Exzeo Group, Inc.

Previous wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited interim Consolidated Financial Statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q (the "Quarterly Report"). This section is intended to provide management's perspective on our financial performance, material trends, and uncertainties that may affect our business, financial condition, results of operations, and cash flows.

Current wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited interim Consolidated Financial Statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q ("Quarterly Report") and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 filed with the SEC on February 26, 2026 ("2025 Annual Report"). This section is intended to provide management’s perspective on our financial performance, material events, trends, and uncertainties that may affect our business, financial condition, results of operations, and cash flows.

Previous wording

This Quarterly Report on Form 10-Q contains forward-looking statements. All statements contained in this Quarterly Report on Form 10-Q, other than statements of historical fact, including statements regarding our future results of operations, financial position, market size and opportunity, our business strategy and plans, the factors affecting our performance, and our objectives for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as "may," "will," "should," "expect," "plan," "anticipate," "could," "intend," "target," "project," "contemplate," "believe," "estimate," "predict," "potential," or "continue" or the negative of these terms or other similar expressions.

Current wording

This Quarterly Report contains forward-looking statements within the meaning of the federal securities laws. All statements contained in this Quarterly Report, other than statements of historical fact, including statements regarding our future results of operations, financial position, market opportunity, business strategy, plans, objectives, and factors affecting our performance are forward-looking statements. In some cases, forward-looking statements can be identified by words such as "may," "will," "should," "expect," "plan," "anticipate," "could," "intend," "target," "project," "contemplate," "believe," "estimate," "predict," "potential," or "continue" or the negative of these terms or other similar expressions.

Previous wording

We have based these forward-looking statements on our current expectations, assumptions, estimates and projections. While we believe these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control. These and other important factors, including those factors discussed or referenced in Part II, Item 1A "Risk Factors" in this Quarterly Report and in other reports we file with the SEC, may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements, or could affect our share price. Important factors that could cause actual results or events to differ materially from those expressed in forward-looking statements include, but are not limited to, the following:

Current wording

These forward-looking statements are based on management's current expectations, assumptions, estimates and projections. While we believe these expectations and assumptions are based on reasonable information, forward-looking statements are inherently predictive in nature and involve known and unknown risks and uncertainties, many of which are beyond our control. Actual results, performance, or achievements may differ materially from those expressed or implied by these forward-looking statements as a result of various factors, including those discussed or referenced in Part II, Item 1A "Risk Factors" in this Quarterly Report and in other reports we file with the SEC.

Previous wording

For further discussion of certain of these factors, see the risk factors disclosed in the section entitled "Risk Factors" in this Quarterly Report and in our prospectus included in the Registration Statement on Form S-1 (File No. 333-290500) (the "Registration Statement") relating to our initial public offering, as initially filed with the SEC on November 5, 2025.

Current wording

For further discussion of certain of these factors, see the risk factors disclosed in the section entitled "Risk Factors" in this Quarterly Report and in the 2025 Annual Report.

Previous wording

You are cautioned not to place undue reliance on such forward-looking statements, which are not guarantees of future performance, and our actual results of operations, financial condition, and liquidity, and the development of the industry in which we operate, may differ materially from the forward-looking statements contained in this Quarterly Report on Form 10-Q. Any forward-looking statement in this Quarterly Report on Form 10-Q speaks only as of the date of such statement, and except as required by federal securities laws, we do not undertake any obligation to update or revise, or to publicly announce any update or revision to, any of the forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this Quarterly Report on Form 10-Q.

Current wording

You are cautioned not to place undue reliance on such forward-looking statements, which are not guarantees of future performance, and our actual results of operations, financial condition, and liquidity, and the development of the industry in which we operate, may differ materially from the forward-looking statements contained in this Quarterly Report. Any forward-looking statement in this Quarterly Report speaks only as of the date of such statement, and except as required by federal securities laws, we do not undertake any obligation to update or revise, or to publicly announce any update or revision to, any of the forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this Quarterly Report.

Previous wording

Exzeo Group, Inc. ("Exzeo"), provides turnkey insurance technology and operations solutions to insurance carriers and their agents (collectively referred to as our "customers") through a proprietary platform of purpose-built software and data analytics applications designed specifically for the property and casualty ("P&C") insurance ecosystem.

Current wording

Exzeo provides turnkey insurance technology and operations solutions to insurance carriers and their agents (collectively referred to as Exzeo's "customers") through a proprietary platform of internally developed software and data analytics applications designed specifically for the P&C insurance market.

Previous wording

Our Insurance-as-a-Service ("IaaS") platform, which we refer to as the Exzeo Platform, currently includes nine highly configurable software and data analytics applications that are purpose-built to serve the insurance value chain. The Exzeo Platform provides technology-based solutions for operational and administrative activities and functions performed by insurance carriers and their agents, including quoting and underwriting, policy management, claims processing management, data reporting, and financial reporting. As a result, the Exzeo Platform streamlines and automates interactions between insurance carriers and policyholders.

Current wording

Our Insurance-as-a-Service platform, referred to as the Exzeo Platform, includes nine highly configurable software and analytics applications that are purpose-built to serve the insurance value chain. The Exzeo Platform provides technology-based solutions for operational and administrative activities and functions performed by insurance carriers and their agents, including quoting and underwriting, policy management, claims management, data reporting, and financial reporting. Through these capabilities, the Exzeo Platform streamlines and automates insurance operational workflows across carriers, agents and policyholders.

Previous wording

We were established in 2012 as the technology and innovation division of HCI Group, Inc. ("HCI"), a leading underwriter of homeowners insurance in Florida that now writes policies in 12 additional states. Since inception, we have been led by experienced technology and insurance professionals with deep domain expertise focused on developing advanced data analytics algorithms and software tools that enable carriers to maximize system efficiency, optimize underwriting outcomes, and serve their customers more effectively.

Current wording

The Exzeo business was established in 2012 as the technology and innovation division of HCI, a leading underwriter of homeowners insurance in Florida that now writes policies in 12 additional states. Since inception, we have been led by experienced technology and insurance professionals with deep domain expertise focused on developing advanced data analytics algorithms and software tools that enable carriers to maximize system efficiency, optimize underwriting outcomes, and serve their customers more effectively.

Previous wording

We deliver our solutions to carrier customers principally through EIS, which holds a managing general agency ("MGA") license in the State of Florida and equivalent licenses in other states. EIS enters into MGA or policy administration services agreements with our insurance-industry customers under which it serves as a managing general agent of an insurance carrier or provides services to a carrier's MGA in exchange for fees largely based on a percentage of managed premiums. Under these agreements, EIS utilizes the Exzeo Platform to provide policy issuance and renewal services, as well as management services such as soliciting and negotiating reinsurance for authorized programs, managing and maintaining policy administration, and providing claims management.

Current wording

The Exzeo Platform is a proprietary suite of software, analytics, and visualization tools capable of supporting, enhancing, or replacing legacy operational systems commonly used in the insurance industry. We enter into MGA or policy administration services agreements with our insurance-industry customers under which we serve as an MGA of an insurance carrier or provide services to a carrier's MGA in exchange for fees largely based on a percentage of managed premiums. Under these agreements, we utilize the Exzeo Platform to provide policy issuance and renewal services, as well as management services such as soliciting and negotiating reinsurance for authorized programs, managing and maintaining policy administration, and providing claims management.

Previous wording

We believe our performance and future success depends on a number of factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and in the section entitled "Risk Factors."

Current wording

We believe our performance and future success depend on a number of factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and in the section entitled Item 1A. Risk Factors, included in our 2025 Annual Report.

Previous wording

Underwriting performance and continued investments in our technology– We leverage data, technology, and proprietary underwriting algorithms to enhance risk management. For instance, we leverage dynamic data sources obtained through various sources and apply advanced statistical methods to model that data into our pricing algorithms. We expect to improve our ability to manage risk and price risk accurately over time as we incorporate new external data sources and utilize the experience gained over time with HCI's policyholder base. These enhancements are expected to lead to better underwriting, lower loss frequency, and lower loss ratios over time, after adjusting for weather-related events. Our success in this area depends on our ability to continuously incorporate new data sources as they become available and effectively apply them to improve our ability to accurately and competitively price risk.

Current wording

Underwriting performance and continued investments in our technology. We leverage data, technology, and proprietary underwriting algorithms to enhance risk management. For example, we incorporate additional dynamic external data sources and apply advanced statistical methods to model that information into our pricing algorithms. We expect to improve our ability to manage and price risk accurately over time as we incorporate new external data sources and utilize the experience gained over time with HCI's policyholder base and other carrier programs. These enhancements are expected to lead to better underwriting, lower loss frequency, and lower loss ratios over time, after adjusting for weather-related events. Our success in this area depends on our ability to continually integrate new data sources and apply them effectively to improve our ability to accurately and competitively price risk.

Previous wording

Intense competition in our market– The market to provide core system software to the P&C insurance industry is highly competitive and fragmented. This market is subject to changing technology, shifting customer needs, and introductions of new products and services. Our competitors vary in size and in the breadth and scope of the products and services offered. The principal competitive factors in our industry include total cost of ownership, product functionality, flexibility and performance, customer references and in-depth knowledge of the P&C insurance industry. We believe that we compete favorably with our competitors on the basis of each of these factors. However, many of our current or potential competitors have greater financial and other resources, greater name recognition, and longer operating histories than we do.

Current wording

Intense competition in our market. The market for core system software serving the P&C insurance industry is highly competitive and fragmented. This market is subject to changing technology, shifting customer needs, and introductions of new products and services. Our competitors vary in size and in the breadth and scope of the products and services offered. The principal competitive factors in our industry include total cost of ownership, product functionality, flexibility and performance, customer references and in-depth knowledge of the P&C insurance industry. We believe that we compete favorably with our competitors on the basis of each of these factors. However, many of our current or potential competitors have greater financial and other resources, greater name recognition, and longer operating histories than we do.

Previous wording

New customer success and retention– We have relied and expect to continue to rely on customer relationships with a relatively small number of carriers in the P&C insurance industry for a substantial portion of our revenue, and the loss of any of these customers or a reduction in revenue from any of these customers would significantly harm our business, results of operations and financial condition. While we currently have one customer that is not affiliated with HCI, we do not expect to generate significant revenue from this customer in the current fiscal year. As part of our growth strategy, we are focused on expanding our customer base by developing new partnerships with additional carriers and their agents. Our future operating results will depend, in part, on the rate at which we acquire new customers that are not affiliates of HCI and maintain our relationships with existing customers as measured by the amount of managed premium on our platform. We believe that introducing these prospective customers to the advantages of our technology and variable fee structure will be critical to diversifying our revenue and reducing customer concentration over time. Our ability to support this expansion depends on the continued performance of our customer success and support teams, which are critical to ensuring high customer satisfaction, adoption, and retention.

Current wording

New customer success and retention. We have relied and expect to continue to rely on customer relationships with a relatively small number of carriers in the P&C insurance industry for a substantial portion of our revenue, and the loss of any of these customers or a reduction in revenue from any of these customers would significantly harm our business, results of operations, and financial condition. As part of our growth strategy, we are focused on expanding our customer base by developing new partnerships with additional carriers and their agents. Our future operating results will depend, in part, on the rate at which we acquire new customers that are not affiliates of HCI and maintain our relationships with existing customers as measured by the amount of managed premium on our platform. We believe that introducing these prospective customers to the advantages of our technology and variable fee structure will be critical to diversifying our revenue and reducing customer concentration over time. Our ability to support this expansion depends on the continued performance of our customer success and support teams, which are critical to ensuring high customer satisfaction, adoption, and retention.

Previous wording

National expansion strategy / Expansion into new geographies and use cases– We believe national expansion will be a key driver of our long-term growth and success of our business. As of September 30, 2025, we provide services to P&C companies in the states of Connecticut, Florida, Georgia, Massachusetts, Montana, Nevada, New Jersey, New Mexico, North Carolina, Rhode Island, South Carolina, South Dakota and Utah. We expect to apply our highly scalable model nationally, using a tailored approach in each state that reflects its regulatory environment and local market dynamics. We aim to expand rapidly and efficiently across different geographies while maintaining a high level of control over our strategy within each market. State expansion should create a broader base from which to grow premiums and increase the geographic diversity in the policyholder base and risk portfolio that we manage. We believe that broader geographic diversification will also improve our ability to secure favorable terms from reinsurers, improving the overall cost structure and profitability for our customers.

Current wording

National expansion strategy / Expansion into new geographies and use cases. We believe national expansion will be a key driver of our long-term growth and success of our business. As of March 31, 2026, we provide services to P&C companies in Connecticut, Florida, Georgia, Massachusetts, Montana, Nevada, New Jersey, New Mexico, North Carolina, Rhode Island, South Carolina, South Dakota, and Utah. We expect to apply our highly scalable model nationally, using a tailored approach in each state that reflects its regulatory environment and local market dynamics. We aim to expand rapidly and efficiently across different geographies while maintaining a high level of control over our strategy within each market. State expansion should create a broader base from which to grow premiums and increase the geographic diversity in the policyholder base and risk portfolio that we manage. We believe that broader geographic diversification will also improve our ability to secure favorable terms from reinsurers, improving the overall cost structure and profitability for our customers.

Previous wording

Transition to a standalone public company– Following our Initial Public Offering ("IPO") in November 2025, we have become subject to the reporting and compliance obligations of federal and state securities laws, as well as applicable stock exchange requirements. Operating as a standalone public company has required, and we expect will continue to require, that we establish and enhance additional governance structures and corporate functions. These expanded capabilities include external financial reporting, internal audit, treasury, investor relations, board of directors and officer support, and stock administration, which have resulted and are expected to result, in additional costs.

Current wording

Transition to a standalone public company. Since our IPO in November 2025, we became subject to federal and state securities laws, and applicable stock exchange requirements. Operating as a standalone public company requires us to build and enhance governance structures and corporate functions including external financial reporting, internal audit, treasury, investor relations, Board of Directors and Officer support, and stock administration, which have resulted, and are expected to continue to result, in additional costs.

Previous wording

Unless otherwise indicated, all dollar amounts presented in this Management's Discussion and Analysis are stated in thousands of dollars. Percentages and ratios are based on the underlying whole dollar amount.

Current wording

Unless otherwise indicated, all dollar amounts presented in this Management's Discussion and Analysis of Financial Condition and Results of Operations are stated in thousands. Percentages, ratios, and per policy figures are based on the underlying whole dollar amount.

Previous wording

We review a number of key operating metrics, which we use as we make strategic decisions, measure our performance, evaluate our business, and identify trends in our business. The following table presents these operational measures:

Current wording

We review a number of key operating metrics, which we use as we make strategic decisions, measure our performance, evaluate our business, and identify trends in our business. These operational measures are presented as follows:

Previous wording

Managed premiums attributable to insurance policies written in the state of Florida represented 89.9% and 82.5% of total managed premiums for the nine months ended September 30, 2025 and 2024, respectively.

Current wording

Managed premiums attributable to insurance policies written in Florida represented 91.7% and 90.1% of total managed premiums for the three months ended March 31, 2026 and 2025, respectively.

Previous wording

The managed premiums attributable to policyholders active from the end of the prior calendar year used to calculate the gross dollar retention rate were $436,427 and $333,581 as of September 30, 2025 and 2024, respectively.

Current wording

As of March 31, 2026 and 2025, managed premiums attributable to policyholders active from the end of the prior-year period used in the gross dollar retention rate calculation were $1,137,161 and $437,095, respectively.

Previous wording

We use ARR as a key operational metric to assess the scale of our recurring revenue generated from managed premium. ARR is defined as the sum of each customer's managed premiums, multiplied by their respective contractual fee rates, plus any applicable policy fee income associated with managed policies as of the period end date. ARR excludes revenue from non-recurring sources, such as catastrophe services.

Current wording

We use ARR as a key operational metric to assess the scale of our recurring revenue generated from managed premium. ARR is defined as the sum of each customer's managed premiums, multiplied by their respective contractual fee rates, plus any applicable policy fee income associated with managed policies as of the period end date. ARR excludes revenue from nonrecurring sources, such as catastrophe services.

Previous wording

We generate revenue from three primary sources: underwriting and management services, claim services, and other technology services. Underwriting and management services include policy issuance and renewal, reinsurance placement, and administrative support, with fees tied to a percentage of premiums written or assumed, plus related policy fees. Claim services involve investigating, adjusting, and settling claims, including catastrophe-related claims, with pricing based on percentage of premiums written or assumed, per-claim fees and/or a percentage of indemnification costs. Other technology services are primarily derived from proprietary software solutions offered through Software-as-a-Service ("SaaS") service agreements, with fees based on a combination of policy or claim volumes, fixed charges, or percentages of claims handled.

Current wording

We generate revenue from three primary sources: underwriting and management services, claim services, and other technology services. Underwriting and management services include policy issuance and renewal, reinsurance placement, and administrative support, with fees tied to a percentage of premiums written or assumed, plus related policy fees. Claim services involve investigating, adjusting, and settling claims, including catastrophe-related claims, with pricing based on percentage of premiums written or assumed, per-claim fees and/or a percentage of indemnification costs. Other technology services are primarily derived from proprietary software solutions offered through Software-as-a-Service service agreements, with fees based on a combination of policy or claim volumes, fixed charges, or percentages of claims handled.

Previous wording

Our cost of revenue consists of expenses directly attributable to the delivery of services that generate revenue. These include salaries and benefits of employees engaged in providing underwriting, management, administrative, and claim services. We collect fees inclusive of agent commissions and subsequently pay the applicable commissions to agents. Cost of revenue also includes amortization of software intangible assets used to provide services, information technology expenses that support policy underwriting, administrative functions, and claim handling services, as well as allocated overhead costs from supporting departments. Claim handling costs are comprised of expenses incurred throughout the claims process, including adjustment, investigation, defense, recording, and payment functions. Allocated expenses from departments supporting these functions are also included in cost of revenue.

Current wording

Our cost of revenue includes expenses directly attributable to delivering our services that generate revenue, such as salaries and benefits for employees supporting underwriting, management, administrative, and claim services. For specific customers, we collect fees that include agent commissions and remit those commissions to agents. Cost of revenue also includes amortization of capitalized internal-use-software and other intangible assets used to provide services, information technology expenses supporting policy underwriting, administrative functions, and claim handling services, and allocated overhead. Claim handling costs include adjustment, investigation, defense, recording, and payment functions. Allocated expenses from departments supporting these functions are also included in cost of revenue.

Previous wording

Gross profit represents profit after cost of revenue, as defined previously, and is the difference between revenues and cost of revenue. The increase in gross profit in the recent periods presented was primarily driven by growth in our managed premiums, which allows us to leverage our relatively fixed cost structure. As we continue to scale and find operational efficiencies, we expect gross margins to improve over time.

Current wording

Gross profit represents revenue less cost of revenue. The increase in gross profit in recent periods was primarily driven by growth in managed premium, which allows us to leverage our relatively fixed cost structure. As we continue to scale and achieve operational efficiencies, we expect gross margins to improve over time.

Previous wording

Selling, general and administrative expenses represent costs associated with supporting operations and primarily consist of employee compensation, including stock-based compensation and benefits for our finance, IT, human resources, legal, sales, and general management functions, as well as facilities and professional services.

Current wording

Selling, general and administrative expenses represent costs associated with supporting operations and primarily consist of employee compensation, including share-based compensation and benefits for our finance, IT, human resources, legal, sales, and general management functions, as well as facilities and professional services.

Previous wording

Our research and development costs consist primarily of personnel expenses, including salaries and benefits, bonuses, stock-based compensation and related overhead costs for employees engaged in the design and development of our technology offerings and other internally used systems and applications.

Current wording

Our research and development costs consist primarily of personnel expenses, including salaries and benefits, bonuses, share-based compensation, facilities, and related overhead costs for employees engaged in the design and development of our technology offerings and other internally developed systems and applications.

Previous wording

Depreciation and amortization costs reflect expenses associated with the ongoing use of our tangible long-lived assets, including computer hardware, office equipment and leasehold improvements.

Current wording

Depreciation and amortization costs reflect expenses associated with the ongoing use of our tangible long-lived assets, including computer hardware, office furniture and equipment, and leasehold improvements.

Previous wording

Investment income represents interest earned from short-term investments. The principal factors that influence investment income are the size of our investment portfolio and the yield on that portfolio.

Current wording

Investment income represents interest and returns earned from both short‑term and long‑term investments. The principal factors that influence investment income include the size and composition of our investment portfolio, the mix of short‑ and long‑duration assets, prevailing market conditions, and the yields generated over time.

Previous wording

Income tax expense (benefit) primarily consists of domestic corporate federal and state income taxes related to the sale of our services. The effective tax rate can be affected by many factors, including changes in tax laws, states of operation, regulations or rates, new interpretations of existing laws or regulations, and changes to our overall levels of income before tax.

Current wording

Income tax expense primarily consists of domestic corporate federal and state income taxes related to the sale of our services. The effective tax rate can be affected by many factors, including changes in tax laws, states in which we operate, regulations or rates, new interpretations of existing laws or regulations, and changes to our overall levels of income before tax.

Previous wording

For the three months ended September 30, 2025 and 2024

Current wording

Three Months Ended March 31, 2026 and 2025

Previous wording

The following table presents selected financial information for the three months ended September 30, 2025 and 2024, including amounts expressed as a percentage of total revenue and the year-over-year percentage change:

Current wording

Selected financial information for the three months ended March 31, 2026, and 2025, including amounts expressed as a percentage of total revenue and the year-over-year change, is presented as follows:

Previous wording

Revenue increased by $26,056, or 89.5%, to $55,166 for the three months ended September 30, 2025, compared to $29,110 for the same period in 2024, driven primarily by growth in underwriting and management services from our existing customer base and expansion of the scope of services provided to customers in the beginning of 2025.

Current wording

Revenue increased by $3,127, or 6.0%, to $55,534 for the three months ended March 31, 2026, compared to $52,407 for the same period in 2025, driven primarily by new customers along with growth in underwriting and management services from our existing customer base.

Previous wording

Claim services revenue increased by $2,612, or 48.2%, to $8,030, representing 14.6% of total revenue, compared to $5,418, representing 18.6% of total revenue for the same period in 2024. The increase was primarily driven by higher managed premiums from our existing customer base, which increased related claims volume and associated service fees, as well as higher Catastrophe ("CAT") claim service fees and field adjuster service fees following severe weather events from 2024. Claim services revenue in future periods will continue to be influenced by the level of managed premiums and the timing and severity of weather events.

Current wording

Claim services revenue remained relatively flat at $6,891 for the three months ended March 31, 2026, compared to $6,829 for the same period in 2025, representing 12.4% and 13.0% of total revenue, respectively. Claim services revenue in future periods will continue to be influenced by the level of managed premiums and the timing and severity of weather events.

Previous wording

Cost of revenue increased by $12,607, or 23.0%, to $67,515 for the nine months ended September 30, 2025, compared to $54,908 for the same period in 2024. As a percentage of total revenue, cost of revenue declined to 41.2% in 2025 from 61.4% in 2024, reflecting improved operating leverage from higher revenue volumes.

Current wording

Cost of revenue decreased by $791, or 3.4%, to $22,791 for the three months ended March 31, 2026, compared to $23,582 for the same period in 2025, representing 41.1% and 45.0% of total revenue, respectively. The decrease in the cost of revenue as a percentage of revenue was primarily driven by improved operating leverage from higher revenue volumes.

Previous wording

Other operating expenses decreased by $330, or 3.6%, to $8,816, representing 5.4% of total revenue, compared to $9,146, representing 10.2% of total revenue in 2024. The decrease was driven by lower claims management activity along with lower bank fee charges following a system optimization initiative implemented in 2025. These decreases were partially offset by the increase in systems expenses related to investments to strengthen infrastructure and systems to support our growth.

Current wording

Other operating expenses increased by $487, or 16.0%, to $3,534 for the three months ended March 31, 2026, compared to $3,047 for the same period in 2025, representing 6.4% and 5.8% of total revenue, respectively. The increase was driven by higher claims management activity along with higher postage and related fees due to significantly higher policy volumes in 2026. These increases were partially offset by the bank fee charges following a system optimization initiative implemented in mid 2025.

Previous wording

Selling, general and administrative expenses increased $2,760, or 40.6%, to $9,566, representing 5.8% of total revenue, for the nine months ended September 30, 2025, compared to $6,806, representing 7.6% of total revenue, for the same period in 2024. The increase primarily reflects higher employee-related costs, including discretionary compensation tied to improved performance and salary and wage expenses resulting from higher headcount to support business growth. The remaining increase reflects higher corporate allocations and other administrative costs associated with scaling operations, partially offset by lower overhead allocations to TTIC. The corporate overhead allocation to TTIC included shared services such as HR, IT, legal, accounting, and lease-related costs. Allocations were based on departmental inputs and applied consistently using methodologies appropriate to each cost type. We ceased providing corporate services, and therefore ceased allocating related expenses, to TTIC as of July 1, 2025.

Current wording

Selling, general and administrative expenses increased by $2,510, or 92.8%, to $5,216 for the three months ended March 31, 2026, compared to $2,706 for the same period in 2025, representing 9.4% and 5.2% of total revenue, respectively. Employee-related costs accounted for approximately half of the increase, primarily due to a higher portion of discretionary compensation costs being reflected in selling, general and administrative expenses rather than in cost of revenue as accruals were finalized, along with salary and wage expenses resulting from higher headcount to support continued business growth. In addition, the increase reflects lower overhead allocations to TTIC following the sale of TTIC to HCI in July 2024. The corporate overhead allocation to TTIC included shared services such as HR, IT, legal, accounting, and lease-related costs which were allocated using methodologies appropriate to each cost type and applied consistently for all periods presented. We ceased providing corporate services, and therefore ceased allocating related expenses, to TTIC as of July 1, 2025. The remaining increase reflects higher operating costs associated with being a publicly traded Company.

Previous wording

In addition to results determined in accordance with accounting principles generally accepted in the United States ("GAAP"), we use certain non-GAAP financial measures to evaluate our operating performance and make strategic decisions. These non-GAAP financial measures include Adjusted EBITDA and Adjusted Revenue. Management believes these measures provide useful supplemental information for investors by facilitating comparisons of performance across reporting periods and with other companies in the industry, many of which use similar non-GAAP financial measures.

Current wording

In addition to results determined in accordance with GAAP, we use certain non-GAAP financial measures to evaluate our operating performance and make strategic decisions. These non-GAAP financial measures include Adjusted EBITDA, Adjusted Revenue, Adjusted EBITDA Margin, and Free Cash Flow. Management believes these measures provide useful supplemental information for investors by facilitating comparisons of performance across reporting periods and with other companies in the industry, many of which use similar non-GAAP financial measures.

Previous wording

We define adjusted EBITDA as net income adjusted to exclude income tax expense, interest expense, investment income, depreciation and amortization, and stock-based compensation expense. Management uses Adjusted EBITDA as a key measure of operating performance and to assess the results of the business excluding certain items that are not considered indicative of core operating results. However, Adjusted EBITDA should not be viewed in isolation or as a substitute for net income calculated in accordance with GAAP, and other companies may define Adjusted EBITDA differently.

Current wording

We define Adjusted EBITDA as net income adjusted to exclude income tax expense, interest expense, investment income, depreciation and amortization, and share-based compensation expense. Management uses Adjusted EBITDA as a key measure of operating performance and to assess the results of the business excluding certain items that are not considered indicative of core operating results. Adjusted EBITDA should not be viewed in isolation or as a substitute for net income calculated in accordance with GAAP, and other companies may define Adjusted EBITDA differently.

Previous wording

The following table presents a reconciliation of net income to Adjusted EBITDA for the periods presented:

Current wording

The reconciliation of net income to Adjusted EBITDA for the periods presented is as follows:

Previous wording

We define Adjusted Revenue as the portion of total GAAP revenue earned through services delivered directly via our proprietary platform technology, without being outsourced to other service providers. This metric excludes revenue associated with services primarily within claims management that are outsourced to a subsidiary of HCI. Although this revenue is recognized on a gross basis under GAAP, we are considered the principal in the transaction, the economics are largely neutral, as the related costs incurred from outsourced service providers closely match the revenue recognized. Management believes Adjusted Revenue provides investors with useful insight into the performance and scalability of our core platform services and clarifies the underlying revenue contribution from internally delivered operations. This metric also assists management and investors in evaluating period-over-period trends in technology-driven revenue streams, excluding variability associated with outsourced service arrangements. This non-GAAP measure should not be considered in isolation or as a substitute for total revenue or any other performance measure calculated in accordance with GAAP.

Current wording

We define Adjusted Revenue as the portion of revenue earned through services delivered directly via our proprietary platform technology. This metric excludes revenue associated with services primarily within claims management that are outsourced to a subsidiary of HCI. Although this revenue is recognized on a gross basis under GAAP because we are considered the principal in the transaction, the economics are largely neutral, as the related costs incurred from outsourced service providers closely match the revenue recognized. Management believes Adjusted Revenue provides investors with useful insight into the performance and scalability of our core platform services and reflects the revenue generated from internally delivered operations, excluding variability associated with outsourced service arrangements. This non-GAAP measure should not be considered in isolation or as a substitute for total revenue or any other performance measure calculated in accordance with GAAP.

Previous wording

The following table presents the calculation of the Adjusted Revenue for the periods presented:

Current wording

The reconciliation of the Adjusted Revenue for the periods presented is as follows: