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EverQuote Stock Surges 30% on Strong Third-Quarter Earnings

By Joe Tenebruso - Nov 5, 2019 at 4:30PM

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The insurance quote provider delivered a surprise profit and boosted its outlook for the year ahead.

Shares of EverQuote ( EVER -1.19% ) soared as much as 30% on Tuesday after the online insurance marketplace delivered third-quarter results that bested Wall Street's expectations.

EverQuote's revenue surged 61% year over year to $67.1 million, driven by an 81% jump in quote requests. That was well above analysts' forecasts for revenue of $58.3 million. 

A person pointing to an upwardly sloping line

 Image source: Getty Images.

EverQuote is enjoying robust growth across its business segments. The company's automotive insurance business grew revenue by 60%, to $57.3 million, while its other insurance segment -- which includes home, life, and health insurance -- saw revenue climb 68%, to $9.8 million.

EverQuote also delivered its first net profit on the basis of generally accepted accounting principles (GAAP). GAAP net income came in at $200,000, or $0.01 per share, compared with a net loss of $3.8 million, or $0.15 per share, in the year-ago quarter. Analysts had anticipated a net loss of $0.08 per share. 

CEO Seth Birnbaum said in a press release: "We are pleased to report a strong quarter of revenue growth and variable marketing margin expansion, as we continue to scale the business across all verticals while achieving our first quarter of GAAP profitability as a public company. The strength of our data-driven marketplace, coupled with strategic investments in driving traffic, improving the customer experience, and expanding engagement with our insurance provider network, delivered a strong third quarter."

Looking ahead

These strong results prompted EverQuote to raise its full-year guidance. Management now expects:

  • Revenue of $242 million to $244 million, up from a prior forecast of $215 million to $219 million.
  • Variable marketing margin -- essentially, revenue less advertising costs -- of $70.5 million to $71.5 million, up from $62.5 million to $64.5 million.
  • Adjusted earnings before interest, taxes, deprivation, and amortization (EBITDA) of $6.1 million to $7.1 million, up from $1 million to $2.5 million.

Better still, EverQuote sees long runways for growth, as requests for insurance quotes continue to shift online.

"We continue to diversify our business with growth in our home and renters, life, and health insurance verticals, as well as the launch of commercial, to capitalize on the massive market opportunity," Birnbaum said.

Analyst upgrades

Several analysts released bullish commentary on EverQuote's stock following its third-quarter report.

Bank of America Merrill Lynch's Nat Schindler upgraded the stock from underperform to buy. He also boosted his target price from $16.50 to $35. Schindler cited accelerating growth in EverQuote's consumer traffic and improving margins as reasons for the upgrade. 

JMP Securities' Ronald Josey reiterated his outperform rating on EverQuote's shares and raised his price target from $20 to $35, citing the company's higher-than-expected profits and guidance. 

The two analysts' price targets represent potential upside of approximately 25% from EverQuote's current share price of around $28.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

EverQuote, Inc. Stock Quote
EverQuote, Inc.
EVER
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