All right, we'll get started. We have MediaAlpha with us to wrap up the conference. Pat Thompson, CFO. Thanks for joining. Excellent. Thanks for having me here, Corey. Before we dive into the recent happenings of the P&C market, Pat, just wanted to ask you for a brief introduction to MediaAlpha, and then, you know, where you sit within the online insurance ecosystem. Yeah, happy to, happy to provide that. When I get this question, I generally like to give a bit of a history lesson on MediaAlpha, 'cause I think it explains kind of, you know, what we do, how we got to where we are, and kind of how our model is a little bit different than some of our other competitors. Business was founded in 2012, as a business called QuoteLab. What QuoteLab was, is an owned and operated business. Buying traffic from Google, qualifying consumers and ultimately, at that time, selling them through kind of a black box ad network that took a pretty big cut of the economics, and ended up selling that traffic on to carriers kind of as a package. Steve and Eugene, who were two of the founders still with the company today, were frustrated at that model 'cause they didn't feel like they were being adequately compensated for the traffic they were generating and the value they were adding in the ecosystem, built out a distribution platform for us to distribute those clicks, calls, and leads ourselves to carriers. Drove carrier purchases of those. Over time, one carrier, Esurance, which is now part of Allstate, reached out and said, "Hey, we have our own calls, clicks, and leads that we're generating from consumers that either don't qualify for us or that we think have a low propensity to convert." They said, "Can you help us monetize those?" The team said, "Yeah, I don't see why not." Made a few changes, ultimately helped them do that. Another carrier came to us asking for help on that. You know, pretty quickly, the focus of the business pivoted from being an owned and operated B2C, you know, kind of variable marketing arbitrage firm to a two-sided online marketplace, where we have today hundreds of different publishers that have consumers with insurance intent. Biggest vertical for us is property and casualty, which is primarily auto, but also, home renters, boat, RV, et cetera. Health is the second biggest vertical, which is a mix of under 65 and Medicare Advantage, life, and then we've got some other smaller verticals that are non-insurance. Business today is overwhelmingly that B2B marketplace. We still have a small portion of which is owned and operated, but, you know, in that marketplace for publishers and advertisers to connect, we are a factor larger than any of our competitors. In building the B2B marketplace, I know data has always been one of your, you know, core competencies. Just, we're asking everyone about AI this conference. How are you currently leveraging AI? You know, how do you think it can impact your business in the industry? Yeah. I actually like how you mentioned data at the start of that, Corey, which is, you know, as we think of focus areas for the company, both now and over the next couple of years, data is really at the core of it. In that, you know, we have, you know, as much or more data than anybody, just given we've got a ton of publishers, a ton of advertisers. We, you know, are always looking to find ways, you know, to get more data, to augment the data we have, to better utilize the data we have. As we think about, you know, the opportunity for the company, that is, you know, really critical to what we're looking to accomplish. As we think about getting more data, obviously generative AI can be an accelerant to it, but, you know, from our perspective, it's probably pretty early days on it. I think, you know, we will learn a lot more kind of over the next, you know, 12, 24 months of what opportunities, you know, will come about from it and potentially, you know, what threats may arise. We think it should be a positive over time, but very early days. Maybe one on product and innovation, then we'll get into the P&C market. You know, what are your biggest priorities on the product side? Where are you investing and, you know, where are you focusing your time there? Yeah. I touched on, I touched on data, but data is one of them. You know, with us, I think the hard market and the P&C space has been a challenge for us and everybody in the industry. One positive thing that I think has come from it is that we've been able to make a lot of progress with some of our carrier advertisers on data. It could be, you know, us passing them data to prefill forms. It could be them passing us data around, conversions, lifetime value, et cetera. We've been, you know, really focused on that because we've essentially found as we get more data, there are better outcomes for everybody in the ecosystem, advertisers, publishers, and of course, ourselves. The, you know, other couple of things that I would say are big opportunities, you know, one is ensuring we are ready to capture more than our fair share as the P&C market recovers. I think coming out of the last downturn in 2017 and 2018, we put quite a bit of space between ourselves and competitors. Q1, which was a pretty good quarter for the industry as a major carrier, came back in a big way. Our P&C business grew 108% sequentially quarter-over-quarter, which is quite a bit faster than anybody else in the space. Last item I would cite for us is kind of a focus area is Medicare Advantage. We've got a nice Medicare Advantage business with strong positions with a number of carriers in terms of spend. That's a market that has had the wind at its back for a long time, and it's a market that we are immensely excited about the potential of. We continue to invest pretty heavily there because we think the underlying growth rate there should be pretty attractive in the medium to long term. I wanna talk about P&C, also Medicare. We'll start with P&C. I think you mentioned this, before the hard cycle, at least, it was historically about two-thirds of your revenue. Yep. It seemed like we were starting to turn the corner at the beginning of the year with a large carrier ramping marketing spend. Of course, you know, the big news about a month ago now was that that carrier had subsequently paused spend in most states. Pat, just hoping you could expand on what happened and, you know, how this kind of unfolded from your seat. Yeah. You know, I actually think you had a pretty good summary of it there, Corey, which is, major carrier, you know, kinda signaled to us in, you know, late Q4 that, effectively their, you know, annual profitability targets would be resetting at the start of the year, and that they were feeling good about their rates and that they were, you know, open for business and gonna be eager to gain share from a marketing standpoint. The budgets started the year strong and were very strong for almost the entire Q1. I think the was a cut instituted in the very last days of March, which essentially had an immaterial impact on Q1. Then over the course of, you know, the time since, there have been a series of additional cuts, and the spend from that carrier is down very, very, very significantly. You know, the guidance from them is, it's gonna be off for Q2, and we'll reevaluate and, you know, so that's kind of, you know, how we're operating the business, which is, you know, we're, you know, we're profitable at current levels and, you know, we're kind of in defensive mode and, you know, waiting for things to get better. Could you just talk about kind of your, you know, frequency of dialogue with the, you know, these carriers? It looked like last week we got an update on April performance from a number of carriers. It looked like trends, at least our takeaway, was that things seem to get better. Curious, you know, if you've had any more recent dialogue, you know, how... what you're hearing and your view kind of on the April update we've received? Yeah. I think, you know, results are different amongst different carriers. You know, you look at there are some carriers that are still operating unprofitably, so combined ratios, you know, over 100. I think they've got probably more work to do on the rate side. You know, as you look at somebody like Progressive that is, you know, combined ratio under 100, I think, you know, they've kinda signaled that they think they've got a bit more work to do on the rate side and that they're, you know, maybe feeling a little bit less bullish now than they were a couple of months ago. You know, I think all of the carriers know what they have to do, and that is, you know, take rate, and they're doing it kind of as fast as they can. You know, I think the, the view from our perspective is it's, you know, really a question of when and not if they get the rates to where they need to be. How do you think about the path forward from here? I know it's tough to predict. I don't think any of us would have predicted the most recent happenings, but just, you know, what are your thoughts on the timeline going forward and just what an eventual recovery, you know, likely looks like? Yeah. You know, I think it was interesting because the downturn for us was lumpy and nonlinear, where it wasn't like a straight line down to the left. I think we said, you know, late last year and early this year that we thought the recovery would be lumpy and nonlinear. I think it has been lumpier and even less linear than we expected. You know, I think the view is, you know, over the course of, you know, this year and, you know, potentially early into next year, you'll start to see, you know, more carriers get to a spot where they feel good about their rates. You know, we would expect marketing spend to, you know, either slightly lead that or, you know, slightly lag it, but to, you know, kind of be, you know, roughly in sync. As, you know, carriers get to a sustainable business model where they're generating profit, that, you know, they will act as they have always acted, which is eager to grow. Could you talk about what you're seeing on the consumer side with prices going up, you know? You know, how long do you think kind of this surge in price comparison can continue? Yeah. You know, I would say that, you know, we've seen, you know, pretty good volume trends, you know, through the course of the hard market and that, you know, the, you know, volumes are growing for us. You know, I think, you know, we'll see elevated shopping as long as consumers are seeing, you know, above historical trendline premium increases, would be my guess, which is. You know, it's not uncommon to hear stories of people getting, you know, 10%, 15%, 20% premium increases, and that, you know, tends to spur more shopping. In a more normalized environment where folks are getting hit with 3% increases, you know, there's a bit less shopping. it's really gonna be a function of, you know, how long it takes the carriers to get to where they need to be and how long it takes for, you know, the Fed to break the back of inflation. One more on P&C. Pat, I've kind of always thought about nirvana for you as just getting the ad inventory on the carrier websites. Yep. I know that's a long, a long process often. Does the recent downturn make that pitch easier or harder? Just what level of interest are you seeing from your supply partners in terms of building deeper relationships in this environment? you know, Corey would say it definitely makes it easier. It's kind of a simple analogy, but in the midst of the hard market now, we've seen a lot of carriers either dramatically curtail or completely shut off marketing spend. I think it's a pretty easy story to say, "Well, if you're not a buyer, you should be a seller." you know, I think one of the things we've been, you know, excited about over the course of the hard market is you know, we've made more progress in the last 12 months in some of those carrier discussions than we had in the couple years before. you know, one carrier in particular, we thought honestly would maybe never consider being a publisher, and now, you know, we're in talks about, you know, potentially doing a test on it. These things tend to be very long lead time because the carriers tend to, you know, move slowly, challenges getting tech resources, et cetera. This is business that is hugely strategic in terms of cementing relationships and tends to be very attractive for other advertisers because it's very highly qualified. Shifting to healthcare, historically, your second-largest vertical, around 25% of transaction via revenue. Your comments on Medicare Advantage earlier I thought were interesting because there's been a lot of focus on that particular area just around recent policy changes. Maybe, before we dive into the policy changes, could you just talk about the different parts of your healthcare business and maybe the relative sizes? Yeah. Yeah, happy to. Within our health vertical, we have two different businesses. One is Medicare Advantage, the second is under 65, and we don't disclose the breakdown of the two, but it is a healthy mix of the two, and it's neither 80% Medicare nor 80% under 65. From a consumer inquiry standpoint, it is over-indexes to clicks relative to the market. We've got a pretty healthy call business as well, and we have a pretty small outbound lead business there, which is, you know, probably a bit more of a legacy product where a consumer fills out a form and waits for somebody to call them. That probably is gonna help this next question, which is just around the Medicare Advantage policy changes. Could you go through what, you know, what's changing and then also your latest interpretation of how it can impact you? Yeah. There's been a tremendous amount of press around Medicare Advantage changes. There are two, you know, kind of changes that we think will have an impact on our business and our ecosystem. Where the first one is going to be around marketing collateral and what publishers can and cannot say on that. Essentially, there are now regulations in place that, you know, any time you mention, you know, plan benefits pricing, that is considered marketing collateral, and it needs to go through a review process run by carriers in order to be approved. Our view is that that is, you know, obviously positive for the consumer over time. You know, there'll be, you know, some work to be done to establish those review flows and make sure everything happens. You know, from a publisher standpoint, I'm sure there will be winners and losers there, but we are diversified and we're doing our part to help the industry navigate those changes. Second thing is, you know, around CMS regulations regarding waiting periods, in particular, this 48-hour rule. The view is, and I think a number of our, you know, peers have said this as well, that it does not apply to inbound calls, which is, you know, an important product for us. Our interpretation is it's still unclear what the impact on outbound leads will be. That product is very, very small for us, and so, you know, to the extent there are changes there, we would expect any impact to our results to be pretty immaterial. A competitor recently announced they're exiting the Medicare business. Are, you know, are you surprised? You know, how big of an opportunity is that for you to potentially take share? Yeah. You know, if we're thinking of the same competitor, you know, they do a number of different things, and I think Medicare was, you know, best case third but maybe fourth or fifth on their list of priorities and, you know, pretty small for them relative to the rest of their business and obviously very small relative to the overall market opportunity. I think they kind of said, you know, "Hey, with regulatory changes and, you know, challenges elsewhere in the business, like, the juice might not be worth the squeeze." You know, sure, I guess it's a, you know, opportunity for us to pick up some of that business. The thing we're much more excited about is Medicare Advantage as a product is 50% penetrated among eligible consumers. That rate ticks up a couple of points a year. Very little of that is, you know, kind of transacted or contacted online. You, you start to say, "Hey, it's a market that the number of bound individuals is growing, you know, mid-single digits." You have offline to online penetration, you know, should ramp that up. We've been gaining share in that market over time. We get pretty excited as we, you know, start to extrapolate that out over time and think about the opportunity that we could capture. If the audience has any questions, by the way, feel free to raise your hand, and we will bring a microphone over. Moving to financials, I got a couple questions here, starting with EBITDA, you remain positive. You've remained positive through the down cycle. You announced a 16% headcount reduction with Q1 earnings. Could you just talk about your OpEx spend going forward then how quickly you think you can get margins back to, you know, pre-hard cycle levels when things return? Yeah. On the OpEx side, you know, we give guidance on that every quarter. You know, as we think about overhead, it's really the delta between gross profit and Adjusted EBITDA, and so it's our, you know, our overhead plus Adjusted EBITDA OpEx. You know, with the headcount reduction that we undertook recently, we expect those overheads to be down around $1.5 million sequentially from Q1 to Q2 and, you know, kind of be at a similar level in Q3. We have not said anything for Q4, but, you know, probably not a stretch to think that should be pretty similar because we're not really adding to the overhead burden in any meaningful way right now given the industry environment. Then just in terms of your Q2 outlook, which you have guided to, you talked about 40%-50% decline in P&C. Trends remain similar sequentially in health, life, other. Could you just talk about some of the key assumptions you're making behind this outlook and maybe the swing factors that could lead you to do better or worse? Yeah. you know, I would say on P&C, you know, probably not a lot to say besides, you know, we need to see, you know, what happens in terms of, you know, carrier spend returning. you know, other ones I think on the, on the health side, around 40% of our business in health is in Q4, and that's when the Annual Enrollment Period for Medicare is, and the Open Enrollment Period for under 65 is. That's where the lion's share of the action is, and you tend to see, you know, kind of opportunity for more variance in terms of growth rates. you know, I think the business has been, you know, kind of pretty stable in Transaction Value and then doing better on revenue and on gross profit. The life business has been down on a year-over-year basis. Really two things have been driving that. One has been decreased mortality fears as we exit COVID. Effectively, during COVID, a lot of people were worried about dying, so they were shopping for life insurance, and now people are less worried. The second would be some, you know, kind of publisher specific things of folks, you know, changing focus a little bit. The other bucket for us is a couple of things. It's travel and personal finance, which is mainly mortgage. Historically, we had a higher education business. We exited higher ed in early Q3 of last year, so that's what's driving a lot of the negative comps, so we'll be lapping that shortly. Corey, I realized I missed part of the prior question, which was around, you know, kind of... Yes. long-term recovery. Snapback. Yeah, snapback. You know, I'd say our view is, you know, two to three quarters away from, you know, P&C recovery. You know, obviously that's a bit hard to define what is a recovery, what level does it get back to. You know, we, you know, believe that, you know, most carriers are still a ways away on that. You know, it's kinda hard to say, you know, exactly what will profit be in 2024 or 2025. We don't give long-term guidance for that reason, really beyond the upcoming quarter. You know, we've been a business that has generated, you know, pretty meaningful levels of EBITDA in the not too distant past and have converted that very strongly to cash. You know, from an overhead standpoint, you know, we've taken a lot of overhead out of the system in the last 18 months since I've been at the company. You know, we believe that this is a business which should grow Transaction Value, grow revenue, grow gross profit, you know, manage overhead, manage overhead well, and, you know, ultimately translate to profitability and share price appreciation over time. Just capital allocation for a bit. You have about $180 million of debt, roughly 7x leverage based on obviously the trough EBITDA numbers, recently. You know, could you just talk about how comfortable you are with your current cash and debt levels, in your capital allocation priorities? Yeah. I mean, we'd say very comfortable. The, our credit agreement, you know, like a lot of them, we've got 21 categories of adjustments to EBITDA to get to a credit agreement EBITDA. The vast majority of those are add backs. Some are tiny, some are meaningful, like public company cost and, you know, pro forma cost takeouts, cash taxes on our SU vests. Through Q1, we've been easily within compliance on that, and our view is that we will continue to be going forward. From a capital allocation standpoint, you know, given the downturn right now, you know, we're focused on reducing net debt, so, you know, continuing to make our quarterly amortization payments and building net cash. I should clarify, my 7x was not an adjusted number. Correct. Yeah, it was just based off of reported Adjusted EBITDA, not Bank EBITDA. The FCC opened an inquiry late in February. Three questions in one, if I can. Yep. I guess, A, what are they looking into? You know, B, how big of a part of your business is that? C, just what can you tell us in terms of where you're at in the process? You know, I think the important word in there is inquiry, which is, you know, they sent us a broad-reaching data request. There are no accusations of wrongdoing in there. It, it seems like a lot of it is around, you know, kind of marketing of, you know, various healthcare products, you know, hard to exactly suss out. We're cooperating with the FTC. We've got a production timeline for those documents. You know, couple things I can tell you is we had $200,000 of expense associated with that in Q1. It's an Adjusted EBITDA add back. We expect that number to be similar to slightly higher in Q2 and Q3 as we produce all that stuff. You know, we believe we did nothing wrong. We believe we, you know, are in full compliance and, you know, it's gonna take how long it's gonna take, but we're not overly concerned. I have three more if you wanna let anyone in the audience has a question, raise your hand. Just going back to life, I know it's a smaller vertical, about 5% of your revenue. You talked a bit about your expectations in the near term and the two things that are impacting it. You know, what's your kind of outlook longer term in the category, in life, that is? Yeah. You know, I would say in life, you know, we're probably, you know, we're excited about it. You know, it's the 3rd most important vertical for us in terms of P&L impact and, you know, the trends there are pretty positive and it's a product that makes a lot of sense for a lot of people. You know, we think a lot of the trends of shopping and purchasing activity moving offline to online, you know, should be beneficial for that. You know, obviously P&C and health are, you know, probably the primary focus areas for us as a business. Okay. Maybe I'll jump to, just open versus private marketplace, and then we'll end on a bigger picture question. Could you just talk about, you know, I guess, what is open versus private marketplace and kind of how, you know, the economics vary and how that impacts your financials? Yeah. You know, I would say, you know, in open marketplaces, you know, we are a principal in the transaction. You know, what that is, you know, we are, you know, directly facilitating the relationship between a publisher and an advertiser. You know, what that means is a publisher, you know, says, "Hey, we've got this inventory of customers and, you know, MediaAlpha help us monetize them." You know, we have relationships, you know, with hundreds of different advertisers and we make that happen for them. We, you know, tend to get take rates in the double digits on that. If there is $100 of spend with us, we recognize that full $100 as Transaction Value. That full $100 is revenue, then the revenue share that we pay to the publisher is in cost of sales for us. You know, if our take rate's 12%, you'd see $100 of Transaction Value, $100 of revenue, $88 of cost of goods, then $12 of gross profit. The private marketplace is a product that essentially allows publishers and advertisers that have a large relationship to transact directly. You can think of, you know, it could be a large financial app with a, you know, large carrier where there's, you know, potentially tens of millions of dollars of annual spend. They would transact directly where they would have a direct relationship, where they would talk to each other. Billing would happen directly. ow, effectively be placing like a click ad, and we'd be handling all of the ad serving and tracking on that. It's an interesting product because the publishers that tend to have these private relationships also have open relationships. So, you know, we essentially work for them to revenue maximize whether it's private or public. The model on that is much more of a, you know, kind of SaaS fee for service model. So if a carrier spends $100 bucks in ads, and we had a 4% take rate, we'd recognize $4 in revenue and essentially $4 in gross profit, 'cause there's virtually no variable cost associated with it. Okay. We'll end on a bigger picture question, not open versus private marketplace. What are the one or two things or three you're most excited about in the years ahead, and you know, where you think there's, you know, the potential to have the most transformation to your business? Yeah. The first thing, you know, is. It's probably an obvious statement, but it's P&C market recovery is something we're pretty excited about because, you know, I think the. You can all see the impact of the downturn on our financials. You know, our view is that as the industry recovers, the P&L should react very positively to that. The, you know, the things I'm most excited about, I think I already touched on, but one is the offline to online transition in P&C. Within the P&C space, estimates have kinda 20%-25% of working marketing spend from the carriers allocated to online channels. You know, as you look across the US economy as a whole, around 2/3 of marketing dollars are spent online, and 2/3 of media consumption from consumers is online. You know, it's hard to say, "Hey, in 2027, what's that percentage gonna be?" I can't tell you exactly, but I am confident it's gonna be markedly higher today, and that should be a really nice tailwind for us. The other one, which I know I touched on, was Medicare Advantage and some of the growth trends that are there. You know, it's a, it's a pretty complicated product for consumers to buy. It's an important decision because it's health insurance. You know, I think the... You know, there are some similarities to the Medicare Advantage market and the P&C market, where the P&C market is, you know, probably five or 10 years ahead in terms of moving online. We think there are some interesting opportunities for us to, you know, kinda help folks navigate that given our experience in auto and other P&C categories. Awesome. Well, we'll leave it there. Thank you. Awesome. Any more questions or...? All right. Thanks, everyone.