Ethos Technologies Inc.

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

Revenue

For the three and six months ended June 30, 2026, revenue increased by $100.7 million and $198.9 million, or 113% and 108%, respectively, compared to the same periods in 2025. The increase in revenue in both periods was primarily driven by increases in activated policies of 133% and 108%, respectively, across both channels.

For the three and six months ended June 30, 2026, direct channel revenue grew by $66.0 million and $150.3 million, or 131% and 134%, respectively, compared to the same periods in 2025. For the three and six months ended June 30, 2026, third-party channel revenue grew by $34.7 million and $48.6 million, or 90% and 68%, respectively, compared to the same periods in 2025. Revenue from our direct channel increased at a higher rate in both periods, reflecting unit economics improvements that enabled efficient deployment of capital across our consumer acquisition channels. Revenue from our third-party channel was primarily driven by contributions from both new and existing agencies, alongside enhancements to our agent portal that improved conversion rates and agent productivity.

Costs and Expenses:

Sales and Marketing

For the three months ended June 30, 2026, sales and marketing expenses increased by $76.3 million, or 148%, compared to the same period in 2025. The increase was primarily attributable to a $69.7 million increase in total advertising, agent payment, and other policy acquisition expenses, reflecting our strategic expansion across both direct and third-party distribution channels to grow and support higher application volumes. The increase in sales and marketing expense was further driven by a $1.2 million increase in stock-based compensation charge and related taxes.

For the six months ended June 30, 2026, sales and marketing expenses increased by $164.1 million, or 152%, compared to the same period in 2025. The increase was primarily attributable to a $144.3 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 an increase of $9.6 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.

General and Administrative

For the three months ended June 30, 2026, general and administrative expenses increased by $15.8 million, or 193%, compared to the same period in 2025. The increase was primarily attributable to an increase of $11.5 million in stock-based compensation charge and related taxes.

For the six months ended June 30, 2026, general and administrative expenses increased by $183.0 million, or 850%, compared to the same period in 2025. The increase was primarily attributable to an increase of $174.2 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)

For the three months ended June 30, 2026, technology expenses increased by $6.6 million, or 90%, compared to the same period in 2025. The increase was primarily attributable to an increase of $2.3 million in stock-based compensation charge and related taxes, an increase of $2.2 million in personnel-related compensation expenses due to headcount growth, an increase of $1.0 million in software and web services to support both the maintenance and expansion of our product suite and technology infrastructure, and an increase of $0.6 million in hosting fees.

For the six months ended June 30, 2026, technology expenses increased by $24.0 million, or 142%, compared to the same period in 2025. The increase was primarily attributable to an increase of $17.0 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, an increase of $3.3 million in personnel-related compensation expenses due to headcount growth, an increase of $1.7 million in software and web services to support both the maintenance and expansion of our product suite and technology infrastructure, and an increase of $1.1 million in hosting fees.

Cost of Revenue

For the three and six months ended June 30, 2026, cost of revenue increased by $2.6 million and $4.3 million, or 183% and 142%, respectively, compared to the same periods in 2025. The increase in both periods was primarily attributable to an increase in underwriting costs, driven by growth in application and activated policy volume.

Depreciation and Amortization

For the three and six months ended June 30, 2026, depreciation and amortization expenses increased by $0.1 million and $0.2 million, or 10% and 6%, respectively, compared to the same periods in 2025. The increase in both periods was primarily attributable to an increase in capitalized software and development costs.

Other Income (Expense):

Interest Expense

For the three and six months ended June 30, 2026, interest expense decreased by less than $0.1 million and $0.3 million, or 5% and 21%, respectively, compared to the same periods in 2025. The decrease was primarily due to the lower liability balance resulting from the sale of commissions for the three and six months ended June 30, 2026 compared to the same periods in 2025.

Interest Income

For the three and six months ended June 30, 2026, interest income increased by $0.2 million and $0.1 million, or 14% and 3%, respectively, compared to the same periods in 2025. The increase in both periods was primarily attributable to higher average investment and cash equivalents balances during the three and six months ended June 30, 2026, compared to the same periods in 2025.

Income Tax Expense

For the three months ended June 30, 2026, income tax expense decreased by $1.5 million, or 116%, compared to the same period in 2025. The decrease was primarily driven by the change in our estimated annual effective tax rate, which is calculated based on our estimated annual pre-tax results and updated each quarter. While we were at a pre-tax profit position for the three months ended June 30, 2026, a full year pre-tax loss is projected for the year ended December 31, 2026.

For the six months ended June 30, 2026, income tax expense increased by $1.5 million, or 68%, compared to the same period in 2025. The increase 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 IPO 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 June 30, 2026, our principal sources of liquidity were cash, cash equivalents, and investments of $252.9 million and working capital of $103.0 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 government bonds, agency bonds, 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 $249.4 million as of June 30, 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, and ongoing conflicts, 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 six months ended June 30, 2026 and 2025:

Cash Flows Provided By / (Used In) Operating Activities

For the six months ended June 30, 2026, net cash provided by operating activities was $66.9 million. While we reported a net loss of $146.9 million for the period, primarily attributable to $208.2 million in non-cash stock-based compensation, $2.9 million related to deferred taxes, $2.9 million related to depreciation and amortization, and $1.3 million related to non-cash interest expense, our core operations generated positive cash flow. In addition, during this period, significant changes in our operating assets and liabilities resulted from the following:

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Increase in commissions receivable of $71.3 million due to an increase in the commissions owed to us by the insurance carriers.

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Increase in accounts payable of $25.4 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 $23.8 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 $20.7 million due primarily to 108% growth in activated policies during the six months ended June 30, 2026.

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Increase in other current liabilities of $39.5 million due primarily to an increase in the persistency reserve liability.

For the six months ended June 30, 2025, net cash provided by operating activities was $24.0 million. We reported a net income of $30.7 million for the period, including non-cash expenses of $10.3 million related to stock-based compensation, $2.7 million related to depreciation and amortization, $1.6 million related to non-cash interest expense, and $1.6 million related to deferred taxes. In addition, during this period, significant changes in our operating assets and liabilities resulted from the following:

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Increase in commissions receivable of $31.1 million due to an increase in the commissions owed to us by the insurance carriers.

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Increase in accounts payable of $22.6 million due primarily to increase in expected commissions to be paid to carriers as a result of clawbacks.

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Increase in prepaid and other assets of $10.9 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 $8.2 million due primarily to 70% growth in activated policies.

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Increase in accrued expenses of $6.1 million due primarily to an increase in accrued agent payments driven by growth in third-party revenue.

Cash Flows Provided By / (Used In) Investing Activities

For the six months ended June 30, 2026, net cash used in investing activities was $79.1 million. This was primarily driven by $122.4 million in investment purchases and $3.3 million investment in software development costs, which were partially offset by $47.3 million in proceeds from maturities and sales of investments.

For the six months ended June 30, 2025, net cash provided by investing activities was $21.2 million. This was primarily due to proceeds from maturity and sale of investments of $45.8 million, partially offset by purchases of investments of $22.2 million.

Cash Flows Provided By / (Used In) Financing Activities

For the six months ended June 30, 2026, cash provided by financing activities was $33.4 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, $7.0 million repayments of the liabilities related to the sale of commissions receivable and $2.8 million payments of deferred offering costs.

For the six months ended June 30, 2025, cash used in financing activities was less than $0.1 million, which primarily consisted of proceeds from the sale of commissions receivable of $5.0 million and proceeds from stock option exercise of $0.8 million, offset by repayments of the liabilities related to the sale of commissions receivable of $4.7 million and payment of deferred offering costs of $1.1 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.