They’ll be tied to sort of this idea of maintaining adjusted EBITDA margin that is above the pre-downturn level that we’ve talked about as a goal and pre-downturn levels were like 5.5% to 6%, and where they were in Q1, which is around 8.25% in Q1, and we’ll manage them in a disciplined way. We’re adding modest incremental investment as we progress through the year on the OpEx side, positions for future growth, but at the same time, we’ll be continuing to make sure we maintain that EBITDA margin and improving it as we get playing a performance in the second half of the year.
Operator: Your next question comes from the line of Cory Carpenter with JPMorgan.
Cory Carpenter: Great. Thanks for the questions. I have two. First, just hoping you could talk more about the incremental investments that you are planning on making, what may be a little more specificity in what you plan on investing in? And then secondly, the home vertical growing 35%, if you could just talk about what you’re seeing there and how you think about it sustainability of that growth going forward. Thank you.
Jayme Mendal: Sure, thanks Cory. So as Joseph mentioned the discipline and expense management will persist, but as we get comfortable with our adjusted EBITDA levels, we will begin ramping some targeted investments back in over, as we progress through the course of the year. Like two areas I’d highlight for you, Cory, probably not exhaustive, but there’ll be some concentrated investment in the areas of data science, ML and AI, where we have applications across the business from traffic to improving carrier performance, patient performance. So that’ll be one area of investment. Another is going to be in continuing to extend our advantage with local agents. Over the last year, we’ve spent a lot of time with the local agent customer base.
I think we’ve got a pretty good sense of their needs and have begun making investments in improving our existing products and developing new products to better meet their needs to both sort of deepen and expand our relationships with that agent base. So that’d be another area where we’ll direct some resources. To your second question about homeowners, we had home, record revenue in home in the first quarter. We’re starting to see some improvement in the homeowners market from an underwriting profitability standpoint. It was similarly challenged to auto. I think it’s gone through a period of a lot of cat losses, but in the first quarter of this year, carriers produced better underwriting results and that was helped by a period of relatively light cat losses.
So the growth has been healthy. We’ve continued to maintain focus on it as we’ve stepped back from some of our previous vertical markets and shifted some of that focus to home, and we expect home to continue to grow over the course of the year. I’ll note that the comps will become a bit higher as we progress through the year, but we do expect to continue to grow that vertical as we progress through 2024.
Operator: Your next question comes from the line of Zach Cummins with B Riley Securities.
Zach Cummins: Hi, good afternoon. Thanks for taking my questions and congrats on the strong results here in Q1. I really just had a question around the ramp up in advertising expenses as you start to see improvements in demand. Can you talk about some of the pricing that you’re seeing in the ad environment and maybe which channels you could be prioritizing versus others as you start to see carrier demand really ramp up?
Jayme Mendal: Yes. So we, as carrier demand has come back, so too has some competition in the advertising environment, particularly in the more vertical specific channels, like Pay Search as an example. And so Zach, the way we’re always managing the business to maximize our variable marketing margin dollars, and so where we think we can get incremental volume or incremental dollars, we’ll bid into that, which may cause VMM margin percentage compression, but results in more variable marketing margin dollars for us. So as we’ve seen the advertising environment become more competitive, we’ve seen a little bit of compression in VMM, but it’s more than made up for in, the cost increases are more than made up for by volume and pricing.
With the higher pricing, what that has changed from a channel standpoint is it now makes insurance as a category more competitive in some of the more broad based channels. So channels that aren’t industry specific display or social or things like that have really come back to life in the first part of the year. They may run at slightly lower margin, but there’s a lot of incremental sort of volume and dollars to go get. And so we’ve been able to reactivate a number of those channels as monetization has come back over the first four months of this year.
Joseph Sanborn: And maybe I could add just to be, and contact some sort of VMM margins to think about what it means for this as we progress through the year. So we had Q1, was just under 34%, we had sort of as expected was down from the levels we saw in Q4, which was an environment that was very depressed. As we think about — as we progress into Q2, you see our guide implies about 31% for VMM margin. We think it will be sort of in the low 30s for the year-on-year balance, and I guess sort of three factors that give you this sort of help understand what’s driving it. One is first and foremost advertising costs. As we get auto recovery, the costs around acquiring advertising is rising. There’s more demand, and that’s getting up costs for the advertising.
The second, which is driving it, from our point of view, especially in Q2, is we’re ramping our traffic. You’re effectively testing back into certain channels. And in doing that, it’s less efficient until you scale them, so that part is impacting Q2. And the third is just at a high level from the business. As we get more, we have a relatively higher VMM margin in agency than enterprise. Generally speaking, as we’ve seen the ramp in enterprise tariff, Q1 driving, being driven by enterprise tariff ramping at a much higher rate, that is resulting in the mix shift to tariff, which is bringing down the VMM margin a hole in the business.
Operator: Your next question comes from the line of Greg Peters with Raymond James.
Unidentified Analyst: Yes, hey, good afternoon. This is Sid on for Greg. Just with the recovery and the auto carriers, it doesn’t feel like they’ve fully restored their budgets, but your second quarter guidance seems to imply revenue near the quarterly run rate you were achieving in 2021. So just curious if you could discuss how, you view your market share and if it’s fair for us to assume that it’s increased the last couple of years.
