Steve Yi: Yeah. And Mike, I would say that, I think efficiency is in our DNA as a Company and as a bootstrap Company it’s been profitable since of the very beginning and we take that very, very seriously. And so I think we’ve managed pretty well through the hard market. We’re going to be seeing a bit of investment over the course of this year. And I would say that some of that is going to be capacity and some of that is going to be in kind of core tech product analytics. But our guidance for the year is on limited dollar overhead growth for the full year ’24 as compared to ’23. And I think we’ve kind of — we’ve indicated Q2 should be up $500,000 versus Q1 and would expect probably a bit of increase in Q3 relative to Q2 and Q4 relative to Q3 as we start to hopefully reinvest as we gain more confidence.
Michael Zaremski: And Pat do you — as a last follow-up, is there any way you could size up high level like what percentage of your expense base is fixed versus variable?
Patrick Thompson: That’s not something we disclose, Mike. The one thing I would say is that, the vast majority of our headcount is included in the operating expenses category. And so we would, deem it to be fixed or semi, kind of semi-fixed. Obviously, there are some roles in there that, probably are variable at some point, which is, hey, if you’ve got, you know, a bunch more business happening, do you need another account manager or something like that. But, you know, I’d say that the vast majority of our headcount I would deem is being fixed.
Michael Zaremski: Okay. Thank you.
Operator: Our next question comes from the line of Cory Carpenter with JPMorgan. Please go ahead.
Cory Carpenter: Hey, good afternoon. Thank you. Steve, could you just give us a sense of how close the wave one carrier is back to normal, fully normalized spending levels? And then if we think of, I’ll call them the wave two or wave three carriers, how much are they contributing? How material was that to 1Q and how do you expect them to ramp in 2Q? Thank you.
Steve Yi: Yeah. So, Cory, if I heard your question correctly, I think you’re asking about, I think the small number of carriers who right now are getting close to normal levels. And I think I just answered your question by saying that I think the small number of carriers who’ve achieved great adequacy are really starting to reinvest in growth, are actually getting close to normal levels. And so we’ve been, again surprised by that very pleasantly so. And again, I think that’s really attributable to the fact that there’s been three years of muted growth investments and the industry is really ready to start reinvesting in growth, once each of the carriers in the industry achieve rate adequacy. In terms of color into what that next wave looks like, I mean, we’re certainly engaged in positive discussions with all of the other carriers.
I think that one thing that we’re seeing that’s a little bit different than the last hard market cycle is just the sheer number of other carriers, right, who typically haven’t been big players within the online direct-to-consumer space. And just how far advanced they are versus when they — when we emerge from the last hard market. And what I mean by that is just in terms of the level of technical integrations that we have with them, their understanding of how to measure expected lifetime value, how to match that to media costs, to achieve target return on ad spend, the value of programs to gain additional monetization from visitors like our carrier publishing program, and the strong adoption we got of that program during the hard market period.
And even with the personnel that are within the marketing departments of a lot of these carriers, and just the level of sophistication they have. And so the timing of the second tier or the next wave of carriers to come on, I think really will be dictated by how quickly they achieve rate adequacy. I think you and I have the same access to that data. Again, I’m not going to go out and say that they’re going to return ahead of getting profitability where they need to be. It was a tough cycle. But when they come back, really what we’re excited about is just how many more carriers actually, in a good place to really scale their spend with us. And I think that that really bodes well for this vertical for us over the next couple of years, again, of what we are expecting to be sort of the opposite of the hard market cycle, which is the soft market cycle where a number of carriers are really aggressively spending in growth and in marketing in order to gain market share.
And we’re excited about working with just a growing number of carrier partners to really realize and help them realize their growth perspectives.
Cory Carpenter: Great. Thank you very much.
Operator: Our next question comes from the line of Tommy McJoynt with KBW. Please go ahead.
Thomas McJoynt: Hey, good afternoon. Thanks for taking my questions. With so much auto consumer shopping going on, you mentioned that carriers are certainly thinking pre-hard about lifetime values of customers. Can you talk about some of the advantages that MediaAlpha has over its competitors in terms of helping carriers evaluate this really important input, as carriers are looking to kind of seek out new customers? Basically, just what is the value proposition that MediaAlpha goes to market to its carriers?
Steve Yi: Sure. I think first is the measurability. All the media in our marketplace is performance media. And so it’s expected to and it’s tied back to an actual sale. So at the end of the day, every dollar spent in our marketplace is fully accountable and again tied back to a policy sale to justify media pricing. And so in addition to being a performance-based marketplace, right, it’s really the scale of our marketplace. Because in terms of carrier spend and our ability to support that, as the marketplace, the carrier spend here, there’s oftentimes two to three times that of any other marketplace. And that additional data really allows the carriers to get a much better view into the expected lifetime value, because there’s just so much data out there for every consumer segment that they’re targeting.
And so what that helps is get — enables them to get a much more accurate bearing on the estimated lifetime value of all the customers that they’re acquiring in our channel, which then allows them to have a much better ROI or return on ad spend, again across 300 to 400 publishers within our marketplace. And in a time like this, when advertisers are really looking to scale up, right, the granularity that’s really enabled a massive scale and transparency that we have in our marketplace is really what’s going to enable carriers to scale up, right, while keeping their efficiencies at target levels.
