Ethos Technologies Inc.

Previous wording

Ethos is a technology company transforming the life insurance industry. We have built a vertically integrated technology platform that makes life insurance accessible, affordable, and transparent for everyone. Since inception, we have activated over 600,000 policies. Through our three-sided technology platform, we serve a growing ecosystem of consumers, agents, and carriers, each of which benefits from the scale, ease-of-use, and efficiency of our platform. This creates strong network effects that drive our continued growth. We serve the following constituents through our digital platform:

Current wording

Ethos is a technology company transforming the life insurance industry. We have built a vertically integrated technology platform that makes life insurance accessible, affordable, and transparent for everyone. Since inception, we have activated over 700,000 policies. Through our three-sided technology platform, we serve a growing ecosystem of consumers, agents, and carriers, each of which benefits from the scale, ease-of-use, and efficiency of our platform. This creates strong network effects that drive our continued growth. We serve the following constituents through our digital platform:

Previous wording

Strategic Carrier Relationships. Maintaining our active carrier relationships and establishing new carrier relationships are critical for our continued growth. However, we still have significant opportunities to increase our share, as we accounted for a minority of these top three carriers’ life insurance premiums in 2025. Beyond our current relationships, we intend to selectively work with new carriers, primarily to facilitate new product introductions and further diversify our positions within our existing carrier base.

Current wording

Strategic Carrier Relationships. Maintaining our active carrier relationships and establishing new carrier relationships are critical for our continued growth. However, we still have significant opportunities to increase our share, as we accounted for a minority of the top three carriers’ life insurance premiums in 2025. Beyond our current relationships, we intend to selectively work with new carriers, primarily to facilitate new product introductions and further diversify our positions within our existing carrier base.

Previous wording

Macroeconomic and Regulatory Trends. Macroeconomic factors, including a high interest rate environment, equity market returns, and a tight labor market impact the financial services and life insurance industries. Moreover, changes in the tax code (demand for insurance for tax planning purposes) or on capital reserving requirements (such as the approval of the principles-based reserving regime in 2017) impact the demand for the life insurance products we offer and the profitability of the carriers with whom we work. These macroeconomic and regulatory factors have the potential to affect demand for our underwriting and distribution services.

Current wording

Macroeconomic and Regulatory Trends. Macroeconomic factors, including a high interest rate environment, equity market returns, and a tight labor market impact the financial services and life insurance industries. Moreover, changes in the tax code (demand for insurance for tax planning purposes) or in capital reserving requirements (such as the approval of the principles-based reserving regime in 2017) impact the demand for the life insurance products we offer and the profitability of the carriers with whom we work. These macroeconomic and regulatory factors have the potential to affect demand for our underwriting and distribution services.

Previous wording

In addition to the measures presented in our condensed consolidated financial statements, we use the following key business metrics to help us evaluate our business, identify trends affecting our business, formulate business plans, and make strategic decisions. The following table presents our key business metrics for the three months ended March 31, 2026 and 2025 (in thousands, except percentages):

Current wording

In addition to the measures presented in our condensed consolidated financial statements, we use the following key business metrics to help us evaluate our business, identify trends affecting our business, formulate business plans, and make strategic decisions. The following table presents our key business metrics for the three and six months ended June 30, 2026 and 2025 (in thousands, except percentages):

Previous wording

The total number of activated policies increased by 84% for the three months ended March 31, 2026 compared to the same period in 2025.

Current wording

The total number of activated policies increased by 133% and 108% for the three and six months ended June 30, 2026 compared to the same periods in 2025.

Previous wording

Average Revenue Per Unit. We define average revenue per unit, or ARPU, as our total GAAP revenue for a given period, divided by the total number of activated policies during the period.

Current wording

Average Revenue Per Unit. We define ARPU as our total GAAP revenue for a given period, divided by the total number of activated policies during the period.

Previous wording

Contribution Profit. We define Contribution Profit as our gross profit less sales and marketing expenses, which includes agent payments and underwriting costs for non-activated policies, plus stock-based compensation related to our employees and overhead costs allocated to sales and marketing expenses. Gross profit is defined as revenue less cost of revenue. Cost of revenue primarily consists of underwriting costs associated with activated policies. Overhead costs allocated to sales and marketing expenses include professional fees, technology expenses, and other related expenses. Contribution Margin is calculated by dividing Contribution Profit for a period by revenue for the same period.

Current wording

Contribution Profit. We define Contribution Profit as our gross profit less sales and marketing expenses, which includes agent payments and underwriting costs for non-activated policies, plus stock-based compensation and related taxes related to our employees and overhead costs allocated to sales and marketing expenses. Gross profit is defined as revenue less cost of revenue. Cost of revenue primarily consists of underwriting costs associated with activated policies. Overhead costs allocated to sales and marketing expenses include professional fees, technology expenses, and other related expenses. Contribution Margin is calculated by dividing Contribution Profit for a period by revenue for the same period.

Previous wording

Contribution Profit increased by $18.1 million from $40.5 million for the three months ended March 31, 2025 to $58.6 million for the three months ended March 31, 2026. This increase in Contribution Profit was primarily driven by continued revenue growth across both our direct and third-party channels, partially offset by the increase in sales and marketing expenses. The Contribution Margins were 30% and 43% for the three months ended March 31, 2026 and 2025, respectively. The decrease was primarily attributable to our one-time charge of $16.5 million in agent compensation in sales and marketing 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. We use Contribution Profit and Contribution Margin to evaluate our operating performance. We believe that Contribution Profit and Contribution Margin provide useful information to investors about our business and financial performance because they offer insight into how efficiently we activate new policies and ultimately revenue by accounting for the direct expenses associated with those activated policies. Contribution Profit and Contribution Margin should not be considered as alternatives to gross profit and gross margin, or any other measure of financial performance calculated and presented in accordance with GAAP.

Current wording

Contribution Margin was 33% and 42% for the three months ended June 30, 2026 and 2025, respectively, and 32% and 43% for the six months ended June 30, 2026 and 2025, respectively. For the three months ended June 30, 2026 and 2025, the decrease was primarily driven by the change to third-party agent compensation and persistency estimates implemented in the period ended March 31, 2026. For the six months ended June 30, 2026 and 2025, the decrease was driven by a one-time charge of $16.5 million in agent compensation in sales and marketing expenses, recorded in the three months ended March 31, 2026. We use Contribution Profit and Contribution Margin to evaluate our operating performance. We believe that Contribution Profit and Contribution Margin provide useful information to investors about our business and financial performance because they offer insight into how efficiently we activate new policies and generate revenue by accounting for the direct expenses associated with those activated policies. Contribution Profit and Contribution Margin should not be considered as alternatives to gross profit and gross margin, or any other measure of financial performance calculated and presented in accordance with GAAP.

Previous wording

Adjusted EBITDA. We define Adjusted EBITDA as net income excluding interest expense, interest income net, income tax expense, depreciation and amortization, and stock-based compensation expense as set forth in the table below. Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA for a period by revenue for the same period. We use Adjusted EBITDA and Adjusted EBITDA Margin to assess performance, to inform the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies, and to assist our board of directors in monitoring our business and financial performance.

Current wording

Adjusted EBITDA. We define Adjusted EBITDA as net income excluding interest expense, interest income, income tax expense (benefit), depreciation and amortization, and stock-based compensation and related taxes as set forth in the table below. Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA for a period by revenue for the same period. We use Adjusted EBITDA and Adjusted EBITDA Margin to assess performance, to inform the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies, and to assist our board of directors in monitoring our business and financial performance. We believe that Adjusted EBITDA and Adjusted EBITDA Margin provide useful information to investors about our business and financial performance, enhance their overall understanding of our past performance and future prospects, including by providing consistency and comparability with our past financial performance, and allow for greater transparency with respect to measures used by our management in investors’ financial and operational decision making. In addition, we believe Adjusted EBITDA is widely used by investors, securities analysts, and other parties in evaluating companies in its industry as a measure of operational performance.

Previous wording

Adjusted EBITDA increased by $9.9 million, to $33.6 million for the three months ended March 31, 2026, from $23.7 million for the three months ended March 31, 2025, representing Adjusted EBITDA Margins of 17% and 25%, respectively. The increase in Adjusted EBITDA was primarily due to the increase in revenue partially offset by the increase in operating expenses excluding stock-based compensation and related taxes expenses. The decrease in Adjusted EBITDA Margin was primarily attributable to our one-time charge of $16.5 million in agent compensation in sales and marketing expenses during the three months ended March 31, 2026.

Current wording

For the three and six months ended June 30, 2026, Adjusted EBITDA increased by $14.5 million and $24.3 million, respectively, compared to the same periods in 2025. The increase in Adjusted EBITDA was primarily due to the increase in revenue partially offset by the increase in operating expenses excluding stock-based compensation and related taxes expenses.

Previous wording

We primarily generate revenue through commissions paid by carriers from policies activated and sold through our platform as well as from our provision of third-party administrator, or TPA, services for such policies. Our commission revenue is recognized upfront upon delivering new policyholders to carriers, and we have no material additional obligations post-sale. Our revenue for an activated policy includes both the first-year commission and renewal commissions, both of which require significant judgment in applying a persistency estimate. In future periods following policy activation, we recognize in-period adjustments in revenue as the applicable persistency estimates are updated.

Current wording

We primarily generate revenue through commissions paid by carriers from policies activated and sold through our platform as well as from our provision of third-party administrator ("TPA") services for such policies. Our commission revenue is recognized upfront upon delivering new policyholders to carriers, and we have no material additional obligations post-sale. Our revenue for an activated policy includes both the first-year commission and renewal commissions, both of which require significant judgment in applying a persistency estimate. In future periods following policy activation, we recognize in-period adjustments in revenue as the applicable persistency estimates are updated.

Previous wording

Interest expense consists of interest costs associated with the sale of commissions receivable. For a portion of our policies, we have at times entered into arrangements in which we sell the rights to a portion of future commissions in exchange for upfront cash payments to unaffiliated entities. During the three months ended March 31, 2026 and 2025, no such arrangements were used. We impute interest on the unamortized portion of the liability for the sale of commissions receivable using the effective interest method, which is based on forecasted payments expected to be made over the term of the agreements.

Current wording

Interest expense consists of interest costs associated with the sale of commissions receivable. For a portion of our policies, we have at times entered into arrangements in which we sell the rights to a portion of future commissions in exchange for upfront cash payments to unaffiliated entities. During the three and six months ended June 30, 2026 and 2025, no such arrangements were used. We impute interest on the unamortized portion of the liability for the sale of commissions receivable using the effective interest method, which is based on forecasted payments expected to be made over the term of the agreements.

Previous wording

We account for uncertain tax positions in accordance with Accounting Standards Codification, or ASC, 740-10, Accounting for Uncertainty in Income Taxes. We recognize the tax effects of an uncertain tax position only if it is more likely than not to be sustained based solely on its technical merits as of the reporting date and only in an amount more likely than not to be sustained upon review by the tax authorities. Interest and penalties related to uncertain tax positions are classified in the condensed consolidated financial statements as income tax expense.

Current wording

We account for uncertain tax positions in accordance with Accounting Standards Codification ("ASC") 740-10, Accounting for Uncertainty in Income Taxes. We recognize the tax effects of an uncertain tax position only if it is more likely than not to be sustained based solely on its technical merits as of the reporting date and only in an amount more likely than not to be sustained upon review by the tax authorities. Interest and penalties related to uncertain tax positions are classified in the condensed consolidated financial statements as income tax expense.