MediaAlpha, Inc.

Key business and financial metrics

In addition to traditional financial metrics, we rely upon certain business and operating metrics that are not presented in accordance with GAAP to estimate the volume of spending on our platform, estimate and recognize revenue, evaluate our business performance and facilitate our operations. Such business and operating metrics should not be considered in isolation from, or as an alternative to, measures presented in accordance with GAAP and should be considered together with other operating and financial performance measures presented in accordance with GAAP. Also, such business and operating metrics may not necessarily be comparable to similarly titled measures presented by other companies.

Adjusted EBITDA

We define “Adjusted EBITDA” as net income (loss) excluding interest expense, income tax expense (benefit), depreciation expense on property and equipment, amortization of intangible assets, as well as equity-based compensation expense and certain other adjustments as listed in the table below. Adjusted EBITDA is a non-GAAP financial measure that we present to supplement the financial information we present on a GAAP basis. We monitor and present Adjusted EBITDA because it is a key measure used by our management to understand and evaluate our operating performance, to establish budgets and to develop operational goals for managing our business. We believe that Adjusted EBITDA helps identify underlying trends in our business that could otherwise be masked by the effect of the expenses that we exclude in the calculations of Adjusted EBITDA. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects. In addition, presenting Adjusted EBITDA provides investors with a metric to evaluate the capital efficiency of our business.

Adjusted EBITDA is not presented in accordance with GAAP and should not be considered in isolation of, or as an alternative to, measures presented in accordance with GAAP. There are a number of limitations related to the use of Adjusted EBITDA rather than net income, which is the most directly comparable financial measure calculated and presented in accordance with GAAP. These limitations include the fact that Adjusted EBITDA excludes interest expense on debt, income tax expense (benefit), equity-based compensation expense, depreciation and amortization, and certain other adjustments that we consider to be useful to investors and others in understanding and evaluating our operating results. In addition, other companies may use other measures to evaluate their performance, including different definitions of “Adjusted EBITDA,” which could reduce the usefulness of our Adjusted EBITDA as a tool for comparison.

The following table reconciles Adjusted EBITDA with net income (loss), the most directly comparable financial measure calculated and presented in accordance with GAAP, for the three months ended March 31, 2026 and 2025:

(1)Transaction expenses for the three months ended March 31, 2026 consist of legal and other fees of $1.1 million and a loss on extinguishment of $0.2 million incurred by us in connection with the 2026 Credit Facilities.

(2)Write-off of intangible assets for the three months ended March 31, 2025 consists of a charge related to the write-off of customer relationships and trademarks, trade names, and domain names intangible assets acquired as part of the acquisition of Customer Helper Team, LLC.

(3)Changes in TRA related liability consist of adjustments to the TRA liability to reflect probable future payments under the agreement.

(4)Legal expenses for the three months ended March 31, 2026 were immaterial. Legal expenses for the three months ended March 31, 2025, consist of an increase of $5.0 million to the loss reserve established in connection with the FTC Matter and legal fees and costs incurred in connection with such matter.

Contribution and Contribution Margin

We define “Contribution” as revenue less revenue share payments and online advertising costs, or, as reported in our consolidated statements of operations, revenue less cost of revenue (i.e., gross profit), as adjusted to exclude the following items from cost of revenue: equity-based compensation; salaries, wages, and related costs; internet and hosting costs; amortization; depreciation; other services; and merchant-related fees. We define “Contribution Margin” as Contribution expressed as a percentage of revenue for the same period. Contribution and Contribution Margin are non-GAAP financial measures that we present to supplement the financial information we present on a GAAP basis. We use Contribution and Contribution Margin to measure the return on our relationships with our Supply Partners (excluding certain fixed costs), the financial return on and efficacy of our online advertising costs to drive consumers to our proprietary websites, and our operating leverage. We do not use Contribution and Contribution Margin as measures of overall profitability. We present Contribution and Contribution Margin because they are used by our management and board of directors to manage our operating performance, including evaluating our operational performance against budget and assessing our overall operating efficiency and operating leverage. For example, if Contribution increases and our headcount costs and other operating expenses remain steady, our Adjusted EBITDA and operating leverage increase. If Contribution Margin decreases, we may choose to re-evaluate and re-negotiate our revenue share agreements with our Supply Partners, to make optimization and pricing changes with respect to our bids for keywords from primary traffic acquisition sources, or to change our overall cost structure with respect to headcount, fixed costs and other costs. Other companies may calculate Contribution and Contribution Margin differently than we do. Contribution and Contribution Margin have their limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results presented in accordance with GAAP.

The following table reconciles Contribution with gross profit, the most directly comparable financial measure calculated and presented in accordance with GAAP, for the three months ended March 31, 2026 and 2025:

Liquidity and capital resources

Overview

Our principal sources of liquidity are our cash flows generated from operations and cash and funds available under the 2026 Revolving Credit Facility. Our principal uses of cash include funding of our operations, interest payments, share repurchases, and mandatory principal payments on our long-term debt. As of March 31, 2026 and December 31, 2025, our cash and cash equivalents totaled $26.1 million and $46.9 million, respectively. As of March 31, 2026, the aggregate principal amount outstanding under the 2026 Term Loan Facility was $150.0 million and our borrowing capacity available under the 2026 Revolving Credit Facility was $45.0 million. On March 25, 2026, we entered into an amendment and restatement agreement (the “Amendment and Restatement Agreement”) to the 2020 Credit Agreement dated as of September 23, 2020, as heretofore amended (the “Existing Credit Agreement” and, as amended and restated by the Amendment and Restatement Agreement) as discussed in detail below.

Our business is seasonal and cyclical in nature and these trends, if continued for a long period of time, could impact our cash flows generated from operations, requiring us to draw on our available borrowing capacity under the 2026 Revolving Credit Facility or raise additional funds in the short term.

On October 28, 2025, our Board of Directors authorized a Share Repurchase Program to repurchase up to $50.0 million of shares of Class A common stock. Subsequently, on February 18, 2026, our Board of Directors authorized an increase in the Repurchase Program by $50.0 million, to a total of up to $100.0 million ("Repurchase Program"). During the three months ended March 31, 2026, we repurchased and retired 2,056,010 shares of Class A common stock under the Repurchase Program for aggregate consideration of $20.3 million. We may repurchase such shares through open market transactions, privately negotiated transactions, preset trading plans, block trades or any combination of such methods. The timing and amount of any share repurchases will be determined by us in our discretion based on the ongoing evaluation of market and economic conditions, the trading price and volume of the our Class A common stock, our capital needs and investment opportunities, and other factors. We expect to complete the vast majority of the Repurchase Program by the end of 2026, but it may be suspended or discontinued at any time, and does not obligate us to acquire any amount of Class A common stock. Shares repurchased under the Repurchase Program are accounted for as of the trade date with a corresponding liability, and the shares repurchased are immediately retired and returned to the status of authorized but unissued shares of Class A common stock. The excess between the repurchase price and the par value of the shares of Class A common stock repurchased is recorded as an adjustment to additional-paid-in capital.

We believe that our expected near-term revenue, cash on hand and availability to access cash available under the 2026 Credit Facilities will be sufficient to meet our projected operating and debt service requirements, and we expect that we will continue to comply with our financial covenants under the 2026 Credit Facilities, for at least the next twelve months. To the extent that our current liquidity is insufficient to fund future activities, or our financial results are below our expectations, or we do not remain in compliance with our financial covenants under the 2026 Credit Facilities, we may need to take additional actions to reduce operating costs, negotiate amendments to or waivers of the terms of such credit facilities, or raise additional capital. We have historically not used funds available under our credit facilities to fund our operations or to make payments required under our credit facilities.

We may in the future engage in merger and acquisition or other activities, including share repurchases, that could require us to draw on our existing credit facilities or raise additional capital through the sale of equity securities or through debt financing arrangements. If we raise additional funds by issuing equity securities, the ownership of our existing stockholders will be diluted. The incurrence of additional debt financing would result in debt service obligations, and any future instruments governing such debt could provide for operating and financing covenants that could restrict our operations. Our material cash requirements include our long-term debt, operating lease obligations, and any payments under the TRA.

Cash Flows

The following table presents a summary of our cash flows for the three months ended March 31, 2026 and 2025, and the dollar and percentage changes between the periods:

Operating activities

Cash flows used in operating activities were $1.6 million for the three months ended March 31, 2026, compared with cash flows provided by operating activities of $23.7 million for the three months ended March 31, 2025. The decrease was due primarily to a decrease in net working capital resulting from an increase in accounts receivable due to higher revenues and from payments of $11.5 million made in connection with the FTC Matter, offset in part by an increase in accounts payable due to the timing of payments, and an increase in net income.

Investing activities

Cash flows used in investing activities were immaterial for the three months ended March 31, 2026 and 2025.

Financing activities

Cash flows used in financing activities were $19.2 million for the three months ended March 31, 2026, compared with $3.3 million for the three months ended March 31, 2025. The increase was due primarily to payments made for share repurchases of $20.3 million and payments made pursuant to the TRA of $7.0 million, offset in part by the net proceeds received from the 2026 Credit Facilities, after repayment of the 2021 Credit Facilities.

Senior secured credit facilities

2026 Credit Facilities

On March 25, 2026, we entered into an amendment and restatement agreement (the “Amendment and Restatement Agreement”) to the 2020 Credit Agreement dated as of September 23, 2020, as heretofore amended (the “Existing Credit Agreement” and, as amended and restated by the Amendment and Restatement Agreement), with the lenders that are party thereto and JPMorgan Chase Bank, N.A., as administrative agent.

The Amendment and Restatement Agreement provides for (i) a new five-year senior secured term loan facility in an aggregate principal amount of $150 million (the "2026 Term Loan Facility"), and (ii) a new five-year senior secured revolving credit facility with commitments in an aggregate amount of $60 million (the "2026 Revolving Credit Facility" and, together with the 2026 Term Loan Facility, the "2026 Credit Facilities"), which replaced the existing term loan facility and revolving credit facility under the Existing Credit Agreement. The proceeds of the 2026 Term Loan Facility, together with $15.0 million drawn on the 2026 Revolving Credit Facility upon the closing of the transaction, were used to refinance the $146.6 million of existing term loans outstanding and $5.0 million of existing revolving loans outstanding under the Existing Credit Agreement, and to pay the accrued and unpaid interest on such loans as of the date of the Amendment and Restatement Agreement and the fees related to the refinancing transactions, as well as to provide cash for general corporate purposes.

The obligations under the 2026 Credit Facilities are secured by substantially all of the Company's assets and the Amendment and Restatement Agreement contains customary affirmative, negative and financial covenants and default provisions. The financial covenants include a minimum Fixed Charge Coverage Ratio and a maximum Total Net Leverage Ratio (in each case, as defined in the Amendment and Restatement Agreement). Non-financial covenants include restrictions on investments, dividends, asset sales, and the incurrence of additional debt and liens. As of March 31, 2026, the Company was in compliance with all such covenants.

Borrowings under the Amendment and Restatement Agreement will bear interest at a rate equal to, at our option, (i) Term SOFR plus an applicable margin, (ii) Daily Simple SOFR plus an applicable margin or (iii) Alternate Base Rate plus an applicable margin (in each case, as defined in the Amendment and Restatement Agreement). The applicable margins will be based on our consolidated total net leverage ratio as calculated under the terms of the Amendment and Restatement Agreement for the prior fiscal quarter and range from 2.00% to 3.00% with respect to the SOFR-based rates and 1.00% to 2.00% with respect to the Alternate Base Rate.

Loans under the 2026 Credit Facilities will mature on March 25, 2031. Loans under the 2026 Term Loan Facility will amortize quarterly, beginning with the fiscal quarter ending June 30, 2026, by an amount equal to (i) through the fiscal quarter ending March 31, 2030, 1.25% of the original aggregate principal amount of the term loans and (ii) for each fiscal quarter thereafter, 2.50% of the original aggregate principal amount of the term loans. Loans under the Amendment and Restatement Agreement may be prepaid, at our option, at any time without premium. Term loans under the Amendment and Restatement Agreement are required to be prepaid from time to time with the proceeds of non-ordinary course asset sales and casualty and condemnation events, subject to customary exceptions.

The 2026 Term Loan Facility was treated as a debt restructuring that included both debt modifications and extinguishments, in addition to new debt issuances. We capitalized $1.5 million of new and existing deferred financing costs which are classified within the current portion of long-term debt and long-term debt, net of current portion on the consolidated balance sheet and will be amortized over the term of the 2026 Term Loan Facility. Third-party costs of $1.1 million allocated to modifications in the 2026 Term Loan Facility were recorded as general and administrative expenses in the consolidated statement of operations. New and existing third-party costs and fees paid to lenders and allocated to the 2026 Revolving Credit Facility of $1.0 million were capitalized and classified within prepaid expenses and other current assets on the consolidated balance sheet and will be amortized over the term of the 2026 Revolving Credit Facility.

As of March 31, 2026, we had $148.5 million of outstanding borrowings, net of deferred debt issuance costs of $1.5 million, under the 2026 Term Loan Facility, and $15.0 million of borrowings outstanding under the 2026 Revolving Credit Facility.

Tax receivables agreement

Our purchases (through Intermediate Holdco) of Class B-1 units from certain unitholders in connection with the IPO, as well as exchanges of Class B-1 units subsequent to the IPO (together with an equal number of shares of our Class B common stock) for shares of our Class A common stock (or, at our election, cash of an equivalent value) ("Exchange"), and the Pre-IPO Leveraged Distribution and other actual or deemed distributions by QLH to its members pursuant to the Exchange Agreement, have resulted and are expected to continue to result in increases in our allocable tax basis in the assets of QLH. These increases in tax basis are expected to increase (for tax purposes) depreciation and amortization deductions allocable to us and, therefore, reduce the amount of tax that we otherwise would be required to pay in the future. This increase in tax basis may also decrease gain (or increase loss) on future dispositions of certain assets to the extent tax basis is allocated to those assets.

In connection with the IPO, we entered into the TRA, as amended, with Insignia, the Senior Executives, and White Mountains related to the tax basis step-up of the assets of QLH and certain net operating losses of Intermediate Holdco. The agreement requires us to pay Insignia and the Senior Executives or any assignees 85% of the cash savings, if any, in U.S. federal, state and local income tax we realize (or are deemed to realize) as a result of (i) any increases in tax basis of assets of QLH resulting from any Exchange, and (ii) certain other tax benefits related to making our payments under the TRA. The TRA also requires us to pay White Mountains 85% of the amount of the cash savings, if any, in U.S. federal, state and local income tax that we realize (or are deemed to realize) as a result of the utilization of the net operating losses of Intermediate Holdco attributable to periods prior to the IPO and the deduction of any imputed interest attributable to our payment obligations under the TRA. We amended the TRA on October 1, 2023 to, among other things, provide for use of a blended state tax rate and replace the LIBOR with the SOFR as the interest rate benchmark.

In addition to tax expenses, we may also make payments under the TRA, which could be significant. We account for the income tax effects and corresponding TRA effects resulting from any Exchange by recognizing an increase in our deferred tax assets, based on enacted tax rates at the date of the Exchange. We evaluate the likelihood that we will realize the benefit represented by the deferred tax asset and, to the extent that we estimate that it is more likely than not that we will not realize the benefit, we will reduce the carrying amount of the deferred tax asset with a valuation allowance. The amounts to be recorded for both the deferred tax assets and the liability for our obligations under the TRA are estimated at the time of any purchase or exchange as a reduction to stockholders’ equity, and subsequent changes to the measurement of liability due to the effects of changes in any of our estimates after this date are recognized within other expense, net in the consolidated statement of operations. Similarly, the effect of subsequent changes in the enacted tax rates will be included in net income (loss). Judgment is required to assess the future tax consequences of events that have been recognized in our consolidated financial statements. A change in our assessment of such consequences, such as realization of deferred tax assets, changes in our assessment of probability of making payments under the TRA, changes in blended tax rates, changes in tax laws or interpretations thereof could materially impact our results. We believe we can generate sufficient future taxable income and determined that making payments under the TRA is probable under ASC 450 — Contingencies. As of March 31, 2026 and December 31, 2025, we recorded a liability of $123.4 million and $131.1 million, respectively, of which $6.8 million and $6.9 million, respectively, is considered current and recorded within accrued expenses, and the remaining amount is recorded within liabilities under tax receivables agreement, net of current portion, respectively, on the consolidated balance sheets.

Recent accounting pronouncements

For a discussion of new accounting pronouncements recently adopted and not yet adopted, see Note 1 to the consolidated financial statements appearing in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Critical accounting policies and estimates

Our critical accounting policies and estimates are included in our 2025 Annual Report on Form 10-K and did not materially change during the three months ended March 31, 2026.