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What changed in MediaAlpha, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of MediaAlpha, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+393 added−384 removedSource: 10-K (2025-02-24) vs 10-K (2024-02-22)

Top changes in MediaAlpha, Inc.'s 2024 10-K

393 paragraphs added · 384 removed · 322 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

76 edited+11 added−10 removed79 unchanged
Biggest changeWe are part of a sector that is disrupting the conventional agent-based insurance distribution channels. This sector is comprised of companies engaged in varied aspects of customer acquisition. On one end of the spectrum, there are companies that are engaged in simple Consumer Referrals acquisition, which they sell to insurance carriers or distributors.
Biggest changeWe believe we have the ability to enter most new verticals with only a modest increase in headcount. Our competition We operate in the broadly defined tech-enabled insurance distribution sector. We are part of a sector that is disrupting the conventional agent-based insurance distribution channels. This sector is comprised of companies engaged in varied aspects of customer acquisition.
We maintain deep, custom integrations with partners representing the majority of our Transaction Value, which enable automated, data-driven processes that optimize these partners’ customer acquisition spend and revenue. Through our platform, our insurance carrier partners can target and price across over 35 separate consumer attributes to manage customized acquisition strategies.
We maintain deep, custom integrations with partners representing the majority of our Transaction Value, which enable automated, data-driven processes that optimize our partners’ customer acquisition spend and revenue. Through our platform, our insurance carrier partners can target and price across over 35 separate consumer attributes to manage customized acquisition strategies.
Our platform allows buyers to fully integrate first-party consumer data to enhance targeting parameters, bidding granularity, and conversion tracking, resulting in more accurate customer acquisition and LTV predictions. We maintain robust data security protections and preserve the confidentiality of each insurance carrier’s customer acquisition strategy.
Our platform allows buyers to fully integrate first-party consumer data to enhance targeting parameters, bidding granularity, and conversion tracking, resulting in more accurate customer acquisition and LTV predictions. We believe we maintain robust data security protections and preserve the confidentiality of each insurance carrier’s customer acquisition strategy.
Item 1. Business. Our Company 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 leading insurance carriers and high-intent consumers together through a real-time, programmatic, transparent, and results-driven ecosystem.
Item 1. Business. Our Company Our mission is to help insurance carriers and distributors target and acquire consumers 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.
Our supply partners are primarily insurance carriers looking to maximize the value of non-converting or low LTV consumers, and insurance-focused research destinations and financial websites looking to monetize high-intent customers.
Our Supply Partners are primarily insurance carriers looking to maximize the value of non-converting or low LTV consumers, and insurance-focused research destinations or other financial websites looking to monetize high-intent customers.
In our Private Marketplace transactions, demand partners and suppliers contract with one another directly, and we earn fees from our supply partners based on the value of the Consumer Referrals transacted on our platform.
In our Private Marketplace transactions, Demand Partners and Supply Partners contract with one another directly, and we earn fees from our Supply Partners based on the value of the Consumer Referrals transacted on our platform.
We believe that providing further customized solutions and higher touch services for our partners will enhance the stickiness of our offerings and drive more customer acquisition spend and users to our platform. • Deepen our relationships with agents. We intend to strategically expand our insurance agency relationships to capture additional customer acquisition spend within our core insurance verticals.
We believe that providing further customized solutions and higher touch services for our partners will enhance the stickiness of our offerings and drive more customer acquisition spend and users to our platform. • Deepen our relationships with agents. We continue to strategically expand our insurance agency relationships to capture additional customer acquisition spend within our core insurance verticals.
Our platform enables consumers to (i) proceed to an insurance carrier’s website on a self-directed basis to purchase a policy (click), (ii) engage with an insurance carrier or agent via phone (call), or (iii) have their data submitted to insurance companies to receive inbound inquiries (lead).
Our platform enables consumers to (i) proceed to an insurance carrier’s website on a self-directed basis to purchase a policy (click), (ii) engage with an insurance carrier or agent via phone (call), or (iii) have their data submitted to insurance companies to receive inbound contacts (lead).
For more information regarding these arrangements, see “Management’s discussion and analysis-Key components of our results of operations-Revenue.” Our technology Our product is a technology platform that allows insurance carriers and distributors to acquire customers and optimize customer acquisition costs to align with expected customer LTV, in a single data-rich but user-friendly environment.
For more information regarding these arrangements, see “Management’s discussion and analysis-Key components of our results of operations-Revenue.” Our technology Our technology platform allows insurance carriers and distributors to acquire customers and optimize customer acquisition costs to align with expected customer LTV, in a single data-rich but user-friendly environment.
We believe that we provide the leading technology platform enabling insurance carriers and distributors to efficiently acquire customers online at scale. Our platform allows buyers to target consumers granularly and to determine their pricing based on how they value various consumer segments. Buyers leveraging our data science capabilities make value-maximizing decisions on how to acquire customers.
We believe that we provide the leading technology platform enabling insurance carriers and distributors to efficiently acquire customers online at scale. Our platform allows Demand Partners to target consumers granularly and to determine their pricing based on how they value various consumer segments. Demand Partners leveraging our data science capabilities make value-maximizing decisions on how to acquire consumers.
We intend to gain adoption of our platform with new insurance partners through business development, word-of-mouth referrals, and inbound inquiries. • Grow our product offerings. We are constantly exploring new ways to deliver value to our partners through development of new tools and services and improvement of our conversion analytics model.
We intend to gain adoption of our platform with new insurance partners through business development, word-of-mouth referrals, and inbound inquiries. 15 Table of Contents • Grow our product offerings. We are constantly exploring new ways to deliver value to our partners through development of new tools and services and improvement of our conversion analytics model.
In addition, recent and proposed changes in the regulations governing the marketing of Medicare insurance have materially changed the rules regarding how such policies are marketed, and may materially restrict our ability to sell Consumer Referrals to certain buyers in the future.
In addition, recent and proposed changes in the regulations governing the marketing of Medicare insurance have 17 Table of Contents materially changed the rules regarding how such policies are marketed, and may materially restrict our ability to sell Consumer Referrals to certain buyers in the future.
Our strong cash flow generation is driven by (i) the nature of our revenue model, which is fee based and generated at the time a Consumer Referral is sold, and (ii) our proprietary technology platform, which is highly scalable and requires minimal capital expenditures ($0.1 million for the years ended December 31, 2023 and 2022).
Our strong cash flow generation is driven by (i) the nature of our revenue model, which is fee based and generated at the time a Consumer Referral is sold, and (ii) our proprietary technology platform, which is highly scalable and requires minimal capital expenditures ($0.3 million and $0.1 million for the years ended December 31, 2024 and 2023, respectively).
In our Open Marketplace transactions, we have separate agreements with demand partners and suppliers and have control over the Consumer Referrals that are sold to our demand partners.
In our Open Marketplace transactions, we have separate agreements with Demand Partners and Supply Partners and have control over the Consumer Referrals that are sold to our Demand Partners.
We have designed our platform to put the best interests of our partners first, fostering a healthy ecosystem within which buyers can transact with confidence. Our sellers: Our supply partners use our platform to monetize their digital consumer traffic.
We have designed our platform to put the best interests of our partners first, fostering a healthy ecosystem within which buyers can transact with confidence. 13 Table of Contents Our sellers: Our Supply Partners use our platform to monetize their digital consumer traffic.
In 2022, 92% of total Transaction Value executed on our platform came from demand partner relationships in existence during 2021. • Culture of transparency, innovation, and execution. Since inception, our vision has been to bring unparalleled transparency and efficiency to the online customer acquisition ecosystem, executed through a powerful technology-enabled platform.
In 2023, 93% of total Transaction Value executed on our platform came from Demand Partner relationships in existence during 2022. • Culture of transparency, innovation, and execution. Since inception, our vision has been to bring unparalleled transparency and efficiency to the online customer acquisition ecosystem, executed through a powerful technology-enabled platform.
See “Management’s discussion and analysis of financial condition and results of operations-Key business and operating metrics.” 6 Table of Contents For the year ended December 31, 2023, we had 15 of the top 20 largest auto insurance carriers by customer acquisition spend as demand partners on our platform. Of these demand partners, 53% were also supply partners in our ecosystem.
See “Management’s discussion and analysis of financial condition and results of operations-Key business and operating metrics.” 6 Table of Contents For the year ended December 31, 2024, we had 15 of the top 20 largest auto insurance carriers by customer acquisition spend as Demand Partners on our platform. Of these carriers, nearly half were also Supply Partners in our ecosystem.
With nearly 99 million Consumer Referrals transacted on our platform in 2023, we believe we offer the largest source of Consumer Referrals in the insurance sector. Our product is a robust, real-time customer acquisition and data analytics platform. It is fueled by rich, anonymized consumer data provided by our extensive data integrations with our partners.
With nearly 119 million Consumer Referrals transacted on our platform in 2024, we believe we offer the largest source of Consumer Referrals in the insurance sector. Our product is a robust, real-time customer acquisition and data analytics platform. It is fueled by rich, anonymized consumer data provided by our extensive data integrations with our partners.
We will continue to expand our platform and drive value for all participants within the ecosystem by increasing the number and depth of data integrations with our partners. • Bring new partners to our platform. There are potential buyers and sellers who are not yet using our platform, and new companies are being formed every year.
We will continue to expand our platform and drive value for all participants within the ecosystem by increasing the number and depth of data integrations with our partners. • Bring new partners to our platform. There are potential Demand and Supply Partners who are not yet using our platform, and new companies are being formed every year.
As of December 31, 2023, there were over 410 insurance supply partners on our platform. We also provide our supply partners with sophisticated, data-driven yield management and monetization capabilities. We believe these capabilities are critical to our partners’ monetization strategies, as they enable optimization of business performance and revenue.
As of December 31, 2024, there were over 400 insurance Supply Partners on our platform. We also provide our Supply Partners with sophisticated, data-driven yield management and monetization capabilities. We believe these capabilities are critical to our partners’ monetization strategies, as they enable optimization of business performance and revenue.
A seller or a supply partner is typically an insurance carrier looking to maximize the value of non-converting or low LTV consumers, or an insurance-focused research or other financial destination looking to monetize the high-intent shoppers on their websites.
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 the high-intent users on their websites.
Total customer acquisition spend in the insurance industry was estimated to be $146 billion in 2021 and is expected to grow to approximately $176 billion by 2025, according to William Blair. In fact, two of the top five most-advertised brands in the U.S. across traditional and online channels are insurance companies—Progressive and GEICO.
Total customer acquisition spend in the insurance industry was estimated to be $146 billion in 2021 and is expected to grow to approximately $176 billion by 2025, according to William Blair. In fact, three of the top fifteen most-advertised brands in the U.S. across traditional and online channels are insurance companies—Progressive, GEICO, and State Farm.
In fact, it is this supply partnership that presents insurance carriers with a highly differentiated monetization opportunity, enabling them to capture revenue from website visitors who either do not qualify for a policy or otherwise may be more valuable as a potential referral to another carrier. 1 “Transaction Value” is an operating metric that we present in this Annual Report on Form 10-K to supplement the financial information we present on a GAAP basis.
In fact, it is this supply partnership that presents insurance carriers with a highly differentiated monetization opportunity, enabling them to capture revenue from website visitors who either do not qualify for a policy or otherwise may be more valuable as a potential referral to another carrier. 1 “Transaction Value” is an operating metric that we present in this Annual Report on Form 10-K to supplement the financial information we present on a accounting principles generally accepted in the United States of America (“GAAP”) basis.
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 $571 million in Transaction Value (1) across our platform from these verticals during the year ended December 31, 2023. We believe in the disruptive power of transparency.
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 $1.5 billion in Transaction Value (1) across our platform from these verticals during the year ended December 31, 2024. We believe in the disruptive power of transparency.
Our market opportunity Insurance is one of the largest industries in the United States, with attractive growth characteristics and market fundamentals. Insurance companies wrote over $2 trillion in premiums in 2022, growing at a 9% CAGR from 2018, according to S&P Global Market Intelligence.
Our market opportunity Insurance is one of the largest industries in the United States, with attractive growth characteristics and market fundamentals. Insurance companies wrote approximately $3 trillion in premiums in 2023, growing at a 9% CAGR from 2018, according to S&P Global Market Intelligence.
As we look ahead, we will continue to assess our company practices with the intent of creating sustainable programs over the long-term, recognizing the importance of prioritizing progress over perfection. 18 Table of Contents Community Involvement We aim to enhance the communities where we live and work, and believe that this commitment helps in our efforts to attract and retain employees.
We continue to assess our company practices with the intent of creating sustainable programs over the long-term, recognizing the importance of prioritizing progress over perfection. Community Involvement We aim to enhance the communities where we live and work, and believe that this commitment helps in our efforts to attract and retain employees.
Traditional, agent-based carriers have responded by investing more heavily in direct customer 8 Table of Contents acquisition efforts themselves, as well as launching digital brands (such as Nationwide launching Spire), acquiring digital agencies (such as Prudential acquiring AssuranceIQ), or acquiring digital insurers (such as Allstate acquiring SquareTrade). • More insurance consumers are shopping online.
Traditional, agent-based carriers have responded by investing more heavily in direct customer acquisition efforts themselves, as well as launching digital brands (such as Nationwide launching Spire), acquiring digital agencies, or acquiring digital insurers (such as Allstate acquiring SquareTrade). • More insurance consumers are shopping online.
Our relationships with our partners are deep, long standing, and involve top-tier insurance carriers in the industry. 15 of the top 20 largest auto insurance carriers by customer acquisition spend are demand partners on our platform. In 2023, 93% of total Transaction Value executed on our platform came from demand partner relationships in existence during 2022.
Our relationships with our partners are deep, longstanding, and involve top-tier insurance carriers in the industry. 15 of the top 20 largest auto insurance carriers by customer acquisition spend are Demand Partners on our platform. In 2024, 96% of total Transaction Value executed on our platform came from Demand Partner relationships in existence during 2023.
A major driver of this growth has been the DTC carriers’ outsized investments, relative to peers, in direct customer acquisition channels. According to S&P Global Market Intelligence, Progressive and GEICO's advertising spend in 2022 was $1.7 billion and $1.3 billion, respectively.
A major driver of this growth has been the DTC carriers’ outsized investments, relative to peers, in direct customer acquisition channels. According to S&P Global Market Intelligence, Progressive and GEICO's advertising spend in 2023 was $1.2 billion and $0.8 billion, respectively.
During the year ended December 31, 2023, high-intent consumers shopped for insurance products on the websites of sellers on our platform and our proprietary websites over 400 million times, resulting in approximately 99 million Consumer Referrals acquired by buyers on our platform. Our value proposition for end consumers • Search relevancy.
During the year ended December 31, 2024, high-intent consumers shopped for insurance products on the websites of sellers on our platform and our proprietary websites, resulting in approximately 119 million Consumer Referrals acquired by buyers on our platform. Our value proposition for end consumers • Search relevancy.
We have developed multi-faceted, deeply-integrated partnerships with insurance carriers and distributors, who can be both buyers and sellers on our platform. We enable insurance carriers and distributors as buyers to optimize their customer acquisition spend by offering source-level transparency, granular controls, and predictive tools to drive measurably superior performance.
We have developed multi-faceted, deeply-integrated partnerships with insurance carriers and distributors, which may be both Demand Partners and Supply Partners on our platform. We enable insurance carriers and distributors as buyers to optimize their customer acquisition spend by offering source-level transparency, granular controls, and predictive tools to drive measurably superior performance.
As an online business, we are also subject to laws and regulations governing the internet, such as those relating to intellectual property ownership and infringement, trade secrets, the distribution of electronic communications, search engines, consumer privacy, and internet tracking technologies, and could be affected by potential changes to laws and regulations that affect the growth, popularity or use of the internet, including with respect to net neutrality and taxation on the use of the internet or e-commerce transactions.
See “Risk Factors - The FTC Matter could have a material adverse effect on our business.” As an online business, we are also subject to laws and regulations governing the internet, such as those relating to intellectual property ownership and infringement, trade secrets, the distribution of electronic communications, search engines, consumer privacy, and internet tracking technologies, and could be affected by potential changes to laws and regulations that affect the growth, popularity or use of the internet, including with respect to net neutrality and taxation on the use of the internet or e-commerce transactions.
Our platform and industry-agnostic technology enables us to quickly expand our operations into existing and adjacent verticals with minimal investments. We have organically scaled the P&C insurance vertical and the health and life insurance verticals to $277.6 million and $293.9 million in Transaction Value, respectively, for the year ended December 31, 2023.
Our platform and industry-agnostic technology enables us to quickly expand our operations into existing and adjacent verticals with minimal investments. We have organically scaled the P&C insurance vertical and the health and life insurance verticals to $1.2 billion and $300.9 million in Transaction Value, respectively, for the year ended December 31, 2024.
The following table presents the percentages of total Transaction Value generated from clicks, calls and leads for the year ended December 31, 2023 and 2022: Year ended December 31, 2023 2022 Clicks 69.4 % 75.3 % Calls 18.6 % 15.3 % Leads 12.0 % 9.4 % Our platform leverages precise data and data science for maximum efficiency.
The following table presents the percentages of total Transaction Value generated from clicks, calls and leads for the year ended December 31, 2024 and 2023: Year ended December 31, 2024 2023 Clicks 84.1 % 69.4 % Calls 9.4 % 18.6 % Leads 6.5 % 12.0 % Our platform leverages precise data and data science for maximum efficiency.
While the P&C insurance industry has experienced underwriting losses driven by inflation in automobile replacement and repair costs, we believe that the secular trends in the insurance industry will provide strong tailwinds for our business over the long term. • Direct-to-consumer is the fastest growing insurance distribution channel.
While the P&C insurance industry experienced underwriting losses from 2021 till 2023 driven by inflation in automobile replacement and repair costs, it recovered strongly during 2024 and we believe that the secular trends in the insurance industry will provide strong tailwinds for our business over the long term. • Direct-to-consumer is the fastest growing insurance distribution channel.
During 2023, an average of 36.9 million consumers shopped for insurance products through the websites of our diversified group of supply partners and our proprietary websites each month, producing an average of 8.2 million Consumer Referrals on our platform each month. We believe our technology is a key differentiator and a powerful driver of our performance.
During 2024, consumers shopping for insurance products through the websites of our diversified group of Supply Partners and our proprietary websites produced an average of 9.9 million Consumer Referrals on our platform each month. We believe our technology is a key differentiator and a powerful driver of our performance.
Industry analysts expect digital marketing spend by the insurance industry to narrow this gap significantly over time as carriers increase their adoption of digital channels. • Carriers and distributors are increasingly focused on optimizing customer acquisition budgets. Mass-market customer acquisition spend is becoming more costly, leading carriers and distributors to increasingly focus on optimizing customer acquisition spend.
Industry analysts expect digital marketing spend by the insurance industry to narrow this gap significantly over time as more consumers shop online and carriers increase their adoption of digital channels. • Carriers and distributors are increasingly focused on optimizing customer acquisition budgets.
For the year ended December 31, 2023, we had $593.4 million in Transaction Value and served over 920 total insurance partners, excluding our agent buyers. For the year ended December 31, 2022, we had $737.5 million in Transaction Value and served over 950 total insurance partners, excluding our agent buyers.
For the year ended December 31, 2024, we had $1.5 billion in Transaction Value and served over 1,000 total insurance partners, excluding our agent partners. For the year ended December 31, 2023, we had $593.4 million in Transaction Value and served over 920 total insurance partners, excluding our agent partners.
All of our teams participate in an annual strategic planning process to identify objectives for business growth and innovation, and set and review goals throughout the year to support the Company’s annual objectives.
We use a combination of company and department goals to drive the execution of our business strategy. All of our teams participate in an annual strategic planning process to identify objectives for business growth and innovation, and set and review goals throughout the year to support the Company’s annual objectives.
To cover the costs and help ease the stress of working from home, we provide our employees with benefits such as internet and cell phone reimbursement, office supply purchasing, flexible work schedules, and access to other tools. We monitor and follow the advice of the public health authorities in the areas where our offices are located.
To cover the costs and help ease the stress of working from home, we provide our employees with benefits such as internet and cell phone reimbursement, office supply purchasing, flexible work schedules, and access to other tools.
During our first quarter, our P&C insurance vertical typically exhibits seasonal strength as customer acquisition budgets from our buyers and Consumer Referral volume from our sellers both increase sequentially. 16 Table of Contents Our health insurance vertical typically experiences seasonal strength during the fourth quarter due to a material increase in Consumer Referrals and a related increase in customer acquisition budgets in connection with the Medicare annual enrollment period, which generally runs from October 15 to December 7 each year, and the under-65 health insurance open enrollment period, which generally runs from November 1 through December 15 in many states, with the last ending on January 31st of the following year.
Our health insurance vertical typically experiences seasonal strength during the fourth quarter due to a material increase in Consumer Referrals and a related increase in customer acquisition budgets in connection with the Medicare annual enrollment period, which generally runs from October 15 to December 7 each year, and the Affordable Care Act (ACA) open enrollment period, which generally runs from November 1 through December 15 in many states, with the last ending on January 31st of the following year.
Demand for insurance products is stable, due to, in many instances, coverage being mandated by law (for example, auto insurance) or federally subsidized (for example, senior health insurance). The insurance industry as a whole is highly competitive and invests heavily in customer acquisition. Overall insurance advertising spend is expected to grow at double digit rates annually over the next decade.
Demand for insurance products is stable, due to, in many instances, coverage being mandated by law (for example, auto insurance) or federally subsidized (for example, senior health insurance). The insurance industry as a whole is highly competitive and invests heavily in customer acquisition.
According to S&P Global Market Intelligence, Progressive’s customer acquisition spend was $1.7 billion in 2022, while GEICO’s customer acquisition spend was nearly $1.3 billion in the same period.
According to S&P Global Market Intelligence, Progressive’s customer acquisition spend was $1.2 billion in 2023, while GEICO’s customer acquisition spend was $0.8 billion in the same period.
Our platform is vertical agnostic, allowing us to quickly and easily expand into new markets with attractive attributes. The increased participation in our technology-driven platform will continue to generate valuable data, enhance feedback loops, and drive stronger results for all participants in the ecosystem.
Our platform is vertical agnostic, allowing us to quickly and easily expand into new markets with attractive attributes. The increased participation in our technology-driven platform continues to generate valuable data, enhance feedback loops, and drive stronger results for all participants in the ecosystem. We believe this creates a flywheel effect as our platform continues to grow. • Superior operating leverage.
These data integrations allow us to more seamlessly transact a Consumer Referral by taking information an end consumer has already provided and pre-populating it into an insurance carrier’s purchase process, potentially increasing policy conversion rates. This enhances the value of the Consumer Referral to our insurance carriers, adding significant value to all parties in our platform.
These data integrations allow us to more seamlessly transact a Consumer Referral by taking information an end consumer has already provided and pre-populating it into an insurance carrier’s purchase process, streamlining and simplifying the process for the consumer and potentially increasing policy conversion rates.
This results in greater customer acquisition efficiency and better return on investment, allowing us to attract more buyers into the ecosystem. Simultaneously, we provide our supply partners the insights and tools they need to drive competition for their high-intent consumers and maximize yield, which draws more supply partners into the ecosystem, providing our buyers with even more high-quality demand sources.
Simultaneously, we provide our Supply Partners the insights and tools they need to drive competition for their high-intent consumers and maximize yield, which draws more Supply Partners into the ecosystem, providing our Demand Partners with even more high-quality demand sources.
They are able to do so by adopting more sophisticated customer acquisition strategies enabled by data science. A significant percentage of marketers believe the inability to measure customer acquisition impact across channels and campaigns is one of their biggest challenges in demonstrating customer acquisition performance.
A significant percentage of marketers believe the inability to measure customer acquisition impact across channels and campaigns is one of their biggest challenges in demonstrating customer acquisition performance.
Intellectual property laws, procedures, and restrictions provide only limited protection and any of our intellectual property or proprietary rights may be challenged, invalidated, circumvented, infringed, misappropriated or otherwise violated.
However, our contractual provisions may not always be effective at preventing unauthorized parties from obtaining our intellectual property and proprietary technologies. Intellectual property laws, procedures, and restrictions provide only limited protection and any of our intellectual property or proprietary rights may be challenged, invalidated, circumvented, infringed, misappropriated or otherwise violated.
Repeat buyers continue to be a strong driver of our business, with 93% of our Transaction Value for 2023 driven by repeat buyers from 2022 and 92% of our Transaction Value for 2022 driven by repeat buyers from 2021. Our value proposition for buyers • Efficiency at scale.
Repeat buyers continue to be a strong driver of our business, with 96% of our Transaction Value for 2024 coming from Demand Partner relationships in existence during 2023 and 93% of our Transaction Value for 2023 coming from Demand Partner relationships in existence during 2022. Our value proposition for buyers • Efficiency at scale.
During 2023, high-intent consumers shopped for insurance products on the websites of sellers on our platform and our proprietary websites over 400 million times, resulting in approximately 99 million Consumer Referrals acquired by buyers on our platform. We serve approximately 600 buyer partners, excluding our agent buyers.
During 2024, high-intent consumers shopping for insurance products on the websites of sellers on our platform and our proprietary websites resulted in approximately 119 million Consumer Referrals acquired by Demand Partners on our platform. We serve over 700 Demand Partners, excluding our agent partners, in our insurance verticals.
In 2023, we employed an average of 142 individuals, who produced $593.4 million of Transaction Value ($4.2 million per employee), $56.6 million of net loss ($0.4 million per employee), and $27.1 million of Adjusted EBITDA ($0.2 million per employee) and in 2022, we employed 164 individuals on average who 14 Table of Contents drove $737.5 million of Transaction Value ($4.5 million per employee), $72.4 million of net loss ($0.4 million per employee), and $22.9 million of Adjusted EBITDA ($0.1 million per employee) for the year. • Sticky, tenured relationships with insurance carriers and distributors.
In 2024, we employed an average of 139 individuals, who produced $1.5 billion of Transaction Value ($10.7 million per employee), $22.1 million of net income ($0.2 million per employee), and $96.1 million of Adjusted EBITDA ($0.7 million per employee) and in 2023, we employed 142 individuals on average who drove $593.4 million of Transaction Value ($4.2 million per employee), $56.6 million of net loss ($0.4 million per employee), and $27.1 million of Adjusted EBITDA ($0.2 million per employee) for the year.
The human capital measures and objectives that we focus on in managing our business include talent acquisition and retention, employee engagement, development and training, diversity and inclusion, compensation and pay equity, and employee health and welfare. None of our employees are represented by a collective bargaining unit or are a party to a collective bargaining agreement.
As of December 31, 2024, we had 144 full-time employees. The human capital measures and objectives that we focus on in managing our business include talent acquisition and retention, employee engagement, development and training, diversity and inclusion, compensation and pay equity, and employee health and welfare.
Repeat sellers continue to be a strong 13 Table of Contents driver of our business, with 99% of our Transaction Value for 2023 driven by repeat sellers from 2022 and 98% of our Transaction Value for 2022 driven by repeat sellers from 2021. Our value proposition for sellers • Yield maximization .
Repeat sellers continue to be a strong driver of our business, with 99% of our Transaction Value for 2024 and 2023 coming from Supply Partner relationships in existence during 2023 and 2022. Our value proposition for sellers • Yield maximization .
As of December 31, 2023, we had 85 buyers with this type of integration in place for active and future campaigns, representing 59% of the total Transaction Value from our insurance verticals for the year then ended.
This enhances the value of the Consumer Referral to our insurance carriers, adding significant value to all parties in our platform. As of December 31, 2024, we had 119 Demand Partners with this type of integration in place for active and future campaigns, representing 84% of the total Transaction Value from our insurance verticals for the year then ended.
On the other end of the spectrum, there are companies that acquire the customer through digital channels and take them through the entire needs-based assessment and policy application and submission process. Within this sector, our closest competitors are technology companies engaged in digital customer acquisition.
On one end of the spectrum, there are companies that are engaged in simple Consumer Referrals acquisition, which they sell to insurance carriers or distributors. On the other end of the spectrum, there are companies that acquire the customer through digital channels and take them through the entire needs-based assessment and policy application and submission process.
As the number of digital consumer acquisition sources grows, the complexity and cost of managing those sources continues to increase. As a result, over time we have seen significant increases in the number of participants on our platform, further enhancing our scale and return on investment to all our partners.
As a result, over time we have seen significant increases in the number of participants on our platform, further enhancing our scale and return on investment to all our partners. We have deep integrations with our partners that are costly and time consuming to implement.
We compete on the basis of a number of factors, including return on investment, technology, and client service. Our platform also offers DTC digital spend optimization capabilities that compete primarily with home grown systems that buyers use to aggregate multiple sources of digital customer acquisition.
Our platform also offers DTC digital spend optimization capabilities that compete primarily with home grown systems that buyers use to aggregate multiple sources of digital customer acquisition. As the number of digital consumer acquisition sources grows, the complexity and cost of managing those sources continues to increase.
Traditional digital consumer acquisition models focus on serving buyers of Consumer Referrals by acquiring consumers from paid search, proprietary websites or other digital avenues and selling them to insurance carriers or producers. Our model is different. We operate a two-sided marketplace where sophisticated demand and supply partners buy and sell high-quality Consumer Referrals.
Within this sector, our closest competitors are technology companies engaged in digital customer acquisition. Traditional digital consumer acquisition models focus on serving buyers of Consumer Referrals by acquiring consumers from paid search, proprietary websites or other digital avenues and selling them to insurance carriers or producers. Our model is different.
Intellectual property The protection of our technology, intellectual property and proprietary rights is an important aspect of our business. We rely on a combination of trade secret, trademark and copyright laws, confidentiality agreements, and technical measures to establish, maintain and protect our intellectual property rights and technology.
We rely on a combination of trade secret, trademark and copyright laws, confidentiality agreements, and technical measures to establish, maintain and protect our intellectual property rights and technology. Additionally, we enter into confidentiality and invention assignment agreements with our employees and enter into confidentiality agreements with third parties, including our buyers and sellers.
We also regularly review our compensation practices, both in terms of our overall workforce and individual employees, to ensure that we compensate our employees in a fair and equitable manner. We also comply with the applicable pay transparency laws by ensuring that our job postings and applicant/employee requests for compensation information are in compliance with state or local laws.
We also comply with the applicable pay transparency laws by ensuring that our job postings and applicant/employee requests for compensation information are in compliance with state or local laws. 18 Table of Contents Diversity, Equity, and Inclusion We remain committed to fostering, cultivating, and maintaining a culture of diversity and inclusion.
We are subject to laws and regulations that apply to businesses in general, such as those relating to worker classification, employment, payments, worker confidentiality obligations, consumer protection and taxation.
We are subject to laws and regulations that apply to businesses in general, such as those relating to worker classification, employment, payments, worker confidentiality obligations, consumer protection and taxation. For example, in October 2024 the FTC Staff asserted that we have violated violations of Section 5(a) of the FTC Act, the Telemarketing Sales Rule and the Government Impersonation Rule.
Consumers are increasingly using the internet not just for research and price discovery, but to purchase insurance as well. According to TransUnion, the number of consumers shopping for insurance online rose from 22% in 2022 to 27% in 2023. Younger consumers are not the only driving force of this shift; the share of digitally savvy older consumers is rapidly growing.
Consumers are increasingly using the internet not just for research and price discovery, but to purchase insurance as well. According to TransUnion, the number of consumers shopping for insurance online rose from 22% in 2022 to 27% in 2023. Additionally, according to a 8 Table of Contents YouGov plc survey in 2024, 48% of U.S. consumers prefer buying insurance online.
See “Risk factors-Risks related to laws and regulation.” Employees We are committed to attracting and retaining the brightest and best talent, so investing in human capital is critical to our success.
See “Risk factors-Risks related to laws and regulation.” Employees We are committed to attracting and retaining the brightest and best talent, so investing in human capital is critical to our success. The employee traits we value include a hands-on approach no matter the experience level, intellectual curiosity, open-mindedness, a growth mindset, and caring deeply about the quality of one’s work.
Access to our platform, other than to obtain basic information, requires system usernames and passwords. We also add additional layers of security such as dual-factor authentication, encryption in transit and intrusion detection. See “Risk factors-Risks related to our intellectual property rights and our technology.” Seasonality Our results are subject to significant seasonal fluctuations as a result of vertical level seasonality.
Access to our platform, other than to obtain basic information, requires system usernames and passwords. We also add additional layers of security such as dual-factor authentication for some users, 16 Table of Contents encryption in transit and intrusion detection.
We have deep integrations with our partners that are costly and time consuming to implement. We believe our scale makes it hard for new entrants to gain direct access to buyers and sellers and replicate what we have built over the years.
We believe our scale makes it hard for new entrants to gain direct access to buyers and sellers and replicate what we have built over the years. Intellectual property The protection of our technology, intellectual property and proprietary rights is an important aspect of our business.
We generate revenue by earning a fee for each Consumer Referral sold on our platform. Our revenue is generally not contingent on the sale of an insurance product to the consumer. We have historically delivered strong growth in our Transaction Value and revenue, enabled by our unique business model and technology platform.
We generate revenue by earning a fee for each Consumer Referral sold on our platform. A transaction becomes payable upon a qualifying consumer action, such as a click, call or lead, and is generally not contingent on the sale of a product to the consumer.
Employee Engagement and Development Our employee engagement efforts include regular “all-hands” meetings and frequent executive communications, through which we aim to keep our employees well-informed and to maximize transparency. We believe in continual improvement and use employee feedback to drive and improve processes that support our customers and ensure a deep understanding of our employees’ needs.
None of our employees are represented by a collective bargaining unit or are a party to a collective bargaining agreement. Employee Engagement and Development Our employee engagement efforts include regular “all-hands” meetings and frequent executive communications, through which we aim to keep our employees well-informed and to maximize transparency.
We conduct annual confidential employee surveys and believe that ongoing performance feedback encourages greater engagement in our business and improves individual performance. Each year, our employees participate in a 360-degree evaluation process to identify critical capabilities for development and establish new stretch goals. We seek to achieve our business objectives through a deep commitment to talent development.
Each year, our employees participate in a 360-degree evaluation process to identify critical capabilities for development and establish new stretch goals. We seek to achieve our business objectives through a deep commitment to talent development. Our talent development efforts include quarterly goals, “lunch and learn” events, individualized professional development plans, leadership team and management training, internal workshops, and guest speakers.
We believe our vertical-agnostic platform and established playbook for entering new markets will allow us to capture attractive market opportunities effectively if we decide to pursue such opportunities. We believe we have the ability to enter most new verticals with only a modest increase in headcount. Our competition We operate in the broadly defined tech-enabled insurance distribution sector.
While we are currently focused on growing our core insurance verticals, we continue to seek expansion opportunities in markets that share similar characteristics. We believe our vertical-agnostic platform and established playbook for entering new markets will allow us to capture attractive market opportunities effectively if we decide to pursue such opportunities.
Diversity, Equity, and Inclusion We remain committed to fostering, cultivating, and maintaining a culture of diversity and inclusion. Our philosophy and actions are built on the premise that as an employer and citizens of our communities, we can create opportunities for lasting change. We take a multi-tiered approach to our diversity, equity and inclusion (“DEI”) practices.
Our philosophy and actions are built on the premise that as an employer and citizens of our communities, we can create opportunities for lasting change. Our core values speak to the importance of individuality, transparency, and challenging ourselves to actively learn and grow together.
We have a dedicated team working to incorporate agents into our digital platform and help them expand their customer acquisition capabilities. We transacted nearly 99 million Consumer Referrals on our platform in the year ended December 31, 2023, equipping us with valuable conversion insights to help us optimize consumer routing to agents based on their desired goals.
We have a dedicated team working to incorporate agents into our digital platform and help them expand their customer acquisition capabilities. We added over 1,200 agents to our platform in the year ended December 31, 2024. This dedicated team will continue to enhance our agency capabilities. • Expand into and scale new verticals.
Our technology enables us to grow in a highly capital efficient manner, with minimal need for working capital or capital expenditure investment.
We designed our business to be highly scalable, driving sustainable long-term growth that delivers superior value to both Demand and Supply Partners. Our technology enables us to grow rapidly in a highly capital efficient manner, with minimal need for working capital or capital expenditure 14 Table of Contents investment.
Total advertising spend in the insurance industry was $11 billion in 2022 and is expected to grow to approximately $17 billion by 2027, according to Allied Market Research and the Business Research Company. Our technology platform was created to serve and grow with our insurance end markets.
Digital insurance advertising spend is expected to grow at double digit rates annually over the next few years. According to eMarketer, insurance digital advertising spend in the U.S. was $9 billion in 2023 and is expected to grow to approximately $14 billion by 2026. Our technology platform was created to serve and grow with our insurance end markets.
According to the Pew Research Center, the share of U.S. internet users ages 65 or older has grown from 66% in 2018 to 88% in 2023. • Insurance customer acquisition spending is growing.
Younger consumers are not the only driving force of this shift; the share of digitally savvy older consumers is rapidly growing as well. According to the Pew Research Center, internet usage among adults aged 65 and older has grown from 66% in 2018 to 90% in 2024. • Insurance customer acquisition spending is growing.
However, for the year ended December 31, 2023, we generated $593.4 million of Transaction Value and $388.1 million of revenue, representing decreases of 19.5% and 15.4%, respectively, compared with the year ended December 31, 2022, as challenging conditions in the personal auto insurance industry continued to pressure P&C carrier underwriting profitability and in turn customer acquisition investments on our platform.
For the year ended December 31, 2024, we generated $1.5 billion of Transaction Value and $864.7 million of revenue, representing increases of 151.4% and 122.8%, respectively, compared with the year ended December 31, 2023, due primarily to an increase in customer acquisition spending by P&C insurance carriers in response to improvements in their underwriting profitability.
We believe the acquisition is a good strategic fit with our long-term objectives and will increase our ability to generate Consumer Referrals on various social media and short form video platforms. We expect the broad secular trends driving our historical growth to resume once P&C carrier profitability recovers and they resume their customer acquisition investments on our platform.
We aim to drive deeper adoption and integration of our platform within the insurance ecosystem to continue delivering strong results to our partners. We expect the broad secular trends driving our historical growth to resume as P&C carrier profitability continues to recover and they increase their customer acquisition investments on our platform.
Removed
Beginning in the second half of 2021, many of our demand partners in our P&C vertical experienced higher-than-expected underwriting losses driven by inflation in automobile replacement and repair costs, leading them to reduce their customer acquisition spend until they obtained approval of premium increases from state regulators.
Added
We have a history of delivering strong growth in our Transaction Value and revenue, enabled by our unique business model and technology platform.
Removed
We believe we are poised to capitalize on the continued shift among P&C carriers to direct, digital distribution when their underwriting profitability recovers. 7 Table of Contents In our health and life insurance verticals, we continue to capitalize on the shift to direct, digital distribution.
Added
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.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAmong other things, these provisions: • divide our Board of Directors into three staggered classes of directors that are each elected to three-year terms; • provide the Board of Directors with the sole ability to fill a vacancy created by the expansion of the Board of Directors; • prohibit stockholder action by written consent after the date on which White Mountains, Insignia, and the Founders cease to collectively own at least a majority in voting power of shares of our common stock; • authorize the issuance of “blank check” preferred stock that could be issued by our Board of Directors to increase the number of outstanding shares of capital stock, making a takeover more difficult and expensive; • prohibit cumulative voting in the election of directors, which could otherwise allow holders of a lesser number of shares to elect director candidates; • provide that special meetings of the stockholders may be called only by or at the direction of the Board of Directors, the chairman of our board, the Chief Executive Officer or, so long as White Mountains, Insignia, and the Founders collectively own at least a majority in voting power of shares of our common stock, any such stockholder, subject to certain limitations; • require advance notice to be given by stockholders for any stockholder proposals or director nominees; • after the date on which White Mountains, Insignia, and the Founders cease to collectively own at least a majority in voting power of shares of our common stock, require the affirmative vote of holders of at least 75% of the voting power of our outstanding shares of common stock to amend certain provisions of our amended and restated certificate of incorporation and any provision of our amended and restated bylaws; • after the date on which White Mountains, Insignia, and the Founders cease to collectively own at least a majority in voting power of shares of our common stock, require the affirmative vote of holders of at least 75% of the voting power of our outstanding shares of common stock to remove directors and only for cause; • provide that each of White Mountains, Insignia and the Founders are entitled to (i) nominate two directors to the Board of Directors for so long as such stockholder owns at least 12.5% of our issued and outstanding shares of common stock as of the closing of our IPO and (ii) nominate one director to the Board of Directors for so long as such stockholder owns less than 12.5% but at least 5% of our issued and outstanding shares of common stock as of the closing of our IPO; • provide that White Mountains, Insignia and the Founders agree to vote for each other’s board nominees pursuant to the terms of the stockholders’ agreement; and • require the prior written consent of a majority in interest of White Mountains, Insignia and the Founders for any change in the size of the Board of Directors and to engage in change in control transactions, for so long as such stockholders collectively own at least a majority of the issued and outstanding shares of common stock. 42 Table of Contents In addition, Section 203 of the General Corporate Law of the State of Delaware (the “DGCL”) may affect the ability of an “interested stockholder” to engage in certain business combinations, for a period of three years following the time that the stockholder becomes an “interested stockholder.” We elected in our amended and restated certificate of incorporation not to be subject to Section 203 of the DGCL.
Biggest changeAmong other things, these provisions: • divide our Board of Directors into three staggered classes of directors that are each elected to three-year terms; • provide the Board of Directors with the sole ability to fill a vacancy created by the expansion of the Board of Directors; • prohibit stockholder action by written consent; • authorize the issuance of “blank check” preferred stock that could be issued by our Board of Directors to increase the number of outstanding shares of capital stock, making a takeover more difficult and expensive; • prohibit cumulative voting in the election of directors, which could otherwise allow holders of a lesser number of shares to elect director candidates; • provide that special meetings of the stockholders may be called only by or at the direction of the Board of Directors, the chairman of our board, the Chief Executive Officer; • require advance notice to be given by stockholders for any stockholder proposals or director nominees; • require the affirmative vote of holders of at least 75% of the voting power of our outstanding shares of common stock to amend certain provisions of our amended and restated certificate of incorporation and any provision of our amended and restated bylaws; • require the affirmative vote of holders of at least 75% of the voting power of our outstanding shares of common stock to remove directors and only for cause; • provide that each of White Mountains, Insignia and the Founders are entitled to (i) nominate two directors to the Board of Directors for so long as such stockholder owns at least 12.5% of our issued and outstanding shares of common stock as of the closing of our IPO and (ii) nominate one director to the Board of Directors for so long as such stockholder owns less than 12.5% but at least 5% of our issued and outstanding shares of common stock as of the closing of our IPO; and • provide that White Mountains, Insignia and the Founders agree to vote for each other’s board nominees pursuant to the terms of the stockholders’ agreement.
For example, insurance regulators have in the past and may in the future make claims that certain of our proprietary properties, particularly in our health insurance vertical, do not comply with one or more regulations governing marketing of insurance products in that state.
For example, state insurance regulators have in the past and may in the future make claims that certain of our proprietary properties, particularly in our health insurance vertical, do not comply with one or more regulations governing marketing of insurance products in that state.
In the future, we may issue additional stock, including as grants of equity awards to employees, directors and consultants under our equity incentive plans, to raise capital through equity financings or to acquire or make investments in companies, products or technologies for which we may issue equity securities to pay for such acquisition or investment.
In the future, we may issue additional stock, including as grants of equity awards to employees, directors and consultants under our equity incentive plans, to raise additional capital through equity financings or to acquire or make investments in companies, products or technologies for which we may issue equity securities to pay for such acquisition or investment.
Similarly, most of our supply partners do not have exclusive relationships with us, and they can seek other solutions to maximize their consumer traffic monetization, such as building their own solution or turning to other service providers, including our competitors, in order to monetize high-intent consumers or maximize the value of non-converting consumers on their websites.
Similarly, most of our Supply Partners do not have exclusive relationships with us, and they can seek other solutions to maximize their consumer traffic monetization, such as building their own solutions or turning to other service providers, including our competitors, in order to monetize high-intent consumers or maximize the value of non-converting consumers on their websites.
These laws, rules and regulations evolve frequently and their scope may continually change, through new legislation, amendments to existing legislation and changes in enforcement, and may be inconsistent from one jurisdiction to another. As a result, implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future.
These laws, rules and regulations evolve frequently and their scope may continually change, through new, or amendments to existing, legislation or regulations and changes in enforcement, and may be inconsistent from one jurisdiction to another. As a result, implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future.
In addition, we may face risks or experience difficulties in: • effectively managing the combined business following the acquisition; • implementing operations, technologies, controls, procedures, and/or policies at the acquired company; • integrating the acquired company’s accounting, human resource, and other administrative systems, and coordination of product, engineering, and sales and marketing functions; • transitioning operations, users, and customers onto our existing platforms; • obtaining any required approvals on a timely basis, if at all, from governmental authorities, or conditions placed upon approval that could, among other things, delay or prevent us from completing a transaction, or otherwise restrict our ability to realize the expected financial or strategic goals of an acquisition or other strategic transaction; • cultural challenges associated with integrating employees from the acquired company into our organization, and retention of employees from the businesses we acquire; 23 Table of Contents • liability for activities of the acquired company, including intellectual property infringement claims, privacy issues, violations of laws, commercial disputes, tax liabilities, and other known and unknown liabilities; and • litigation or other claims in connection with the acquisition of the acquired company, including claims from terminated employees, customers, former stockholders, or other third parties.
In addition, we may face risks or experience difficulties in: • effectively managing the combined business following the acquisition; • implementing operations, technologies, controls, procedures, and/or policies at the acquired company; • integrating the acquired company’s accounting, human resource, and other administrative systems, and coordination of product, engineering, and sales and marketing functions; • transitioning operations, users, and customers onto our existing platforms; • obtaining any required approvals on a timely basis, if at all, from governmental authorities, or conditions placed upon approval that could, among other things, delay or prevent us from completing a transaction, or otherwise restrict our ability to realize the expected financial or strategic goals of an acquisition or other strategic transaction; • cultural challenges associated with integrating employees from the acquired company into our organization, and retention of employees from the businesses we acquire; • liability for activities of the acquired company, including intellectual property infringement claims, privacy issues, violations of laws, commercial disputes, tax liabilities, and other known and unknown liabilities; and • litigation or other claims in connection with the acquisition of the acquired company, including claims from terminated employees, customers, former stockholders, or other third parties.
Certain jurisdictions in which we do not collect such taxes may assert that such taxes are applicable, which could result in tax assessments, penalties and interest, to us or our end-customers for the past amounts, and we may be required to collect such taxes in the future.
Certain jurisdictions in which we do not collect such taxes may assert that such taxes are applicable, which could result in tax assessments, penalties and interest, to us or our customers for the past amounts, and we may be required to collect such taxes in the future.
Our amended and restated bylaws provide that, except to the extent prohibited by the DGCL, and unless our Board of Directors otherwise approves, in the event that any claiming party (a) initiates, asserts, joins, offers substantial assistance to or has a direct financial interest in a covered proceeding and (b) such claiming party does not obtain a judgment on the merits that substantially achieves, in substance and amount, the full remedy sought by such claiming party, then each such claiming party will be obligated to reimburse us and any applicable director, officer or other employee for all fees, costs, and expenses of every kind and description (including, but not limited to, all attorneys’ fees and other litigation expenses) that we or any such director, officer or other employee actually incurs in connection with the covered proceeding.
Our amended and restated bylaws provide that, except to the extent prohibited by the DGCL, and unless our Board of Directors otherwise approves, in the event that any claiming party (a) initiates, asserts, joins, offers substantial assistance to or 44 Table of Contents has a direct financial interest in a covered proceeding and (b) such claiming party does not obtain a judgment on the merits that substantially achieves, in substance and amount, the full remedy sought by such claiming party, then each such claiming party will be obligated to reimburse us and any applicable director, officer or other employee for all fees, costs, and expenses of every kind and description (including, but not limited to, all attorneys’ fees and other litigation expenses) that we or any such director, officer or other employee actually incurs in connection with the covered proceeding.
If our underlying estimates and assumptions prove to be incorrect or if events occur that require us to revise our previous estimates or assumptions, our business, financial condition, operating results, cash flows, and prospects may be materially and adversely affected. 39 Table of Contents The obligations associated with being a public company require significant resources and management attention, which has increased and will increase our costs of operations and may divert focus from our business operations.
If our underlying estimates and assumptions prove to be incorrect or if events occur that require us to revise our previous estimates or assumptions, our business, financial condition, operating results, cash flows, and prospects may be materially and adversely affected. 40 Table of Contents The obligations associated with being a public company require significant resources and management attention, which has increased and will increase our costs of operations and may divert focus from our business operations.
If we identify any material weaknesses in the future and are unable to successfully remediate any future material weaknesses in our internal control over financial reporting, the accuracy and timing of our financial reporting may be adversely affected, we may be unable to maintain compliance with securities law 40 Table of Contents requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting, and our share price may decline as a result.
If we identify any material weaknesses in the future and are unable to successfully remediate any future material weaknesses in our internal control over financial reporting, the accuracy and timing of our financial reporting may be adversely affected, we may be unable to maintain compliance with securities law 41 Table of Contents requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting, and our share price may decline as a result.
Our failure, or the failure by our third-party providers or partners, to comply with applicable laws or regulations or any other obligations relating to privacy, data protection or information security, or any compromise of security that results in unauthorized access to, or use or release of personally identifiable information or other data, or the perception that any of the foregoing types of failure or compromise has occurred, could damage our reputation, discourage new and existing partners from using our platform, delay planned uses, and disclosures of data or result in fines or proceedings by governmental agencies and private claims and litigation, any of which could materially and adversely affect our business, financial condition, operating results, cash flows, and prospects.
Our failure, or the failure by our third-party 38 Table of Contents providers or partners, to comply with applicable laws or regulations or any other obligations relating to privacy, data protection or information security, or any compromise of security that results in unauthorized access to, or use or release of personally identifiable information or other data, or the perception that any of the foregoing types of failure or compromise has occurred, could damage our reputation, discourage new and existing partners from using our platform, delay planned uses, and disclosures of data or result in fines or proceedings by governmental agencies and private claims and litigation, any of which could materially and adversely affect our business, financial condition, operating results, cash flows, and prospects.
Finding, developing, and retaining high quality Consumer Referrals on a cost-effective basis is challenging because competition for web traffic among companies engaged in digital customer acquisition, websites, and search engines, as well as competition with traditional media companies, has resulted and may continue to result in significant increases in web traffic costs, declining margins, and reduction in revenue.
Finding, developing, and retaining high quality Consumer Referrals on a cost-effective basis is challenging because competition for web traffic among companies engaged in digital customer acquisition, websites, and search engines, as well as competition with traditional media companies, has resulted and may continue to result in significant increases in web traffic costs, declining margins, and reductions in revenue.
Some specific factors that may have a significant effect on the market price of our Class A common stock include: • actual or anticipated fluctuations in our operating results or those of our competitors; • actual or anticipated changes in the growth rate of the online insurance/digital advertising market or the growth rate of our businesses or those of companies that investors deem comparable to us; • changes in economic or business conditions; • changes in governmental regulation; and • publication of research reports about us, our competitors or our industry, or changes in, or failure to meet, estimates made by securities analysts or ratings agencies of our financial and operating performance, or lack of research reports by industry analysts or ceasing of analyst coverage.
Some specific factors that may have a significant effect on the market price of our Class A common stock include: • actual or anticipated fluctuations in our operating results or those of our competitors; • actual or anticipated changes in the growth rate of the online insurance/digital advertising market or the growth rate of our businesses or those of companies that investors deem comparable to us; • changes in economic or business conditions; • changes in governmental regulation and the outcome of governmental enforcement of such regulation; and • publication of research reports about us, our competitors or our industry, or changes in, or failure to meet, estimates made by securities analysts or ratings agencies of our financial and operating performance, or lack of research reports by industry analysts or ceasing of analyst coverage.
Laws in all 50 states require businesses to provide notice to customers whose personally identifiable information has been disclosed as a result of a data breach. The laws are not consistent, and compliance in the event of a widespread data breach is costly. States are also frequently amending existing laws, requiring attention to frequently changing regulatory requirements.
Laws in all 50 states require businesses to provide notice to consumers whose personally identifiable information has been disclosed as a result of a data breach. The laws are not consistent, and compliance in the event of a widespread data breach is costly. States are also frequently amending existing laws, requiring attention to frequently changing regulatory requirements.
We rely on third-party service providers and technologies to operate critical business systems to process sensitive information in a variety of contexts, including cloud-based infrastructure, data center facilities, encryption and authentication technology, employee communications, and other functions, and we also have data integrations with certain partners, both of 29 Table of Contents which may increase the risk of cybersecurity attacks and loss, corruption, or unauthorized publication of our information or the confidential information of consumers and employees.
We rely on third-party service providers and technologies to operate critical business systems to process sensitive information in a variety of contexts, including cloud-based infrastructure, data center facilities, encryption and authentication technology, employee communications, and other functions, and we also have data integrations with certain partners, both of which may increase the risk of cybersecurity attacks and loss, corruption, or unauthorized publication of our information or the confidential information of consumers and employees.
In addition, CMS has recently proposed changes in the regulations regarding the compensation of Medicare brokers and the maximum duration of short-term, limited-duration health insurance plans, These or other changes have impacted and could in the future impact the manner in which we or our partners are permitted to conduct business, which could negatively affect our and/or their marketing 35 Table of Contents practices, budgets, and overall level of business with us, which could adversely impact our business, financial condition, operating results, cash flows, and prospects.
In addition, CMS has recently proposed changes in the regulations regarding the compensation of Medicare brokers and the maximum duration of short-term, limited-duration health insurance plans, These or other changes have impacted and could in the future impact the manner in which we or our partners are permitted to conduct business, which could negatively affect our and/or their marketing practices, budgets, and overall level of business with us, which could adversely impact our business, financial condition, operating results, cash flows, and prospects.
Since shares of our Class A common stock were initially sold in the IPO in October 2020 at a price of $19.00 per share, the low and high closing sales prices of our Class A common stock ranged from $5.36 to $64.11 per share, respectively, through December 31, 2023.
Since shares of our Class A common stock were initially sold in the IPO in October 2020 at a price of $19.00 per share, the low and high closing sales prices of our Class A common stock ranged from $5.36 to $64.11 per share, respectively, through December 31, 2024.
The market price of our Class A common stock could decline as a result of sales of a large number of shares of our Class A common stock by our pre-IPO stockholders, including shares issuable upon the exchange of Class B-1 units (together 41 Table of Contents with an equal number of shares of our Class B common stock).
The market price of our Class A common stock could decline as a result of sales of a large number of shares of our Class A common stock by our pre-IPO stockholders, including shares issuable upon the exchange of Class B-1 units (together 42 Table of Contents with an equal number of shares of our Class B common stock).
We will not be able to grow as expected, or at all, if we do not accomplish the following: • maintain and expand the number of demand and supply partners that use our platform; • increase the volume and quality of Consumer Referrals available on our platform; 22 Table of Contents • further enhance the capabilities and effectiveness of our platform, and effectively demonstrate the value provided by our platform to current and prospective partners; • maintain the quality of our platform; and • expand our presence to new verticals.
We will not be able to grow as expected, or at all, if we do not accomplish the following: • maintain and expand the number of Demand and Supply Partners that use our platform; • increase the volume and quality of Consumer Referrals available on our platform; • further enhance the capabilities and effectiveness of our platform, and effectively demonstrate the value provided by our platform to current and prospective partners; • maintain the quality of our platform; and • expand our presence to new verticals.
If one or more of the search engines or other online sources on which we or our suppliers rely for purchased listings modifies or terminates its relationship with us or decides to decrease its rating of the relevance and quality of our suppliers’ or our proprietary websites, our expenses could rise, we could lose consumers, and traffic to our suppliers’ websites and our proprietary websites could decrease, which could in turn decrease the amount and quality of Consumer Referrals made available for sale on our platform.
If one or more of the search engines or other online sources on which we or our suppliers rely for purchased listings modifies or terminates its relationship with us or decides to decrease its rating of the relevance and quality of our suppliers’ or our proprietary websites, our traffic acquisition cost could rise, we could lose consumers, and traffic to our suppliers’ websites and our proprietary websites could decrease, which could in turn decrease the amount and quality of Consumer Referrals made available for sale on our platform.
In addition, Medicare providers and their brokers and marketing partners are subject to the regulations governing the marketing and sale of Medicare Advantage and Medicare Supplement plans, which are administered by the Centers for Medicare and Medicaid Services (CMS), have materially changed the rules regarding how such policies are marketed, and may materially restrict our ability to sell Consumer Referrals to certain buyers in the future.
In addition, Medicare providers and their brokers and marketing partners are subject 36 Table of Contents to the regulations governing the marketing and sale of Medicare Advantage and Medicare Supplement plans, which are administered by the Centers for Medicare and Medicaid Services (CMS), have materially changed the rules regarding how such policies are marketed, and may materially restrict our ability to sell Consumer Referrals to certain buyers in the future.
These cycles are often characterized by periods of “soft” market conditions, when carriers’ loss ratios are relatively low and they tend to focus on investing to acquire customers and build market share, and “hard” market conditions, when their loss ratios are relatively high and they tend to prioritize profitability over growth and reduce their customer acquisition spending until they can obtain regulatory approval to raise premiums.
These cycles are often characterized by periods of “soft” market conditions, when carriers’ loss ratios are relatively low and they tend to focus on investing to acquire customers and build market share, 20 Table of Contents and “hard” market conditions, when their loss ratios are relatively high and they tend to prioritize profitability over growth and reduce their customer acquisition spending until they can obtain regulatory approval to raise premiums.
The actual amount we will be required to pay under the tax receivables agreement may be materially greater than this hypothetical amount as potential future payments will vary depending on a number of factors, including the timing of the exchanges, the price of our Class A common stock at the time of the exchanges, the amount, character, and timing of our income and the tax rates then applicable.
The actual amount we will be required to pay under the tax receivables agreement may be materially greater than this hypothetical amount as potential future 46 Table of Contents payments will vary depending on a number of factors, including the timing of the exchanges, the price of our Class A common stock at the time of the exchanges, the amount, character, and timing of our income and the tax rates then applicable.
Even if not subject to legal challenge, the perception of privacy concerns, whether or not valid, may harm our reputation and brand and materially and adversely affect our business, financial condition, operating results, cash flows, and prospects. 37 Table of Contents Our and our partners’ communications with potential and existing consumers are subject to laws regulating telephone and email marketing practices.
Even if not subject to legal challenge, the perception of privacy concerns, whether or not valid, may harm our reputation and brand and materially and adversely affect our business, financial condition, operating results, cash flows, and prospects. Our and our partners’ communications with potential and existing consumers are subject to laws regulating telephone and email marketing practices.
The CCPA provides for fines of up to $7,500 per violation, as well as a private right of action for data breaches that is expected to increase the frequency of data breach litigation. While the CCPA has already been amended multiple times, it is unclear how this legislation will be further modified or how it will be interpreted.
The CCPA provides for fines of up to $7,500 per violation, as well as a private right of action for data breaches that is expected to increase the frequency of data breach litigation. The CCPA has already been amended multiple times, and it is unclear whether this legislation will be further modified or how it will be interpreted.
Consolidation of sellers could eventually lead to a concentration of desirable inventory on websites or networks owned by a small number of individuals or entities, which could limit the supply or impact the pricing of inventory available to us.
Consolidation of suppliers could eventually lead to a concentration of desirable inventory on websites or networks owned by a small number of individuals or entities, which could limit the supply or impact the pricing of inventory available to us.
Complying with these 36 Table of Contents regulations may cause us to incur substantial operational costs or require us to change our business practices. Despite our efforts, we may not be successful in our efforts to achieve compliance either due to internal or external factors such as resource allocation limitations or a lack of vendor cooperation.
Complying with these regulations may cause us to incur substantial operational costs or require us to change our business practices. Despite our efforts, we may not be successful in our efforts to achieve compliance either due to internal or external factors such as resource allocation limitations or a lack of vendor cooperation.
For example, in April 2021, Google implemented a new policy requiring paid search advertisers to be licensed health insurance brokers to bid on health insurance-related keywords, which required us to become a licensed health insurance broker in all 50 states and the District of Columbia to be able to continue bidding on such keywords.
For example, in April 2021, Google implemented a new policy requiring paid search advertisers to be licensed health insurance brokers to bid on 25 Table of Contents health insurance-related keywords, which required us to become a licensed health insurance broker in all 50 states and the District of Columbia to be able to continue bidding on such keywords.
In addition, in our travel vertical, COVID-19 has led to a dramatic decline in consumers shopping for travel-related products, which has led to a significant decline in our revenue from the travel vertical, and there is uncertainty about whether our business in this vertical will return to pre-pandemic levels and the timing of any such recovery.
In addition, in our travel vertical, COVID-19 has led 29 Table of Contents to a dramatic decline in consumers shopping for travel-related products, which has led to a significant decline in our revenue from the travel vertical, and there is uncertainty about whether our business in this vertical will return to pre-pandemic levels and the timing of any such recovery.
Any person or entity purchasing or otherwise acquiring any interest in our Class A common stock shall 43 Table of Contents be deemed to have notice of and consented to this exclusive forum provision, but will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder.
Any person or entity purchasing or otherwise acquiring any interest in our Class A common stock shall be deemed to have notice of and consented to this exclusive forum provision, but will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder.
Any of the foregoing could have a material and adverse effect on our business, financial condition, operating results, cash flows and prospects. 24 Table of Contents The ability to maintain or grow the number of visitors to our suppliers’ websites and our proprietary websites from search companies is not entirely within our control.
Any of the foregoing could have a material and adverse effect on our business, financial condition, operating results, cash flows and prospects. The ability to maintain or grow the number of visitors to our suppliers’ websites and our proprietary websites from search companies is not entirely within our control.
Accordingly, payments under the tax receivables agreement may be made years in advance of the actual realization, if any, of the anticipated tax benefits and may be 46 Table of Contents significantly greater than the benefits we eventually realize. In these situations, our obligations under the tax receivables agreement could have a substantial negative impact on our liquidity.
Accordingly, payments under the tax receivables agreement may be made years in advance of the actual realization, if any, of the anticipated tax benefits and may be significantly greater than the benefits we eventually realize. In these situations, our obligations under the tax receivables agreement could have a substantial negative impact on our liquidity.
The publication of our privacy policy and other documentation that provide promises and assurances about privacy and security can subject us to potential state and federal action in the U.S. if they are found to be deceptive, unfair, or misrepresentative of our actual practices.
The publication of our privacy policy and other documentation that provide promises and assurances about privacy and security can subject us to potential state and federal action in the U.S. if they are found to be deceptive, unfair, or 37 Table of Contents misrepresentative of our actual practices.
Our initial purchase of units in the IPO, the Pre-IPO Leveraged Distribution and other actual or deemed distributions by QLH to its members, and the post-IPO exchanges of Class B-1 units may result in increases in our share of the 45 Table of Contents tax basis of the assets of QLH.
Our initial purchase of units in the IPO, the Pre-IPO Leveraged Distribution and other actual or deemed distributions by QLH to its members, and the post-IPO exchanges of Class B-1 units may result in increases in our share of the tax basis of the assets of QLH.
Further, we might be required to seek a license for third-party intellectual property, which may not be available on commercially reasonable terms (if at all) and may significantly increase our operating expenses. Some licenses may be non-exclusive, and therefore our competitors may have access to the same technology licensed to us.
Further, we might be required to seek a license for third-party intellectual property, which may not be available on commercially reasonable terms (if at all) and may significantly increase our operating expenses. Some licenses may be non-exclusive, and therefore our competitors may have access to the same 33 Table of Contents technology licensed to us.
Sustained or repeated system failures would reduce the attractiveness of our platform to our partners, thereby reducing revenue. Moreover, negative publicity arising from these types of disruptions could damage our reputation and may adversely impact the use of our platform.
Sustained or repeated system failures would reduce the attractiveness of our platform to our partners, thereby reducing revenue. Moreover, negative publicity arising from these types of disruptions could damage our 34 Table of Contents reputation and may adversely impact the use of our platform.
Assuming no material changes in relevant tax law and based on our current operating plan and other assumptions, if all of the Class B-1 units were acquired by us in taxable transactions at December 31, 2023 for a price of $11.15 (which is the last reported sale price of our Class A common stock as of December 31, 2023 on the NYSE) per Class B-1 unit, we estimate that the amount that we would be required to pay under the tax receivables agreement could be approximately $160 million.
Assuming no material changes in relevant tax law and based on our current operating plan and other assumptions, if all of the Class B-1 units were acquired by us in taxable transactions at December 31, 2024 for a price of $11.29 (which is the last reported sale price of our Class A common stock as of December 31, 2024 on the NYSE) per Class B-1 unit, we estimate that the amount that we would be required to pay under the tax receivables agreement could be approximately $164 million.
The CCPA, CPRA and other changes in laws or regulations relating to privacy, data protection and information security, particularly any new or modified laws or regulations that require enhanced protection of certain types of data or new obligations with regard to data retention, transfer or disclosure, could greatly increase the cost of providing our offerings, require significant changes to our operations or even prevent us from providing certain offerings in jurisdictions in which we currently operate and in which we may operate in the future.
The CCPA, CPRA and other changes in laws or regulations relating to privacy, data protection and information security, particularly any new or modified laws or regulations that require enhanced protection of certain types of data or new obligations with regard to data retention, transfer or disclosure, could greatly increase the cost of providing our offerings, limit our ability to collect and/or use certain types of data or otherwise require significant changes to our operations or even prevent us from providing certain offerings in jurisdictions in which we currently operate and in which we may operate in the future.
Competition from the DTC distribution channel may affect both volume and price, and, thus, revenue, profit margins, and profitability. If we fail to deliver results that are superior to those that other technology companies engaged in digital customer acquisition deliver to partners, we could lose partners and market share, and our revenue may decline.
Competition from the DTC distribution channel may affect both volume and price, and, thus, revenue, profit margins, and 22 Table of Contents profitability. If we fail to deliver results that are superior to those that other technology companies engaged in digital customer acquisition deliver to partners, we could lose partners and market share, and our revenue may decline.
In particular, our corporate headquarters are located in Los Angeles, California, a region known for seismic activity. In addition, any unforeseen 28 Table of Contents political crises, terrorist attacks, war, political instability, or other catastrophic events, whether in the United States or abroad, could adversely affect our operations or the economy as a whole.
In particular, our corporate headquarters are located in Los Angeles, California, a region known for seismic activity. In addition, any unforeseen political crises, terrorist attacks, war, political instability, or other catastrophic events, whether in the United States or abroad, could adversely affect our operations or the economy as a whole.
We expect to obtain payment from our demand partners for work performed and maintain an allowance against receivables for potential losses on partner accounts. Actual losses on partner receivables could differ from those that we have historically experienced or currently anticipate and, as a result, we may need to adjust our allowances.
We expect to obtain payment from our customers for work performed and maintain an allowance for credit losses against receivables for potential losses on partner accounts. Actual losses on partner receivables could differ from those that we have historically experienced or currently anticipate and, as a result, we may need to adjust our allowances.
Any debt financing that we may secure in the future could involve debt service obligations and restrictive covenants relating to our capital 26 Table of Contents raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities.
Any debt financing that we may secure in the future could involve debt service obligations and restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities.
If such demand partners determine to compete directly with us or choose to favor one or more third-party platforms, they could cease or reduce purchases of Consumer Referrals on our platform.
If such Demand Partners decide to compete directly with us or choose to favor one or more third-party platforms, they could cease or reduce their purchases of Consumer Referrals on our platform.
Our principal competitors in this space include technology companies engaged in digital customer acquisition for insurance carriers, as well as other companies including: • direct distribution companies focused on insurance products; • industry-specific portals or customer acquisition companies with insurance-focused research online destinations; • online marketing or media services providers; 21 Table of Contents • major internet portals and search engine companies with online advertising platforms; and • supply partners with their own sales forces that sell their online Consumer Referrals directly to buyers.
Our principal competitors in this space include technology companies engaged in digital customer acquisition for insurance carriers, as well as other companies including: • direct distribution companies focused on insurance products; • industry-specific portals or customer acquisition companies with insurance-focused research online destinations; • online marketing or media services providers; • major internet portals and search engine companies with online advertising platforms; and • Supply Partners with their own sales forces that sell their online Consumer Referrals directly to Demand Partners.
We also have employees and contractors located outside of the United States, which may subject us to greater risk of cyberattacks.
We also have employees located outside of the United States, which may subject us to greater risk of cyberattacks.
These agreements may be breached, and we may not have adequate remedies for any such breach. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret or know-how is difficult, expensive, and time-consuming, and the outcome is unpredictable.
These agreements may be breached, and we may not have adequate remedies for any such breach. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret or know-how is 32 Table of Contents difficult, expensive, and time-consuming, and the outcome is unpredictable.
For example, the CCPA, among other things, requires new disclosures to California consumers and affords such consumers new abilities to access and delete their personal information, opt-out of certain sales of personal information and receive detailed information about how their personal information is used.
For example, the CCPA (as amended by the CPRA), among other things, requires new disclosures to California consumers and affords such consumers new abilities to access and delete their personal information, opt-out of certain sales of personal information and receive detailed information about how their personal information is used.
We may not realize the anticipated benefits of any acquisitions and we may not be successful in overcoming these risks or any other problems encountered in connection with potential acquisitions.
We may not realize the anticipated benefits of any acquisitions and we may not be successful in overcoming these risks or any other problems encountered in 24 Table of Contents connection with potential acquisitions.
The impacts of the COVID-19 pandemic, including supply chain constraints and labor shortages, have contributed to higher-than-expected inflation in insurance claims costs, which has driven significant reductions in P&C insurance carrier profitability, leading our P&C insurance carrier partners to reduce their customer acquisition spending. The timing and slope of a recovery in this vertical are difficult to predict.
For example, the impacts of the COVID-19 pandemic, including supply chain constraints and labor shortages, contributed to higher-than-expected inflation in insurance claims costs, which drove significant reductions in P&C insurance carrier profitability, leading our P&C insurance carrier partners to reduce their customer acquisition spending. The timing and slope of a recovery in this vertical are difficult to predict.
The 2021 Revolving Credit Facility is available for general corporate purposes. The 2021 Credit Facilities will mature on July 29, 2026. As of December 31, 2023, the aggregate principal amount outstanding under the 2021 Term Loan Facility was $171.0 million and our borrowing capacity under the 2021 Revolving Credit Facility was $45.0 million.
The 2021 Revolving Credit Facility is available for general corporate purposes. The 2021 Credit Facilities will mature on July 29, 2026. As of December 31, 2024, the aggregate principal amount outstanding under the 2021 Term Loan Facility was $158.5 million and our borrowing capacity under the 2021 Revolving Credit Facility was $45.0 million.
We do not collect sales, use, value added or similar taxes in the majority of the jurisdictions in which we have sales, and we believe that such taxes are not applicable either because we do not have the requisite amount of contacts with the state for the state to be able to impose these taxes or our products and services are not subject to these taxes.
We do not collect indirect taxes in the majority of the jurisdictions in which we have sales, and we believe that such taxes are not applicable either because our products and services are not subject to these taxes or we do not have the requisite amount of contacts with the state for the state to be able to impose these taxes.
We could be subject to suits by parties claiming ownership of what we believe to be open source software, or claiming non-compliance with open source licensing terms.
We could be subject to suits by parties 35 Table of Contents claiming ownership of what we believe to be open source software, or claiming non-compliance with open source licensing terms.
Although we endeavor to comply with our published policies and documentation and ensure their compliance with current laws, rules and regulations, we may at times fail to do so or be alleged to have failed to do so.
Although we endeavor to comply with our published policies and documentation and ensure their compliance with current laws, rules and regulations, we (and other parties with whom we do business) may at times fail to do so or be alleged to have failed to do so.
We cannot assure you that we will be able to acquire Consumer Referrals that meet our partners’ performance, price, and quality requirements, in which case our revenue could decline or our operating costs could increase.
We cannot assure you that we will be able to acquire Consumer Referrals that meet our partners’ performance, price, and quality requirements, in which case our revenue could decline or our cost of revenue could increase.
For example, in the third quarter of 2021, many automobile insurers began to reduce their customer acquisition spending sharply in response to higher-than-expected loss ratios 20 Table of Contents resulting from higher accident severity and increased repair costs due to global supply chain issues, and those reductions continued and in many cases worsened during 2022 and 2023.
For example, in the third quarter of 2021, many automobile insurers began to reduce their customer acquisition spending sharply in response to higher-than-expected loss ratios resulting from higher accident severity and increased repair costs due to global supply chain issues, and those reductions continued and in many cases worsened during 2022 and 2023 before beginning to recover in 2024.
Federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), Section 5(c) of the Federal Trade Commission Act, the FTC’s Telemarketing Sales Rule (the “TSR”), the EU’s General Data Protection Regulation, supplemented by national laws (such as, in the United Kingdom, the Data Protection Act 2018) and further implemented through binding guidance from the European Data Protection Board.
Federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), Section 5(c) of the Federal Trade Commission Act, the TSR, the EU’s General Data Protection Regulation, supplemented by national laws (such as, in the United Kingdom, the Data Protection Act 2018) and further implemented through binding guidance from the European Data Protection Board.
If we are held to have breached or failed to fully comply with all the terms and conditions of an open source software license, or if an author or other third party that distributes such open source software were to allege that we had not complied with the conditions of one or more of these licenses, we could be required to incur significant legal expenses defending against such allegations, could be subject to significant damages, enjoined from the operation of our platform or other liability, or be required to seek costly licenses from third parties to continue providing our platform on terms that are not economically feasible, to re-engineer our platform, to discontinue or delay the provision of our platform if re-engineering could not be accomplished on a timely basis, or to make generally available, in source code form, our proprietary code, any of which would adversely affect our business, financial condition, operating results, cash flows, and prospects, and could help our competitors develop platforms that are similar to or better than ours. 34 Table of Contents Risks related to laws and regulation Our business is subject to a variety of laws and regulations, both in the U.S. and internationally, many of which are evolving.
If we are held to have breached or failed to fully comply with all the terms and conditions of an open source software license, or if an author or other third party that distributes such open source software were to allege that we had not complied with the conditions of one or more of these licenses, we could be required to incur significant legal expenses defending against such allegations, could be subject to significant damages, enjoined from the operation of our platform or other liability, or be required to seek costly licenses from third parties to continue providing our platform on terms that are not economically feasible, to re-engineer our platform, to discontinue or delay the provision of our platform if re-engineering could not be accomplished on a timely basis, or to make generally available, in source code form, our proprietary code, any of which would adversely affect our business, financial condition, operating results, cash flows, and prospects, and could help our competitors develop platforms that are similar to or better than ours.
In the event that we are unable to generate the levels of Consolidated EBITDA required to maintain compliance with such financial covenants, we may need to reduce operating costs, negotiate amendments to or waivers of the terms of such credit facilities, refinance our debt, or raise additional capital.
In the event that, due to business conditions or other events, we are unable to continue to generate the levels of Consolidated EBITDA required to maintain compliance with such financial covenants, we may need to reduce operating costs, negotiate amendments to or waivers of the terms of such credit facilities, refinance our debt, or raise additional capital.
Our existing or future indebtedness could have important consequences, including: • requiring us to dedicate a substantial portion of our cash flow to payments on our indebtedness, which would reduce the amount of cash flow available to fund working capital, capital expenditures or other corporate purposes; 25 Table of Contents • increasing our vulnerability to general adverse economic, industry, and market conditions; • subjecting us to restrictive covenants, including restrictions on our ability to pay dividends and requiring the pledge of substantially all of our assets as collateral, that may reduce our ability to take certain corporate actions or obtain further debt or equity financing; • limiting our ability to plan for and respond to business opportunities or changes in our business or industry; and • placing us at a competitive disadvantage compared with our competitors that have less debt or better debt servicing options.
Our existing or future indebtedness could have important consequences, including: • requiring us to dedicate a substantial portion of our cash flow to payments on our indebtedness, which would reduce the amount of cash flow available to fund working capital, capital expenditures or other corporate purposes; • increasing our vulnerability to general adverse economic, industry, and market conditions; • subjecting us to restrictive covenants, including restrictions on our ability to pay dividends and requiring the pledge of substantially all of our assets as collateral, that may reduce our ability to take certain corporate actions or obtain further debt or equity financing; • limiting our ability to plan for and respond to business opportunities or changes in our business or industry; and • placing us at a competitive disadvantage compared with our competitors that have less debt or better debt servicing options. 26 Table of Contents In addition, our indebtedness under the 2021 Credit Facilities bears interest at a variable rate, making us vulnerable to increases in the market rate of interest.
In November 2021, pursuant to a registration rights agreement with certain of our existing investors, including White Mountains, Insignia, and the Senior Executives, we registered certain of their shares of our Class A common stock, including those delivered in exchange for Class B-1 units, for resale, of which 34.3 million shares remained registered and available for sale as of November 30, 2023.
In November 2021, pursuant to a registration rights agreement with certain of our existing investors, including White Mountains, Insignia, and the Senior Executives, we registered certain of their shares of our Class A common stock, including those delivered in exchange for Class B-1 units, for resale, of which 23.7 million shares remained registered and available for sale as of May 7, 2024.
Supply partners use our platform to optimize consumer conversions and the yield on their traffic. If supply partners are not able to obtain the best yield on their traffic using our platform, they may stop using our platform to make their Consumer Referrals available. The majority of our partners can stop using our platform at any time with no notice.
If Supply Partners are not able to obtain the best yield on their traffic using our platform, they may stop using our platform to make their Consumer Referrals available. 19 Table of Contents The majority of our partners can stop using our platform at any time with no notice.
We derive a substantial majority of our revenue from sales of Consumer Referrals to property & casualty insurance carriers, health insurance carriers, and life insurance carriers. Revenue from our insurance verticals accounted for 96.6% and 95.5% of our total revenue for the years ended December 31, 2023 and 2022, respectively.
We derive a substantial majority of our revenue from sales of Consumer Referrals to property & casualty insurance carriers, health insurance carriers and brokers, and life insurance carriers. Revenue from our insurance verticals accounted for 99.0% and 96.6% of our total revenue for the years ended December 31, 2024 and 2023, respectively.
Our top 20 demand partners represented 41% and 46% of our revenue for the years ended December 31, 2023 and 2022, respectively.
Our top 20 Demand Partners represented 72% and 41% of our revenue for the years ended December 31, 2024 and 2023, respectively.
Any failure or perceived failure by us to comply with our privacy policies, our privacy-related obligations to consumers or other third parties, or our privacy-related legal obligations, or any compromise of security that results in the unauthorized release or transfer of sensitive information, which could include personally identifiable information or other user data, may result in governmental investigations, enforcement actions, regulatory fines, litigation, and public statements against us by consumer advocacy groups or others, and could cause consumers and partners to lose trust in us, all of which could be costly and have an adverse effect on our business, financial condition, operating results, cash flows, and prospects.
For example, unauthorized parties could steal consumer names, email addresses, physical addresses, phone numbers, and other information, which we collect when providing our services. 31 Table of Contents Any failure or perceived failure by us to comply with our privacy policies, our privacy-related obligations to consumers or other third parties, or our privacy-related legal obligations, or any compromise of security that results in the unauthorized release or transfer of sensitive information, which could include personally identifiable information or other user data, may result in governmental investigations, enforcement actions, regulatory fines, litigation, and public statements against us by consumer advocacy groups or others, and could cause consumers and partners to lose trust in us, all of which could be costly and have an adverse effect on our business, financial condition, operating results, cash flows, and prospects.
Maintaining strong brand recognition and a reputation for delivering value to our partners is important to our business. A failure by us to protect our brand and deliver on these expectations could harm our reputation and damage our ability to attract and retain partners, which could adversely affect our business, financial condition, operating results, cash flows, and prospects.
A failure by us to protect our brand and deliver on these expectations could harm our reputation and damage our ability to attract and retain partners, which could adversely affect our business, financial condition, operating results, cash flows, and prospects.
The law is unsettled on the extent of liability that an advertiser has for the activities of sellers or vendors. Insurance regulations may impose liability on us and our demand partners for misrepresentations made by their marketing service providers. In addition, certain of our contracts impose liability on us, including indemnification obligations, for the acts of our sellers or vendors.
Insurance regulations may impose liability on us and our Demand Partners for misrepresentations made by their marketing service providers. In addition, certain of our contracts impose liability on us, including indemnification obligations, for the acts of our sellers or vendors.
The perception in the public market that our pre-IPO stockholders might sell shares of Class A common stock could also depress our market price. As of December 31, 2023, 47.4 million Class A-1 units and 18.1 million Class B-1 units were outstanding.
The perception in the public market that our pre-IPO stockholders might sell shares of Class A common stock could also depress our market price. As of December 31, 2024, 55.5 million Class A-1 units and 11.6 million Class B-1 units were outstanding.
Different interests among our investors or between our investors and us, including with respect to related party transactions, could prevent us from achieving our business goals. For the foreseeable future, we expect that a majority of our Board of Directors will include directors who are affiliated with White Mountains, Insignia, and the Founders.
Different interests among our investors or between our investors and us, including with respect to related party transactions, could prevent us from achieving our business goals. A majority of our Board of Directors is comprised of directors who are affiliated with White Mountains, Insignia, and the Founders.
This sector is intensely competitive, and we expect this competition to continue to increase in the future both from existing and new competitors that provide competing platforms or technology. We compete both for demand partners’ customer acquisition budgets and high-quality Consumer Referrals. We compete on the basis of a number of factors, including return on investment, technology, and client service.
This sector is intensely competitive, and we expect this competition to continue to increase in the future both from existing and new competitors that provide competing platforms or technology. We compete both for Demand Partners’ customer acquisition budgets and high-quality Consumer Referrals.
Our largest demand partner represented 7% and 10% of our revenue for the years ended December 31, 2023 and 2022, respectively, and our next largest demand partner represented 6% and 5% of revenue for the years ended December 31, 2023 and 2022, respectively.
Our largest Demand Partner represented 23% and 7% of our revenue for the years ended December 31, 2024 and 2023, respectively, and our next largest Demand Partner represented 18% and 6% of revenue for the years ended December 31, 2024 and 2023, respectively.
In the U.S., these include enforcement actions in response to rules and regulations promulgated under the authority of federal agencies and state attorneys general and legislatures and consumer protection agencies.
In many jurisdictions, enforcement actions and consequences for non-compliance are rising. In the U.S., these include enforcement actions in response to rules and regulations promulgated under the authority of federal agencies and state attorneys general and legislatures and consumer protection agencies.
We or our supply partners may also fail to optimally manage our paid listings, or our proprietary bid management technologies may fail, which may lead to a decrease in the number of visits to our supply partners’ websites or our proprietary websites.
We or our Supply Partners may also fail to optimally manage our paid listings, or our proprietary bid management technologies may fail, or higher bids by our competitors may increase the cost of Consumer Referrals, any of which may lead to a decrease in the number of visits to our Supply Partners’ websites or our proprietary websites.
We and our partners make telephone calls and send emails and text messages to potential and existing consumers, which are subject to various state and federal laws regulating telemarketing communications (including SMS or text messaging), including the TCPA and TSR.
We and our partners make telephone calls and send emails and text messages to potential and existing consumers, which are subject to various state and federal laws regulating telemarketing communications (including SMS or text messaging), including the TCPA and TSR. In connection with the FTC Matter, the FTC Staff has alleged that we have violated the TSR.
We are currently not a party to any material legal proceedings. However, we have in the past and may from time to time in the future be involved in various legal proceedings, including, but not limited to, actions relating to claims of violations of laws or regulations, breach of contract, and intellectual property infringement, misappropriation or other violation.
We have in the past and may from time to time in the future be involved in various legal proceedings, including, but not limited to, actions relating to claims of violations of laws or regulations, breach of contract, and intellectual property infringement, misappropriation or other violation. In addition to the FTC Matter, there are other sources of litigation risk.
These laws are subject to change at any time and could further limit our ability to protect our intellectual property rights. Additionally, there is uncertainty concerning the scope of intellectual property protection for software and business methods, which are fields in which we rely on intellectual property laws to protect our rights.
Additionally, there is uncertainty concerning the scope of intellectual property protection for software and business methods, which are fields in which we rely on intellectual property laws to protect our rights.
For example, in 2023 the FTC started taking a new position (in public statements and enforcement actions) that consent to receive robocalls under the TSR must be received directly from the consumer, rather than through a third party such as a lead generator.
For example, in 2023 the FTC took the position (in public statements and enforcement actions) that consent to receive robocalls under the TSR must be received directly from the consumer, rather than through a third party such as a lead generator, and it appears that the staff of the FTC continues to assert this position in relation to the FTC Matter.
Our business depends on our ability to retain our key executives and management, including Steven Yi, Chief Executive Officer and Co-Founder, and Eugene Nonko, Chief Technology Officer and Co-Founder, and to hire, develop, and retain other key employees.
Our business depends on our ability to retain our key executives and management, including Steven Yi, our Chief Executive Officer and Co-Founder, and to hire, develop, and retain other key employees, as well as our ability to plan for and manage executive succession.
As a result, we cannot guarantee that our partners will continue to work with us, or, if they do, the amount of Consumer Referrals demand partners will purchase or the amount of Consumer Referrals supply partners will make available on our platform. 19 Table of Contents If a partner is not satisfied with our platform, it could cause us to lose our relationship with them.
As a result, we cannot guarantee that our partners will continue to work with us, or, if they do, the amount of Consumer Referrals Demand Partners will purchase or the amount of Consumer Referrals Supply Partners will make available on our platform.
If we or any of our partners or third-party service providers experience security breaches that cause interruptions to the services we provide, or the loss or unauthorized disclosure or use of confidential information, it could cause partners or consumers to lose confidence and trust in us and our services, terminate data integrations with us, or stop using our platform or websites entirely, which could have an adverse effect on our business, financial condition, operating results, cash flows, and prospects.
If we or any of our partners or third-party service providers experience security breaches that cause interruptions to the services we provide, or the loss or unauthorized disclosure or use of confidential information, it could cause partners or consumers to lose confidence and trust in us and our services, terminate data integrations with us, or stop using our platform or websites entirely, which could have an adverse effect on our business, financial condition, operating results, cash flows, and prospects. 30 Table of Contents We take efforts to protect our systems and data, including establishing cybersecurity policies and processes, performing risk assessments to aid in the identification and mitigation of threats, and implementing technological measures designed to provide multiple layers of security.
A reduction in the volume of leads and calls supplied to our marketplaces, or a reduction in the ability of our owned and operated lead generation websites to generate such leads and calls profitably, could harm our business, financial condition, operating results, cash flows, and prospects.
Any such new laws or regulations or changes in regulations could result in a reduction in the volume of leads and calls supplied to our marketplaces, or a reduction in the ability of our owned and operated lead generation websites to generate such leads and calls profitably, or increase the risk of claims made against us or our partners, any of which could harm our business, financial condition, operating results, cash flows, and prospects.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Audit Committee also conducts an annual review of the Company’s cybersecurity posture and the effectiveness of its risk management strategies. In the event of a cybersecurity incident, the CISO is equipped with a well-defined cyber crisis response plan.
Biggest changeThe Audit Committee also conducts an annual review of the Company’s cybersecurity posture and the effectiveness of its risk management strategies. In the event of a cybersecurity incident, including aggregation of a series of related incidents, management is equipped with a well-defined cyber crisis response plan.
We have implemented a risk-based approach to identify and assess the cybersecurity threats that could affect our business and information systems. Our cybersecurity program is aligned with industry standards and best practices. We are currently pursuing a SOC 2 Type 2 Report, and are working to achieve compliance with the National Institute of Standards and Technology (“NIST”) 800-171 Cybersecurity Framework.
We have implemented a risk-based approach to identify and assess the cybersecurity threats that could affect our business and information systems. Our cybersecurity program is aligned with industry standards and best practices. We are currently pursuing a SOC 2 Type 2 Report, and are working to achieve alignment with the National Institute of Standards and Technology (“NIST”) 800-171 Cybersecurity Framework.
They provide comprehensive briefings to the Audit Committee, generally on a quarterly basis but at least annually, which encompass a broad range of topics, including: • Current cybersecurity landscape and emerging threats; • Status of ongoing cybersecurity initiatives and strategies; • Incident reports and learnings from any cybersecurity events; and 47 Table of Contents • Compliance with regulatory requirements and industry standards.
They provide comprehensive briefings to the Audit Committee, generally on a quarterly basis but at least annually, which encompass a broad range of topics, including: • Current cybersecurity landscape and emerging threats; • Status of ongoing cybersecurity initiatives and strategies; • Incident reports and learnings from any cybersecurity events; and • Compliance with regulatory requirements and industry standards.
Item 1C. Cybersecurity. Risk management and strategy Our technology platform and other information systems are subject to various cybersecurity risks that could adversely affect our business, financial condition, and results of operations, including intellectual property theft, fraud, extortion, harm to employees or customers, violation of privacy laws and other litigation and legal risk, and reputational risk.
Item 1C. Cybersecurity. Risk management and strategy 47 Table of Contents Our technology platform and other information systems are subject to various cybersecurity risks that could adversely affect our business, financial condition, and results of operations, including intellectual property theft, fraud, extortion, harm to employees or customers, violation of privacy laws and other litigation and legal risk, and reputational risk.
All incidents are reported to the Security Steering Committee, and events that may result in a material loss are additionally reported to the Audit Committee and evaluated for public disclosure as well as disclosure to the appropriate authorities.
All relevant and critical incidents are reported to the Security Steering Committee, and events that may result in a material loss are additionally reported to the Audit Committee and evaluated for public disclosure as well as disclosure to the appropriate authorities.
The Audit Committee oversees management’s remediation actions relating to such events, and approves management’s assessment of the materiality of the event to the Company.
The Audit Committee oversees management’s remediation actions relating to such events, and approves management’s assessment of the materiality of the event to the Company. 48 Table of Contents

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties. Our principal executive office is located in Los Angeles, California. In addition to our Los Angeles office, we operate from four other offices located in Bellevue, Washington; Tempe, Arizona; St. Petersburg, Florida; and Taipei City, Taiwan. We lease each of our offices. We believe that our current facilities are adequate to meet our immediate needs.
Biggest changeItem 2. Properties. Our principal executive office is located in Los Angeles, California. In addition to our Los Angeles office, we operate from four other offices located in Bellevue, Washington; Tempe, Arizona; St. Petersburg, Florida; and Taipei, Taiwan. We lease each of our offices. We believe that our current facilities are adequate to meet our immediate needs.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings. From time to time we are a party to various litigation matters incidental to the conduct of our business. We are not presently party to any legal proceedings the resolution of which we believe would have a material adverse effect on our business, prospects, financial condition, liquidity, results of operation, cash flows or capital levels.
Biggest changeItem 3. Legal Proceedings. From time to time we are a party to various litigation matters incidental to the conduct of our business.
The content of Part II, Item 8 "Financial Statements and Supplementary Data—Note 8 to the Consolidated Financial Statements—Commitments and contingencies - Litigation and other matters" of this Annual Report on Form 10-K is hereby incorporated by reference in its entirety in this Item 3. Item 4. Mine Safety Disclosures. Not applicable. 48 Table of Contents PART II
For more information regarding material lawsuits and proceedings (including those known to be contemplated by governmental authorities), see Part II, Item 8 "Financial Statements and Supplementary Data—Note 8 to the Consolidated Financial Statements—Commitments and contingencies - Litigation and other matters" of this Annual Report on Form 10-K, which is hereby incorporated by reference in its entirety in this Item 3.
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Item 4. Mine Safety Disclosures. Not applicable. 49 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer Purchases of Equity Securities The following table provides information about our share repurchase activity for the quarter ended December 31, 2023: Period: Total Number of Shares (or Units) Purchased (1) Average Price Paid per Share (or Unit) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs October, 2023 — — N/A N/A November, 2023 85,933 9.56 N/A N/A December, 2023 — — N/A N/A (1) These shares of Class A Common Stock were withheld to satisfy tax withholding obligations in connection with the vesting of restricted stock units issued to employees of the Company.
Biggest changeIssuer Purchases of Equity Securities The following table provides information about our share repurchase activity for the quarter ended December 31, 2024: 2024 Total Number of Shares (or Units) Purchased (1) Average Price Paid per Share (or Unit) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs October 1 through October 31 — — N/A N/A November 1 through November 30 90,522 12.37 N/A N/A December 1 through December 31 — — N/A N/A (1) These shares of Class A Common Stock were withheld to satisfy tax withholding obligations in connection with the vesting of restricted stock units issued to employees of the Company.
The graph set forth above compares the cumulative total return to stockholders on our Class A common stock relative to the cumulative total returns of the Russell 3000 Index and the S&P 500 Information Technology Index between October 28, 2020 (the date our Class A common stock commenced trading on NYSE) through December 31, 2023.
The graph set forth above compares the cumulative total return to stockholders on our Class A common stock relative to the cumulative total returns of the Russell 3000 Index and the S&P 500 Information Technology Index between October 28, 2020 (the date our Class A common stock commenced trading on NYSE) through December 31, 2024.
Securities authorized for issuance under equity compensation plans The information required by this item will be included in our Proxy Statement for the 2024 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2023 and is incorporated herein by reference. 49 Table of Contents Performance Graph The performance graph and related information shall not be deemed to be “soliciting material” or “filed” for purposes of Section 18 of the Exchange Act nor shall such information be incorporated by reference into any filing of MediaAlpha, Inc. under the Exchange Act or the Securities Act, except to the extent we specifically incorporate it by reference in such filing.
Securities authorized for issuance under equity compensation plans The information required by this item will be included in our Proxy Statement for the 2025 Annual Meeting of Stockholders, which will be filed with the SEC within 120 days of the fiscal year ended December 31, 2024 and is incorporated herein by reference. 50 Table of Contents Performance Graph The performance graph and related information shall not be deemed to be “soliciting material” or “filed” for purposes of Section 18 of the Exchange Act nor shall such information be incorporated by reference into any filing of MediaAlpha, Inc. under the Exchange Act or the Securities Act, except to the extent we specifically incorporate it by reference in such filing.
Holders of Record As of January 31, 2024, there were 24 holders of record of our Class A common stock and 13 holders of record of our Class B common stock. We believe there are a significantly larger number of beneficial owners of our common stock because many shares are held by brokers and other institutions on behalf of stockholders.
Holders of Record As of January 31, 2025, there were 10 holders of record of our Class A common stock and 12 holders of record of our Class B common stock. We believe there are a significantly larger number of beneficial owners of our common stock because many shares are held by brokers and other institutions on behalf of stockholders.
We withheld these shares at their fair market values based upon the closing prices of our Class A Common Shares on NYSE on the purchase dates. 50 Table of Contents Item 6. Reserved.
We withheld these shares at their fair market values based upon the closing prices of our Class A Common Shares as reported by the NYSE on the day preceding the vesting dates. 51 Table of Contents Item 6. Reserved.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeFor the year ended December 31, 2022, other expense (income), net consisted primarily of a gain on reduction of our liability pursuant to the TRA of $83.3 million resulting from remeasuring of the non-current portion of liability to zero as of December 31, 2022 after we concluded that payments under the agreement are no longer probable, offset in part by charges related to the impairment of our cost method investment of $8.6 million. 59 Table of Contents Interest expense The following table presents our interest expense for the years ended December 31, 2023 and 2022, and the dollar and percentage changes between the periods: (in thousands) Year ended December 31, 2023 $ % Year ended December 31, 2022 Interest expense, net $ 15,315 6,070 65.7 % $ 9,245 Percentage of revenue 3.9 % 2.0 % The increase in interest expense for the year ended December 31, 2023, compared with the year ended December 31, 2022, was driven by an increase in the interest rate payable on amounts borrowed under the 2021 Credit Facilities, offset in part by the impact of lower outstanding balances in the current year period.
Biggest changeOther expense, net The following table presents our other expense, net for the years ended December 31, 2024 and 2023, and the dollar and percentage changes between the periods: (in thousands) Year ended December 31, 2024 $ % Year ended December 31, 2023 Other expense, net $ 4,872 3,093 173.9 % $ 1,779 Percentage of revenue 0.6 % 0.5 % The increase in other expense, net for the year ended December 31, 2024, compared with the year ended December 31, 2023, was driven primarily by a $7.0 million charge to increase the TRA liability as a result of remeasuring the non-current portion of the liability to the amount of payment under the agreement considered to be probable, offset in part by a one-time contract termination fee of $1.7 million received from one of our Supply Partners in the Health and Life insurance verticals that ceased operations during the year ended December 31, 2024, and by an impairment charge of $1.4 million during the year ended December 31, 2023 related to a cost method investment that did not recur in 2024.
Transaction Value 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 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).
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.
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 business is seasonal and cyclical in nature and these trends, if continued for a long period of time, could impact the cash flows generated from operations, requiring us to draw on our available borrowing capacity under the 2021 Revolving Credit Facility or raise additional funds in the short term.
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 2021 Revolving Credit Facility or raise additional funds in the short term.
During the second half of 2021, the auto insurance industry began to experience a cyclical downturn, as supply chain disruptions and cost increases caused by the pandemic and overall inflationary pressures contributed to higher-than-expected P&C insurance claims costs, which led many carriers to reduce their customer acquisition spending significantly to preserve their profitability.
During the second half of 2021, the auto insurance industry began to experience a cyclical downturn, as supply chain disruptions and cost increases caused by the pandemic and overall inflationary pressures contributed to higher-than-expected P&C insurance claims costs, which led many carriers to reduce their customer acquisition spending to preserve their profitability.
Our obligations under the 2021 Credit Facilities are guaranteed by QLH and secured by substantially all assets of QLH and QuoteLab, LLC. On June 8, 2023, the Company entered into a Second Amendment (the “Second Amendment”) to the Existing Credit Agreement, (as amended by the Second Amendment, the “Amended Credit Agreement”).
Our obligations under the 2021 Credit Facilities are guaranteed by QLH and secured by substantially all assets of QLH and QuoteLab, LLC. On June 8, 2023, QuoteLab, LLC and QLH entered into a Second Amendment (the “Second Amendment”) to the Existing Credit Agreement, (as amended by the Second Amendment, the “Amended Credit Agreement”).
Overview 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.
Overview Our mission is to help insurance carriers and distributors target and acquire consumers 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 have omitted discussion of 2021 results where it would be redundant to the discussion previously included in Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations," of our Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the Securities and Exchange Commission and is incorporated by reference, and should be referred to for information regarding this period.
We have omitted discussion of 2022 results where it would be redundant to the discussion previously included in Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations," of our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the Securities and Exchange Commission and is incorporated by reference, and should be referred to for information regarding this period.
For the years ended December 31, 2023 and 2022, there were no impairments recognized for goodwill. Impairment of long-lived assets Long-lived assets such as property and equipment and finite lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable.
For the years ended December 31, 2024 and 2023, there were no impairments recognized for goodwill. Impairment of long-lived assets Long-lived assets such as property and equipment and finite lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable.
We believe it is useful to investors to assess the overall level of activity on our platform and to better understand the sources of our revenue across our different transaction models and verticals. 62 Table of Contents The following table presents Transaction Value by platform model for the years ended December 31, 2023 and 2022.
We believe it is useful to investors to assess the overall level of activity on our platform and to better understand the sources of our revenue across our different transaction models and verticals. 62 Table of Contents The following table presents Transaction Value by platform model for the years ended December 31, 2024 and 2023.
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, such as native, social, and display advertising. Seasonality Our results are subject to fluctuations as a result of seasonality.
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. Seasonality Our results are subject to fluctuations as a result of seasonality.
The Second Amendment amends the Existing Credit Agreement, effective on the amendment date, to, among other things, replace the London Interbank Offered Rate (“LIBOR”) applicable to the 2021 Credit Facilities with the Secured Overnight Financing Rate (“SOFR”), with a credit spread adjustment of 0.10% per annum, as the interest rate benchmark.
The Second Amendment amended the Existing Credit Agreement, effective on the amendment date, to, among other things, replace the London Interbank Offered Rate (“LIBOR”) applicable to the 2021 Credit Facilities with the Secured Overnight Financing Rate (“SOFR”), with a credit spread adjustment of 0.10% per annum, as the interest rate benchmark.
Other factors affecting our partners’ businesses include macro factors such as credit availability in the market, the strength of the economy and employment levels. Cyclicality Our results are also subject to fluctuations as a result of business cycles experienced by companies in the insurance industry.
Other factors affecting our partners’ businesses include macro factors such as credit availability in the market, the strength of the economy and employment levels. Cyclicality Our results are also subject to fluctuations as a result of business cycles experienced by companies in the P&C insurance industry.
We recognize revenue pursuant to the framework contained in Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers (“ASC 606"), as issued by the Financial Accounting Standards Board (“FASB”): (i) identify the contract with a client; (ii) identify the performance obligations in the contract, including whether they are distinct in the context of the contract; (iii) determine the transaction 54 Table of Contents price, including the constraint on variable consideration; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when we satisfy the performance obligations.
We recognize revenue pursuant to the framework contained in Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers (“ASC 606"), as issued by the Financial Accounting Standards Board (“FASB”): (i) identify the contract with a client; (ii) identify the performance obligations in the contract, including whether they are distinct in the context of the contract; (iii) determine the transaction price, including the constraint on variable consideration; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when we satisfy the performance obligations.
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; 61 Table of Contents amortization; depreciation; other services; and merchant-related fees.
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 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 52 Table of Contents acquisition and monetization, resulting in strong retention rates.
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.
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.
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.
In addition the 2021 Term Loan Facility also requires mandatory prepayments of principal with any Excess Cash Flow (as defined in the Amended Credit Agreement) on an annual basis.
In addition the 2021 Term Loan Facility also requires mandatory prepayments of principal in the amount of any Excess Cash Flow (as defined in the Amended Credit Agreement) on an annual basis.
To the extent our estimate of future state apportionment changes and/or there are changes in tax law, this could significantly impact the amount required to be paid under the TRA.
To the extent our estimate of future state apportionment changes and/or there are changes in tax law, this could significantly impact the amounts required to be paid under the TRA.
We use the number of demand and supply partners on our platform to evaluate our current business performance and future business prospects. Liquidity and capital resources Overview Our principal sources of liquidity are our cash flow generated from operations and cash and funds available under the 2021 Revolving Credit Facility.
We use the number of Demand and Supply Partners on our platform to evaluate our current business performance and future business prospects. 63 Table of Contents Liquidity and capital resources Overview Our principal sources of liquidity are our cash flow generated from operations and cash and funds available under the 2021 Revolving Credit Facility.
Cost of revenue 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.
Cost of revenue 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.
The following table reconciles Contribution with gross profit, the most directly comparable financial measure calculated and presented in accordance with GAAP, for the years ended December 31, 2023 and 2022.
The following table reconciles Contribution with gross profit, the most directly comparable financial measure calculated and presented in accordance with GAAP, for the years ended December 31, 2024 and 2023.
We do not promise to provide any other significant goods or services to our partners after delivery and generally do not offer a right of return. Costs and operating expenses Costs and operating expenses consist primarily of cost of revenue, sales and marketing expenses, product expenses and general and administrative expenses.
We do not promise to provide any other significant goods or services to our partners after delivery and generally do not offer a right of return. 55 Table of Contents Costs and operating expenses Costs and operating expenses consist primarily of cost of revenue, sales and marketing expenses, product expenses and general and administrative expenses.
Under this method, we determine deferred tax assets and liabilities on the basis of the differences between the consolidated financial statements and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are 68 Table of Contents expected to reverse.
Under this method, we determine deferred tax assets and liabilities on the basis of the differences between the consolidated financial statements and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse.
The excess 67 Table of Contents of the purchase price over the fair value of the identified assets and liabilities is recorded as goodwill. Operating results of the acquired entity are reflected in our consolidated financial statements from the date of acquisition.
The excess of the purchase price over the fair value of the identified assets and liabilities is recorded as goodwill. Operating results of the acquired entity are reflected in our consolidated financial statements from the date of acquisition.
These limitations include the fact that Adjusted EBITDA excludes interest expense on debt, income tax benefit (expense), equity-based compensation expense, depreciation and amortization, and certain other adjustments that we 60 Table of Contents consider to be useful to investors and others in understanding and evaluating our operating results.
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.
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 buyers, during the year ended December 31, 2023, 15 of the top 20 largest auto insurance carriers by customer acquisition spend were on our platform.
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 year ended December 31, 2024, 15 of the top 20 largest auto insurance carriers by customer acquisition spend were on our platform.
The following table reconciles Adjusted EBITDA with net (loss), the most directly comparable financial measure calculated and presented in accordance with GAAP, for the years ended December 31, 2023 and 2022.
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 years ended December 31, 2024 and 2023.
In such event, the Company would be required to make an immediate cash payment equal to the present value of the anticipated future tax benefits that are the subject of the TRA.
In such event, the Company would be required to make an immediate cash payment equal to the present value of the anticipated future tax benefits that are the subject of the TRA. 69 Table of Contents
As of December 31, 2023, we had no payments due pursuant to the TRA, as in conjunction with recording a valuation allowance on our deferred tax assets and projections of future taxable income we determined that we no longer consider the payments under the TRA to be probable, and so remeasured our liabilities pursuant to the TRA to be zero.
As of December 31, 2023, we had no payments due pursuant to the TRA, as in conjunction with recording a valuation allowance on our deferred tax assets and projections of future taxable income we determined that we do not consider the payments under the TRA to be probable for the foreseeable future, and so remeasured our liabilities pursuant to the TRA to be zero.
Generally, our contracts with buyers specify a period of time covered and a budget governing spend limits. While contracts can specify a term, most of our contracts can be terminated at any time without penalty upon 30- or 60-days’ notice.
Generally, our contracts with Demand Partners and Supply Partners specify a period of time covered and a budget governing spend limits. While contracts can specify a term, most of our contracts can be terminated at any time without penalty upon 30- or 60-days’ notice.
For the year ended December 31, 2023, 93% of total insurance Transaction Value executed on our platform came from demand partner relationships in existence during 2022. Our demand and supply partners Our success depends on our ability to retain and grow the number of demand and supply partners on our platform.
For the year ended December 31, 2024, 96% of total insurance Transaction Value executed on our platform came from Demand Partner relationships in existence during 2023. Our Demand and Supply Partners Our success depends on our ability to retain and grow the number of high-quality Demand and Supply Partners on our platform.
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.
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.
We believe we are the largest online customer acquisition platform in our core verticals of P&C insurance, health insurance, and life insurance, supporting $571 million in Transaction Value across our platform from these verticals in the year ended December 31, 2023. We have multi-faceted relationships with top-tier insurance carriers and distributors.
We believe we are the largest online customer acquisition platform in our core verticals of P&C insurance, health insurance, and life insurance, supporting $1.5 billion in Transaction Value across our platform from these verticals in the year ended December 31, 2024. We have multi-faceted relationships with top-tier insurance carriers and distributors.
In our Private Marketplace model, revenue recognized represents a platform fee billed to the demand partner or supply partner based on an agreed-upon percentage of the Transaction Value for the Consumer Referrals transacted, and accordingly there are no associated costs of revenue.
In our Private Marketplace model, revenue recognized represents a platform fee billed to the Demand Partner or Supply Partner based on an agreed-upon percentage of the Transaction Value for the Consumer Referrals transacted, and accordingly there are no associated costs of revenue. We utilize Transaction Value to assess the overall level of transaction activity through our platform.
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.
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.
The 2021 Revolving Credit Facility does not require amortization of principal and will mature on July 29, 2026. As of December 31, 2023, we had $169.3 million of outstanding borrowings, net of deferred debt issuance costs of $1.7 million, under the 2021 Term Loan Facility, and $5.0 million of borrowings outstanding under the 2021 Revolving Credit Facility.
The 2021 Revolving Credit Facility does not require amortization of principal and will mature on July 29, 2026. As of December 31, 2024, we had $157.4 million of outstanding borrowings, net of deferred debt issuance costs of $1.0 million, under the 2021 Term Loan Facility, and $5.0 million of borrowings outstanding under the 2021 Revolving Credit Facility.
Our principal uses of cash include funding of our operations, interest payments, and mandatory principal payments on our long-term debt. As of December 31, 2023 and December 31, 2022, our cash and cash equivalents totaled $17.3 million and $14.5 million, respectively.
Our principal uses of cash include funding of our operations, interest payments, and mandatory principal payments on our long-term debt. As of December 31, 2024 and December 31, 2023, our cash and cash equivalents totaled $43.3 million and $17.3 million, respectively.
As of December 31, 2023, the aggregate principal amount outstanding under the 2021 Term Loan Facility was $171.0 million and our borrowing capacity available under the 2021 Revolving Credit Facility was $45.0 million.
As of December 31, 2024, the aggregate principal amount outstanding under the 2021 Term Loan Facility was $158.5 million and our borrowing capacity available under the 2021 Revolving Credit Facility was $45.0 million.
The decrease in other revenue for the year ended December 31, 2023, compared with the year ended December 31, 2022, was driven primarily by lower revenue from our travel vertical, as a significant increase in cost of acquisition for publishers reduced the supply of Consumer Referrals to our marketplaces.
The decrease in other revenue for the year ended December 31, 2024, compared with the year ended December 31, 2023, was driven primarily by lower revenue from our travel vertical, as a significant increase in traffic acquisition costs for our Supply Partners reduced the supply of Consumer Referrals to our marketplaces.
We believe that the auto insurance industry has been in a "hard” market since the second half of 2021, with many P&C insurance 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.
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.
We have developed multi-faceted, deeply integrated partnerships with insurance carriers and distributors, who may be both buyers and sellers on our platform.
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.
Interest expense Interest expense consists primarily of interest expense associated with outstanding borrowings under our 2021 Credit Facilities and the amortization of deferred financing costs associated with these arrangements.
Interest expense Interest expense consists primarily of interest expense associated with outstanding borrowings under our 2021 Credit Facilities and the amortization of deferred financing costs associated with these arrangements. See “Liquidity and capital resources-Financing activities” below.
We generate revenue by earning a fee for each Consumer Referral sold on our platform. A transaction becomes payable upon a qualifying consumer action, such as a click, call or lead, and is generally not contingent on the sale of a product to the consumer. We believe our technology is a key differentiator and a powerful driver of our performance.
A transaction becomes payable upon a qualifying consumer action, such as a click, call or lead, and is generally not contingent on the sale of a product to the consumer. We believe our technology is a key differentiator and a powerful driver of our performance.
Investing activities Our investing activities consist primarily of purchases of property and equipment, acquisitions of intangible assets as part of business acquisitions, and investments. Cash flows used in investing activities were $0.1 million for the year ended December 31, 2023, compared with $49.8 million for the year ended December 31, 2022.
Investing activities Our investing activities consist primarily of purchases of property and equipment, purchases of intangible assets, and investments. Cash flows used in investing activities were $0.7 million for the year ended December 31, 2024, compared with $0.1 million for the year ended December 31, 2023.
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.
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.
Cash flows used in financing activities were $17.4 million for the year ended December 31, 2023, compared with $14.5 million for the year ended December 31, 2022.
Cash flows used in financing activities were $19.2 million for the year ended December 31, 2024, compared with $17.4 million for the year ended December 31, 2023.
The aggregate number of demand and supply partners active on our platform, excluding our agent buyers, was approximately 1,230 for the years ended December 31, 2023 and 2022, driven by increased engagement in our Health vertical. We retain and attract demand partners by finding high-quality sources of Consumer Referrals to make available to our demand partners.
The aggregate number of Demand and Supply Partners active on our platform, excluding our agent partners, was 53 Table of Contents approximately 1,230 for the years ended December 31, 2024 and 2023. We retain and attract Demand Partners by finding high-quality sources of Consumer Referrals to make available to our Demand Partners.
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 the effects of changes in any of our estimates after this date will be included in net income (loss).
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.
We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events included in our consolidated financial statements.
Significant judgment is required in determining our provision or benefit for income taxes and in evaluating uncertain tax positions. We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events included in our consolidated financial statements.
Consumer Referrals 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 98.8 million for the year ended December 31, 2023 from 90.4 million for the year ended December 31, 2022.
The aggregate number of consumer clicks, calls, and leads purchased by insurance buyers on our platform increased to 118.8 million for the year ended December 31, 2024 from 98.8 million for the year ended December 31, 2023.
Transaction Value on our platform declined to $593.4 million for the year ended December 31, 2023 from $737.5 million for the year ended December 31, 2022, due primarily to a decrease in customer acquisition spending by P&C insurance carriers in response to significant reductions in their underwriting profitability.
Transaction Value on our platform increased to $1.5 billion for the year ended December 31, 2024 from $593.4 million for the year ended December 31, 2023, due primarily to an increase in customer acquisition spending by P&C insurance carriers in response to improvements in their underwriting profitability.
During the year ended December 31, 2023, an average of 36.9 million consumers shopped for insurance products through the websites of our diversified group of supply partners and our proprietary websites each month, driving an average of 8.2 million Consumer Referrals on our platform each month.
During the year ended December 31, 2024, consumers shopped for insurance products through the websites of our diversified group of Supply Partners and our proprietary websites each month, driving an average of 9.9 million Consumer Referrals on our platform each month. We generate revenue by earning a fee for each Consumer Referral sold on our platform.
Income tax (benefit) expense The following table presents our income tax (benefit) expense for the years ended December 31, 2023 and 2022, and the dollar and percentage changes between the periods: (in thousands) Year ended December 31, 2023 $ % Year ended December 31, 2022 Income tax (benefit) expense $ (463) (103,368) n/m $ 102,905 Percentage of revenue (0.1) % 22.4 % For the year ended December 31, 2023, our income tax benefit of $0.5 million consisted primarily of the tax impacts of changes in our uncertain tax positions, as we recorded a valuation allowance against our current year losses.
Income tax expense (benefit) The following table presents our income tax expense (benefit) for the years ended December 31, 2024 and 2023, and the dollar and percentage changes between the periods: (in thousands) Year ended December 31, 2024 $ % Year ended December 31, 2023 Income tax expense (benefit) $ 1,384 1,847 n/m $ (463) Percentage of revenue 0.2 % (0.1) % For the year ended December 31, 2024, our income tax expense of $1.4 million consisted primarily of the tax impacts of changes in our valuation allowance and uncertain tax positions.
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 these changes may ultimately be implemented and/or 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.
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 54 Table of Contents and policies.
Year Ended December 31, 2023 2022 (in thousands) Property & Casualty insurance $ 277,552 $ 399,861 Percentage of total Transaction Value 46.8 % 54.2 % Health insurance 259,822 251,400 Percentage of total Transaction Value 43.8 % 34.1 % Life insurance 34,057 44,619 Percentage of total Transaction Value 5.7 % 6.0 % Other 22,007 41,634 Percentage of total Transaction Value 3.7 % 5.6 % Total Transaction Value $ 593,438 $ 737,514 Consumer Referrals We define “Consumer Referral” as any consumer click, call or lead purchased by a buyer on our platform.
Year Ended December 31, 2024 2023 (in thousands) Property & Casualty insurance $ 1,178,497 $ 277,552 Percentage of total Transaction Value 79.0 % 46.8 % Health insurance 270,285 259,822 Percentage of total Transaction Value 18.1 % 43.8 % Life insurance 30,662 34,057 Percentage of total Transaction Value 2.1 % 5.7 % Other 12,416 22,007 Percentage of total Transaction Value 0.8 % 3.7 % Total Transaction Value $ 1,491,860 $ 593,438 Consumer Referrals We define “Consumer Referral” as any consumer click, call or lead purchased by a buyer on our platform.
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. 66 Table of Contents In connection with the IPO, we entered into the Tax Receivables Agreement (“TRA”) 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.
In connection with the IPO, we entered into the Tax Receivables Agreement (“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 66 Table of Contents Intermediate Holdco.
Year Ended December 31, (in thousands) 2023 2022 Revenue $ 388,149 $ 459,072 Less cost of revenue (321,437) (389,013) Gross profit $ 66,712 $ 70,059 Adjusted to exclude the following (as related to cost of revenue): Equity-based compensation 3,875 3,634 Salaries, wages, and related 3,682 3,556 Internet and hosting 579 496 Depreciation 38 41 Other expenses 692 720 Other services 2,491 2,171 Merchant-related fees 32 109 Contribution $ 78,101 $ 80,786 Gross Margin 17.2 % 15.3 % Contribution Margin 20.1 % 17.6 % Transaction Value We define “Transaction Value” as the total gross dollars transacted by our partners on our platform.
Year Ended December 31, (in thousands) 2024 2023 Revenue $ 864,704 $ 388,149 Less cost of revenue (721,131) (321,437) Gross profit $ 143,573 $ 66,712 Adjusted to exclude the following (as related to cost of revenue): Equity-based compensation 3,026 3,875 Salaries, wages, and related 3,387 3,682 Internet and hosting 570 579 Depreciation 21 38 Other expenses 796 692 Other services 2,737 2,491 Merchant-related fees 306 32 Contribution $ 154,416 $ 78,101 Gross Margin 16.6 % 17.2 % Contribution Margin 17.9 % 20.1 % Transaction Value We define “Transaction Value” as the total gross dollars transacted by our partners on our platform.
In our Open Marketplace model, Transaction Value is equal to revenue recognized and revenue share payments to our supply partners represent costs of revenue.
In our Open Marketplace model, revenue recognized represents the fees paid by our Demand Partners for Consumer Referrals sold and is equal to the Transaction Value and revenue share payments to our Supply Partners represent costs of revenue.
Business combinations We account for business acquisitions in accordance with ASC Topic 805 - Business Combinations , which requires us, among other things, to recognize the fair value of all the assets acquired and liabilities assumed; the recognition of acquisition-related costs in the consolidated statements of operations; and contingent purchase consideration to be recognized at their fair values on the acquisition date with subsequent adjustments recognized in the consolidated statements of operations.
Also, See Part II, Item 8 “Financial Statements and Supplementary Data - Note 2 to the Consolidated Financial Statements - Summary of significant accounting policies” of this Annual Report on Form 10-K. 67 Table of Contents Business combinations We account for business acquisitions in accordance with ASC Topic 805 - Business Combinations , which requires us, among other things, to recognize the fair value of all the assets acquired and liabilities assumed; the recognition of acquisition-related costs in the consolidated statements of operations; and contingent purchase consideration to be recognized at their fair values on the acquisition date with subsequent adjustments recognized in the consolidated statements of operations.
Financing activities Our financing activities consist primarily of proceeds from and repayments on our term debt facilities and revolving line of credit, payments of debt issue costs, and transactions related to our common stock.
The increase resulted primarily from the purchase of certain intangible assets during the year ended December 31, 2024. Financing activities Our financing activities consist primarily of proceeds from and repayments on our term debt facilities and revolving line of credit, payments of debt issue costs, and transactions related to our common stock.
We recognize revenue derived from Consumer Referrals when we transfer these Consumer Referrals to our buyers in an amount that reflects the consideration to which we are entitled.
We do not make any payments to Supply Partners in our Private Marketplace transactions. We recognize revenue derived from Consumer Referrals when we transfer these Consumer Referrals to our Demand Partners in an amount that reflects the consideration to which we are entitled.
To the extent that our current liquidity is insufficient to fund future activities or we do not remain in compliance with our financial covenants under the 2021 Credit Facilities, we may need to further reduce operating costs, negotiate amendments to or waivers of the terms of such credit facilities, refinance our debt, or raise additional capital.
To the extent that our current liquidity is insufficient to fund future activities or any amounts we agree to pay in settlement of the FTC's claims, or our financial results are below our expectations due to cyclical conditions in our primary vertical markets or other factors and we do not remain in compliance with our financial covenants under the 2021 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, refinance our debt, or raise additional capital.
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.
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.
As long as these secular trends persist, we expect digital insurance customer acquisition spending to continue to grow over time, and we believe we are well-positioned to benefit from this growth.
As long as these secular trends persist, we expect digital insurance customer acquisition spending to continue to grow over time, and we believe we are well-positioned to benefit from this growth. Transaction Value We define “Transaction Value” as the total gross dollars transacted by our partners on our platform.
We believe that our current sources of liquidity, which include cash flow generated from operations, cash and funds available under the 2021 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 2021 Credit Facilities, for at least the next twelve months.
We believe that our expected near-term revenue, cash on hand and availability to access cash available under the 2021 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 2021 Credit Facilities, for at least the next twelve months.
In such cases, the carrying value of these assets are adjusted to their estimated fair values and assets held for sale are adjusted to their estimated fair values less selling expenses. For the years ended December 31, 2023 and 2022, there were no impairments recognized for long-lived assets.
In such cases, the carrying value of these assets are adjusted to their estimated fair values and assets held for sale are adjusted to their estimated fair values less selling expenses.
Contribution, which generally represents revenue less revenue share payments and online advertising costs, was $78.1 million for the year ended December 31, 2023, a year-over-year decline of 3.3%. Contribution Margin was 20.1%, compared with 17.6% in 2022.
Contribution, which generally represents revenue less revenue share payments and online advertising costs, was $154.4 million for the year ended December 31, 2024, a year-over-year increase of 97.7%, driven primarily by the higher revenue. Contribution Margin was 17.9% for the year ended December 31, 2024, compared with 20.1% for the year ended December 31, 2023.
Adjusted EBITDA We define “Adjusted EBITDA” as net income excluding interest expense, income tax benefit (expense), 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.
Also, such business and operating metrics may not necessarily be comparable to similarly titled measures presented by other companies. 60 Table of Contents 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.
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.
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 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.
The decrease in health insurance revenue for the year ended December 31, 2023, compared with the year ended December 31, 2022, was driven primarily by a decrease in the supply of Consumer Referrals from our Medicare supply partners due to challenges in complying with recent changes in marketing regulations, offset in part by increased advertising spend from our under 65 health insurance partners.
The decrease in health insurance revenue for the year ended December 31, 2024, compared with the year ended December 31, 2023, was driven primarily by a decrease in the supply of Consumer Referrals from our Medicare Supply Partners due to one of our partners ceasing operations during the first half of the year, as well as reduced advertising spend from our under-65 health insurance partners.
Year Ended December 31, (in thousands) 2023 2022 Open Marketplace transactions $ 378,730 $ 445,950 Percentage of total Transaction Value 63.8 % 60.5 % Private Marketplace transactions $ 214,708 291,564 Percentage of total Transaction Value 36.2 % 39.5 % Total Transaction Value $ 593,438 $ 737,514 The following table presents Transaction Value by vertical for the years ended December 31, 2023 and 2022.
Year Ended December 31, (in thousands) 2024 2023 Open Marketplace transactions $ 841,604 $ 378,730 Percentage of total Transaction Value 56.4 % 63.8 % Private Marketplace transactions 650,256 214,708 Percentage of total Transaction Value 43.6 % 36.2 % Total Transaction Value $ 1,491,860 $ 593,438 The following table presents Transaction Value by vertical for the years ended December 31, 2024 and 2023.
Results of operations The following table sets forth our operating results in absolute dollars and as a percentage of revenue for the years ended December 31, 2023 and 2022: Year Ended December 31, 2023 2022 (in thousands) Revenue $ 388,149 100.0 % $ 459,072 100.0 % Costs and operating expenses Cost of revenue 321,437 82.8 % 389,013 84.7 % Sales and marketing 25,432 6.6 % 28,816 6.3 % Product development 18,458 4.8 % 21,077 4.6 % General and administrative 62,746 16.2 % 55,556 12.1 % Total costs and operating expenses 428,073 110.3 % 494,462 107.7 % (Loss) from operations (39,924) (10.3) % (35,390) (7.7) % Other expense (income), net 1,779 0.5 % (75,094) (16.4) % Interest expense 15,315 3.9 % 9,245 2.0 % Total other expense (income), net 17,094 4.4 % (65,849) (14.3) % (Loss) income before income taxes (57,018) (14.7) % 30,459 6.6 % Income tax (benefit) expense (463) (0.1) % 102,905 22.4 % Net (loss) $ (56,555) (14.6) % $ (72,446) (15.8) % Net (loss) attributable to non-controlling interest (16,135) (4.2) % (14,780) (3.2) % Net (loss) attributable to MediaAlpha, Inc. $ (40,420) (10.4) % $ (57,666) (12.6) % Net (loss) per share of Class A common stock -Basic and diluted $ (0.89) $ (1.37) Weighted average shares of Class A common stock outstanding -Basic and diluted 45,573,416 41,944,874 56 Table of Contents Revenue The following table presents our revenue, disaggregated by vertical, for the years ended December 31, 2023 and 2022, and the dollar and percentage changes between the periods: (in thousands) Year ended December 31, 2023 $ % Year ended December 31, 2022 Property & casualty insurance $ 164,234 (60,132) (26.8) % $ 224,366 Percentage of revenue 42.3 % 48.9 % Health insurance 186,275 (1,117) (0.6) % 187,392 Percentage of revenue 48.0 % 40.8 % Life insurance 24,287 (2,424) (9.1) % 26,711 Percentage of revenue 6.3 % 5.8 % Other 13,353 (7,250) (35.2) % 20,603 Percentage of revenue 3.4 % 4.5 % Revenue $ 388,149 (70,923) (15.4) % $ 459,072 The decrease in P&C insurance revenue for the year ended December 31, 2023, compared with the year ended December 31, 2022, was due primarily to a decrease in customer acquisition spending by P&C carriers in response to lower than expected underwriting profitability.
Results of operations The following table sets forth our operating results in absolute dollars and as a percentage of revenue for the years ended December 31, 2024 and 2023: Year Ended December 31, 2024 2023 (in thousands) Revenue $ 864,704 100.0 % $ 388,149 100.0 % Costs and operating expenses Cost of revenue 721,131 83.4 % 321,437 82.8 % Sales and marketing 24,725 2.9 % 25,432 6.6 % Product development 19,764 2.3 % 18,458 4.8 % General and administrative 56,359 6.5 % 62,746 16.2 % Total costs and operating expenses 821,979 95.1 % 428,073 110.3 % Income (loss) from operations 42,725 4.9 % (39,924) (10.3) % Other expense, net 4,872 0.6 % 1,779 0.5 % Interest expense 14,351 1.7 % 15,315 3.9 % Total other expense, net 19,223 2.2 % 17,094 4.4 % Income (loss) before income taxes 23,502 2.7 % (57,018) (14.7) % Income tax expense (benefit) 1,384 0.2 % (463) (0.1) % Net income (loss) $ 22,118 2.6 % $ (56,555) (14.6) % Net income (loss) attributable to non-controlling interest 5,489 0.6 % (16,135) (4.2) % Net income (loss) attributable to MediaAlpha, Inc. $ 16,629 1.9 % $ (40,420) (10.4) % Net income (loss) per share of Class A common stock -Basic and diluted $ 0.31 $ (0.89) Weighted average shares of Class A common stock outstanding -Basic and diluted 53,043,576 45,573,416 Revenue The following table presents our revenue, disaggregated by vertical, for the years ended December 31, 2024 and 2023, and the dollar and percentage changes between the periods: (in thousands) Year ended December 31, 2024 $ % Year ended December 31, 2023 Property & casualty insurance $ 658,197 493,963 300.8 % $ 164,234 Percentage of revenue 76.1 % 42.3 % Health insurance 173,531 (12,744) (6.8) % 186,275 Percentage of revenue 20.1 % 48.0 % Life insurance 24,374 87 0.4 % 24,287 Percentage of revenue 2.8 % 6.3 % Other 8,602 (4,751) (35.6) % 13,353 Percentage of revenue 1.0 % 3.4 % Revenue $ 864,704 476,555 122.8 % $ 388,149 57 Table of Contents The increase in P&C insurance revenue for the year ended December 31, 2024, compared with the year ended December 31, 2023, was due primarily to an increase in customer acquisition spending by P&C carriers as insurance industry profitability improved throughout the year due to premium increases beginning to outpace loss cost inflation.
See “ Liquidity and capital resources-Financing activities” below. 55 Table of Contents Income tax expense (benefit) 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.
Income tax expense (benefit) 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.
(8) Reduction in force costs for the year ended December 31, 2023 consist of $1.2 million of severance benefits provided to the terminated employees in connection with the RIF Plan. Additionally, equity-based compensation expense includes $0.3 million of charges related to the RIF Plan for the year ended December 31, 2023.
Additionally, equity-based compensation expense includes $0.3 million of charges related to the RIF Plan for the year ended December 31, 2023.
Year Ended December 31, (in thousands) 2023 2022 Net (loss) $ (56,555) $ (72,446) Equity-based compensation expense 53,321 58,472 Interest expense 15,315 9,245 Income tax (benefit) expense (463) 102,905 Depreciation expense on property and equipment 353 392 Amortization of intangible assets 6,917 5,755 Transaction expenses (1) 641 636 SOX implementation costs (2) — 110 Fair value adjustment to contingent consideration (3) — (7,007) Impairment of cost method investment 1,406 8,594 Changes in TRA related liability (4) 6 (83,832) Changes in Tax Indemnification Receivable (5) 639 (58) Settlement of federal and state income tax refunds (6) 5 92 Legal expenses (7) 4,303 — Reduction in force costs (8) 1,233 — Adjusted EBITDA $ 27,121 $ 22,858 (1) Transaction expenses for the year ended December 31, 2023 consist of $0.6 million of legal and accounting fees incurred by us in connection with the amendment to the 2021 Credit Facilities, the tender offer filed by the Company's largest shareholder in May 2023, and a resale registration statement filed with the SEC.
Year Ended December 31, (in thousands) 2024 2023 Net income (loss) $ 22,118 $ (56,555) Equity-based compensation expense 34,083 53,321 Interest expense 14,351 15,315 Income tax expense (benefit) 1,384 (463) Depreciation expense on property and equipment 252 353 Amortization of intangible assets 6,430 6,917 Transaction expenses (1) 1,172 641 Impairment of cost method investment — 1,406 Contract Settlement (2) (1,725) — Changes in TRA related liability (3) 7,006 6 Changes in Tax Indemnification Receivable (52) 639 Settlement of federal and state income tax refunds — 5 Legal expenses (4) 11,092 4,303 Reduction in force costs (5) — 1,233 Adjusted EBITDA $ 96,111 $ 27,121 (1) Transaction expenses for the year ended December 31, 2024 consist of $1.2 million of legal and accounting fees incurred by us in connection with resale registration statements filed with the SEC.
Sales and marketing The following table presents our sales and marketing expenses for the years ended December 31, 2023 and 2022 and the dollar and percentage changes between the periods: (in thousands) Year ended December 31, 2023 $ % Year ended December 31, 2022 Sales and marketing $ 25,432 (3,384) (11.7) % $ 28,816 Percentage of revenue 6.6 % 6.3 % The decrease in sales and marketing expenses for the year ended December 31, 2023, compared with the year ended December 31, 2022, was driven primarily by a decrease in equity-based compensation expense of $1.8 million and a decrease in other personnel-related costs of $2.1 million, which were related to lower employee headcount resulting primarily from the reduction in force plan implemented by us in May 2023 (RIF Plan), offset in part by an increase in amortization expense of $0.9 million related to the amortization of intangible assets arising from our acquisition of CHT.
Sales and marketing The following table presents our sales and marketing expenses for the years ended December 31, 2024 and 2023 and the dollar and percentage changes between the periods: (in thousands) Year ended December 31, 2024 $ % Year ended December 31, 2023 Sales and marketing $ 24,725 (707) (2.8) % $ 25,432 Percentage of revenue 2.9 % 6.6 % The decrease in sales and marketing expenses for the year ended December 31, 2024, compared with the year ended December 31, 2023, was driven primarily by a decrease in equity-based compensation expense of $1.4 million and a decrease in amortization expense of $0.6 million, offset in part by an increase in personnel-related costs of $1.1 million due primarily to accruals for higher bonus payouts during the year ended December 31, 2024.
Cash flows The following table presents a summary of our cash flows for the years ended December 31, 2023 and 2022, and the dollar and percentage changes between the periods: (in thousands) Year ended December 31, 2023 $ % Year ended December 31, 2022 Net cash provided by operating activities $ 20,231 (8,043) (28.4) % $ 28,274 Net cash used in investing activities $ (73) 49,702 (99.9) % $ (49,775) Net cash used in financing activities $ (17,429) (2,908) 20.0 % $ (14,521) Operating activities Net cash provided by operating activities consists primarily of net loss, adjusted for certain (i) non-cash items including equity-based compensation expense, changes in deferred taxes, amortization of intangible assets, and deferred debt issuance costs, and (ii) changes in operating assets and liabilities (accounts receivable, prepaid expenses and other current assets, accounts payable, accrued expenses and deferred rent).
In addition, we may require material cash to fund our defense costs and/or any amounts that we may agree to pay to resolve the FTC Matter. 64 Table of Contents Cash flows The following table presents a summary of our cash flows for the years ended December 31, 2024 and 2023, and the dollar and percentage changes between the periods: (in thousands) Year ended December 31, 2024 $ % Year ended December 31, 2023 Net cash provided by operating activities $ 45,872 25,641 126.7 % $ 20,231 Net cash used in investing activities $ (654) (581) 795.9 % $ (73) Net cash used in financing activities $ (19,223) (1,794) 10.3 % $ (17,429) Operating activities Net cash provided by operating activities consists primarily of net income (loss), adjusted for certain (i) non-cash items including equity-based compensation expense, changes in deferred taxes, amortization of intangible assets, and deferred debt issuance costs, and (ii) changes in operating assets and liabilities (accounts receivable, prepaid expenses and other current assets, accounts payable, accrued expenses and deferred rent).
Product development The following table presents our product development expenses for the years ended December 31, 2023 and 2022, and the dollar and percentage changes between the periods: (in thousands) Year ended December 31, 2023 $ % Year ended December 31, 2022 Product development $ 18,458 (2,619) (12.4) % $ 21,077 Percentage of revenue 4.8 % 4.6 % The decrease in product development expenses for the year ended December 31, 2023, compared with the year ended December 31, 2022, was driven primarily by a decrease in equity-based compensation expense of $1.8 million and a decrease in other personnel-related costs of $0.4 million, which were related to lower employee headcount resulting primarily from the RIF Plan.
Product development The following table presents our product development expenses for the years ended December 31, 2024 and 2023, and the dollar and percentage changes between the periods: (in thousands) Year ended December 31, 2024 $ % Year ended December 31, 2023 Product development $ 19,764 1,306 7.1 % $ 18,458 Percentage of revenue 2.3 % 4.8 % 58 Table of Contents The increase in product development expenses for the year ended December 31, 2024, compared with the year ended December 31, 2023, was driven primarily by an increase in personnel-related costs of $2.1 million as we hired additional employees and due to accrual for higher bonuses, offset in part by a decrease in equity-based compensation expense of $1.3 million.
General and administrative The following table presents our general and administrative expenses for the years ended December 31, 2023 and 2022, and the dollar and percentage changes between the periods: (in thousands) Year ended December 31, 2023 $ % Year ended December 31, 2022 General and administrative $ 62,746 7,190 12.9 % $ 55,556 Percentage of revenue 16.2 % 12.1 % The increase in general and administrative expenses for the year ended December 31, 2023, compared with the year ended December 31, 2022, was driven primarily by a gain of $7.0 million recorded during the year ended December 31, 2022 on remeasurement of the contingent consideration related to CHT , as well as to a $5.2 million increase in legal costs associated primarily with the civil investigative demand from the Federal Trade Commission and a legal settlement unrelated to our core 58 Table of Contents operations, offset in part by a $2.4 million decrease in directors and officers insurance premiums, a $2.7 million decrease in accounting and professional fees, and a $1.8 million decrease in equity-based compensation.
General and administrative The following table presents our general and administrative expenses for the years ended December 31, 2024 and 2023, and the dollar and percentage changes between the periods: (in thousands) Year ended December 31, 2024 $ % Year ended December 31, 2023 General and administrative $ 56,359 (6,387) (10.2) % $ 62,746 Percentage of revenue 6.5 % 16.2 % The decrease in general and administrative expenses for the year ended December 31, 2024, compared with the year ended December 31, 2023, was driven primarily by a decrease in equity-based compensation of $15.7 million and a $1.0 million decrease in directors and officers insurance premiums, offset in part by a $7.5 million increase driven primarily by higher legal fees and a charge of $7.0 million to establish a reserve relating to the FTC Matter, a $1.1 million increase in accounting and professional fees, and a $0.6 million increase in personnel-related costs.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeCustomer concentrations consisted of the below: 2023 2022 Number of customers exceeding 10% Aggregate Value (in millions) % of Total Number of customers exceeding 10% Aggregate Value (in millions) % of Total Revenue — $ — — % 1 $ 48 10 % Accounts receivable 1 $ 7 14 % — $ — — % Our supplier concentration can expose us to business risks.
Biggest changeCustomer concentrations consisted of the below: 2024 2023 Number of customers exceeding 10% Aggregate Value (in millions) % of Total Number of customers exceeding 10% Aggregate Value (in millions) % of Total Revenue 2 $ 358 41 % — $ — — % Accounts receivable 2 $ 66 46 % 1 $ 7 14 % Our supplier concentration can also expose us to business risks.
As a result, we may be exposed to fluctuations in interest rates to the extent of our outstanding borrowings under the 2021 Credit Facilities. A hypothetical 1.0% increase or decrease in the interest rate associated with the 2021 Credit Facilities would have resulted in a $1.8 million impact on interest expense for the year ended December 31, 2023.
As a result, we may be exposed to fluctuations in interest rates to the extent of our outstanding borrowings under the 2021 Credit Facilities. A hypothetical 1.0% increase or decrease in the interest rate associated with the 2021 Credit Facilities would have resulted in a $1.7 million impact on interest expense for the year ended December 31, 2024.
Concentrations of credit risk and of significant demand and supply partners Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. We maintain cash balances that can, at times, exceed amounts insured by the 69 Table of Contents Federal Deposit Insurance Corporation.
Concentrations of credit risk and of significant Demand and Supply Partners Financial instruments that potentially expose us to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. We maintain cash balances that can, at times, exceed amounts insured by the Federal Deposit Insurance Corporation.
Supplier concentrations consisted of the below: 2023 2022 Number of suppliers exceeding 10% Aggregate Value (in millions) % of Total Number of suppliers exceeding 10% Aggregate Value (in millions) % of Total Purchases 1 $ 41 13 % 1 $ 46 11 % Accounts payable 1 $ 12 21 % 2 $ 22 40 % 70 Table of Contents
Supplier concentrations consisted of the below: 2024 2023 Number of suppliers exceeding 10% Aggregate Value (in millions) % of Total Number of suppliers exceeding 10% Aggregate Value (in millions) % of Total Purchases 1 $ 75 11 % 1 $ 41 13 % Accounts payable 4 $ 56 53 % 1 $ 12 21 % 70 Table of Contents

Other MAX 10-K year-over-year comparisons