Ethos Technologies Inc.

The following tables set forth our results of operations for the periods presented:

Revenue

Revenue increased by $98.2 million, or 104%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The increase was primarily driven by an 84% increase in activated policies across both direct and third-party channels.

Direct channel revenue grew by $84.3 million, or 136%, whereas third-party channel revenue grew by $13.9 million, or 42%. Revenue from our direct channel increased at a higher rate, reflecting unit economics improvements that enabled efficient deployment of capital across our consumer acquisition channels.

Costs and Expenses:

Sales and Marketing

Sales and marketing expenses increased by $87.7 million, or 156%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025, primarily due to $73.1 million increase in total advertising, agent payment, and other policy acquisition expenses, which included a one-time increase of $16.5 million in agent compensation expenses as a result of our updated third-party agent compensation and persistency estimates to better reflect both maturing cohort experience and the impact of recent operational improvements, and $7.9 million increase in stock-based compensation charge and related taxes associated with RSUs with a liquidity event vesting condition that was satisfied upon the effectiveness of our IPO. This increase reflects our strategic expansion across both direct and third-party distribution channels to grow and support higher application volumes.

General and Administrative

General and administrative expenses increased by $167.2 million, or 1248%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. This increase was primarily attributable to an increase of $166.5 million in stock-based compensation charge and related taxes associated with RSUs with a liquidity event vesting condition that was satisfied upon the effectiveness of our IPO.

Technology (Exclusive of Amortization)

Technology expenses increased by $17.4 million, or 180%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The increase was primarily attributable to an increase of $0.9 million in personnel-related compensation expenses due to headcount growth, an increase of $0.5 million in hosting fees, and an increase of $0.7 million in software and web services to support both the maintenance and expansion of our product suite and technology infrastructure, and an increase of $13.9 million in stock-based compensation charge and related taxes associated with RSUs with a liquidity event vesting condition that was satisfied upon the effectiveness of our IPO.

Cost of Revenue

Cost of revenue expenses increased by $1.7 million, or 105%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The increase was primarily attributable to an increase in underwriting costs, driven by growth in application and activated policy volume.

Depreciation and Amortization

Depreciation and amortization expenses were relatively consistent for the three months ended March 31, 2026 compared to the three months ended March 31, 2025.

Other Income (Expense):

Interest Expense

Interest expense decreased by $0.3 million, or 32%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The decrease was primarily due to the lower liability balance resulting from the sale of commissions for the three months ended March 31, 2026 compared to the three months ended March 31, 2025.

Interest Income

Interest income decreased by $0.1 million, or 9%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The decrease was primarily attributable to lower interest rates, which were partially offset by a higher average investment and cash equivalents balance as of March 31, 2026.

Income Tax Expense

The increase in provision for income taxes of $3.0 million during the three months ended March 31, 2026 compared to the three months ended March 31, 2025, was primarily driven by changes to the valuation allowance attributable to the increases to deferred tax liabilities associated with revenue recognition and income taxes in foreign jurisdictions.

Liquidity and Capital Resources

Since our inception, we have financed our operations primarily through net proceeds from our equity financings (including from our IPO and from pre-IPO sales of our convertible preferred stock) and commissions received from the sale of our products. Upon the closing of our initial public offering in January 2026, we received approximately $82.6 million in net proceeds, after deducting underwriting discounts and commissions and offering expenses paid or payable by us. As of March 31, 2026, our principal sources of liquidity were cash, cash equivalents, and investments of $223.8 million and working capital of $104.4 million. Cash and cash equivalents are comprised of cash held in demand deposit accounts and short-term, highly liquid investments with original maturities of three months or less. Marketable securities are comprised primarily of commercial paper and investment grade U.S. and non-U.S.-issued corporate debt securities. Our principal use of cash has been to fund our operations and invest in technology to support our growth.

We have generated significant losses from operations and negative cash flows from operating activities in the past as reflected in our accumulated deficit of $268.9 million as of March 31, 2026. Our future cash flows from operating activities may fluctuate as a result of investments we continue to make across our organization. However, we believe that our existing cash and cash equivalents will be sufficient to meet our working capital requirements for at least the next twelve months. However, our liquidity assumptions may prove to be incorrect, and we could utilize our available financial resources sooner than we currently expect. Our future capital requirements and the adequacy of available funds will depend on many factors, including our growth rate, accuracy of persistency estimates, expansion of sales and marketing activities, expansion of carrier and agency relationships, investments in technology enhancements, continued market adoption of our platform and services, and timing and amount of sales of commissions receivable. In addition, we may enter into agreements to acquire or invest in complementary businesses, products, teams, and technologies, including intellectual property rights, which could increase our cash requirements. As a result of these and other factors, we may be required to seek additional financing sooner than we currently anticipate. However, we may not be able to secure additional financing to meet our operating requirements or growth strategies on acceptable terms, or at all.

In particular, recent volatility in the global financial markets, including due to heightened inflation, rising interest rates, tariffs, and other macroeconomic conditions, geopolitical events, such as the ongoing conflicts between Russia and Ukraine and in the Middle East, and disruptions in access to bank deposits or lending commitments due to bank failures could reduce our ability to access capital and negatively affect our liquidity in the future. If we raise additional funds by issuing equity or equity-linked securities, the ownership of our existing stockholders will be diluted. If we raise additional financing by the incurrence of indebtedness, we will be subject to increased fixed payment obligations and could also be subject to restrictive covenants, such as limitations on our ability to incur additional debt, and other operating restrictions that could adversely impact our ability to conduct our business. If we are unable to obtain needed additional funds, we will have to reduce our operating costs, which would impair our growth prospects and could otherwise negatively impact our business.

Cash Flows

The following table sets forth certain cash flow information for the three months ended March 31, 2026 and 2025:

Cash Flows Provided By / (Used In) Operating Activities

For the three months ended March 31, 2026, net cash provided by operating activities was $31.2 million. This was driven primarily by non-cash expenses of $192.7 million related to stock-based compensation, $3.2 million related to deferred taxes, $1.3 million related to depreciation and amortization, $0.7 million related to interest expense, offsets to the net loss of $166.4 million. In addition, during the three months ended March 31, 2026, significant changes in our operating assets and liabilities resulted from the following:

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Increase in commissions receivable of $38.4 million due to an increase in the commissions owed to us by the insurance carriers.

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Increase in accounts payable of $10.0 million due primarily to increase in expected commissions to be paid to carriers as a result of clawbacks.

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Increase in accrued expenses of $14.7 million due primarily to an increase in accrued agent payments driven by growth in third-party revenue.

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Increase in accounts receivable of $16.8 million due primarily to 84% growth in activated policies during the three months ended March 31, 2026.

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Increase in other current liabilities of $17.9 million due primarily to a reclassification of contract asset balances to contract liabilities.

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Decrease in prepaid and other assets of $12.4 million due primarily to reduction in expected clawbacks from payments made to agents for policies sold.

For the three months ended March 31, 2025, net cash provided by operating activities was $10.8 million. This was driven primarily by net income of $12.2 million, non-cash expenses of $9.8 million related to stock-based compensation, $1.3 million related to depreciation and amortization, $1.0 million related to interest expense and $0.6 million related to deferred taxes. In addition, during the three months ended March 31, 2025, significant changes in our operating assets and liabilities resulted from the following:

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Increase in commissions receivable of $17.7 million due to an increase in the commissions owed to us by the insurance carriers.

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Increase in prepaid and other assets of $8.0 million due primarily to growth in expected clawbacks from payments made to agents for policies sold.

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Increase in accounts receivable of $9.0 million due primarily to 69% growth in activated policies.

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Increase in accounts payable of $10.2 million due primarily to increase in expected commissions to be paid to carriers as a result of clawbacks.

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Increase in accrued expenses of $6.0 million due primarily to an increase in accrued agent payments driven by growth in third-party revenue.

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Increase in other current liabilities of $4.6 million due primarily to a reclassification of contract asset balances to contract liabilities.

Cash Flows Provided By / (Used In) Investing Activities

For the three months ended March 31, 2026, net cash used in investing activities was $52.1 million. This was primarily driven by $77.2 million in investment purchases and $1.6 million investment in software development costs, which were partially offset by $27.0 million in proceeds from maturities and sales of investments.

For the three months ended March 31, 2025, net cash provided by investing activities was $2.0 million. This was primarily due to proceeds from maturity and sale of investments of $25.2 million, partially offset by purchases of investments of $22.2 million.

Cash Flows Provided By / (Used In) Financing Activities

For the three months ended March 31, 2026, cash provided by financing activities was $37.8 million. This was primarily driven by $91.6 million in proceeds from initial public offering and $0.7 million proceeds from exercise of stock options, partially offset by $49.1 million of payment of tax withholdings on settlement of RSUs, $3.6 million repayments of the liabilities related to the sale of commissions receivable and $1.8 million payments of deferred offering costs.

For the three months ended March 31, 2025, cash provided by financing activities was $3.4 million, which primarily consisted of proceeds from the sale of commissions receivable of $5.0 million, offset by repayments of the liabilities related to the sale of commissions receivable of $2.2 million and proceeds from stock option exercise of $0.7 million.

Critical Accounting Policies and Estimates

There have been no material changes in our critical accounting estimates from those disclosed under the heading “Critical Accounting Policies and Estimates” within Part II, Item 7. “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on March 17, 2026.

Recent Accounting Pronouncements

For a discussion of the recent accounting pronouncements, refer to “Accounting Pronouncements” in Note 2. “Summary of Significant Accounting Policies” in Part I, Item 1 of this Quarterly Report.