Ethos Technologies Inc.

Previous wording

The following discussion and analysis of the financial condition and results of operations of Ethos Technologies Inc. (“Ethos,” “the Company,” “we,” “our” and “us”) should be read in conjunction with our unaudited condensed financial statements and related notes included elsewhere within this Quarterly Report. The discussion and analysis should also be read together with the audited consolidated financial statements and the related notes in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 17, 2026 (“Annual Report”). Some of the information contained in this discussion and analysis includes forward-looking statements that involve risks and uncertainties. You should review the sections titled “Special Note Regarding Forward-Looking Statements” and “Risk Factors” of this Quarterly Report for a discussion of forward-looking statements and important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Current wording

The following discussion and analysis of the financial condition and results of operations of Ethos Technologies Inc. (“Ethos,” “the Company,” “we,” “our” and “us”) should be read in conjunction with our unaudited condensed financial statements and related notes included elsewhere within this Quarterly Report. The discussion and analysis should also be read together with the audited consolidated financial statements and the related notes in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 17, 2026 (“Annual Report”). Some of the information contained in this discussion and analysis includes forward-looking statements that involve risks and uncertainties. You should review the sections titled “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” of this Quarterly Report for a discussion of forward-looking statements and important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

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 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:

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 850,000 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

Further, because we offer most of our products through both channels, including Term Life Insurance, Whole Life Insurance, and Indexed Universal Life Insurance, our strategy and shifts in consumer insurance purchasing patterns and trends also drive fluctuations in product mix by channel, which impacts our results of operations. Certain of our products, such as Whole Life Insurance, have historically been sold primarily through our third-party channel due to various factors, including preferences and demographics of the target consumers for such products as well as sales strategies and priorities of our agency partners. In addition, our sales and marketing expense and Contribution Margin are impacted by our channel mix, as described further under the section titled “—Key Business Metrics and Non-GAAP Financial Measures–Contribution Profit.”

Current wording

Further, because we offer most of our products through both channels, including Term Life Insurance, Whole Life Insurance, and Indexed Universal Life Insurance, our strategy and shifts in consumer insurance purchasing patterns and trends also drive fluctuations in product mix by channel, which impacts our results of operations. Certain of our products, such as Whole Life Insurance, have historically been sold primarily through our third-party channel due to various factors, including preferences and demographics of the target consumers for such products as well as sales strategies and priorities of independent agencies that use our platform to sell insurance products. In addition, our sales and marketing expense and Contribution Margin are impacted by our channel mix, as described further under the section titled “—Key Business Metrics and Non-GAAP Financial Measures–Contribution Profit.”

Previous wording

Seasonality. Seasonality can impact our activated policies patterns, influencing acquisition volume, costs, and conversion rates. The three months ended March 31 have historically been our strongest quarter of activated policies, as consumer demand for life insurance is elevated by factors such as annual financial planning cycles that typically occur post-New Year. During this period, digital marketing costs tend to be lower relative to other periods, allowing us to efficiently invest more in direct marketing.

Current wording

Seasonality. Seasonality can impact our activated policy patterns, influencing acquisition volume, costs, and conversion rates. The three months ended March 31 have historically been our strongest quarter of activated policies, as consumer demand for life insurance is elevated by factors such as annual financial planning cycles that typically occur post-New Year. During this period, digital marketing costs tend to be lower relative to other periods, allowing us to efficiently invest more in direct marketing. However, as our business has grown rapidly and period-over-period growth has become an increasingly significant driver of our results, it is uncertain whether and to what extent seasonality will continue to impact our first quarter results compared to other quarters. As a result, our historical seasonal patterns may be less indicative of future results, and results for any single quarter may not be indicative of results for the full year or future periods.

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 and six months ended June 30, 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 nine months ended September 30, 2026 and 2025 (in thousands, except activated policies, ARPU and percentages):

Previous wording

Activated Policies. We define activated policies as the number of policies issued on our platform over a given period of measurement. Activated policies have increased over time as we have expanded our direct and third-party channels and added product offerings with existing and new carriers.

Current wording

Activated Policies. We define activated policies as the number of policies sold through our platform over a given period of measurement. Activated policies have increased over time as we have expanded our direct and third-party channels and added product offerings with existing and new carriers.

Previous 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.

Current wording

The total number of activated policies increased by 189% and 136% for the three and nine months ended September 30, 2026 compared to the same periods in 2025.

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 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.

Current wording

Contribution Profit. We define Contribution Profit as our gross profit less sales and marketing expenses, which include 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

For the three and six months ended June 30, 2026, Contribution Profit increased by $24.7 million and $42.8 million, respectively, compared to the same periods in 2025. The 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.

Current wording

For the three and nine months ended September 30, 2026, Contribution Profit increased by $29.7 million and $72.5 million, respectively, compared to the same periods in 2025. The 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.

Previous 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.

Current wording

Contribution Margin was 28% and 39% for the three months ended September 30, 2026 and 2025, respectively, and 30% and 41% for the nine months ended September 30, 2026 and 2025, respectively. For the three months ended September 30, 2026 and 2025, the decrease was primarily driven by the change to third-party agent compensation and persistency estimates implemented since the period ended March 31, 2026, along with a shift in channel mix toward our third-party channel. For the nine months ended September 30, 2026 and 2025, the decrease was driven by the change to third-party agent compensation and persistency estimates implemented in the period ended March 31, 2026, and 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, 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.

Current wording

Adjusted EBITDA. We define Adjusted EBITDA as net income (loss) 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 their industry as a measure of operational performance.

Previous 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.

Current wording

For the three and nine months ended September 30, 2026, Adjusted EBITDA increased by $16.2 million and $40.6 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.

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 ("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 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 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.

Current wording

Interest expense consists primarily 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 nine months ended September 30, 2026, 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.