- 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
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 final prospectus filed with the SEC pursuant
to Rule 424(b) promulgated under the Securities Act of 1933, as
amended (the “Securities Act”), on March 22, 2021 and 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.
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210513005956/en/
Investors Investor Relations
IR@MediaAlpha.com
Press SHIFT MediaAlpha@SHIFTComm.com
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