Jayme Mendal: Yes, so we are today the largest digital P&C insurance marketplace. You just look at that by revenue. Now, over the last couple of years, we’ve been in a very constrained budget environment. In that environment, we’ve been mostly focused on maximizing profitability and improving the value we’re delivering to our customers, whether that’s through better targeting, higher-end traffic. In some cases, that means actually pulling back on volume. But even still we remain the largest digital insurance marketplace in P&C. And so as we do that, we expect, as we continue to make these investments, we expect our position to continue to strengthen. Do you want to talk about the relative like benchmarking in terms of revenue versus historical periods?
Joseph Sanborn: Yes, sure. So I mean, when you think about auto and think about auto revenues, our peak was Q1 of 2023 for auto, not for total revenue for auto. So remember, we had the health business prior to June of ‘23. So look at just auto was just under $90 million in Q1 of ‘23. And if you look at that, where our Q2 guide, and what’s implied by that Q2 guide, we’re sort of at or near the peak levels implied in Q2 that we start in Q1 of ‘23. So we look to the second half for the year, we believe that auto recovery, we’re still very bullish on the outlook for auto recovery. I think what we’re highlighting now is what exactly will happen in the second half of ‘24 depends on factors we don’t yet know. So one is, other carriers coming to the market, some carriers are, a handful of carriers have been more aggressive in getting rate increases.
They’ve been aggressively leaning into term market in Q1 and expect that to continue in Q2. As you get to the end of Q2, for those large, some of these handfuls are very large carriers have leaned in aggressively. There’re relatively few states they can open at this point in our marketplace, that have opened so many. The state can remain in some of these very large states with more, relatively more challenging regulatory environments. And how windows will open is an open question. Some are saying it won’t be in a meaningful way till 2025. So I think that’s a piece to think about it. The second piece I’d say, if you look at the second half of the year, we’re expecting a year, a strong year-on-year growth from the second half of ’23 to second half of ‘24, I think the thing we highlighted in response to Ralph’s question is, how will the seasonality play out?
And I think as we look at it right now, we’ve got a very front-end loaded recovery, that’s what we expected. So it’s hard to know the normal sequential increase you see from Q2 to Q3 will apply based on what we are seeing today, just given the environment. But we’re very bullish in the long term view, and as Jayme said, trying to measure it. We are the largest P&C marketplace today, but as you look at measuring market earnings, we’ll be talking about more of that over time, as we get to a market where there’s more predictability in the market, and you’re seeing more broad-based of tariffs coming in.
Operator: Your next question comes from the line of Jason Kreyer with Craig-Hallum Capital Group,
Carl Bartyzal : Thank you. This is Carl Barty is on for Jason. So just to start following up on some of the commentary that you had agents, just kind of curious what you’re seeing there, what maybe the pockets of strength, and if there’s any green shoots that you’re seeing from captive carriers that would indicate the upswing in the agent channel.
Jayme Mendal: Sure. So our agent business performed well in the first quarter. We did see the return of some carrier subsidies. Now, it’s been happening in a fairly targeted way, right, similar to how we’ve seen direct carriers kind of re-enter the market state by state. We’re seeing subsidy dollars re-enter the market state by state. But overall it’s been a favorable trend. Going forward, as I mentioned earlier, we’ve spent a lot of time with agents over the last year. I think we’re going to continue, it’s an area we’ll continue to invest to extend our advantage. I think we have an opportunity to grow the agent base specifically in that independent agent channel and deepen our relationships with agents, so more spend for agent, more sticky relationships by improving the existing products and services we’re offering them as well as extending into sort of adjacent products and services to help them solve for their growth needs.
Carl Bartyzal : Perfect. Thanks. And then just second one for me quick. Just wanted to follow up on kind of some of the comments earlier about some of this new bidding technology, some of the things you guys are doing on the tech side. As we’ve seen VMM as the Q2 guide implies kind of getting back towards where it kind of has been historically. I mean do you think that there’s any upside to historic levels particularly as you continue to roll out these tech improvements?
Jayme Mendal: Yes, I wouldn’t over index any one quarter on the VMM front. Joseph explained some of the factors that have contributed to the VMM compression on a percentage basis over the one quarter to the next. I think over a longer period of time, certainly some of the investments we are making, particularly in our bidding platform have structurally improved the VMM of the business. We’re now able to take more data at more granular level in real time about a consumer, about our distribution, about the auctions in which we are competing, and apply ML more effectively to generate profit maximizing bids, and that has been responsible for just a structural expansion of the VMM as a percentage. Right now, we’re in a period of time where the advertising landscape is in transition.
We’re testing back into new channels. Our distribution mix is shifting, and so there’s a bit of fluctuation, but we continue to expect our VMM levels to settle out probably somewhere between where they were at their peak and somewhere where they’ve been historically, and the structural increase there largely can be attributed to some of the bidding technology that we’ve rolled out.
Joseph Sanborn: Yes. Maybe I can just expand on the numbers more specifically. So we talked about this in our prior call on some of our public comments last quarter, but when you look at 2023, you had VMM margins that had lots of things going on, puts and takes of DTCA, not DTCA. You had also the very depressed environment where we were able to get advertising relatively cheaply. What we did say, and if you look back on those comments, we said normalized VMM margin just for the marketplace, including DTCA was sort of high 20s, low 30s starting last year. We had some improvement as we progressed through the year in the normalized marketplace. And what we said going into this year is we expected it would settle off between that 30 to 35 range, and we said Q1 would be just under 34, it landed just under 34.
