MediaAlpha Inc
For the period ended Sep 30, 2024. Filed Nov 4, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 4, 2024
MAX$14.20-1.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-01.
0001818383-24-000062
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-04.
0001818383-24-000093
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 165 previous paragraphs and 166 current paragraphs.
86 unchanged; 73 reworded; 6 added; 4 removed; 2 previous and 1 current paragraphs rearranged.
Tables are not compared: 29 previous and 29 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (6)
Current report
The increase in sales and marketing expenses for the three months ended September 30, 2024, compared with the three months ended September 30, 2023, was due primarily to an increase in personnel-related costs resulting primarily from the hiring of additional employees, offset in part by lower equity-based compensation expense.
Current report
The decrease in health insurance revenue for the nine months ended September 30, 2024, compared with the nine months ended September 30, 2023, was immaterial and driven primarily by lower transactions through our Open Marketplace, due primarily to a reduced supply of consumer referrals resulting from one of our partners ceasing operations during the three months ended June 30, 2024, offset by higher customer acquisition spending by certain demand partners who transact primarily via our Private Marketplaces.
Current report
The following table presents our cost of revenue for the nine months ended September 30, 2024 and 2023, and the dollar and percentage changes between the two periods:
Current report
The increase in product development expenses for the nine months ended September 30, 2024, compared with the nine months ended September 30, 2023, was due primarily to an increase in personnel-related costs of $1.1 million as we hired additional employees, offset in part by a decrease in equity-based compensation expense of $1.2 million.
Current report
The decrease in amortization expense for the nine months ended September 30, 2024, compared with the nine months ended September 30, 2023, was immaterial.
Current report
On February 21, 2023, we received a civil investigative demand from the Federal Trade Commission (the “FTC”) regarding compliance with the FTC Act and the TSR, as they relate to the advertising, marketing, promotion, offering for sale, or sale of healthcare-related products, the collection, sale, transfer or provision to third parties of consumer data, telemarketing practices, and/or consumer privacy or data security. We have cooperated fully with the FTC investigation. On October 30, 2024, we received an initial settlement demand from the staff of the FTC (the “FTC Staff”) stating that the FTC Staff is prepared to recommend that the FTC approve the filing of a complaint against the Company for violations of Section 5(a) of the FTC Act, the TSR and the Government and Business Impersonation Rule (the “Impersonation Rule”). The FTC proposes to seek injunctive and monetary relief and civil penalties. If obtained in whole or in part, the monetary relief and penalties proposed by the FTC Staff would have an adverse, and potentially material, effect on the Company’s liquidity, financial condition and results of operations. The total amount of the monetary relief and penalties proposed by the FTC Staff significantly exceeds our existing liquidity and financial resources. Any such costs above the existing liquidity and financial resources would require us to seek additional capital, incur debt or otherwise take significant actions in order to satisfy the claims and there can be no assurances that such financing could be obtained on acceptable terms, or at all. In addition, the proposed injunctive terms, if obtained in whole or in part, could materially and adversely affect our ability to operate our business in the Health insurance vertical, including how we conduct our marketing activities and endeavors to ensure compliance with consumer protection laws by itself and third parties with which we do business. We strongly disagree with the allegations and believe we have substantial and meritorious defenses to the claims. Among other things, we believe that our conduct does not rise to the legal standard required for the FTC to obtain the proposed monetary relief and penalties. We will continue to engage in good faith with the FTC and seek to resolve this matter prior to litigation, but we are prepared to defend ourselves vigorously if a complaint is filed.
Removed paragraphs (4)
Previous report
The increase in health insurance revenue for the six months ended June 30, 2024, compared with the six months ended June 30, 2023, was driven by increased customer acquisition spending in our marketplaces by demand partners, and an increased supply of consumer referrals to our marketplaces by our supply partners and our proprietary websites due to the increased demand during the Open Enrollment period, offset in part by one of our partners ceasing operations during the three months ended June 30, 2024.
Previous report
The following table presents our cost of revenue for the six months ended June 30, 2024 and 2023, and the dollar and percentage changes between the two periods:
Previous report
The decrease in sales and marketing expenses for the six months ended June 30, 2024, compared with the six months ended June 30, 2023, was due primarily to a decrease in equity-based compensation expense of $1.0 million and a decrease in personnel-related costs of $0.3 million, which were related to lower employee headcount, and a decrease in amortization expense of $0.3 million related to the amortization of intangible assets arising from our acquisition of Customer Helper Team, LLC.
Previous report
The decrease in amortization expense for the six months ended June 30, 2024, compared with the six months ended June 30, 2023, was immaterial.
Reworded paragraphs (73)
Previous wording
Our mission is to help insurance carriers and distributors target and acquire customers more efficiently and at greater scale through technology and data science. Our technology platform brings together leading insurance carriers and high-intent consumers through a real-time, programmatic, transparent, and results-driven ecosystem. We believe we are the largest online customer acquisition platform in our core verticals of property & casualty ("P&C") insurance, health insurance, and life insurance, supporting $797 million in Transaction Value across our platform from these verticals over the twelve-month period ended June 30, 2024.
Current wording
Our mission is to help insurance carriers and distributors target and acquire customers more efficiently and at greater scale through technology and data science. Our technology platform brings together leading insurance carriers and high-intent consumers through a real-time, programmatic, transparent, and results-driven ecosystem. We believe we are the largest online customer acquisition platform in our core verticals of property & casualty ("P&C") insurance, health insurance, and life insurance, supporting over $1.1 billion in Transaction Value across our platform from these verticals over the twelve-month period ended September 30, 2024.
Previous wording
We have multi-faceted relationships with top-tier insurance carriers and distributors. A buyer or a demand partner within our ecosystem is generally an insurance carrier or distributor seeking to reach high-intent insurance consumers. A seller or a supply partner is typically an insurance carrier looking to maximize the value of non-converting or low expected LTV consumers, or an insurance-focused research destination or other financial website looking to monetize high-intent users on their websites. For the twelve-month period ended June 30, 2024, the websites of our diversified group of supply partners and our proprietary websites drove an average of 8.5 million Consumer Referrals on our platform each month.
Current wording
We have multi-faceted relationships with top-tier insurance carriers and distributors. A buyer or a demand partner within our ecosystem is generally an insurance carrier or distributor seeking to reach high-intent insurance consumers. A seller or a supply partner is typically an insurance carrier looking to maximize the value of non-converting or low expected LTV consumers, or an insurance-focused research destination or other financial website looking to monetize high-intent users on their websites. For the twelve-month period ended September 30, 2024, the websites of our diversified group of supply partners and our proprietary websites drove an average of 9.1 million Consumer Referrals on our platform each month.
Previous wording
For the three months ended June 30, 2024, we generated $178.3 million of revenue and $321.8 million of Transaction Value, representing increases of 110.3% and 155.6%, respectively, compared with the three months ended June 30, 2023, driven primarily by significant increases in customer acquisition spending by multiple P&C carrier partners as they refocus on growth in light of improved underwriting profitability.
Current wording
For the three months ended September 30, 2024, we generated $259.1 million of revenue and $451.8 million of Transaction Value, representing increases of 247.5% and 314.4%, respectively, compared with the three months ended September 30, 2023, driven primarily by significant increases in customer acquisition spending by P&C carrier partners as they refocus on growth in response to improving underwriting profitability.
Previous wording
Contribution, which generally represents revenue less revenue share payments and online advertising costs, was $33.7 million for the three months ended June 30, 2024, a year-over-year increase of 104.1%, driven primarily by the higher revenue. Contribution Margin was 18.9%, compared with 19.5% in the three months ended June 30, 2023.
Current wording
Contribution, which generally represents revenue less revenue share payments and online advertising costs, was $41.5 million for the three months ended September 30, 2024, a year-over-year increase of 175.9%, driven primarily by the higher revenue. Contribution Margin was 16.0% in the three months ended September 30, 2024, compared with 20.2% in the three months ended September 30, 2023.
Previous wording
Net income for the three months ended June 30, 2024 was $4.4 million, compared with a net loss of $20.0 million for the three months ended June 30, 2023, driven primarily by the increase in gross profit and decrease in equity-based compensation expense.
Current wording
Net income for the three months ended September 30, 2024 was $11.9 million, compared with a net loss of $18.7 million for the three months ended September 30, 2023, driven primarily by the increase in gross profit and lower equity-based compensation expense.
Previous wording
Adjusted EBITDA for the three months ended June 30, 2024 was $18.7 million, a year-over-year increase of 421.7%, due primarily to higher gross profit as well as continued expense discipline.
Current wording
Adjusted EBITDA for the three months ended September 30, 2024 was $26.3 million, a year-over-year increase of 632.6%, due primarily to higher gross profit.
Previous wording
We believe that our future performance will depend on many factors, including those described below and in Part I, Item 1A "Risk Factors" in our 2023 Annual Report on Form 10-K.
Current wording
We believe that our future performance will depend on many factors, including those described below and in Part I, Item 1A "Risk Factors" in our 2023 Annual Report on Form 10-K and under Part II, Item 1A "Risk Factors" in this Quarterly Report on Form 10-Q.
Previous wording
We define “Transaction Value” as the total gross dollars transacted by our partners on our platform. Transaction Value is an operating metric not presented in accordance with GAAP, and is a driver of revenue based on the economic relationships we have with our partners. Transaction Value from Open Marketplace transactions is a direct driver of our revenue, while Transaction Value from Private Marketplace transactions is an indirect driver of our revenue (see “Key business and operating metrics” below). Transaction Value on our platform increased to $321.8 million and $540.9 million for the three and six months ended June 30, 2024, respectively, from $125.9 million and $319.1 million for the three and six months ended June 30, 2023, respectively, due primarily to an increase in customer acquisition spending by P&C insurance carriers in response to improvements in their underwriting profitability. We have developed multi-faceted, deeply integrated partnerships with insurance carriers and distributors, who may be both demand partners and supply partners on our platform. We believe the versatility and breadth of our offerings, coupled with our focus on high-quality products, provide significant value to insurance carriers and distributors, leading many of them to use our platform as their central hub for broadly managing digital customer acquisition and monetization, resulting in strong retention rates. For the three and six months ended June 30, 2024, 97% and 98% of total insurance Transaction Value executed on our platform, respectively, came from demand partner relationships in existence during 2023.
Current wording
We define “Transaction Value” as the total gross dollars transacted by our partners on our platform. Transaction Value is an operating metric not presented in accordance with GAAP, and is a driver of revenue based on the economic relationships we have with our partners. Transaction Value from Open Marketplace transactions is a direct driver of our revenue, while Transaction Value from Private Marketplace transactions is an indirect driver of our revenue (see “Key business and operating metrics” below). Transaction Value on our platform increased to $451.8 million and $992.7 million for the three and nine months ended September 30, 2024, respectively, from $109.0 million and $428.1 million for the three and nine months ended September 30, 2023, respectively, due primarily to an increase in customer acquisition spending by P&C insurance carriers in response to improvements in their underwriting profitability. We have developed multi-faceted, deeply integrated partnerships with insurance carriers and distributors, who may be both demand partners and supply partners on our platform. We believe the versatility and breadth of our offerings, coupled with our focus on high-quality products, provide significant value to insurance carriers and distributors, leading many of them to use our platform as their central hub for broadly managing digital customer acquisition and monetization, resulting in strong retention rates. For the three and nine months ended September 30, 2024, 97% of total insurance Transaction Value executed on our platform, respectively, came from demand partner relationships in existence during 2023.
Previous wording
We retain and attract demand partners by finding high-quality sources of Consumer Referrals to make available to our demand partners. We obtain these Consumer Referrals from our diverse network of supply partners as well as from our proprietary properties. We seek to develop, acquire and retain relationships with high-quality supply partners by developing flexible platforms to enable our supply partners to maximize their revenue, manage their demand side relationships in scalable and flexible ways and focus on long-term sustainable economics with respect to revenue share. Our relationships with our partners are deep and long standing and involve most of the top-tier insurance carriers in the industry. In terms of demand partners, during the six months ended June 30, 2024, 13 of the top 20 largest auto insurance carriers by customer acquisition spend were on our platform.
Current wording
We retain and attract demand partners by finding high-quality sources of Consumer Referrals to make available to our demand partners. We obtain these Consumer Referrals from our diverse network of supply partners as well as from our proprietary properties. We seek to develop, acquire and retain relationships with high-quality supply partners by developing flexible platforms to enable our supply partners to maximize their revenue, manage their demand side relationships in scalable and flexible ways and focus on long-term sustainable economics with respect to revenue share. Our relationships with our partners are deep and long standing and involve most of the top-tier insurance carriers in the industry. In terms of demand partners, during the nine months ended September 30, 2024, 13 of the top 20 largest auto insurance carriers by customer acquisition spend were on our platform.
Previous wording
Our results depend in large part on the number of Consumer Referrals purchased on our platform. The aggregate number of consumer clicks, calls, and leads purchased by insurance buyers on our platform increased to 26.2 million and 52.8 million for the three and six months ended June 30, 2024, respectively, from 24.3 million and 49.2 million for the three and six months ended June 30, 2023, respectively. We seek to increase the number and scale of our supply relationships and drive consumers to our proprietary properties through a variety of paid traffic acquisition sources. We continuously look to diversify our paid media sources to extend beyond search engine marketing, which has historically represented the bulk of our paid media spend, into other online media sources, including native, social, and display advertising.
Current wording
Our results depend in large part on the number of Consumer Referrals purchased on our platform and the pricing of such Consumer Referrals. The aggregate number of consumer clicks, calls, and leads purchased by insurance buyers on our platform increased to 30.5 million and 83.3 million for the three and nine months ended September 30, 2024, respectively, from 23.2 million and 72.4 million for the three and nine months ended September 30, 2023, respectively. We seek to increase the number and scale of our supply relationships and drive consumers to our proprietary properties through a variety of paid traffic acquisition sources. We continuously look to diversify our paid media sources to extend beyond search engine marketing, which has historically represented the bulk of our paid media spend, into other online media sources, including native, social, and display advertising.
Previous wording
Our results are subject to fluctuations as a result of seasonality. In particular, our P&C insurance vertical is typically characterized by seasonal strength in our quarters ending March 31 due to a greater supply of Consumer Referrals and higher customer acquisition budgets during the start of the year, and to seasonal weakness in our quarters ending December 31 due to a lower supply of Consumer Referrals available on a cost-effective basis and lower customer acquisition budgets from some buyers during those quarters. Our health insurance vertical is typically characterized by seasonal strength in our quarters ending December 31 due to open enrollment periods for health insurance and annual enrollment for Medicare during those quarters, with a material increase in consumer search volume for health products and a related increase in buyer customer acquisition budgets.
Current wording
Our results are subject to fluctuations as a result of seasonality. In particular, our P&C insurance vertical is typically characterized by seasonal strength in our quarters ending March 31 due to a greater supply of Consumer Referrals and higher customer acquisition budgets during the start of the year, and by seasonal weakness in our quarters ending December 31 due to a lower supply of Consumer Referrals available on a cost-effective basis and lower customer acquisition budgets from some buyers during those quarters. Our health insurance vertical is typically characterized by seasonal strength in our quarters ending December 31 due to open enrollment periods for health insurance and annual enrollment for Medicare during those quarters, with a material increase in consumer search volume for health products and a related increase in buyer customer acquisition budgets.
Previous wording
Our results are also subject to fluctuations as a result of business cycles experienced by companies in the insurance industry. These cycles in the auto insurance industry are characterized by periods of “soft” market conditions, when carriers are profitable and are focused on increasing capacity and building market share, and “hard” market conditions, when carriers are experiencing lower or even negative underwriting profits and are seeking to increase their premium rates to improve their profitability. As our demand partners in these industries go through these market cycles, they often increase their customer acquisition spending during soft markets and reduce it during hard markets, causing their relative demand for Consumer Referrals from our platform to increase and decrease accordingly. Beginning in the second half of 2021, the auto insurance industry entered a "hard” market, with many carriers experiencing lower than expected underwriting profitability due to higher than expected inflation in automobile claims costs, causing them to significantly reduce their customer acquisition spending on our platform. In late 2023, P&C insurance industry profitability began to improve as premium increases began to outpace loss cost inflation, causing them to begin to resume their marketing investments. This recovery gained significant momentum during the first half of 2024 as multiple carriers meaningfully increased their spending in our marketplaces, and we expect this trend to continue as additional carriers refocus on growth in response to improved underwriting profitability.
Current wording
Our results are also subject to fluctuations as a result of business cycles experienced by companies in the P&C insurance industry. These cycles in the P&C insurance industry are characterized by periods of “soft” market conditions, when carriers are profitable and are focused on increasing capacity and building market share, and “hard” market conditions, when carriers are experiencing lower or even negative underwriting profits and are seeking to increase their premium rates to improve their profitability. As our demand partners in the P&C insurance industry go through these market cycles, they often increase their customer acquisition spending during soft markets and reduce it during hard markets, causing their relative demand for Consumer Referrals from our platform to increase and decrease accordingly. Beginning in the second half of 2021, the P&C insurance industry entered a "hard” market, with many carriers experiencing lower than expected underwriting profitability due to higher than expected inflation in automobile claims costs, causing them to significantly reduce their customer acquisition spending on our platform. In late 2023, P&C insurance industry profitability began to improve as premium increases began to outpace loss cost inflation, causing them to begin to resume their marketing investments. This recovery gained significant momentum during the first nine months of 2024 as multiple carriers meaningfully increased their spending in our marketplaces. While we expect this improvement to continue, we are currently unable to accurately predict the pace or slope of this recovery, or its impact on our revenue from the P&C insurance vertical or our profitability, beyond the fourth quarter of 2024.
Previous wording
Our revenue and earnings may fluctuate from time to time as a result of federal, state, international and industry-based laws, directives and regulations and developing standards with respect to the enforcement of those regulations. Our business is affected directly because we operate websites, conduct telemarketing and email marketing and collect, process, store, share, disclose, transfer and use consumer information and other data. Our business is affected indirectly as our clients adjust their operations as a result of regulatory changes and enforcement activity within their industries. For example, the FTC has recently started taking a new position (in recent public statements and enforcement actions) regarding the consent rules under the Telemarketing Sales Rule ("TSR"), and the Federal Communications Commission has recently adopted changes to the consent rules under the Telephone Consumer Protection Act of 1991 (“TCPA”). These changes have required, and may in the future require, both us and our Partners to adjust their telemarketing activities. While it is unclear how some of these changes may ultimately be interpreted, they may have a significant impact on the market for leads, and may require us and our Partners to modify our telemarketing practices and policies. In addition, the California Consumer Privacy Act ("CCPA") became effective on January 1, 2020 and has been amended by the California Privacy Rights Act ("CPRA"), which became effective January 1, 2023, and a number of other states, including Colorado, Connecticut, Delaware, Florida, Indiana, Iowa, Montana, New Jersey, Oregon, Tennessee, Texas, Utah, Virginia, and Washington, have enacted or are considering similar laws, all of which may affect our business. While it is unclear how this new legislation may be modified or how certain provisions will be interpreted, the effects of this legislation are potentially significant, and may require us to modify our data processing practices and policies and incur substantial compliance-related costs and expenses. In addition, we are licensed as a health insurance broker in all 50 states and the District of Columbia, making us subject to certain insurance laws and regulations. Our Medicare business is also subject to Federal rules governing the marketing of such policies. For a description of laws and regulations to which we are generally subject, see Item 1 “Business” and Item 1A “Risk Factors.” in our 2023 Annual Report on Form 10-K.
Current wording
Our revenue and earnings may fluctuate from time to time as a result of federal, state, international and industry-based laws, directives and regulations and developing standards with respect to the enforcement of those regulations. Our business is affected directly because we operate websites, conduct telemarketing and email marketing and collect, process, store, share, disclose, transfer and use consumer information and other data. Our business is affected indirectly as our clients adjust their operations as a result of regulatory changes and enforcement activity within their industries. For example, the FTC has recently started taking a new position (in recent public statements and enforcement actions) regarding the consent rules under the Telemarketing Sales Rule ("TSR"), and the Federal Communications Commission has recently adopted changes to the consent rules under the Telephone Consumer Protection Act of 1991 (“TCPA”). These changes have required, and may in the future require, both us and our Partners to adjust their telemarketing activities. While it is unclear how some of these changes may ultimately be interpreted, they may have a significant impact on the market for leads, and may require us and our Partners to modify our telemarketing practices and policies. In addition, the California Consumer Privacy Act ("CCPA") became effective on January 1, 2020 and has been amended by the California Privacy Rights Act ("CPRA"), which became effective January 1, 2023, and more than 20 other states have enacted or are considering similar laws, all of which may affect our business. While it is unclear how this new legislation may be modified or how certain provisions will be interpreted, the effects of this legislation are potentially significant, and may require us to modify our data processing practices and policies and incur substantial compliance-related costs and expenses. In addition, we are licensed as a health insurance broker in all 50 states and the District of Columbia, making us subject to certain insurance laws and regulations. Our Medicare business is also subject to federal rules governing the marketing of such policies. For a description of laws and regulations to which we are generally subject, see Item 1 “Business” and Item 1A “Risk Factors.” in our 2023 Annual Report on Form 10-K and under Part II, Item 1A "Risk Factors" in this Quarterly Report on Form 10-Q.
Previous wording
The price and amount of Consumer Referrals purchased and sold on our platform vary based on a number of market conditions and consumer attributes, including (i) geographic location of consumers, (ii) demographic attributes of consumers, (iii) the source of Consumer Referrals and quality of conversion by source, (iv) buyer bid levels and (v) buyer demand and budgets.
Current wording
The price and amount of Consumer Referrals purchased and sold on our platform vary based on a number of market conditions and consumer attributes, including (i) geographic location of consumers, (ii) demographic attributes of consumers, (iii) the source of Consumer Referrals and quality of conversion by source, (iv) the volume of Consumer Referrals provided by our Supply Partners (v) Demand Partner bid levels and (vi) Demand Partner demand and budgets.
Previous wording
In our Open Marketplace transactions, we have control over the Consumer Referrals that are sold to our demand partners. In these arrangements, we have separate agreements with suppliers and demand partners. Suppliers are not a party to the contractual arrangements with our demand partners, nor are the suppliers the beneficiaries of our demand partner agreements. We generate revenue from the sale of consumer referrals from our demand partners and separately pay (i) a revenue share to suppliers or (ii) a fee to internet search companies to drive consumers to our proprietary websites. We are the principal in Open Marketplace transactions. As a result, the fees paid by demand partners for Consumer Referrals are recognized as revenue and the fees paid to suppliers are included in cost of revenue.
Current wording
In our Open Marketplace transactions, we have control over the Consumer Referrals that are sold to our Demand Partners. In these arrangements, we have separate agreements with the Supply Partners and Demand Partners. Supply Partners are not a party to the contractual arrangements with our Demand Partners, nor are the Supply Partners the beneficiaries of our Demand Partner agreements. We generate revenue from the delivery of Consumer Referrals to our customers (Demand Partners) on our technology platform and separately pay (i) a revenue share to Supply Partners or (ii) a fee to internet search companies to drive consumers to our proprietary websites. We are the principal in Open Marketplace transactions. As a result, the price paid by the Demand Partners for Consumer Referrals sold is recognized as revenue and the price paid to the Supply Partner is included in cost of revenue.
Previous wording
With respect to our Private Marketplace transactions, buyers and suppliers contract with one another directly and leverage our platform to facilitate transparent, real-time transactions utilizing the reporting and analytical tools available to them from use of our platform. We charge the supplier a platform fee on the Consumer Referrals transacted. We act as an agent in Private Marketplace transactions and recognize revenue for the platform fee received, which is a negotiated percentage of the Transaction Value of such transactions. We do not make any payments to suppliers in our Private Marketplaces.
Current wording
With respect to our Private Marketplace transactions, Supply Partners and Demand Partners contract with one another directly. In these transactions, we act as an agent, facilitating the sale of Consumer Referrals between these Supply and Demand Partners, by providing access to our platform to the Supply Partner for their use as a tracking, reporting, optimization, and analytics tool in transacting with the Demand Partner, and we generate revenue by charging the Supply Partner a platform fee on the Consumer Referrals transacted, which is a negotiated percentage of the Transaction Value of such transactions. We do not make any payments to Supply Partners in our Private Marketplace transactions.
Previous wording
Our cost of revenue is comprised primarily of revenue share payments to suppliers and traffic acquisition costs paid to search engines and social media platforms, as well as telephony infrastructure costs, internet and hosting costs, and merchant fees, and includes salaries, wages, equity-based compensation, the cost of health and other employee benefits for employees engaged in media buying, and other expenses including allocated portion of rent and facilities expenses.
Current wording
Our cost of revenue is comprised primarily of revenue share payments to Supply Partners and traffic acquisition costs paid to search engines and social media platforms, as well as telephony infrastructure costs, internet and hosting costs, and merchant fees, and includes salaries, wages, equity-based compensation, the cost of health and other employee benefits for employees engaged in media buying, and other expenses including an allocated portion of rent and facilities expenses.
Previous wording
General and administrative expenses consist primarily of an allocation of personnel expenses for executive, finance, legal, people operations, and business analytics employees, and include salaries, wages, equity-based compensation, and the cost of health and other employee benefits. General and administrative expenses also include professional services, an allocated portion of rent and facilities expenses and depreciation and amortization expense, and any change in fair value of contingent consideration.
Current wording
General and administrative expenses consist primarily of an allocation of personnel expenses for executive, finance, legal, people operations, and business analytics employees, and include salaries, wages, equity-based compensation, and the cost of health and other employee benefits. General and administrative expenses also include professional services, an allocated portion of rent and facilities expenses and depreciation and amortization expense.
Previous wording
MediaAlpha, Inc. is taxed as a corporation and pays corporate federal, state and local taxes on income allocated to it from QLH based upon MediaAlpha, Inc.’s economic interest held in QLH. QLH is treated as a pass-through partnership for income tax reporting purposes and is not subject to federal income tax. Instead, QLH’s taxable income or loss is passed through to its members, including MediaAlpha, Inc, pro-rata to their ownership interest in QLH. Accordingly, as our ownership interest in QLH increases, our share of the taxable income (loss) of QLH also increases. As of June 30, 2024, our ownership interest in QLH was 82.5%.
Current wording
MediaAlpha, Inc. is taxed as a corporation and pays corporate federal, state and local taxes on income allocated to it from QLH based upon MediaAlpha, Inc.’s economic interest held in QLH. QLH is treated as a pass-through partnership for income tax reporting purposes and is not subject to federal income tax. Instead, QLH’s taxable income or loss is passed through to its members, including MediaAlpha, Inc., pro-rata to their ownership interest in QLH. Accordingly, as our ownership interest in QLH increases, our share of the taxable income (loss) of QLH also increases. As of September 30, 2024, our ownership interest in QLH was 82.6%.
Previous wording
The increase in P&C insurance revenue for the three months ended June 30, 2024, compared with the three months ended June 30, 2023, was due to an increase in customer acquisition spending by multiple P&C insurance carrier partners as they refocus on growth in response to the significant improvement in their underwriting profitability. We believe that the hard market cycle the P&C insurance industry has experienced since the second half of 2021 has now turned and a market recovery is underway. While we expect this improvement to continue, we are currently unable to accurately predict the pace or slope of this recovery, or its impact on our revenue from the P&C insurance vertical or our profitability, beyond the third quarter of 2024.
Current wording
The increase in P&C insurance revenue for the three months ended September 30, 2024, compared with the three months ended September 30, 2023, was due to an increase in customer acquisition spending by P&C insurance carrier partners as they refocus on growth in response to the significant improvement in their underwriting profitability. This additional demand drove increased year-over-year pricing and higher volume as we continued to scale the business and expand our market share. We believe that the hard market cycle the P&C insurance industry has experienced since the second half of 2021 has now turned and the industry is improving rapidly. While we expect this improvement to continue, we are currently unable to accurately predict the pace or slope of this recovery, or its impact on our revenue from the P&C insurance vertical or our profitability, beyond the fourth quarter of 2024.
Previous wording
The decrease in health insurance revenue for the three months ended June 30, 2024, compared with the three months ended June 30, 2023, was driven by a lower mix of transaction through our Open Marketplace, which negatively impacted revenue, and by one of our partners ceasing operations during the three months ended June 30, 2024, offset in part by increases in customer acquisition spending in our marketplaces due primarily to increased demand for leads and calls.
Current wording
The decrease in health insurance revenue for the three months ended September 30, 2024, compared with the three months ended September 30, 2023, was driven by lower transactions through our Open Marketplace, due primarily to a reduced supply of consumer referrals resulting from one of our partners ceasing operations during the three months ended June 30, 2024, offset in part by higher customer acquisition spending by certain demand partners who transact primarily via our Private Marketplaces.
Previous wording
The increase in life insurance revenue for the six months ended June 30, 2024, compared with the six months ended June 30, 2023, was driven by a high mix of transactions through our Open Marketplace, which positively impacted revenue, offset in part by a decrease in customer acquisition spending.
Current wording
The decrease in life insurance revenue for the three months ended September 30, 2024, compared with the three months ended September 30, 2023, was due primarily to a reduced supply of consumer referrals resulting from one of our supply partners ceasing operations during the three months ended June 30, 2024, offset in part by a higher mix of transactions through our Open Marketplace, which have a greater impact on revenue.
Previous wording
The increase in cost of revenue for the three months ended June 30, 2024, compared with the three months ended June 30, 2023, was driven primarily by higher revenue share payments to suppliers due to the overall increase in revenue.
Current wording
The increase in cost of revenue for the three months ended September 30, 2024, compared with the three months ended September 30, 2023, was driven primarily by higher revenue share payments to suppliers due to the overall increase in revenue and lower take rates, offset in part by higher transactions in our Private Marketplaces, which have a lower impact on cost of revenue.
Previous wording
The decrease in product development expenses for the six months ended June 30, 2024, compared with the six months ended June 30, 2023, was due primarily to a decrease in equity-based compensation expense of $1.0 million.
Current wording
The increase in product development expenses for the three months ended September 30, 2024, compared with the three months ended September 30, 2023, was due primarily to an increase in personnel-related costs of $1.0 million resulting primarily from the hiring of additional employees, offset in part by a decrease in equity-based compensation expense.
Previous wording
The decrease in general and administrative expenses for the three months ended June 30, 2024, compared with the three months ended June 30, 2023, was due primarily to a decrease in equity-based compensation expense of $4.7 million, a $0.3 million reduction in directors & officers insurance premiums, and a decrease in personnel-related costs of $0.2 million, offset in part by higher legal and accounting fees related to secondary offerings of our shares.
Current wording
The decrease in general and administrative expenses for the three months ended September 30, 2024, compared with the three months ended September 30, 2023, was due primarily to a decrease in equity-based compensation expense of $4.9 million, a $1.6 million decrease in legal costs driven primarily by lower costs associated with the civil investigative demand from the Federal Trade Commission, and a $0.3 million reduction in directors & officers insurance premiums, offset in part by an increase in personnel-related costs of $0.6 million.
Previous wording
The decrease in equity-based compensation expense for the three months ended June 30, 2024, compared with the three months ended June 30, 2023, was due primarily to certain Restricted Stock Units (RSUs) granted to key employees at the IPO being fully vested as of December 31, 2023, as well as the lower employee headcount, offset in part by expenses related to annual awards of RSUs granted to employees during the three months ended March 31, 2024.
Current wording
The decrease in equity-based compensation expense for the three months ended September 30, 2024, compared with the three months ended September 30, 2023, was due primarily to certain Restricted Stock Units (RSUs) granted to key employees at the IPO being fully vested as of December 31, 2023, offset in part by expenses related to annual awards of RSUs granted to employees during the three months ended March 31, 2024 and higher employee headcount.
Previous wording
The increase in other (income), net for the three months ended June 30, 2024, compared with the three months ended June 30, 2023, was driven primarily by a one-time contract termination fee of $1.7 million receivable from one of our partners in the Health and Life vertical that ceased operations during the three months ended June 30, 2024.
Current wording
The increase in other (income), net for the three months ended September 30, 2024, compared with the three months ended September 30, 2023, was immaterial.
Previous wording
The decrease in interest expense for the three months ended June 30, 2024, compared with the three months ended June 30, 2023, was driven by the impact of lower outstanding balances during 2024, offset in part by a higher interest rate payable on amounts borrowed under the 2021 Credit Facilities.
Current wording
The decrease in interest expense for the three months ended September 30, 2024, compared with the three months ended September 30, 2023, was driven by the impact of lower interest rates as well as lower outstanding balances during 2024.
Previous wording
For the three months ended June 30, 2024, we recorded an income tax expense of $0.1 million resulting from our effective tax rate of 2.9%, which differed from the U.S. federal statutory rate of 21%, due primarily to the tax impacts of changes in our valuation allowance, nondeductible equity-based compensation, losses associated with non-controlling interests not taxable to us, state taxes, and other nondeductible permanent items. For the three months ended June 30, 2023, we recorded an income tax expense of $0.2 million resulting from our effective tax rate of (0.8)%, which differed from the U.S. federal statutory rate of 21%, due primarily to the tax impacts of recording a valuation allowance against current year losses, nondeductible equity-based compensation, losses associated with non-controlling interests not taxable to us, state taxes, and other nondeductible permanent items.
Current wording
For the three months ended September 30, 2024, we recorded an income tax expense of $0.3 million resulting from our effective tax rate of 2.6%, which differed from the U.S. federal statutory rate of 21%, due primarily to the tax impacts of changes in our valuation allowance. For the three months ended September 30, 2023, we recorded an income tax expense of $0.1 million resulting from our effective tax rate of (0.5)%, which differed from the U.S. federal statutory rate of 21%.
Previous wording
Operating results for the six months ended June 30, 2024 and 2023
Current wording
Operating results for the nine months ended September 30, 2024 and 2023
Previous wording
The following table sets forth our operating results in absolute dollars and as a percentage of revenue for the six months ended June 30, 2024 and 2023:
Current wording
The following table sets forth our operating results in absolute dollars and as a percentage of revenue for the nine months ended September 30, 2024 and 2023:
Previous wording
The following table presents our revenue, disaggregated by vertical, for the six months ended June 30, 2024 and 2023, and the dollar and percentage changes between the two periods:
Current wording
The following table presents our revenue, disaggregated by vertical, for the nine months ended September 30, 2024 and 2023, and the dollar and percentage changes between the two periods:
Previous wording
The increase in P&C insurance revenue for the six months ended June 30, 2024, compared with the six months ended June 30, 2023, was due to an increase in customer acquisition spending by multiple P&C insurance carrier partners as they refocus on growth in response to the significant improvement in their underwriting profitability. We believe that the hard market cycle the P&C insurance industry has experienced since the second half of 2021 has now turned and a market recovery is underway.
Current wording
The increase in P&C insurance revenue for the nine months ended September 30, 2024, compared with the nine months ended September 30, 2023, was due to an increase in customer acquisition spending by multiple P&C insurance carrier partners as they refocus on growth in response to the significant improvement in their underwriting profitability. We believe that the hard market cycle the P&C insurance industry has experienced since the second half of 2021 has now turned and the industry is improving rapidly.
Previous wording
The increase in life insurance revenue for the three months ended June 30, 2024, compared with the three months ended June 30, 2023, was driven by a high mix of transactions through our Open Marketplace, which positively impacted revenue, offset in part by a decrease in customer acquisition spending.
Current wording
The increase in life insurance revenue for the nine months ended September 30, 2024, compared with the nine months ended September 30, 2023, was driven by a high mix of transactions through our Open Marketplace, which have a greater impact on revenue, offset in part by reduced supply of consumer referrals resulting from one of our supply partners ceasing operations during the three months ended June 30, 2024.
Previous wording
The decrease in other revenue for the six months ended June 30, 2024, compared with the six months ended June 30, 2023, was driven by lower revenue from our travel vertical due to a reduced supply of consumer referrals resulting from higher traffic acquisition costs, as well as lower revenue from our consumer finance vertical due to a reduction in mortgage and refinancing activity caused by rising interest rates.
Current wording
The decrease in other revenue for the nine months ended September 30, 2024, compared with the nine months ended September 30, 2023, was driven by lower revenue from our travel vertical due to a reduced supply of consumer referrals resulting from higher traffic acquisition costs, as well as lower revenue from our consumer finance vertical due to a reduction in mortgage and refinancing activity caused by high interest rate levels.
Previous wording
The increase in cost of revenue for the six months ended June 30, 2024, compared with the six months ended June 30, 2023, was driven primarily by higher revenue share payments to suppliers due to the overall increase in revenue.
Current wording
The increase in cost of revenue for the nine months ended September 30, 2024, compared with the nine months ended September 30, 2023, was driven primarily by higher revenue share payments to suppliers due to the overall increase in revenue and lower take rates, offset in part by higher transactions in our Private Marketplaces, which have a lower impact on cost of revenue.
Previous wording
The following table presents our sales and marketing expenses for the six months ended June 30, 2024 and 2023, and the dollar and percentage changes between the two periods:
Current wording
The following table presents our sales and marketing expenses for the nine months ended September 30, 2024 and 2023, and the dollar and percentage changes between the two periods:
Previous wording
The decrease in product development expenses for the three months ended June 30, 2024, compared with the three months ended June 30, 2023, was due primarily to a decrease in equity-based compensation expense of $0.3 million, offset in part by an increase in personnel-related costs of $0.2 million.
Current wording
The decrease in sales and marketing expenses for the nine months ended September 30, 2024, compared with the nine months ended September 30, 2023, was due primarily to a decrease in equity-based compensation expense of $1.2 million and a decrease in amortization expense of $0.4 million, offset in part by an increase in personnel-related costs of $0.3 million.
Previous wording
The following table presents our product development expenses for the six months ended June 30, 2024 and 2023, and the dollar and percentage changes between the two periods:
Current wording
The following table presents our product development expenses for the nine months ended September 30, 2024 and 2023, and the dollar and percentage changes between the two periods:
Previous wording
The following table presents our general and administrative expenses for the six months ended June 30, 2024 and 2023, and the dollar and percentage changes between the two periods:
Current wording
The following table presents our general and administrative expenses for the nine months ended September 30, 2024 and 2023, and the dollar and percentage changes between the two periods:
Showing the first 40 of 73 pairs. Open the source sections for the rest.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Credit Agreement) on an annual basis. We generated Excess Cash Flow for the year ended December 31, 2023, and prepaid approximately $3.0 million of the principal under the 2021 Term Loan Facility during the three months ended June 30, 2024. The 2021 Revolving Credit Facility does not require amortization of principal and will mature on July 29, 2026.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
The decrease in sales and marketing expenses for the three months ended June 30, 2024, compared with the three months ended June 30, 2023, was due primarily to a decrease in equity-based compensation expense of $0.3 million.
Previous report — wording carried elsewhere
Term Loan Facility was $163.2 million and our borrowing capacity available under the 2021 Revolving Credit Facility was $45.0 million.