- Fourth quarter revenue of $190 million, growing 51%
year-over-year; Full year 2020 revenue of $585 million, growing 43%
year-over-year
- Fourth quarter revenue from Property & Casualty grew 97%
year-over-year to $123 million; Full year 2020 revenue from
Property & Casualty grew 81% to $398 million
- Fourth quarter Transaction Value reaches a record $257
million, growing 51% year-over-year; Full year 2020 Transaction
Value of $816 million, growing 46% year-over-year
MediaAlpha, Inc. (NYSE: MAX), today announced its financial
results for the fourth quarter and full year ended December 31,
2020.
“The resilience of our team amidst the challenges we all faced
in 2020 was truly inspiring, and it was a key component of our
success in Q4 and the year overall,” said Steve Yi, MediaAlpha
Co-founder and CEO. “Our Health insurance vertical delivered
record-breaking performance, driven by increased demand from
carriers and brokers during the strongest Open Enrollment Period
and Annual Enrollment Period we’ve seen. Our Property &
Casualty insurance vertical also continued to dominate the
industry, as key carriers actually increased their budgets with us
in what has historically been a seasonally soft quarter. We enter
2021 energized as to what we can accomplish.”
Fourth Quarter 2020 Financial Results
- Revenue of $190.2 million, an increase of 51%
year-over-year;
- Transaction Value of $256.9 million, an increase of 51%
year-over-year;
- Gross margin of 13.9%, as compared to 16.1% from the same
period in 2019;
- Contribution Margin(1) of 16.2%, as compared to 17.0% from the
same period in 2019;
- Net income was $(13.2) million, as compared to $10.4 million in
the fourth quarter of 2019; and
- Adjusted EBITDA(1) was $18.2 million, compared to Adjusted
EBITDA of $13.9 million in the fourth quarter of 2019
Full Year 2020 Financial Results
- Revenue of $584.8 million, an increase of 43%
year-over-year;
- Transaction Value of $815.7 million, an increase of 46%
year-over-year;
- Gross margin of 14.6%, as compared to 16.0% in 2019;
- Contribution Margin of 15.8%, as compared to 17.0% in
2019;
- Net income was $10.6 million, as compared to $17.8 million in
2019; and
- Adjusted EBITDA was $58.1 million, compared to Adjusted EBITDA
of $42.9 million in 2019
(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 first quarter of 2021, MediaAlpha currently expects the
following:
- Transaction Value between $250 - $260 million, representing 54%
year-over-year growth at the midpoint of the guidance range
- Revenue between $170 - $175 million, representing 44%
year-over-year growth at the midpoint of the guidance range
- Contribution between $26 - $28 million, representing 37%
year-over-year growth at the midpoint of the guidance range
- Adjusted EBITDA between $16 - $17 million, representing 30%
year-over-year growth at the midpoint of the guidance range
For the full year 2021, MediaAlpha currently expects the
following:
- Transaction Value between $1,000 - $1,050 million, representing
26% year-over-year growth at the midpoint of the guidance
range
- Revenue between $700 - $740 million, representing 23%
year-over-year growth at the midpoint of the guidance range
- Contribution between $108 - $117 million, representing 21%
year-over-year growth at the midpoint of the guidance range
- Adjusted EBITDA between $64 - $66 million, representing 12%
year-over-year growth at the midpoint of the guidance range
We expect total shares outstanding to be 59.4 million and 64.4
million on a basic and fully diluted basis, respectively, at the
end of Q1 2021.
With respect to the Company’s projections of Contribution and
Adjusted EBITDA under “Financial Discussion – Q1 and FY 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 fourth quarter and full year 2020 results 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#2458015. 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
first 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 October 29, 2020 and the Annual
Report on Form 10-K that will be filed following this press
release. 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)
As of December 31,
2020
2019
Assets
Current assets
Cash and cash equivalents
$
23,554
$
10,028
Accounts receivable, net of allowance for
doubtful accounts
96,295
56,012
Prepaid expenses and other current
assets
7,950
1,448
Total current assets
$
127,799
$
67,488
Property and equipment, net
762
755
Intangible assets, net
15,551
18,752
Goodwill
18,402
18,402
Deferred tax assets
35,210
—
Other non-current assets
16,210
Total assets
$
213,934
$
105,397
Liabilities, Redeemable Class A units
and Stockholders'/Members’ (Deficit)
Current liabilities
Accounts payable
98,249
40,455
Accrued expenses
9,206
6,584
Current portion of long-term debt
-
873
Total current liabilities
$
107,455
$
47,912
Long-term debt, net of current portion
182,668
96,665
Liabilities under tax receivable
agreement
22,498
-
Other long-term liabilities
2,834
319
Total liabilities
$
315,455
$
144,896
Redeemable Class A units
-
74,097
Stockholders'/members' deficit
$
(101,521
)
$
(113,596
)
Total liabilities and
stockholders'/members' deficit
$
213,934
$
105,397
MediaAlpha, Inc.
Condensed Consolidated
Statements of Operations
(In thousands, except per
share data and per share amounts)
Year ended December
31,
2020
2019
Revenue
$
584,814
$
408,005
Cost and operating expenses
Cost of revenue
499,434
342,909
Sales and marketing
20,483
13,822
Product development
12,449
7,042
General and administrative
32,913
19,391
Total cost and operating expenses
565,279
383,164
Income from operations
19,535
24,841
Other expense
2,302
—
Interest expense
7,938
7,021
Total other expense
10,240
7,021
Income before income taxes
9,295
17,820
Income tax (benefit)
(1,267
)
—
Net income
$
10,562
$
17,820
Net income attributable to MediaAlpha,
Inc.
$
(4,366
)
$
17,820
Net loss per share of Class A common stock
- basic and
diluted (1)
$
(0.14
)
—
Weighted average shares of Class A common
stock
outstanding - basic and diluted (1)
32,134,170
—
(1)
Represents net loss per share of Class A
common stock and weighted-average shares of Class A common stock
outstanding for the portion of the period following the IPO and
related pre-IPO reorganization transactions.
MediaAlpha, Inc.
Condensed Consolidated
Statements of Cash Flows
(In thousands)
Year ended December
31,
2020
2019
Cash Flows from operating
activities
Net income
10,562
$
17,820
Adjustments to reconcile net income to net
cash provided by operating activities:
Non-cash equity-based compensation
expense
24,745
2,308
Depreciation expense on property and
equipment
289
272
Amortization of intangible assets
3,201
5,381
Amortization of deferred debt issuance
costs
1,228
665
Loss on extinguishment of debt
1,998
-
Bad debt expense
526
354
Deferred taxes
(545
)
-
Tax receivable agreement liability
adjustments
413
-
Changes in operating assets and
liabilities:
Accounts receivable
(40,809
)
(19,216
)
Prepaid expenses and other current
assets
(6,482
)
(162
)
Other assets
(4,375
)
-
Accounts payable
57,793
13,441
Accrued expenses
2,866
1,280
Net cash provided by operating
activities
51,410
22,143
Cash flows from investing
activities
Purchases of property and equipment
(296
)
(146
)
Acquisition of intangible assets
-
(148
)
Purchase of cost method investment
(10,000
)
-
Net cash (used in) investing
activities
(10,296
)
(294
)
Cash flows from financing
activities
Proceeds received from:
Proceeds from issuance of Class A and
Class B common stock, net of underwriter commission
124,179
-
Issuance of long-term debt
210,000
100,000
Proceeds from revolving line of credit
7,500
-
Member contributions
-
62,806
Payments made for:
Repayments on revolving line of credit
(7,500
)
-
Repayments on long-term debt
(123,648
)
(15,073
)
Debt issuance costs
(4,467
)
(2,303
)
Redemption of Class B units up to fair
value
(1,453
)
(4,467
)
Payment of IPO costs to third parties
(12,227
)
-
Shares withheld for taxes on vesting of
restricted stock units
(4,235
)
-
Cash paid to retire Class B-1 units at
QLH
(84,320
)
-
Redemption of Class A units
-
(62,806
)
Member distributions
(131,417
)
(95,640
)
Net cash (used in) financing
activities
(27,588
)
(17,483
)
Net increase (decrease) in cash and cash
equivalents
13,526
4,366
Cash and cash equivalents, beginning of
period
10,028
5,662
Cash and cash equivalents, end of
period
$
23,554
$
10,028
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 years ended December 31, 2020 and 2019.
Year Ended December
31,
(in thousands)
2020
2019
Open platform transactions
$
573,242
$
399,945
Percentage of total Transaction Value
70.3
%
71.4
%
Private platform transactions
242,470
160,181
Percentage of total Transaction Value
29.7
%
28.6
%
Total Transaction Value
$
815,712
$
560,126
The following table presents Transaction Value by platform model
for the three months ended December 31, 2020 and 2019.
Three Months Ended December
31,
(in thousands)
2020
2019
Open platform transactions
$
187,018
$
123,954
Percentage of total Transaction Value
72.8
%
73.1
%
Private platform transactions
69,880
45,687
Percentage of total Transaction Value
27.2
%
26.9
%
Total Transaction Value
$
256,898
$
169,641
The following table presents Transaction Value by vertical for
the years ended December 31, 2020 and 2019:
Year Ended December
31,
2020
2019
(in thousands)
Property & casualty insurance
$
549,916
$
322,817
Percentage of total Transaction Value
67.4
%
57.6
%
Health insurance
175,539
122,320
Percentage of total Transaction Value
21.5
%
21.8
%
Life insurance
42,206
34,884
Percentage of total Transaction Value
5.2
%
6.2
%
Other
48,051
80,105
Percentage of total Transaction Value
5.9
%
14.3
%
Total Transaction Value
$
815,712
$
560,126
The following table presents Transaction Value by vertical for
the three months ended December 31, 2020 and 2019:
Three Months Ended December
31,
2020
2019
(in thousands)
Property & casualty insurance
$
158,961
$
89,071
Percentage of total Transaction Value
61.9
%
52.5
%
Health insurance
76,800
54,151
Percentage of total Transaction Value
29.9
%
31.9
%
Life insurance
10,489
8,043
Percentage of total Transaction Value
4.1
%
4.7
%
Other
10,648
18,376
Percentage of total Transaction Value
4.1
%
10.8
%
Total Transaction Value
$
256,898
$
169,641
Contribution and Contribution Margin
The following table reconciles Contribution and Contribution
Margin with gross profit, the most directly comparable financial
measure calculated and presented in accordance with GAAP, for years
ended December 31, 2020 and 2019:
Year Ended December
31,
(in thousands)
2020
2019
Revenue
$
584,814
$
408,005
Less cost of revenue
(499,434
)
(342,909
)
Gross profit
$
85,380
$
65,096
Adjusted to exclude the following (as
related to
cost of revenue):
Equity-based compensation
2,809
181
Salaries, wages, and related
2,188
1,471
Internet and hosting
438
520
Amortization
—
511
Depreciation
24
22
Other expenses
284
263
Other services
902
778
Merchant-related fees
585
452
Contribution
$
92,610
$
69,294
Gross Margin
14.6
%
16.0
%
Contribution Margin
15.8
%
17.0
%
The following table reconciles Contribution and Contribution
Margin with gross profit, the most directly comparable financial
measure calculated and presented in accordance with GAAP, for three
months ended December 31, 2020 and 2019:
Three Months Ended December
31,
(in thousands)
2020
2019
Revenue
$
190,205
$
126,148
Less cost of revenue
(163,742
)
(105,779
)
Gross profit
$
26,463
$
20,369
Adjusted to exclude the following (as
related to
cost of revenue):
Equity-based compensation
2,751
23
Salaries, wages, and related
1,013
444
Internet and hosting
110
127
Amortization
—
—
Depreciation
7
4
Other expenses
79
70
Other services
286
255
Merchant-related fees
138
179
Contribution
$
30,847
$
21,471
Gross Margin
13.9
%
16.1
%
Contribution Margin
16.2
%
17.0
%
Adjusted EBITDA
The following table reconciles Adjusted EBITDA with net income,
the most directly comparable financial measure calculated and
presented in accordance with GAAP, for the year ended December 31,
2020 and 2019.
Year ended December
31,
(in thousands)
2020
2019
Net income
$
10,562
$
17,820
Equity-based compensation expense
25,536
3,594
Interest expense
7,938
7,021
Income tax (benefit)
(1,267
)
—
Depreciation expense on property and
equipment
289
272
Amortization of intangible assets
3,201
5,381
Transaction expenses(1)
11,815
8,831
Adjusted EBITDA
$
58,074
$
42,919
(1)
For the twelve-months ended December 31, 2020, transaction
expenses include $5.9 million in legal, and other consulting fees,
$3.6 million in transaction bonus related to the IPO and related
pre-IPO reorganization transactions, $2.0 million in loss on
extinguishment of debt related to the termination of 2019 Credit
Facilities, and $0.3 million related to reversal of tax
indemnification receivable created in connection with the pre-IPO
reorganization transaction. For the twelve-months ended December
31, 2019, transaction expenses included $7.2 million in legal,
investment banking and other consulting fees and $1.6 million in
transaction bonuses related to a transaction with Insignia in
February 2019.
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
December 31, 2020 and 2019.
Three Months ended
December 31,
(in thousands)
2020
2019
Net income
$
(13,238
)
$
10,377
Equity-based compensation expense
22,983
513
Interest expense
3,094
1,762
Income tax (benefit)
(1,287
)
—
Depreciation expense on property and
equipment
79
64
Amortization of intangible assets
799
1,223
Transaction expenses(1)
5,767
—
Adjusted EBITDA
$
18,197
$
13,939
(1)
For the three-months ended December 31,
2020, transaction expenses include $1.8 million in legal, and other
consulting fees, $3.6 million in transaction bonus related to the
IPO and related pre-IPO reorganization transactions, and $0.3
million related to reversal of tax indemnification receivable
created in connection with the pre-IPO reorganization
transaction.
Key business and operating metrics
“Transaction Value” represents 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. We utilize
Transaction Value to assess revenue and to assess the overall level
of transaction activity through our platform.
“Contribution” represents 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.
“Adjusted EBITDA” represents 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210311005994/en/
Investors Investor Relations
IR@MediaAlpha.com
Press SHIFT MediaAlpha@SHIFTComm.com
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