Attached files
| file | filename |
|---|---|
| EX-99.2 - SHAREHOLDER LETTER - MediaAlpha, Inc. | ex99-2.htm |
| 8-K - CURRENT REPORT - MediaAlpha, Inc. | form-8k.htm |
Exhibit 99.1
MEDIAALPHA ANNOUNCES FIRST QUARTER 2021
FINANCIAL RESULTS
| ● |
Revenue of $174 million, up 45% year over year
|
| ○ |
Revenue from Property & Casualty grew 74% year over year to $126 million
|
| ● |
Transaction Value grew to a record $262.5 million, up 58% year over year
|
Los Angeles, CA (May 13, 2021) – MediaAlpha, Inc. (NYSE: MAX), today announced its financial results for the first quarter ended March 31, 2021.
“We had a great start to 2021, with our Transaction Value growing 58% year over year to another quarterly record,” said Steve Yi, MediaAlpha Co-Founder and CEO. “Given consumers’ aggressive adoption of online shopping in
the past year, and our industry-leading market share, we are very optimistic about further solidifying our position as the leading customer acquisition partner to the insurance industry this year. As a result, we are raising our guidance for
Transaction Value, Contribution and Adjusted EBITDA for full year 2021.”
First Quarter 2021 Financial Results
| ● |
Revenue of $173.6 million, an increase of 45% year over year;
|
| ● |
Transaction Value of $262.5 million, an increase of 58% year over year;
|
| ● |
Gross margin of 15.2%, compared with 15.7% in the first quarter of 2020;
|
| ● |
Contribution Margin(1) of 16.1%, compared with 16.5% in the first quarter of 2020;
|
| ● |
Net income was $0.2 million, compared with $8.8 million in the first quarter of 2020; and
|
| ● |
Adjusted EBITDA(1) was $16.3 million, compared with $12.7 million in the first quarter of 2020.
|
(1)A reconciliation of GAAP to Non-GAAP financial measures has been provided at the end of this press release. An
explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.”
Financial Outlook
For the second quarter of 2021, MediaAlpha currently expects the following:
| ● |
Transaction Value between $255 million - $260 million, representing 47% year-over-year growth at the midpoint of the guidance range;
|
| ● |
Revenue between $156 million - $161 million, representing 28% year-over-year growth at the midpoint of the guidance range;
|
| ● |
Contribution between $25 million - $27 million, representing 28% year-over-year growth at the midpoint of the guidance range; and
|
| ● |
Adjusted EBITDA between $14.5 million - $15.5 million, representing 13% year-over-year growth at the midpoint of the guidance range.
|
For the full year 2021, MediaAlpha currently expects the following:
| ● |
Transaction Value between $1,050 million - $1,100 million, representing 32% year-over-year growth at the midpoint of the guidance range;
|
| ● |
Revenue between $680 million - $710 million, representing 19% year-over-year growth at the midpoint of the guidance range;
|
| ● |
Contribution between $114 million - $118 million, representing 25% year-over-year growth at the midpoint of the guidance range; and
|
| ● |
Adjusted EBITDA between $65 million - $67 million, representing 14% year-over-year growth at the midpoint of the guidance range.
|
The Company expects total shares outstanding at the end of the second quarter of 2021 to be 59.4 million and 64.6 million on a basic and fully diluted basis, respectively.
With respect to the Company’s projections of Contribution and Adjusted EBITDA under “Financial Discussion – Q2 2021 Outlook,” MediaAlpha is not providing a reconciliation of Contribution or Adjusted EBITDA to the respective
GAAP measures because the Company is unable to predict with reasonable certainty the reconciling items that may affect gross profit and net income without unreasonable effort, including equity-based compensation, transaction expenses and income tax
expense. These reconciling items are uncertain, depend on various factors and could significantly impact, either individually or in the aggregate, the GAAP measures for the applicable period.
For a detailed explanation of the Company’s non-GAAP measures, please refer to the appendix section of this press release.
Conference Call Information
MediaAlpha will host a Q&A conference call today to discuss the Company’s first quarter 2021 results and its financial outlook for the second quarter and full year of 2021 at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). A live audio
webcast of the call will be available on the MediaAlpha Investor Relations website at https://investors.mediaalpha.com. To register for the webcast, click here. Participants may also dial-in,
toll-free, at (833) 350-1346 or internationally at (236) 389-2445 with Conference ID 8753258. An audio replay of the conference call will be available for two weeks following the call and available on the
MediaAlpha Investor Relations website at https://investors.mediaalpha.com.
We have also posted to our investor relations website a letter to shareholders. We have used, and intend to continue to use, our investor relations website at https://investors.mediaalpha.com as
a means of disclosing material nonpublic information and for complying with our disclosure obligations under Regulation FD.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our financial outlook for the second quarter and full
year 2021. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as
“may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “would,” and “outlook,” or the negative version of those words or other
comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain
assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks,
assumptions and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the
results expressed or implied by the forward-looking statements.
There are or will be important factors that could cause our actual results to differ materially from those indicated in these forward-looking statements, including those more fully described in MediaAlpha’s filings
with the Securities and Exchange Commission (“SEC”), including the Annual Report on Form 10-K filed on March 15, 2021 and our Quarterly Report on Form 10-Q to be filed for the first quarter of 2021. These factors should not be construed as
exhaustive. MediaAlpha disclaims any obligation to update any forward-looking statements to reflect events or circumstances that occur after the date of this shareholder letter.
Non-GAAP Financial Measures and Operating Metrics
This press release includes Adjusted EBITDA, Contribution, and Contribution Margin, which are non-GAAP financial measures. The Company also presents Transaction Value, which is an operating metric not presented in
accordance with GAAP. See the appendix for definitions of Adjusted EBITDA, Contribution, Contribution Margin and Transaction Value, as well as reconciliations to the corresponding GAAP financial metrics, as applicable.
We present Transaction Value, Adjusted EBITDA, Contribution, and Contribution Margin because they are used extensively by our management and board of directors to manage our operating performance, including evaluating
our operational performance against budget and assessing our overall operating efficiency and operating leverage. Accordingly, the Company believes that Transaction Value, Adjusted EBITDA, Contribution, and Contribution Margin provide useful
information to investors and others in understanding and evaluating its operating results in the same manner as its management team and board of directors. Each of Transaction Value, Adjusted EBITDA, Contribution, and Contribution Margin has
limitations as a financial measure and investors should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP.
Contacts:
Investors
Investor Relations
IR@MediaAlpha.com
Press
SHIFT
MediaAlpha@SHIFTComm.com
MediaAlpha, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
|
March 31,
|
December 31,
|
|||||||
|
2021
|
2020
|
|||||||
|
Assets
|
||||||||
|
Current assets
|
||||||||
|
Cash and cash equivalents
|
$
|
12,853
|
$
|
23,554
|
||||
|
Accounts receivable, net of allowance for credit losses of $0.6 million and $0.4 million, respectively
|
80,268
|
96,295
|
||||||
|
Prepaid expenses and other current assets
|
7,251
|
7,950
|
||||||
|
Total current assets
|
100,372
|
127,799
|
||||||
|
Property and equipment, net
|
749
|
762
|
||||||
|
Intangible assets, net
|
14,805
|
15,551
|
||||||
|
Goodwill
|
18,402
|
18,402
|
||||||
|
Deferred tax asset
|
91,278
|
31,613
|
||||||
|
Other assets
|
16,085
|
16,210
|
||||||
|
Total assets
|
$
|
241,691
|
$
|
210,337
|
||||
|
Liabilities and stockholders’ deficit
|
||||||||
|
Current liabilities
|
||||||||
|
Accounts payable
|
$
|
64,574
|
$
|
98,249
|
||||
|
Accrued expenses
|
5,360
|
9,206
|
||||||
|
Total current liabilities
|
69,934
|
107,455
|
||||||
|
Long-term debt
|
183,004
|
182,668
|
||||||
|
Liabilities under tax receivable agreement, net of current portion
|
75,355
|
22,498
|
||||||
|
Other long-term liabilities
|
2,823
|
2,834
|
||||||
|
Total liabilities
|
331,116
|
315,455
|
||||||
|
Total stockholders’ (deficit) attributable to MediaAlpha, Inc.
|
$
|
(30,803
|
)
|
$
|
(33,773
|
)
|
||
|
Non-controlling interest
|
(58,622
|
)
|
(71,345
|
)
|
||||
|
Total stockholders’ (deficit)
|
$
|
(89,425
|
)
|
$
|
(105,118
|
)
|
||
|
Total liabilities and stockholders’ deficit
|
$
|
241,691
|
$
|
210,337
|
||||
MediaAlpha, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share data and per share amounts)
|
Three months ended
March 31,
|
||||||||
|
2021
|
2020
|
|||||||
|
Revenue
|
$
|
173,588
|
$
|
119,445
|
||||
|
Cost and operating expenses
|
||||||||
|
Cost of revenue
|
147,179
|
100,669
|
||||||
|
Sales and marketing
|
5,384
|
3,136
|
||||||
|
Product development
|
3,315
|
1,843
|
||||||
|
General and administrative
|
15,746
|
3,247
|
||||||
|
Total cost and operating expenses
|
171,624
|
108,895
|
||||||
|
Income from operations
|
1,964
|
10,550
|
||||||
|
Other (income), net
|
(150
|
)
|
—
|
|||||
|
Interest expense
|
2,301
|
1,715
|
||||||
|
Total other expense
|
2,151
|
1,715
|
||||||
|
(Loss) income before income taxes
|
(187
|
)
|
8,835
|
|||||
|
Income tax (benefit)
|
(364
|
)
|
—
|
|||||
|
Net income
|
$
|
177
|
$
|
8,835
|
||||
|
Net income attributable to QLH prior to Reorganization Transactions
|
—
|
8,835
|
||||||
|
Net (loss) attributable to non-controlling interest
|
(117
|
)
|
—
|
|||||
|
Net income attributable to MediaAlpha, Inc.
|
$
|
294
|
$
|
—
|
||||
|
Net income per share of Class A common stock
|
||||||||
|
-Basic
|
$
|
0.01
|
$
|
—
|
||||
|
-Diluted
|
$
|
0.00
|
$
|
—
|
||||
|
Weighted average shares of Class A common stock outstanding
|
||||||||
|
-Basic
|
33,136,632
|
—
|
||||||
|
-Diluted
|
62,163,390
|
—
|
||||||
MediaAlpha, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
|
Three months ended
March 31,
|
||||||||
|
2021
|
2020
|
|||||||
|
Cash flows from operating activities
|
||||||||
|
Net income
|
$
|
177
|
$
|
8,835
|
||||
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
|
Non-cash equity-based compensation expense
|
10,602
|
568
|
||||||
|
Depreciation expense on property and equipment
|
82
|
67
|
||||||
|
Amortization of intangible assets
|
746
|
804
|
||||||
|
Amortization of deferred debt issuance costs
|
345
|
113
|
||||||
|
Bad debt expense
|
157
|
107
|
||||||
|
Deferred taxes
|
(358
|
)
|
—
|
|||||
|
Tax receivable agreement liability adjustments
|
(156
|
)
|
—
|
|||||
|
Changes in operating assets and liabilities:
|
||||||||
|
Accounts receivable
|
15,870
|
8,012
|
||||||
|
Prepaid expenses and other current assets
|
690
|
(54
|
)
|
|||||
|
Other assets
|
125
|
(4,750
|
)
|
|||||
|
Accounts payable
|
(33,675
|
)
|
(2,615
|
)
|
||||
|
Accrued expenses
|
(3,961
|
)
|
(3,796
|
)
|
||||
|
Net cash (used in) provided by operating activities
|
(9,356
|
)
|
7,291
|
|||||
|
Cash flows from investing activities
|
||||||||
|
Purchases of property and equipment
|
(69
|
)
|
(17
|
)
|
||||
|
Net cash used in investing activities
|
(69
|
)
|
(17
|
)
|
||||
|
Cash flows from financing activities
|
||||||||
|
Proceeds received from:
|
||||||||
|
Revolving line of credit
|
—
|
2,500
|
||||||
|
Payments made for:
|
||||||||
|
Repayments on revolving line of credit
|
—
|
(2,500
|
)
|
|||||
|
Repayments on long-term debt
|
—
|
(562
|
)
|
|||||
|
Repurchase of Class B units at QLH up to fair value
|
—
|
(1,254
|
)
|
|||||
|
Shares withheld for taxes on vesting of restricted stock units
|
(1,276
|
)
|
—
|
|||||
|
Net cash used in financing activities
|
(1,276
|
)
|
(1,816
|
)
|
||||
|
Net (decrease) increase in cash and cash equivalents
|
(10,701
|
)
|
5,458
|
|||||
|
Cash and cash equivalents, beginning of period
|
23,554
|
10,028
|
||||||
|
Cash and cash equivalents, end of period
|
$
|
12,853
|
$
|
15,486
|
||||
Key business and operating metrics
Transaction Value
We define “Transaction Value” as the total gross dollars transacted by our partners on our platform. Transaction Value is a direct driver of revenue, with differing revenue recognition based
on the economic relationship we have with our partners. Our partners use our platform to transact via open and private platform transactions. In our open platform model, revenue recognized represents the Transaction Value and revenue share payments
to our supply partners represent costs of revenue. In our private platform 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 revenue and to assess the overall level of transaction activity through our platform. 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.
The following table presents Transaction Value by platform model for the three months ended March 31, 2021 and 2020:
|
Three months ended
March 31,
|
||||||||
|
(dollars in thousands)
|
2021
|
2020
|
||||||
|
Open platform transactions
|
$
|
169,348
|
$
|
117,022
|
||||
|
Percentage of total Transaction Value
|
64.5
|
%
|
70.5
|
%
|
||||
|
Private platform transactions
|
93,114
|
49,026
|
||||||
|
Percentage of total Transaction Value
|
35.5
|
%
|
29.5
|
%
|
||||
|
Total Transaction Value
|
$
|
262,462
|
$
|
166,048
|
||||
The following table presents Transaction Value by vertical for the three months ended March 31, 2021 and 2020:
|
Three months ended
March 31,
|
||||||||
|
(dollars in thousands)
|
2021
|
2020
|
||||||
|
Property & casualty insurance
|
$
|
183,426
|
$
|
104,860
|
||||
|
Percentage of total Transaction Value
|
69.9
|
%
|
63.2
|
%
|
||||
|
Health insurance
|
50,342
|
33,346
|
||||||
|
Percentage of total Transaction Value
|
19.2
|
%
|
20.1
|
%
|
||||
|
Life insurance
|
14,442
|
10,316
|
||||||
|
Percentage of total Transaction Value
|
5.5
|
%
|
6.2
|
%
|
||||
|
Other(1)
|
14,251
|
17,526
|
||||||
|
Percentage of total Transaction Value
|
5.4
|
%
|
10.6
|
%
|
||||
|
Total Transaction Value
|
$
|
262,462
|
$
|
166,048
|
||||
| (1) |
Our other verticals include Travel, Education and Consumer Finance.
|
Contribution and Contribution Margin
We define “Contribution” as revenue less revenue share payments and online advertising costs, or, as reported in our consolidated statement of operations, revenue less cost of revenue, as adjusted to
exclude the following items from cost of revenue: equity-based compensation; salaries, wages, and related; internet and hosting; amortization; depreciation; other services; and merchant-related fees. “Contribution Margin” represents Contribution
expressed as a percentage of revenue for the same period. We use Contribution and Contribution Margin to measure the return on our relationships with our supply partners (excluding certain fixed costs), the financial return on our online advertising,
and our operating leverage. We do not use Contribution and Contribution Margin as measures of overall profitability. We present Contribution and Contribution Margin because they are used extensively by our management and board of directors to manage
our operating performance, including evaluating our operational performance against budget and assessing our overall operating efficiency and operating leverage.
The following table reconciles Contribution and Contribution Margin with gross profit, the most directly comparable financial measure calculated and presented in accordance with GAAP, the three months ended March
31, 2021 and 2020:
|
Three months ended
March 31,
|
||||||||
|
(in thousands)
|
2021
|
2020
|
||||||
|
Revenue
|
$
|
173,588
|
$
|
119,445
|
||||
|
Less cost of revenue
|
(147,179
|
)
|
(100,669
|
)
|
||||
|
Gross profit
|
26,409
|
18,776
|
||||||
|
Adjusted to exclude the following (as related to cost of revenue):
|
||||||||
|
Equity-based compensation
|
400
|
21
|
||||||
|
Salaries, wages, and related
|
464
|
356
|
||||||
|
Internet and hosting
|
102
|
123
|
||||||
|
Other expenses
|
105
|
68
|
||||||
|
Depreciation
|
7
|
5
|
||||||
|
Other services
|
291
|
219
|
||||||
|
Merchant-related fees
|
90
|
152
|
||||||
|
Contribution
|
$
|
27,868
|
$
|
19,720
|
||||
|
Gross margin
|
15.2
|
%
|
15.7
|
%
|
||||
|
Contribution Margin
|
16.1
|
%
|
16.5
|
%
|
||||
Adjusted EBITDA
We define “Adjusted EBITDA” as net income excluding interest expense, income tax benefit (expense), depreciation expense on property and equipment, and amortization of intangible assets, as well as
equity-based compensation expense and transaction expenses. Adjusted EBITDA is a key measure used by our management to understand and evaluate our operating performance, to establish budgets and to develop operational goals for managing our business.
In addition, presenting Adjusted EBITDA provides investors with a metric to evaluate the capital efficiency of our business.
The following table reconciles Adjusted EBITDA with net income, the most directly comparable financial measure calculated and presented in accordance with GAAP, for the three months ended March 31, 2021 and 2020.
|
Three months ended
March 31,
|
||||||||
|
(in thousands)
|
2021
|
2020
|
||||||
|
Net income
|
$
|
177
|
$
|
8,835
|
||||
|
Equity-based compensation expense
|
10,602
|
1,266
|
||||||
|
Interest expense
|
2,301
|
1,715
|
||||||
|
Income tax (benefit)
|
(364
|
)
|
—
|
|||||
|
Depreciation expense on property and equipment
|
82
|
67
|
||||||
|
Amortization of intangible assets
|
746
|
804
|
||||||
|
Transaction expenses(1)
|
2,759
|
—
|
||||||
|
Adjusted EBITDA
|
$
|
16,303
|
$
|
12,687
|
||||
| (1) |
For the three months ended March 31, 2021, transaction expenses included $2.8 million in legal, accounting, and other consulting fees related primarily to the Secondary Offering.
|