EverQuote, Inc. — FY 2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023; filed February 27, 2024. This filing reports annual results, not standalone fourth-quarter results, so Q4-specific financial values are not clearly provided in the filing text.
Business context
EverQuote operates an online insurance-shopping marketplace that sells consumer referrals to insurance carriers, agents and indirect distributors, and also earns commissions on some policy sales. Auto insurance remains the core business. In 2023, the company exited its health insurance vertical and reduced its workforce as auto carriers curtailed customer-acquisition spending amid claims inflation and weak underwriting results.
Financial and operating results
| Metric | FY 2023 | FY 2022 | Change or context |
|---|---|---|---|
| Revenue | $287.9 million | $404.1 million | Down 28.8% |
| Operating loss | $52.0 million | $24.8 million | Loss widened |
| Net loss | $51.3 million | $24.4 million | Loss widened; diluted loss per share was $1.54 versus $0.77 |
| Adjusted EBITDA | $0.5 million | $5.9 million | Non-GAAP measure; down substantially |
| Cash from operating activities | $(2.8) million | $(15.8) million | Cash use declined year over year |
| Cash from investing activities | $9.4 million | $(4.3) million | Includes $13.2 million proceeds from the health-asset sale |
| Cash and cash equivalents | $38.0 million | $30.8 million | At year-end |
| Debt | No borrowings outstanding | — | $25 million revolving facility available, subject to borrowing-base and covenant terms |
- Auto revenue was $227.5 million, down from $324.4 million; home and renters revenue rose to $40.9 million from $31.9 million. Other revenue fell to $19.5 million from $47.8 million, primarily reflecting the health exit.
- Auto represented 79% of 2023 revenue. Two largest customers represented 27% of revenue, down from 32% in 2022; one customer alone represented 18% in 2023.
- Sales and marketing expense was $240.1 million, or 83.4% of revenue, versus $349.3 million, or 86.4%, in 2022. Advertising expense was $187.6 million versus $275.9 million.
- Variable marketing margin (revenue less advertising expense) was $100.3 million, down 21.8%; it is a management efficiency metric, not a measure of profitability.
- Year-end total assets were $110.9 million and stockholders’ equity was $80.9 million. Commissions receivable totaled $12.0 million, including $7.6 million non-current.
Material changes and unusual items
- Revenue declined $116.2 million year over year. Lower auto carrier referral spending, including reduced subsidies from a large carrier, was the principal driver; auto commission revenue also decreased.
- The company sold Eversurance LLC, its former health-insurance subsidiary, in August 2023 for $13.2 million cash and recorded a $19.4 million loss on sale. The sold assets included $30.8 million of commissions receivable expected to be collected over seven years.
- A June 2023 workforce reduction eliminated 175 positions, approximately 28% of the workforce. The company recorded $4.0 million of severance-related charges and expects non-marketing operating cost savings exceeding 15% compared with periods before the plan.
- Operating cash use improved, but 2023 cash generation included the health-sale proceeds in investing activities; operating activities still used cash.
Outlook, risks and contingencies
- Management expects overall revenue to increase in 2024, including auto and home/renters, assuming increased spending from carrier partners. It expects revenue from other insurance verticals to decline further following the health exit. The filing provides no quantified revenue guidance.
- Management expects sales and marketing expense to rise with higher carrier spending, while personnel costs are expected to fall following restructuring; research and development expense is expected to remain relatively flat and general and administrative expense to decline.
- Management says existing cash should fund operating and capital expenditure needs for at least 12 months from the financial-statement issuance date, without relying on the credit facility. This depends on revenue and spending; management says costs could be reduced if revenue goals are not met.
- The auto insurance market remains volatile. Carrier spending may fall without notice; the two largest customers have no minimum-spend commitments, and a major carrier had discontinued subsidies in Q4 2023 before resuming certain payments in 2024.
- Other prominent risks include customer and auto-vertical concentration; dependence on third-party traffic and advertising platforms; privacy, telemarketing and robotext regulation; cybersecurity; and changes to online tracking, including Google’s planned third-party-cookie restrictions.
- The $25 million revolving facility matures July 15, 2025, bears interest at the greater of 7% or prime, is secured by substantially all assets, and includes financial covenants. The company reported covenant compliance and no borrowings at year-end. A universal shelf registration statement for up to $150 million was being filed; management reported no current plan to sell securities under it.
- The filing discloses ordinary-course legal matters but states management does not expect them to have a material adverse effect. The audit opinion was unqualified; management and the auditor concluded internal control over financial reporting was effective as of year-end.
Important facts for investors to verify
- Whether carrier spending—especially from the largest customers—and subsidy payments recover as management expects, and how that affects 2024 revenue and margins.
- The terms, collection timing and realizability of commissions receivable, including the $30.8 million transferred in the Eversurance sale and the concentration of receivables among customers.
- Whether restructuring savings are achieved without impairing marketplace performance, and whether the reported $19.4 million sale loss is fully reflected in comparisons of ongoing results.
- Liquidity, operating cash burn and compliance with the revolving-credit facility’s borrowing-base and adjusted-quick-ratio requirements.
- The effects and timing of evolving consent, privacy, cookie and robotext requirements on referral volume, marketing costs and customer participation.