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EverQuote, Inc.  (NASDAQ:EVER)
Q4 2019 Earnings Call
Feb 24, 2020, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by and welcome to EverQuote's Fourth Quarter 2019 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded [Operator Instructions].

I would now like to hand the conference over to your speaker today, Brinlea Johnson of The Blueshirt Group. Thank you. Please go ahead, Ms. Johnson.

Brinlea Johnson -- Investor Relations

Thank you. Good afternoon and welcome to EverQuote's fourth quarter and full year 2019 earnings call. We'll be discussing the results announced in our press release issued today after the market close. With me on the call this afternoon is, Seth Birnbaum, EverQuote's Chief Executive Officer and Co-Founder and John Wagner, Chief Financial Officer of EverQuote.

During the call, we will make statements related to our business that may be considered forward-looking statements, under federal securities laws, including statements concerning our financial guidance for the first quarter and full year 2020, our growth strategy, our plans to execute on our growth strategy, key initiatives, our investments in the business, the growth levers we expect to drive our business, our ability to maintain existing and acquire new customers, our interest or ability to acquire other companies, our goals for integrations and other statements regarding our plans, and prospects.

Forward-looking statements may be identified with words and phrases such as we expect, we believe, we intend, we anticipate, we plan, may, upcoming and similar words and phrases. These statements reflect our views only as of today and should not be considered our views as of any subsequent date, which is specifically disclaim any obligation to update or revise these forward-looking statements except as required by law. Forward-looking statements are not promises or guarantees of future performance and are subject to a variety of risks and uncertainties that could cause the actual results to differ materially from our expectations. For a discussion of material risks and other important factors that could affect our actual results, please refer to those contained under the heading Risk Factors in our most recent quarterly report on Form 10-Q, which is on file with the Securities and Exchange Commission and available on the Investor Relations section of our website at investors.everquote.com and on the SEC's website at SEC.gov.

Finally, during the course of today's call, we will refer to certain non-GAAP financial measures, which we believe are helpful to investors. A reconciliation of GAAP to non-GAAP measures was included in the press release we issued after the close of market today, which is available on the Investor Relations section of our website at investors.everquote.com. Thank you.

I will now turn the call over to Seth.

Seth Birnbaum -- Chief Executive Officer and Co-Founder

Thank you, Brinlea. Good afternoon and thank you everyone for joining us today. We are pleased to report strong fourth quarter results across all of our key financial metrics, building off a solid third quarter and closing out a record year. We are executing consistently across our key growth levers, growing provider coverage and budget, attracting more high intent consumers to our marketplace, and deepening consumer engagement, resulting in an increase in conversion rate.

Additionally, we continue to increase diversity and momentum in our insurance marketplace by successfully launching our renters, health and commercial verticals and growing non-autos revenue as a percentage of total revenue. We will continue to invest across our growth levers and verticals as we expand our efficient, inclusive and growing tech-powered insurance marketplace.

2019 exceeded our expectations across the Board and I will let John provide you with the financial details. The result, that I'm most proud of is the development, strengthening and continued build-out of our EverQuote team. We have a highly collaborative data-driven culture, which is centered on our mission of being the largest online source for insurance policies by using data and technology to make insurance simpler, more affordable and personalized.

During 2019, we hired several senior leaders to help scale our business and drive operational efficiencies. I'm proud of their positive impact and what we have all accomplished together this past year. We believe the strength of our team, business model and disciplined execution, coupled with the continued secular shift of insurance online positions us well for the future.

Now turning to a deeper discussion on our growth levers and key initiatives. Our traffic teams executed well and growing consumer volume and capitalizing on favorable market conditions. In the fourth quarter, we delivered a 79% increase in consumer quote request volume year-over-year, while reducing cost per quote request. We continue to focus on acquiring more high-intent consumers to our marketplace and improving the conversion of those customers into quote requests.

With regards to consumer acquisition, our expanding data sciences team has allowed us to leverage our artificial intelligence to be more selective in the acquisition of higher performing traffic from both existing and new sources by delivering the right ad at the right time, with the right bid. With regards to conversion of consumers into quote requests, we have seen multiple wins with the application of our proprietary machine learning algorithms to drive higher conversion rates and better downstream conversion to a policy for our partners. We continue to add more providers and deepen our relationships with existing carriers and agents to grow overall revenue.

More than 95% of revenue from carriers in the quarter came from those who have been on our platform for more than a year. The top 10 customers on our platform in Q4 increased their spend with us by nearly 100% on a year-over-year basis. During 2019, we added 14 new carriers as we continue to expand provider coverage on our platform. In Q4, we added 22 new integrations, as we work toward the goal of getting each consumer one click or one call away from a bindable or purchasable quote. We delivered 78% revenue growth in Q4 year-on-year in autos, while diversifying our business with growth in our other verticals, which consist of home, renters, life, commercial and health and which grew 130% in Q4 over the prior-year period.

We believe this growth indicates that our non-auto verticals are starting to experience the effects of our marketplace flywheel and targeted investments in our growth levers. In our home vertical, for example, we further optimized our workflows driving higher conversion rates by virtue of providing a simpler and easier consumer experience. Our health vertical had a strong start in its first Medicare open-enrollment season and we are continuing to ramp these offerings and build out coverage with additional provider partners being added since the start of this year.

Now, turning to 2020. Looking ahead, as evidenced by the guidance John will provide, I'm optimistic for the first quarter and year ahead. We are focused on three primary themes for 2020. First, we have established the goal of completing deep integrations with 100% of our carrier partners by the end of 2020 to improve the customer experience as well as bind rates or policy purchase rates. Second, we plan to continue to build out our engineering and data science capabilities as we seek to better leverage our large and growing data set of consumer and carrier preferences to drive customer satisfaction and operating leverage. Third, we are investing for continued distribution growth by building out our sales and customer success teams.

We strive to be the partner of choice for online distribution for our provider partners and we are investing in building deeper integrations. For one of our top five carriers, for example, we are working with them to expand their current integration from pre-filling the first few fields on their quoting page to pre-filling three pages on their quoting flow. This change is expected to reduce the time required to fill out a quote request from five-plus minutes to under 30 seconds, saving customers' time and leading them to faster quotes and more policy purchases.

Currently, over two-thirds of referrals from our marketplace were to insurance provider partners with some level of integration. We view expanding integrations as beneficial for all participants by creating a more efficient marketplace with less friction. Consumers enjoy a faster and simpler consumer experience, providers benefit from a streamlined opportunity to acquire new customers, and we enjoy enhanced monetization.

For example, one of our carrier partners Allison Auto, share that after the increase performance and success we've seen with EverQuote from our pre-fill integration, we'll be expanding our integration to full click-to-quote in Q1. With a click-to-quote integration, we expect additional improvement to our close rates, while providing a better experience to potential customers.

In 2020, we plan to increase our investment in data sciences, machine learning and infrastructure with the goal of fully automating bidding across most traffic sources. We anticipate multiple benefits to our business model from these investments. For example, we believe these capabilities will create performance lift and operating leverage, driving increased variable marketing margin by providing generalizable and scalable solutions for data problem classes that can be used repeatedly across the organization. In addition, our proprietary machine learning algorithms allow us to better customize each consumers' experience, leading to better bind rates for our partners, higher monetization for EverQuote and potentially higher customer satisfaction.

Finally, we also plan to invest in our growth by adding more sales and customer success team members as we scale our marketplace. This investment will allow us to continue to expand coverage for our consumers, especially in our newer non-auto verticals. In addition, we plan to enhance our capabilities to support the success of our insurance provider partners on our platform.

In summary, we delivered a very strong fourth quarter with solid execution across all of our verticals closing out a record year. Our key revenue growth drivers, coupled with our disciplined approach to managing our operations lead to results that substantially exceeded our expectations. We're scaling the business and executing well on building our team and capitalizing on our massive market opportunity. We have an exciting vision for 2020 and beyond, and a focus and credible path to get there.

I want to thank the EverQuote team for their hard work, results and execution throughout 2019. We are making excellent progress on our mission to be the largest source of online insurance policies in the world. We are using data and technology to make insurance simpler, more affordable and personalized. We want to thank our investors for believing in our vision. We are very bullish on the long-term prospects of our business and believe we have set the stage for continued growth and profitability in 2020 and beyond.

Now, I'll turn the call over to John to provide more details on our financial results.

John Wagner -- Chief Financial Officer

Thank you. Seth, and good afternoon everyone. I'll start by discussing our financial results for the fourth quarter and full year 2019. And then, I will provide guidance for the first quarter and full year of 2020. We are pleased to report strong fourth quarter and full year 2019 results, across all of our key financial metrics, exceeding our revenue, variable marketing margin and adjusted EBITDA guidance provided last quarter.

We delivered fourth quarter revenue of $73.8 million, up 86% year-over-year and full year 2019 revenue of $248.8 million, up 52% from the previous year. Revenue growth rates accelerated across multiple verticals with continued impressive growth in our auto insurance vertical and even faster growth in our other insurance verticals, which includes home and renters, life, health, and commercial. Fourth quarter revenue in our auto insurance vertical increased to $60.2 million, a growth rate of 78% year-over-year. Fourth quarter revenue from our other insurance verticals increased to $13.6 million, a growth rate of 130% year-over-year and an increase to 18% of total revenue.

Looking at the full year, revenue from our auto insurance vertical increased to $212.3 million, up 50% year-over-year. Revenue from our other insurance verticals increased 65% year-over-year to $36.5 million and represented 15% of total revenue. Our growth in Q4 was driven by attracting greater volumes of high-intent consumers to our marketplace, coupled with strong demand from our insurance providers. In the fourth quarter, we delivered 79% year-over-year increase in consumer quote request to $5.9 million, while reducing cost per quote request.

We continued to see improvement in converting consumers, arriving at our marketplace into quote requests, reflecting a trend toward higher performing traffic acquisition. Throughout the quarter, carrier demand remained strong, as reflected in a year-over-year and sequential increase in revenue per quote request. The improvement in revenue per quote request was driven by an increase in the price per referral balanced with a slight decline in the number of monetized referrals per quote request. For the full year, consumer quote request increased 56% year-over-year to $20 million with a reduction in cost per quote request, which more than offset the slight 3% year-over-year reduction in revenue per quote requests.

Turning to our variable marketing margin or VMM, defined as revenue less advertising expense, which is our North Star for managing the profitable growth of our marketplace. We delivered fourth quarter VMM of $21.8 million, an increase of 113% year-over-year, which exceeded our guidance provided last quarter. As a percentage of revenue, fourth quarter VMM expanded to 29.6%, up from 25.7% in Q4 of last year. Full year VMM grew 59% year-over-year to $73.3 million. As a percentage of revenue, full year VMM expanded to 29.5%, up from 28.2% in the previous year.

Fourth quarter GAAP net loss was $0.9 million or a loss of $0.04 per share based on approximately 26.2 million diluted weighted average shares outstanding. Fourth quarter's net loss was an improvement of $6 million as compared to the prior year period. Full year GAAP net loss was $7.1 million or a loss of $0.28 per share, an improvement from GAAP net loss of $13.8 million or a loss of $3.03 per share in the prior year period.

We delivered record positive adjusted EBITDA of $4.2 million or 5.7% of revenue for the fourth quarter, favorable to our guidance range. This was due to our better-than-expected revenue and VMM performance, which outpaced our investment in the operations of the business during the period. In Q4, we also reached a preliminary settlement of a securities class action lawsuit against the Company related to our IPO, which resulted in a $1.2 million charge, net of insurance coverage, which is not included in the calculation of adjusted EBITDA. For the full year, we delivered adjusted EBITDA of $8.3 million or 3.4% of revenue.

On the balance sheet, fueled by positive free cash flow of $3.2 million in the quarter, we ended the quarter with $46.1 million in cash and cash equivalents, a $4.1 million improvement from the previous quarter-end.

Turning to future guidance, 2019 was an exceptionally strong year for EverQuote and we continue to reflect much of this momentum in our Q1 and full year 2020 guidance. We are pleased to provide revenue guidance that reflects growth rates in excess of our long-term model. Coming on the heels of a significant margin improvement in 2019, in 2020, we expect to balance further adjusted EBITDA margin expansion with investments to take advantage of our massive market opportunity, while remaining committed to adjusted EBITDA expansion.

As Seth outlined, specific area slated for investment include technology, data science and distribution, areas that we believe will give us a long-term competitive advantage as insurance continues to move online. This continued revenue momentum and operational investment is reflected in our Q1 guidance as follows. We expect revenue to be between $77 million and $79 million, a year-over-year increase of 49% at the midpoint. We expect variable marketing margin to be between $22 million and $23.5 million, a year-over-year increase of 64% at the midpoint. We expect positive adjusted EBITDA to be between $2 million and $3.5 million, a year-over-year improvement of $4.1 million at the midpoint.

For full year 2020, our guidance is as follows. We expect revenue to be between $315 million and $325 million, a year-over-year increase of 29% at the midpoint. We expect variable marketing margin to be between $92 million and $98 million, a year-over-year increase of 30% at the midpoint. And we expect positive adjusted EBITDA of between $10 million and $15 million, a year-over-year increase of 51% at the midpoint.

In summary, our strong fourth quarter financial results completed an outstanding year for EverQuote. In 2020, we will focus on near-term execution, while also positioning EverQuote to capture the long-term market opportunity within the shift to online in insurance.

And with that, Seth and I look forward to taking your questions.

Questions and Answers:

Operator

[Operator Instructions] Your first question comes from Jed Kelly from Oppenheimer. Your line is open.

Jed Kelly -- Oppenheimer -- Analyst

Great, thanks for taking my question. Just on the guidance implies some margin expansion. However, Seth, you did mention in your prepared remarks, sort of leveraging machine learning, improved conversion. So can you just talk about how we should view the margin progression throughout the year?

John Wagner -- Chief Financial Officer

Sure. Hi, Jed. How are you. I'll take the first part of it, that's John here and then Seth can comment as well. So I guess, as we think about the guidance in the full year, we do imply some margin improvement. We will always go back to say that we manage the business based on variable marketing dollars first and foremost. So, we really give the guidance with the expectation that we're going to grow and meet our goals around variable marketing dollars first and foremost. But we have said also in the long-term model that we will expand VMM as a percentage of revenue. And I think, what we've reflected in the guide is doing both of those, some modest increase in VMM is some -- a little bit greater increase in adjusted EBITDA guide so -- and then strong top line growth. So, I think it is a year that captures kind of that long-term growth story of growing top line, but also expanding margins over time.

Seth Birnbaum -- Chief Executive Officer and Co-Founder

And just to echo John as well, Jed, hi, it's Seth, we are obviously very confident in our long-term VMM target and things like using machine learning for bidding as examples have increased not only sort of our view that we get through our long-term model and our comfort there but also near term, it has given us both variable marketing margin dollar expansion as well as variable marketing margin percentage expansion. We saw that in the Q4 results and in the Q1 guidance and so, obviously, really bullish on that tech.

Jed Kelly -- Oppenheimer -- Analyst

And then on -- in 4Q, on revenue per quote request was up 4% and it's pretty impressive considering your volume was up about 79%. What's driving some of the pricing increases?

Seth Birnbaum -- Chief Executive Officer and Co-Founder

And so I would say that it's probably -- it's a function of two-folds, the convergence of we saw very strong carrier spend in Q4 pretty much across the Board distribution spend, in fact not just carrier both with agents and carriers in Q4 leaned in. So, the market was great for the volume. We also have continued to make progress with things like integrations. And as you know, integrations don't just improve the customer experience, they also increase the potential or the bind rates or policy purchase rate for our provider partners and enable them to lean in. And then there was actually a third leg of the stool that it's important to mention is we do have some machine learning tools that our providers can use to access our marketplace to basically further optimize their performance and spend. And that also helps increase RPQR. So, really it was a convergence of market conditions and progress we made in the business.

And again, as we grow the business, we're always focused on variable marketing dollar, things like revenue per quote request, really we do view ultimately as outputs over time and obviously as we continue to see strong growth in consumer quote request volume, which is obviously one of our key metrics outside of VMD for running the business, you can from time-to-time see revenue compress as that incremental volume flows through the auction. But that traffic success really drives for us, it's like stored energy. Seeing that consumer volume there gives us the opportunity to layer in distribution spend over time. And we do think again we're really confident that over the longer-term, revenue per quote request, referrals per quote request are a lever in our business and it's one of the reasons you see us now investing in distribution as we head into the year.

John Wagner -- Chief Financial Officer

Jed, I'm just going to add it also just -- Jed, I'll add just because it's probably helpful for modeling purposes again, we manage the business of VMD. We think of revenue per quote request as an output, but certainly as we look forward to 2020 in our own models, we're certainly thinking about quote request volumes driving growth into 2020, in a similar way, that it has in 2019. So, in terms of modeling, I would look to strong growth in traffic. And as Seth said, that can sometimes come with some compression in revenue per quote request just as you're driving that much more volume through the marketplace.

Jed Kelly -- Oppenheimer -- Analyst

Thank you.

Operator

Your next question comes from Ron Josey from JMP Securities. Your line is open.

Andrew Boone -- JMP Securities -- Analyst

Hi guys, this is Andrew Boone on for Ron. Thanks for taking our questions. You talked about higher converting traffic in your comments. Can you provide more details on kind of what drove that? And then secondarily, with your goal of full integration for 2020, integrations were up in the back half of the year versus the first half. Can you talk about what drove that and then just how you are going to accomplish that goal? Thank you.

John Wagner -- Chief Financial Officer

Sure. And not all consumer marketing channels are created equal. Some obviously generate a high volume of arrivals or visits to a lower volume of quote requests and vice versa. I'd say one of the bigger levers we have in our marketplace and something that we've seen play out is using machine learning tools to deliver the right bid, the right -- the right basically conversion rate adjusted bid for traffic also helps us drive up that conversion rate and drive higher intent traffic into the marketplace. And we've seen success with our new bidding strategies in our machine learning algorithms specifically for bidding. So, it's just a great example of something that's working for us and is driving higher intent traffic.

Operator

Your next question...

Andrew Boone -- JMP Securities -- Analyst

And then integration?

John Wagner -- Chief Financial Officer

Sure. So the second sort of goal of integrations, obviously, right, there's sort of three outputs of integrations. One is, it's a much lower friction for the consumer. So our ultimate goal over time is to get the consumer either one click or one call away from the relevant match quote. The second, obviously, advantages for our provider partners you see an increasing conversion rate downstream to an actual purchase policy as you get deeper, more deeply integrated with the provider. And obviously the third benefit is in terms of EverQuote's monetization, typically the providers can lean in on their bids based on the improvement in performance brought about by integration. So really again a very powerful medium-term lever for the business and to echo sort of the call itself, our goal is to get a 100% of our carriers this year to a deep integration with EverQuote.

Andrew Boone -- JMP Securities -- Analyst

I guess one more question, is there a change operationally and how you guys have to do that? Is there an investment there or is there any change for you guys to do that or is just further execution?

John Wagner -- Chief Financial Officer

It's a combination of further execution, investment and new tooling to make it easier for a partner to integrate with us and so, all three. And we are scaling up our integrations team, both on the engineering and tech side, but also on the partnership and biz dev side.

Andrew Boone -- JMP Securities -- Analyst

Great. Thank you.

Operator

Your next question comes from Mayank Tandon from Needham. Your line is open.

Mayank Tandon -- Needham -- Analyst

Great, Seth and John, congrats on a strong finish to '19. So, in terms of the contribution from some of the newer verticals held commercial renters, could you talk about -- did they add any to revenue in the fourth quarter? And then as you look at the 2020 guide, what are you baking into the revenue contribution from these verticals? And then I have a follow-up.

Seth Birnbaum -- Chief Executive Officer and Co-Founder

Sure. So let me just take the first question, and then John will answer your second. Thanks a lot, Mayank. So in terms of the contribution, its perhaps unsurprisingly sort of life insurance and home and renters sort of being the older of our newer verticals contributed more significantly to revenue and variable marketing dollar in the quarter.

That having been said, we saw health get off to a strong start and it did contribute both revenue and variable marketing dollars in Q4 and we were really pleased with that performance and what we're going to keep investing in the development of the health vertical. Commercial, brand new right just launched and still very modest, but really contribution across the new verticals excited about both the revenue momentum, but just as much by seeing the variable marketing dollar contribution from those verticals now and obviously the potential in the new year. So...

John Wagner -- Chief Financial Officer

So Mayank, on the guide I'd make these comments, which is -- it is consistent guidance philosophy with last year. Obviously, last year was a great year for us and we had a series of very strong quarters that was really because of the momentum that was building in the business with our guides. Our goal is always to try to give you the insight that we have into the year and into the quarter.

That said, with regard to kind of the new verticals. Obviously, the new verticals we expect those to grow faster than autos in the near term, and as well as in the longer term. And then with regard to kind of the very newest verticals something like healthcare, we've said before that we don't figure new initiatives into our guidance until such time that we have a proof point that we have a basis in order to figure them in. We now have data points within Q4 with regard to health. We start to consider health in terms of the full year guide as well as its impact on Q4. So some contribution from those new verticals is built in.

Mayank Tandon -- Needham -- Analyst

Got it. That's helpful. And then as a follow-up sorry, John, if you already addressed this, but the seasonality in 1Q, typically, you get a big spike in terms of growth. Obviously you're coming off a much larger base from 4Q, but just wanted to understand if there is something else going on in terms of 1Q, in terms of budgets or is that just a function of the law of large numbers suggesting that your growth would be more moderate versus prior years from 4Q to 1Q.

John Wagner -- Chief Financial Officer

Yeah. If you heard me talk about the seasonality, I always like to say the seasonal patterns are very consistent except when they're not, right. So we often embrace those seasonal patterns, especially with new verticals and growth opportunities that we've seen in the past that can affect that. Traditionally, Q1 is a very big sequential growth quarter for us. Clearly in 2019, we also had a great second half of the year. So, we captured an awful lot of growth in the second half of the year. And in general, we're pleased with the Q1 guide that we're giving that has top line growth at the midpoint of -- in the high 40s, I think 49% at the midpoint. So we are still seeing a lot of growth in the first half of the year and really carrying on that momentum that we saw in the back half of 2019.

Mayank Tandon -- Needham -- Analyst

Sure. Okay, great, thank you so much.

Operator

Your next question comes from Michael Graham from Canaccord. Your line is open.

Michael Graham -- Canaccord -- Analyst

Thank you. Hey, I just wanted to ask a couple -- one big picture one, first in, then one more on the guidance. But I was looking through the presentation you posted on your website, which was pretty interesting and you made a point of highlighting that only a small portion of sort of the digital spend that you're enjoying is coming really from premium -- from commissions paid right now from sort of the distribution spend. And I'm just wondering as you look out over the next year or two, do you think that some of the technology things that you're working on and start to unlock some of the commission dollars a little more aggressively, but I think heretofore a lot of the growth is really been coming from just shift of some of the advertising spend to digital.

And then, I just wanted to also ask about visibility from some of the major carrier partners like this year relative to past years. How are some of the conversation has been and how sort of confident are you in the year here based on sort of conversations relative to prior years? And thank you.

Seth Birnbaum -- Chief Executive Officer and Co-Founder

Sure. Thank you, Mike. Maybe I'll take the second question first. Obviously, we're very confident in the year and bullish on our prospects. Just to echo what we said on the call as well. In terms of the investments in distribution, they're not limited to just incremental sales heads to drive up provider of both carrier and agent coverage, we are also investing in technology platform as you say, in fact to drive more of the commission dollars that we see from agents today, we do expect an increasing percentage of the agents, which is marketing spend, which is derived from the commission stream to be directed at EverQuote specifically in online marketplaces more broadly.

Longer term sort of over the year, we're confident that our model of working with agents gives us the strength of our data and technology strategy then combined with the product and sales strength of our partnership agents. We also believe that within certain verticals and segments, there may be an opportunity to partner with insurance providers essentially more directly to tap into that commission model. And so we are bullish on seeing that commission portion of the spend increase over time significantly, and obviously, Michael, it's huge, so it's just a massive opportunity for us and we are investing in that.

John Wagner -- Chief Financial Officer

And on the second part Michael, I'd say. Certainly, our guidance is partially a result of scenario analysis that we do and that includes bottoms-up as well as kind of a top-down ways of looking at the business. On the bottoms-up side, we get feedback from our sales and business development group as to what the carriers, especially our major carriers are doing. So we do build that with the large carriers have been at least holding share with us and in many cases, growing even their share with us.

I think our top 10 carriers in Q4 roughly double that. So our top 10 carriers as a group is roughly responsible for twice as much revenue as the top 10 carriers were in Q4 of 2018. So, we're seeing nice growth, but we are build into our guidance the feedback, both in the short -- shorter term, as well as the longer-term on what our sales folks say that the carriers are doing what feedback they're giving on their spend.

Michael Graham -- Canaccord -- Analyst

Okay, nice. Thank you very much.

Operator

Your next question comes from Ralph Schackart from William Blair. Your line is open.

Ralph Schackart -- William Blair -- Analyst

Hi, good afternoon. Seth, I think in the prepared remarks you talked about the non-auto hitting a flywheel. Just curious, is that a combination of factors come together? Anything specific you would call out in Q4? And then maybe one follow-up, you talked about investing in sales and customer service teams. Just curious is that sort of recurring investment or is there some more pronounced investment in 2020? Thanks.

Seth Birnbaum -- Chief Executive Officer and Co-Founder

So again let's take the questions out of order, it's a more pronounced investment, we're leaning in on the opportunities inherent. In terms of the non-autos hitting the flywheel, one of the best examples of -- and again part of the Q4 strength, we're seeing really good execution in the new verticals, not just auto, but just as a good example, Ralph, I think it speaks to your question, if not right, we'll take it again, but one of the key flywheel elements is, for example, the strength of our traffic teams.

So the same type of traffic technology, data, training expertise that we've leveraged to grow the autos, quote request volume can be efficiently leveraged in the new verticals, and we saw that in the growth of volume of consumer quote request in the new verticals in Q4 and obviously it contributed to both revenue and variable marketing dollar expansion and so that is just an example of where we can leverage componentry of our marketplace, the flywheel, if you will, to acquire more consumers that obviously fuels provider adoption, which we also saw in the new verticals, and we expect to continue in 2020. So those are just sort of perhaps two examples to answer your question again. If I haven't gotten to and happy to take another run at it Ralph.

John Wagner -- Chief Financial Officer

Ralph, I'll just add a little bit of -- Ralph, I can add a little bit of commentary on the investments we're making and how we think about it for 2020 and a little commentary on our adjusted EBITDA in Q4. We've always been clear that we are growing the business and we're running the business for growth as well as increased profitability. When we have a strong quarter in terms of variable marketing dollars, it's often a challenge to be able to take those dollars and invest from in the business in a way that sensible.

Candidly, if we had the opportunity in Q4 to invest some of the EBITDA dollars back in the business in terms of the large market opportunity that we have, we would have. But it takes lead time in order to deploy those dollars sensibly. So, part of our guide in 2020 is really focused on making sure that we lay the foundation for our growth in 2021 and beyond with really sensible investments in what is a really big market opportunity that we'll be making in 2020.

Ralph Schackart -- William Blair -- Analyst

That's helpful. Thanks, John. Thanks, Seth.

Seth Birnbaum -- Chief Executive Officer and Co-Founder

Thank you.

Operator

[Operator Instructions] Your next question comes from Doug Anmuth from JPMorgan. Your line is open.

Dave Lee -- JPMorgan -- Analyst

Hey, this is Dave Lee on for Doug. Thanks for taking our questions. First one for John, as a follow-up to your comment around 2020 growth being driven by more quote request. Could you talk about the drivers of the growth relative to what you saw in 2019? Are you anticipating ongoing opportunity and improving conversion or are you finding ways to acquire more traffic into the channels that you have or exploring newer channels?

And then in terms of big picture advertising environment changes, how do you anticipate relative focus changes like CCPAs [Phonetic] and limiting cookies on browsers, that limit target targeting ability affecting your ability to acquire traffic?

John Wagner -- Chief Financial Officer

So I'll go ahead and start the answer, and I'll let Seth jump in as well. So, I guess the most important thing when we think about traffic acquisition it's that we do not manage necessarily to any type of conversion rate. Ultimately, we will bid all traffic sources to value. And so in many ways conversion is considered in the bid. The expected conversion of different traffic sources. 2019 was marked by a year in which we move toward more, I would say higher performing traffic in terms of conversion, as well as we saw some conversion advances internally as well, just in terms of how we are always iterating and focusing on how consumers come through our workflows.

So, there was a combination in 2019, but ultimately our growth in 2019 was driven by the traffic side of the business and like any two-sided marketplace, you are always going to strive to make sure that you equal both sides. So in 2019, we drove traffic very successfully. It was a fairly broad-based traffic growth. We saw some reduction in revenue per quote request and that is only natural, when you bring a lot of volume into a marketplace or into an auction kind of into an auction dynamics, but in many ways that represents almost like a loaded spring in terms of the ability over time to see revenue per quote request go up over time. We think that is a future lever. As we think of 2020, we do think of revenue growth being, driven by quote request volume first and foremost. And again, when you're driving this much volume, it's natural to see some compression in revenue per quote request. Seth, you want to comment?

Seth Birnbaum -- Chief Executive Officer and Co-Founder

Sure. So let me just again -- hi Dave, it's Seth. Thanks again. So even in our sort of, let's say, older traffic sources or marketing channels like search and display, we expect and see a lot of growth opportunities and we saw that -- it certainly through 2019 and we expect to continue. There is still plenty of upside in our older sources. We also expect to add traffic from newer sources, those are things like the verified partner program, which we mentioned was just still a small minority of our overall traffic, but growing and have a ton of opportunity out in the landscape.

Ditto with social, social grew well certainly in the back half of 2019, but it's still a very small component of our overall traffic. And we expect that there is tons of marketing opportunities across the verticals to grow those newer channels as well. As far as some of the changes, CCPA, we believe right as an industry that will adopt and we factored in any potential impact although modest, but we'd expect if at all into the guidance for the year and so again, I'm prepared for that.

As far as the changes to the browser technology, that's predominantly focused to third-party cookies, where we have literally nearly no reliance at all. But even first-party cookies is a very small sub-5%, maybe even sub-3% of our overall traffic. Has any kind of reliance on first -- even first-party cookies, so we don't have a tremendous dependence.

And remember our traffic model overall is really diversified and we are increasing our investment in integrations, consumer experience distribution for the very reason that it allows us to access an ever-broadening array of consumer traffic to find those intentful insurance shoppers. So, really bullish on the year to see continued momentum in traffic and obviously the opportunity to attach incremental distribution over the course of the year or two, as we lean in investments in that part of the marketplace as well.

Dave Lee -- JPMorgan -- Analyst

Great, thank you.

Operator

We have no further questions. I would now like to turn the call back over to management for closing remarks.

Seth Birnbaum -- Chief Executive Officer and Co-Founder

Thank you so much. We are really very pleased to be an important part of the insurance industry shift online, we're grateful deeply to fantastic partners, all of our customers, consumer and provider, our great team, all of our investors for supporting our growth and our journey. I am genuinely, we all are and we're excited by our vision for 2020 and beyond and we really look forward to continuing to update you on our progress. Thank you again, and thank you, especially for joining us on such a hectic day in the market. Look forward to speaking again as we progress. Take care.

Operator

[Operator Closing Remarks]

Duration: 43 minutes

Call participants:

Brinlea Johnson -- Investor Relations

Seth Birnbaum -- Chief Executive Officer and Co-Founder

John Wagner -- Chief Financial Officer

Jed Kelly -- Oppenheimer -- Analyst

Andrew Boone -- JMP Securities -- Analyst

Mayank Tandon -- Needham -- Analyst

Michael Graham -- Canaccord -- Analyst

Ralph Schackart -- William Blair -- Analyst

Dave Lee -- JPMorgan -- Analyst

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