the past cycles we've seen in the P&C space. And so as a reminder, we dealt with that in 2022 and 2023. And these cycles are normal and they're temporary. And really, they're being driven by some of the carrier partners experiencing headwinds due to elevated loss costs, which are pressuring overall profitability. And as we look at the Medicare Advantage market, what we see is a business that over time has a lot of wind at its back, which is the number of seniors and eligible population for Medicare is growing. That population is increasingly opting into Medicare Advantage. Medicare Advantage is an important purchase for people, or important decision for folks. And it is one where the new folks aging in every year are much more kind of Internet-enabled. And we believe we're very well positioned to kind of help that industry navigate more and more to online as consumers look to shop there. So it's an area where we think over a 3-, 5-, 7-, 10-year period, the opportunity is very, very attractive for us.

Tommy, I'll add -- this is Steve. I'll also add that while Medicare Advantage has pretty broad bipartisan support I think at the margin, certainly because of the private market alternative to government run pay-per-service Medicare that it had marginally more support from Republican administration. And so I think you're starting to see that play out a bit and a more favorable climate starting to emerge from increased payment rates, which I think the industry was pleasantly surprised by the 5% plus payment rate that were set by CMS earlier this month. And I think that you're starting to see signs of a different regulatory approach that this administration is ready to take with Medicare Advantage. And again, while both -- sorry, both parties had to be pretty supportive of Medicare Advantage, I do think that over the next few years at the margins, you'll see an administration that it's going to take more of a growth-oriented and a supportive position with regard to Medicaid -- Medicare Advantage carriers.

Your next question comes from the line of Mike Zaremski with BMO Capital Markets.

I know this might be a complicated question, but can you help unpack kind of what's contributing to the contribution margin ratio declining?

Yes. And Mike, which contribution margin are you talking about, as a percentage of revenue?

Yes, percentage of revenue.

Yes. And Mike, I would say we don't spend a ton of time looking at metrics as a percentage of revenue. I would say the two big metrics, we really -- we focus on most heavily internally and we would encourage you to focus on, would be -- the first is take rate, which is contribution as a percentage of transaction value. And for us, that number has been decreasing a bit over time. And I would say, first off, on that, that number for us tends to peak every year in the fourth quarter, which is when we have the largest -- Health is the largest portion of our business. And secondly, I would say it's been trending down over time as P&C has become, and is continuing to become, a larger percentage of our business. I would say, third, one other thing we've seen is that certain publishers have gotten larger. We've naturally seen a bit of compression in the take rates that we've seen with them kind of to reflect the increased scale that they've been able to realize. And so I'd say those are the three biggest drivers. And then the other piece, which was, I think, implicit in the three things I talked about is the mix of open and private exchange because the private exchange has a lower take rate for us.

That's helpful, Pat. And anything going on, on the mix of clicks increasing meaningfully that's also impacting some of the profit margin KPIs you look at?

Yes. And Mike, is what you're getting at the relative mix of clicks, calls and leads?

Yes.

Yes. I would say the mix is changing a little bit. But really, the big driver of that mix change within our business is going to be the mix of P&C versus Health. Where the P&C business is very heavily click-driven for us, whereas the Health business is a bit more balanced. So it really is kind of a mix between verticals.

Okay. Got it. That's helpful. I guess going back to -- I guess, 2-part question on auto. Steve, you mentioned the potential -- you talked about tariffs and their potential impact. Curious, in your 2Q guide, did you embed any conservatism from tariffs? And related, when we think back to 3 months ago when you put out your 1Q '25 guide, which was handily exceeded, maybe in your prepared remarks, what changed? I think in your prepared remarks, you might have said March ended up being a lot better. I'm not saying being conservative isn't a good way to go, but I'm curious if something just dramatically changed versus kind of 90 days ago when you put out what would appear to be a conservative guide that was exceeded?

Yes. So Pat can address that first question about the forecast. I think with regard to how we guided for Q1, I think as I mentioned earlier in the call, I don't think -- the things change so much at the initial conservatism with which carriers have started off the year, which we highlighted, started to wear off as the quarter wore on. And so we did have a stronger performance than expected in March because I think the carriers are very profitable, right? They see heightened consumer shopping behavior. It's hard for them to really ignore that and remain conservative around the sidelines for too long in a market environment like that. And so I think certainly, when we gave back guidance, we were seeing some of the conservatism from the carriers as the New Year started. I think we did our best to point out that we suspected that this was an overly conservative start to the year, right, and that there's a possibility that things could improve as the quarter wore on. I just think that things improved and carriers really started to put a robust budget into our marketplace, perhaps a bit earlier than we expected. And again, we saw that the growth in margin, and we've seen that continue into Q2.

And Mike, to address the other part of your question. I would say that on the tariffs and their potential impact on Q2. From a guidance standpoint, we guide to what we have a high degree of confidence in. And we're in a spot where April is pretty much in the books for us, and we're starting to get some visibility on what they look like. And so we've extrapolated out for the balance of the quarter and I think the view of tariffs and potential impact on Q2 is likely to be relatively muted. I think Steve in his prepared remarks said, it could be something that impacts more of the later -- the latter part of the year, but probably too early to tell exactly what that might ultimately look like. But I think we feel like we've guided for Q2, numbers that we have a pretty good degree of confidence in.

Got it. And probably nothing you can say on this, but any comments you can make on time line for resolution to the legal inquiry that's been ongoing?

Yes. And I think you've -- I think as you pointed out, I think, it's difficult for us to really comment on that while we're actively engaged in discussions with the FTC staff. Both because we're limited in what we can disclose and because I think the timing of these types of negotiations, particularly with the government body tends to be hard to predict.

Sorry my last follow-up. Is there any kind of statutory time line whereby something would have to be disclosed in a certain amount of time based on kind of what this has been going on for a while? Or just kind of fish for -- if there's anything that might come out into the public domain based on just the required disclosure?

Yes, Mike, it's -- I'm not certain of this. But to my knowledge, there is no statutory time line at play here.

Yes. And Mike, I would just say if we reach a resolution, we'll update investors. Otherwise we're going to keep kind of updating our disclosures and investors on a quarter-to-quarter basis.

Your next question will come from the line of Andrew Kligerman with TD Securities.

First question on the private market versus open exchange. I wasn't quite clear on why more business will flow to open exchange? And maybe -- so maybe you can elaborate on what you were saying earlier. And then Pat, you mentioned that it would probably in the near term shift more towards private exchange. So year-over-year, it went from 44.1% to 45.4%. How high could that private exchange proportion get in the near term?

I can start off the answer, which is that what I was -- the point I was making was that, I think, as the first carriers to recover and the first publishers to really be able to take advantage of the recovery of the P&C market, or the large advertisers and the large publishers. And so I think what you're seeing now as this recovery starts to build momentum, we're still in a position where the recovery is relatively head heavy, right? Again, compared to where we expect to be quarter 3 from now, 4 quarters from now. And so there's going to be more transactions generally speaking in the early part of a recovery like this because this is a private marketplace, or the seller exchange option that we have is really meant for our largest publishers to be able to work directly and contract directly with our largest advertisers. And to the point I was making is overall as the recovery starts to gain momentum, they become more broad-based, both on the carrier side and in terms of attracting new publishers into our marketplace, is that they thought the new entrants are going to be smaller, right, in nature. And so most likely, the growth at some point in this recovery is going to start to flow into the open exchange vis-a-vis the seller exchange. And I think what Pat was pointing out was that notwithstanding this general trend, our seller exchange and open exchange mix tends to be vertical specific, and there are specific partnerships that we might be onboarding that might skew this one direction or another. Pat do you have anything to add?

I think that's a great thought.

I'm glad we could clarify that.

Yes. And then, Steve, you made another comment in the Q&A that the -- I think you said something like there are 10 carriers not punching where they should be. So you think that there's more activity to come going forward? So this is kind of a broad question for you. But kind of curious, like in your view -- and it feels like the market has come back a lot. Like on a scale of 1 to 10, where are we in terms of shopping activity? Are we like a 7 or an 8? It feels like an 8, but I'm kind of curious as to how you see the market having reopened.

So I think I heard a couple of different things. One is the point I was making was that of the top 10, like personal lines carriers, or personal auto carriers, there are still several who aren't punching their weight in terms of spending at historical levels in our channel, or really investing in the secular growth of their direct-to-consumer offering and distribution channel. And so again, for carriers who really aren't punching their weight based on where they were pre-COVID or pre-hard market, sorry, I think you'd expect to see them starting to really ramp up their spend more quickly. But there are other carriers in the top 10, in the top 25, right, who have been a bit slow to really invest in direct-to-consumer as a channel, right. And that you'd expect to see those carriers really starting to make that dealer shift to emphasizing direct-to-consumer channels more in the upcoming quarters and years. And so that was really the point I was trying to make with that. Now you asked about where the shopping behavior is? I think it's a slightly different question because then we're talking about consumer shopping and spend switching activity that has been heightened because of all the rate increases that you saw flowing in and starting to earn in over the last few years. And currently, I think currently, consumer shopping behavior and switching behavior remain at historical highs. But I think you're going to start to see that come down a bit as the rate increases, that carriers are taking -- start to slow down and so the rate increases that are being passed through to existing customers through the renewals also start to slow down.

So if the shopping activity slows, Steve, would that mean kind of less activity for MediaAlpha? Do you feel like there's a lot of tailwind left before things normalize?

It's a great question. I think it's cut both ways. And I would say that my general quick answer is going to be no, right? And -- because I think consumer shopping activity being at very high levels, I think oftentimes for carriers act as an excuse to not spend too much on marketing because they're getting a lot of organic traffic. But the carrier is being immensely profitable and actually needing to grow, that need is not going to go away. And so in some ways, I think they're going to be curious to then invest more in advertising to try to fuel their growth because they can't rely on this ambient consumer shopping activity to generate new policies for that. And so certainly, it might make it a little bit more difficult for our publishers to get interested consumers to shop on their site. But there again, if there's ample budget and appetite for carriers to grow, I think we're just firm believers that the comparison site, and the lead generation sites, and the carrier sites that we work with among our publisher base will find a way to generate interested consumer shopping activity, if there's ample budget on the part of carriers to support that.

I see. So it sounds like you feel like there's some significant runway ahead for more?

Yes. Yes.

Okay. And then just one last one. So the customer health team, so you've taken this write-down, I think it was like $11 million. As I look back, it's a deal that you acquired back in Feb '22 -- February of 2022. So maybe share with us a little bit what happened there, why the write-down after such a short time?

Yes. And Andrew, we acquired the customer helper team in 2022. As a reminder, it was a business that was focused on -- known and operated business focused on social media, was in the Medicare and health space. And the acquisition brought us some new capabilities. I would say, in general, it fell short of our expectations. And as we've kind of continue to integrate the team and kind of focus on -- focus on kind of our true strength going forward, we've sunset a lot of those social marketing activities. And as a result, under kind of accounting policy, we had to run analyses on that if we ultimately recognize the write-off of certain intangible assets that we acquired from them. And so I would say it's probably the last you will hear us talk about CHT and any of our files.

Your next question comes from the line of Eric Sheridan with Goldman Sachs.

In terms of looking out of the next 12, 18 months, I wanted know if you could parse out some of the investments that almost should be viewed as fixed against where you want to take the platform and elements of growth looking out over the time horizon? And where there could be elements of variability in the way you invest or protect margin, if there was an overall slowdown in the broader macroeconomic activity? Sort of elements of must invest versus elements where there could be flex and ability to respond to an environment shift.

Yes. And Eric, this is Pat. Are you thinking of this in terms of, like, kind of overhead and people investments? Or in terms of commercial relationships? Or kind of -- in what context are you thinking about that?

Frankly, a little bit of growth investments that you plan on making against what you see as the opportunity set over the next couple of years that you probably wouldn't want to lose sight of if there was a slowdown in the economy for a couple of quarters, versus areas where you could be responsive to a slowdown and either slow the rate of investments or cut the fixed cost to protect the margin if there was such a slowdown?

Yes. And Eric, I appreciate the clarification on that. I would say, for us, we run very, very lean as a company. I think we ended Q1 with 146 employees. And if you look at what we did in 2022 and 2023, which was hardest market -- worst market, the P&C carriers that had in my lifetime. We backed down the hatches. We had a reduction in force and we did make some -- there was a lot of belt tightening and there were some cuts in there. But we kept the core team intact. We continue to hire selectively where there was business need. And we think we positioned ourselves really well to take advantage of the market recovery that happened in 2024 and relatively strong market dynamics that we have today. And I think to the extent we needed to do something like that again in the future, we would look to the playbook that we executed in the past, which is anything that we can live without, we live without. But our business has had cycles in the past, and the cycles can be painful on the downside. But a lot of activity happens in the recovery, and it is paramount to be well positioned for that recovery. And I think we will continue to execute the playbook that has treated us very well over the last 15 years.

Your next question is from the line of Ben Hendrix with RBC.

Just wanted to go back to your comments on the senior Medicare Advantage business and the hard market cycle. We saw, I guess, earlier this week, Elevance Health announced that they will be removing nearly all of their Medicare Advantage plans from online marketing platform, I guess, effective tomorrow. And I read that as kind of reaction to this elevated utilization environment and a desire to kind of side step from the adverse selection you may be seeing, considering they're one of the stronger growers this year. And just wanted to see, just given that they're the #4 largest MA carrier, if that is factoring in -- in your thoughts to the back half of the year, or the back part of the year? And if it's a behavior that you're seeing from any other big MA carriers?

Yes. I'll take the first stab at that question. I think we're certainly not seeing -- not having the discussions of -- investment discussions for the upcoming AEP period with carriers at this time. And so we're not -- it's too early for us to tell whether these actions that they're taking now will flow into the upcoming AEP. I do think that this is just a normal cycle of carriers or payers in this case, really to making adjustments that are needed to maintain their profitability at a time when they have challenging utilization rates and challenging payment rates as well, which, again, I think are starting to be addressed by this new administration. And so as Pat mentioned, I think that it's not technically a hard market, but there's a hard market like environment for Medicare Advantage. I think we'll be temporary, and we'll continue to work with the carriers that we continue to believe that this $500 billion industry covering over 50% of seniors will continue to grow and we'll continue to move online as we've seen other insurance verticals do. And we believe that we're pretty well positioned to capitalize on that long-term opportunity.

Yes. And then, I'll probably just add two things, which is I would say that Medicare has been similar to P&C and that certain carriers have taken action earlier, some have taken action later. And so we've seen folks be taking actions for 4 or 5 quarters now, and I'm sure there will still be more that are yet to come on that. And I would also say that I think the carriers are in a spot that's pretty tough, but I think some of the brokers are actually doing all right at the moment in the Medicare side. And while carriers are probably the most exciting long-term opportunity for us in Medicare, we've got good broker relationships and I think those relationships are, I think, generally doing all right at the moment.

There are no further questions at this time.

Yes. Well, thanks, everyone. I think that concludes the call.

Thank you, everyone, for joining today's call. You may now disconnect.