0001818383FALSE00018183832024-07-312024-07-31

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_____________________________
FORM 8-K
_____________________________
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 31, 2024
_____________________________
MediaAlpha, Inc.
(Exact Name of Registrant as Specified in Its Charter)
_____________________________
Delaware001-3967185-1854133
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)
700 South Flower Street, Suite 640
Los Angeles, California
90017
(Address of Principal Executive Offices)(Zip Code)
(213) 316-6256
(Registrant’s telephone number, including area code)
(Not Applicable)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A common stock, $0.01 par valueMAXNew York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company     o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    o


ITEM 2.02 – Results of Operations and Financial Condition.
On July 31, 2024, MediaAlpha, Inc. (“MediaAlpha”) issued a press release and an accompanying shareholder letter announcing its financial results as of and for the second quarter ended June 30, 2024, and its financial outlook for the third quarter of 2024. Copies of the press release and shareholder letter are furnished as Exhibit 99.1 and Exhibit 99.2, respectively, to this Form 8-K and are incorporated by reference herein.
This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
MediaAlpha refers to non-GAAP financial information in the press release and shareholder letter. A reconciliation of these non-GAAP financial measures to the comparable GAAP financial measures is contained in each document.


ITEM 9.01 – Financial Statements and Exhibits.
(d) Exhibits
Exhibit
No.
Description
99.1
99.2
104Cover Page Interactive Data File (embedded within the Inline XBRL document).


SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
MediaAlpha, Inc.
Date: July 31, 2024By:/s/ Jeffrey B. Coyne
Name:Jeffrey B. Coyne
Title:General Counsel & Secretary

Exhibit 99.1
MEDIAALPHA ANNOUNCES SECOND QUARTER 2024
FINANCIAL RESULTS
•Revenue of $178 million, up 110% year over year
•Transaction Value of $322 million, up 156% year over year
•Transaction Value from Property & Casualty up 320% year over year to $255 million
•Transaction Value from Health up 9% year over year to $55 million
Los Angeles, CA (July 31, 2024) – MediaAlpha, Inc. (NYSE: MAX), today announced its financial results for the second quarter ended June 30, 2024.
“We had an outstanding second quarter, underscoring the strength of our business model and solid execution. Our quarterly performance was the strongest in our history, with Transaction Value and Adjusted EBITDA reaching record levels,” said MediaAlpha co-founder and CEO Steve Yi. “Looking ahead, we expect continued strong growth and market share gains as the recovery in our Property and Casualty insurance vertical builds momentum.”
Second Quarter 2024 Financial Results
•Revenue of $178.3 million, an increase of 110% year over year;
•Transaction Value of $321.8 million, an increase of 156% year over year;
•Gross margin of 17.8%, compared with 16.2% in the second quarter of 2023;
•Contribution Margin(1) of 18.9%, compared with 19.5% in the second quarter of 2023;
•Net income was $4.4 million, compared with a net loss of $(20.0) million in the second quarter of 2023; and
•Adjusted EBITDA(1) was $18.7 million, compared with $3.6 million in the second quarter of 2023.

(1)A reconciliation of GAAP to Non-GAAP financial measures has been provided at the end of this press release. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.”



Financial Outlook
Our guidance for the third quarter of 2024 reflects a continuation of the recent trends in customer acquisition spending that we have seen in our P&C vertical. As a result, we expect Transaction Value in our P&C insurance vertical to be 40% to 45% higher than Q2 2024 levels. We expect third quarter Transaction Value in our Health vertical to grow year over year at a rate similar to Q2 2024.

For the third quarter of 2024, MediaAlpha currently expects the following:
•Transaction Value between $415 million - $435 million, representing a 290% year-over-year increase at the midpoint of the guidance range;
•Revenue between $240 million - $255 million, representing a 232% year-over-year increase at the midpoint of the guidance range;
•Adjusted EBITDA between $22.0 million and $24.0 million, representing a 541% year-over-year increase at the midpoint of the guidance range. We are projecting Contribution less Adjusted EBITDA to be flat to slightly up compared with Q2 2024 levels.
With respect to the Company’s projection of Adjusted EBITDA under “Financial Outlook,” MediaAlpha is not providing a reconciliation of Adjusted EBITDA to net income (loss) because the Company is unable to predict with reasonable certainty the reconciling items that may affect net income (loss) without unreasonable effort, including equity-based compensation, transaction expenses and income tax expense. These reconciling items are uncertain, depend on various factors and could significantly impact, either individually or in the aggregate, the corresponding GAAP measures for the applicable period.
For a detailed explanation of the Company’s non-GAAP measures, please refer to the appendix section of this press release.




Conference Call Information
MediaAlpha will host a Q&A conference call today to discuss the Company's second quarter 2024 results and its financial outlook for the third quarter of 2024 at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). A live audio webcast of the call will be available on the MediaAlpha Investor Relations website at https://investors.mediaalpha.com. To register for the webcast, click here. Participants may also dial-in, toll-free, at (888) 330-2022 or (646) 960-0690, with passcode 3195092. An audio replay of the conference call will be available following the call and available on the MediaAlpha Investor Relations website at https://investors.mediaalpha.com.

We have also posted to our investor relations website a letter to shareholders. We have used, and intend to continue to use, our investor relations website at https://investors.mediaalpha.com as a means of disclosing material nonpublic information and for complying with our disclosure obligations under Regulation FD.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including without limitation statements regarding our expectation of continued strong growth and market share gains as the recovery in our Property and Casualty insurance vertical builds momentum, and our financial outlook for the third quarter of 2024. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “would,” and “outlook,” or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements.
There are or will be important factors that could cause our actual results to differ materially from those indicated in these forward-looking statements, including those more fully described in MediaAlpha’s filings with the Securities and Exchange Commission (“SEC”), including the Form 10-K filed on February 22, 2024 and the Forms 10-Q filed on May 2, 2024 and to be filed on or about August 1, 2024. These factors should not be construed as exhaustive. MediaAlpha disclaims any obligation to update any forward-looking statements to reflect events or circumstances that occur after the date of this press release.


Non-GAAP Financial Measures and Operating Metrics
This press release includes Adjusted EBITDA, Contribution, and Contribution Margin, which are non-GAAP financial measures. The Company also presents Transaction Value, which is an operating metric not presented in accordance with GAAP. See the appendix for definitions of Adjusted EBITDA, Contribution, Contribution Margin and Transaction Value, as well as reconciliations to the corresponding GAAP financial metrics, as applicable.
We present Transaction Value, Adjusted EBITDA, Contribution, and Contribution Margin because they are used extensively by our management and board of directors to manage our operating performance, including evaluating our operational performance against budget and assessing our overall operating efficiency and operating leverage. Accordingly, we believe that Transaction Value, Adjusted EBITDA and Contribution Margin provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management team and board of directors. Each of Transaction Value, Adjusted EBITDA and Contribution Margin has limitations as a financial measure and investors should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP.

Contacts:
Investors
Denise Garcia
Hayflower Partners
Denise@HayflowerPartners.com



MediaAlpha, Inc. and subsidiaries
Consolidated Balance Sheets
(Unaudited; in thousands, except share data and per share amounts)

June 30,
2024		December 31,
2023
Assets
Current assets
Cash and cash equivalents$28,659 $17,271 
Accounts receivable, net of allowance for credit losses of $684 and $537, respectively
90,696 53,773 
Prepaid expenses and other current assets3,340 3,529 
Total current assets122,695 74,573 
Intangible assets, net22,797 26,015 
Goodwill47,739 47,739 
Other assets4,994 5,598 
Total assets$198,225 $153,925 
Liabilities and stockholders' deficit
Current liabilities
Accounts payable$90,604 $56,279 
Accrued expenses11,808 11,588 
Current portion of long-term debt8,829 11,854 
Total current liabilities111,241 79,721 
Long-term debt, net of current portion158,023 162,445 
Other long-term liabilities6,931 6,184 
Total liabilities$276,195 $248,350 
Commitments and contingencies
Stockholders' (deficit)
Class A common stock, $0.01 par value - 1.0 billion shares authorized; 54.7 million and 47.4 million shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively
547 474 
Class B common stock, $0.01 par value - 100 million shares authorized; 11.6 million and 18.1 million shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively
116 181 
Preferred stock, $0.01 par value - 50 million shares authorized; 0 shares issued and outstanding as of June 30, 2024 and December 31, 2023
— — 
Additional paid-in capital494,995 511,613 
Accumulated deficit(520,055)(522,562)
Total stockholders' (deficit) attributable to MediaAlpha, Inc.$(24,397)$(10,294)
Non-controlling interest(53,573)(84,131)
Total stockholders' (deficit)$(77,970)$(94,425)
Total liabilities and stockholders' deficit$198,225 $153,925 



MediaAlpha, Inc. and subsidiaries
Consolidated Statements of Operations
(Unaudited; in thousands, except share data and per share amounts)
Three Months Ended
June 30,		Six Months Ended
June 30,
2024202320242023
Revenue$178,274 $84,772 $304,923 $196,402 
Costs and operating expenses
Cost of revenue146,589 71,006 249,558 164,268 
Sales and marketing6,316 6,707 12,112 13,701 
Product development5,052 5,061 9,415 10,229 
General and administrative13,824 18,070 24,973 33,825 
Total costs and operating expenses171,781 100,844 296,058 222,023 
Income (loss) from operations6,493 (16,072)8,865 (25,621)
Other (income) expense, net(1,808)(116)(1,817)1,265 
Interest expense3,751 3,874 7,596 7,450 
Total other expense, net1,943 3,758 5,779 8,715 
Income (loss) before income taxes4,550 (19,830)3,086 (34,336)
Income tax expense130 150 157 228 
Net income (loss)$4,420 $(19,980)$2,929 $(34,564)
Net income (loss) attributable to non-controlling interest800 (5,694)422 (10,012)
Net income (loss) attributable to MediaAlpha, Inc.$3,620 $(14,286)$2,507 $(24,552)
Net income (loss) per share of Class A common stock
-Basic$0.07 $(0.32)$0.05 $(0.55)
-Diluted$0.07 $(0.32)$0.04 $(0.55)
Weighted average shares of Class A common stock outstanding
-Basic53,367,896 45,160,646 50,971,172 44,518,890 
-Diluted53,367,896 45,160,646 65,868,384 44,518,890 


MediaAlpha, Inc. and subsidiaries
Consolidated Statements of Cash Flows
(Unaudited; in thousands)
Six Months Ended
June 30,
20242023
Cash flows from operating activities
Net income (loss)$2,929 $(34,564)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Equity-based compensation expense17,855 29,489 
Non-cash lease expense395 337 
Depreciation expense on property and equipment126 188 
Amortization of intangible assets3,218 3,458 
Amortization of deferred debt issuance costs380 398 
Impairment of cost method investment— 1,406 
Credit losses147 (250)
Tax receivable agreement liability adjustments— 6 
Changes in operating assets and liabilities:
Accounts receivable(37,070)27,659 
Prepaid expenses and other current assets159 2,364 
Other assets249 250 
Accounts payable34,325 (16,177)
Accrued expenses574 1,777 
Net cash provided by operating activities$23,287 $16,341 
Cash flows from investing activities
Purchases of property and equipment(164)(47)
Net cash (used in) investing activities$(164)$(47)
Cash flows from financing activities
Payments made for / proceeds received from:
Repayments on long-term debt(7,797)(4,750)
Contributions from QLH’s members756 — 
Distributions(1,017)(1,296)
Payments pursuant to tax receivable agreement— (2,822)
Shares withheld for taxes on vesting of restricted stock units(3,677)(1,939)
Net cash (used in) financing activities$(11,735)$(10,807)
Net increase in cash and cash equivalents11,388 5,487 
Cash and cash equivalents, beginning of period17,271 14,542 
Cash and cash equivalents, end of period$28,659 $20,029 


Key business and operating metrics and Non-GAAP financial measures
Transaction Value
We define “Transaction Value” as the total gross dollars transacted by our partners on our platform. Transaction Value is an operating metric not presented in accordance with GAAP, and is a driver of revenue based on the economic relationships we have with our partners. Our partners use our platform to transact via Open and Private Marketplace transactions. In our Open Marketplace model, Transaction Value is equal to revenue recognized and revenue share payments to our supply partners represent costs of revenue. In our Private Marketplace model, revenue recognized represents a platform fee billed to the demand partner or supply partner based on an agreed-upon percentage of the Transaction Value for the Consumer Referrals transacted, and accordingly there are no associated costs of revenue. We utilize Transaction Value to assess revenue and to assess the overall level of transaction activity through our platform. We believe it is useful to investors to assess the overall level of activity on our platform and to better understand the sources of our revenue across our different transaction models and verticals.

The following table presents Transaction Value by platform model for the three and six months ended June 30, 2024 and 2023:
Three Months Ended
June 30,		Six Months Ended
June 30,
(dollars in thousands)2024202320242023
Open Marketplace transactions$171,504 $82,856 $293,933 $190,515 
Percentage of total Transaction Value53.3 %65.8 %54.3 %59.7 %
Private Marketplace transactions150,306 43,055 246,983 128,561 
Percentage of total Transaction Value46.7 %34.2 %45.7 %40.3 %
Total Transaction Value$321,810 $125,911 $540,916 $319,076 

The following table presents Transaction Value by vertical for the three and six months ended June 30, 2024 and 2023:

Three Months Ended
June 30,		Six Months Ended
June 30,
(dollars in thousands)2024202320242023
Property & Casualty insurance$254,576 $60,666 $390,070 $178,590 
Percentage of total Transaction Value79.1 %48.2 %72.1 %56.0 %
Health insurance55,278 50,828 124,365 110,240 
Percentage of total Transaction Value17.2 %40.4 %23.0 %34.5 %
Life insurance7,886 8,359 18,123 18,476 
Percentage of total Transaction Value2.5 %6.6 %3.4 %5.8 %
Other(1)
4,070 6,058 8,358 11,770 
Percentage of total Transaction Value1.2 %4.8 %1.5 %3.7 %
Total Transaction Value$321,810 $125,911 $540,916 $319,076 
(1)Our other verticals include Travel, Education and Consumer Finance.


Contribution and Contribution Margin
We define “Contribution” as revenue less revenue share payments and online advertising costs, or, as reported in our consolidated statements of operations, revenue less cost of revenue (i.e., gross profit), as adjusted to exclude the following items from cost of revenue: equity-based compensation; salaries, wages, and related costs; internet and hosting costs; amortization; depreciation; other services; and merchant-related fees. We define “Contribution Margin” as Contribution expressed as a percentage of revenue for the same period. Contribution and Contribution Margin are non-GAAP financial measures that we present to supplement the financial information we present on a GAAP basis. We use Contribution and Contribution Margin to measure the return on our relationships with our supply partners (excluding certain fixed costs), the financial return on and efficacy of our online advertising costs to drive consumers to our proprietary websites, and our operating leverage. We do not use Contribution and Contribution Margin as measures of overall profitability. We present Contribution and Contribution Margin because they are used by our management and board of directors to manage our operating performance, including evaluating our operational performance against budget and assessing our overall operating efficiency and operating leverage. For example, if Contribution increases and our headcount costs and other operating expenses remain steady, our Adjusted EBITDA and operating leverage increase. If Contribution Margin decreases, we may choose to re-evaluate and re-negotiate our revenue share agreements with our supply partners, to make optimization and pricing changes with respect to our bids for keywords from primary traffic acquisition sources, or to change our overall cost structure with respect to headcount, fixed costs and other costs. Other companies may calculate Contribution and Contribution Margin differently than we do. Contribution and Contribution Margin have their limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results presented in accordance with GAAP.
The following table reconciles Contribution with gross profit, the most directly comparable financial measure calculated and presented in accordance with GAAP, for the three and six months ended June 30, 2024 and 2023:

Three Months Ended
June 30,		Six Months Ended
June 30,
(in thousands)2024202320242023
Revenue$178,274 $84,772 $304,923 $196,402 
Less cost of revenue(146,589)(71,006)(249,558)(164,268)
Gross profit31,685 13,766 55,365 32,134 
Adjusted to exclude the following (as related to cost of revenue):
Equity-based compensation392 981 2,249 1,947 
Salaries, wages, and related659 907 1,567 1,954 
Internet and hosting126 130 257 280 
Other expenses166 162 369 334 
Depreciation5 10 10 21 
Other services631 566 1,459 1,281 
Merchant-related fees78 7 142 3 
Contribution33,742 16,529 61,418 37,954 
Gross margin17.8 %16.2 %18.2 %16.4 %
Contribution Margin18.9 %19.5 %20.1 %19.3 %



Adjusted EBITDA
We define “Adjusted EBITDA” as net income excluding interest expense, income tax benefit (expense), depreciation expense on property and equipment, amortization of intangible assets, as well as equity-based compensation expense and certain other adjustments as listed in the table below. Adjusted EBITDA is a non-GAAP financial measure that we present to supplement the financial information we present on a GAAP basis. We monitor and present Adjusted EBITDA because it is a key measure used by our management to understand and evaluate our operating performance, to establish budgets and to develop operational goals for managing our business. We believe that Adjusted EBITDA helps identify underlying trends in our business that could otherwise be masked by the effect of the expenses that we exclude in the calculations of Adjusted EBITDA. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects. In addition, presenting Adjusted EBITDA provides investors with a metric to evaluate the capital efficiency of our business.
Adjusted EBITDA is not presented in accordance with GAAP and should not be considered in isolation of, or as an alternative to, measures presented in accordance with GAAP. There are a number of limitations related to the use of Adjusted EBITDA rather than net income, which is the most directly comparable financial measure calculated and presented in accordance with GAAP. These limitations include the fact that Adjusted EBITDA excludes interest expense on debt, income tax benefit (expense), equity-based compensation expense, depreciation and amortization, and certain other adjustments that we consider to be useful to investors and others in understanding and evaluating our operating results. In addition, other companies may use other measures to evaluate their performance, including different definitions of “Adjusted EBITDA,” which could reduce the usefulness of our Adjusted EBITDA as a tool for comparison.
The following table reconciles Adjusted EBITDA with net income (loss), the most directly comparable financial measure calculated and presented in accordance with GAAP, for the three and six months ended June 30, 2024 and 2023:
Three Months Ended
June 30,		Six Months Ended
June 30,
(in thousands)2024202320242023
Net income (loss)$4,420 $(19,980)$2,929 $(34,564)
Equity-based compensation expense9,221 15,148 17,855 29,489 
Interest expense3,751 3,874 7,596 7,450 
Income tax expense130 150 157 228 
Depreciation expense on property and equipment65 92 126 188 
Amortization of intangible assets1,609 1,729 3,218 3,458 
Transaction expenses(1)
559 254 1,217 548 
Impairment of cost method investment— — — 1,406 
Contract settlement(2)
(1,725)— (1,725)— 
Changes in TRA related liability— — — 6 
Changes in Tax Indemnification Receivable(1)(14)(2)(28)
Settlement of federal and state income tax refunds— — — 3 
Legal expenses(3)
711 1,106 1,788 1,439 
Reduction in force costs (4)
— 1,233 — 1,233 
Adjusted EBITDA$18,740 $3,592 $33,159 $10,856 
(1)Transaction expenses consist of $0.6 million and $1.2 million of legal and accounting fees incurred by us for the three and six months ended June 30, 2024, respectively, in connection with resale registration statements filed with the SEC. For the three and six months ended June 30, 2023, transaction expenses consist of $0.3 million and $0.5 million of expenses, respectively, in connection with the


amendment to the 2021 Credit Facilities, the tender offer filed by the Company's largest shareholder in May 2023, and a resale registration statement filed with the SEC.
(2)Contract settlement consists of $1.7 million of income for the three and six months ended June 30, 2024 recorded in connection with a one-time contract termination fee receivable from one of our partners in the Health vertical that ceased operations during the three months ended June 30, 2024.
(3)Legal expenses of $0.7 million and $1.8 million for the three and six months ended June 30, 2024, respectively, and $1.1 million and $1.4 million for the three and six months ended June 30, 2023, respectively, consist of legal fees incurred in connection with the civil investigative demand received from the Federal Trade Commission in February 2023.
(4)Reduction in force costs for the three and six months ended June 30, 2023 consist of $1.2 million of severance benefits provided to the terminated employees in connection with the RIF Plan. Additionally, equity-based compensation expense includes $0.3 million of charges related to the RIF Plan for the three and six months ended June 30, 2023.


image_1.jpg
SHAREHOLDER LETTER
Q2 2024
Q2 2024
image_11.jpg
Q2 2024 Results
Q2
(in millions, except percentages)
2023
2024
YoY Change
Revenue$84.8$178.3110%
Transaction Value 1
$125.9$321.8156%
  
  
Gross Profit$13.8$31.7130%
Contribution 1
$16.5$33.7104%
 
  
Net (Loss) Income
$(20.0)$4.4n/m
Adjusted EBITDA 1
$3.6$18.7422%
n/m - Not Meaningful
__________________
1.See “Key Business and Operating Metrics and Non-GAAP Financial Measures” for additional information regarding non-GAAP metrics used in this shareholder letter.
Q2 2024
1
image_11.jpg
Executive Summary
We delivered record results in the second quarter. Transaction Value increased 156% year over year, reaching an all-time high of $321.8 million as our P&C insurance vertical more than tripled. We achieved Adjusted EBITDA of $18.7 million, up more than 400% year over year and our highest to date, underscoring the strong operating leverage in our business model.

The recovery in our P&C vertical gained significant momentum in the second quarter. Multiple carriers meaningfully increased their spending in our marketplaces, and we expect this trend to continue as additional carriers refocus on growth in light of improving underwriting profitability. We believe we will deliver outsized top-line performance in our P&C vertical, both in the near term as the market continues to recover, and over the long term as we continue to benefit from the secular trend of carriers shifting more of their business to online direct-to-consumer distribution.

In our Health insurance vertical, second quarter Transaction Value grew 9% year over year, in line with our expectations. For the full year, we expect our Health vertical to generate around 20% of Transaction Value, compared with 44% in 2023, as our business mix normalizes in connection with the rebound in our P&C vertical. We continue to cooperate with the FTC on its ongoing inquiry, and we are cautiously optimistic we will have closure sooner rather than later.

We continued to strengthen our balance sheet during the quarter as we generated $14 million of cash and paid down over $5 million of debt. We also drove significant operating leverage and converted a high percentage of Adjusted EBITDA to cash due to our minimal capital expenditure and working capital needs. Regarding near-term capital allocation, while we continue to prioritize reducing net debt, we regularly evaluate other opportunities to deploy capital to create long-term shareholder value.

Our results this quarter highlight the strength of our business model, long-term focus and solid execution. After an unprecedented downturn in auto insurance, market conditions have never been better. We are focused on helping our P&C carrier partners meet their customer acquisition objectives as they pivot to growth. More broadly, we believe the unmatched scale and transparency of our marketplaces will enable us to capture an increasing share of our large and growing addressable market. Above all, we are excited about the compelling opportunities to create significant shareholder value moving forward.


Q2 2024
2
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Financial Discussion - Transaction Value and Revenue Metrics
Transaction Value increased 156% year over year to $321.8 million in Q2 2024, driven primarily by a 320% increase in the P&C vertical. Transaction Value represents the total gross investment in customer acquisition executed by our partners on our platform and is one of the key metrics that reflects our ability to drive value for our partners and increase our share of wallet as budgets increasingly migrate online.
chart-1711d29a6cec4df98cf.jpg
Transaction Value from our P&C insurance vertical increased 320% year over year to $254.6 million, driven by significant year-over-year increases in marketing budgets and customer acquisition spending by our carrier partners as they refocus on growth in response to improving underwriting profitability.
Transaction Value from our Health insurance vertical increased 9% year over year to $55.3 million, due primarily to higher demand for calls and leads.
Transaction Value from our Life insurance vertical declined 6% year over year to $7.9 million.
Transaction Value from our Other vertical, which includes travel and consumer finance, declined 33% year over year to $4.1 million, driven primarily by continued weakness in our travel vertical.


Q2 2024
3
image_11.jpg
We generated $178.3 million of total revenue in Q2 2024, up 110% year over year, driven primarily by higher revenue from our P&C insurance vertical.

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Revenue from our P&C insurance vertical increased 240% year over year to $134.4 million in Q2 2024, driven by increasing marketing budgets from multiple carrier partners due to the aforementioned focus on policies in force growth.
Revenue from our Health insurance vertical declined 2% year over year to $34.8 million in Q2 2024. Health revenue decreased while Transaction Value increased due to a higher percentage of transactions from our Private Marketplaces, where we recognize only our platform fee as revenue.
Revenue from our Life insurance vertical increased 11% year over year to $6.5 million in Q2 2024.
Revenue from our Other vertical, which consists of travel and consumer finance, declined 32% year over year to $2.6 million in Q2 2024, driven primarily by continued weakness in our travel vertical.
Q2 2024
4
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Financial Discussion - Profitability
Gross profit was $31.7 million in Q2 2024, a year-over-year increase of 130%. Contribution, which generally represents revenue less revenue share payments and online advertising costs, was $33.7 million in Q2 2024, a year-over-year increase of 104%. The year-over-year increase in Gross Profit and Contribution were driven primarily by the higher revenue. Contribution Margin was 18.9% in Q2 2024, compared with 19.5% in Q2 2023.
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Net income was $4.4 million in Q2 2024, compared with a net loss of $20.0 million in Q2 2023. The increase was driven primarily by an increase in gross profit of $17.9 million, lower equity-based compensation expense of $5.9 million, and a one-time payment of $1.7 million from Prudential in connection with its wind down of Assurance IQ, which was a supply partner of ours.
Adjusted EBITDA was $18.7 million in Q2 2024, a year-over-year increase of 422%. Adjusted EBITDA margin was 10.5% in Q2 2024, compared with 4.2% in Q2 2023. The increase was driven primarily by higher gross profit as well as continued expense discipline.
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Q2 2024
5
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Financial Discussion - Q3 2024 Outlook 1

Q3 2024
Transaction Value 2
$415 million-$435 million
Y/Y Growth281%299%
Revenue$240 million-$255 million
Y/Y Growth222%242%
Adjusted EBITDA 2
$22.0 million-$24.0 million
Y/Y Growth513%569%
Our guidance for Q3 2024 reflects a continuation of the recent trends in customer acquisition spending that we have seen in our P&C insurance vertical. As a result, we expect Transaction Value in our P&C vertical to be 40% to 45% higher than Q2 2024 levels. We expect third quarter Transaction Value in our Health vertical to grow year over year at a rate similar to Q2 2024.

Transaction Value: For Q3 2024, we expect Transaction Value to be in the range of $415 million - $435 million, a year-over-year increase of 290% at the midpoint.
Revenue: For Q3 2024, we expect revenue to be in the range of $240 million - $255 million, a year-over-year increase of 232% at the midpoint.
Adjusted EBITDA: For Q3 2024, we expect Adjusted EBITDA to be between $22.0 million and $24.0 million, a year-over-year increase of 541% at the midpoint. We are projecting Contribution less Adjusted EBITDA to be flat to slightly up compared with Q2 2024 levels.


Thank you,
Steve YiPatrick Thompson
Chief Executive Officer, President and Co-FounderChief Financial Officer & Treasurer
1 With respect to the Company’s projection of Adjusted EBITDA under “Financial Discussion – Q3 2024 Outlook”, MediaAlpha is not providing a reconciliation of Adjusted EBITDA to net income (loss) because the Company is unable to predict with reasonable certainty the reconciling items that may affect net income (loss) without unreasonable effort, including equity-based compensation, transaction expenses and income tax expense. These reconciling items are uncertain, depend on various factors and could significantly impact, either individually or in the aggregate, the GAAP measures for the applicable period.
2 See “Key Business and Operating Metrics and Non-GAAP Financial Measures” for additional information regarding non-GAAP metrics used in this shareholder letter.
Q2 2024
6
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Key Business and Operating Metrics and Non-GAAP Financial Measures
In addition to traditional financial metrics, we rely upon certain business and operating metrics that are not presented in accordance with GAAP to estimate the volume of spending on our platform, estimate and recognize revenue, evaluate our business performance and facilitate our operations. Such business and operating metrics should not be considered in isolation from, or as an alternative to, measures presented in accordance with GAAP and should be considered together with other operating and financial performance measures presented in accordance with GAAP. Also, such business and operating metrics may not necessarily be comparable to similarly titled measures presented by other companies.
Transaction Value
We define “Transaction Value” as the total gross dollars transacted by our partners on our platform. Transaction Value is an operating metric not presented in accordance with GAAP, and is a driver of revenue based on the economic relationships we have with our partners. Our partners use our platform to transact via Open and Private Marketplace transactions. In our Open Marketplace model, Transaction Value is equal to revenue recognized and revenue share payments to our supply partners represent costs of revenue. In our Private Marketplace model, revenue recognized represents a platform fee billed to the demand partner or supply partner based on an agreed-upon percentage of the Transaction Value for the Consumer Referrals transacted, and accordingly there are no associated costs of revenue. We utilize Transaction Value to assess revenue and to assess the overall level of transaction activity through our platform. We believe it is useful to investors to assess the overall level of activity on our platform and to better understand the sources of our revenue across our different transaction models and verticals.
The following table presents Transaction Value by platform model for the three and six months ended June 30, 2024 and 2023:
Three Months Ended June 30,Six Months Ended June 30,
(in thousands)2024202320242023
Open Marketplace transactions$171,504 $82,856 $293,933 $190,515 
Percentage of total Transaction Value53.3 %65.8 %54.3 %59.7 %
Private Marketplace transactions150,306 43,055 246,983 128,561 
Percentage of total Transaction Value46.7 %34.2 %45.7 %40.3 %
Total Transaction Value$321,810 $125,911 $540,916 $319,076 
The following table presents Transaction Value by vertical for the three and six months ended June 30, 2024 and 2023:
Three Months Ended June 30,Six Months Ended June 30,
(in thousands)2024202320242023
Property & Casualty insurance$254,576 $60,666 $390,070 $178,590 
Percentage of total Transaction Value79.1 %48.2 %72.1 %56.0 %
Health insurance55,278 50,828 124,365 110,240 
Percentage of total Transaction Value17.2 %40.4 %23.0 %34.5 %
Life insurance7,886 8,359 18,123 18,476 
Percentage of total Transaction Value2.5 %6.6 %3.4 %5.8 %
Other4,070 6,058 8,358 11,770 
Percentage of total Transaction Value1.2 %4.8 %1.5 %3.7 %
Total Transaction Value$321,810 $125,911 $540,916 $319,076 
Q2 2024
9
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Contribution and Contribution Margin
We define “Contribution” as revenue less revenue share payments and online advertising costs, or, as reported in our consolidated statements of operations, revenue less cost of revenue (i.e., gross profit), as adjusted to exclude the following items from cost of revenue: equity-based compensation; salaries, wages, and related costs; internet and hosting costs; amortization; depreciation; other services; and merchant-related fees. We define “Contribution Margin” as Contribution expressed as a percentage of revenue for the same period. Contribution and Contribution Margin are non-GAAP financial measures that we present to supplement the financial information we present on a GAAP basis. We use Contribution and Contribution Margin to measure the return on our relationships with our supply partners (excluding certain fixed costs), the financial return on and efficacy of our online advertising costs to drive consumers to our proprietary websites, and our operating leverage. We do not use Contribution and Contribution Margin as measures of overall profitability. We present Contribution and Contribution Margin because they are used by our management and board of directors to manage our operating performance, including evaluating our operational performance against budget and assessing our overall operating efficiency and operating leverage. For example, if Contribution increases and our headcount costs and other operating expenses remain steady, our Adjusted EBITDA and operating leverage increase. If Contribution Margin decreases, we may choose to re-evaluate and re-negotiate our revenue share agreements with our supply partners, to make optimization and pricing changes with respect to our bids for keywords from primary traffic acquisition sources, or to change our overall cost structure with respect to headcount, fixed costs and other costs. Other companies may calculate Contribution and Contribution Margin differently than we do. Contribution and Contribution Margin have their limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results presented in accordance with GAAP.
The following table reconciles Contribution with gross profit, the most directly comparable financial measure calculated and presented in accordance with GAAP, for the three and six months ended June 30, 2024 and 2023:
Three Months Ended June 30,Six Months Ended June 30,
(in thousands)2024202320242023
Revenue$178,274 $84,772 $304,923 $196,402 
Less cost of revenue(146,589)(71,006)(249,558)(164,268)
Gross profit$31,685 $13,766 $55,365 $32,134 
Adjusted to exclude the following (as related to cost of revenue):
Equity-based compensation392 981 2,249 1,947 
Salaries, wages, and related659 907 1,567 1,954 
Internet and hosting126 130 257 280 
Other expenses166 162 369 334 
Depreciation5 10 10 21 
Other services631 566 1,459 1,281 
Merchant-related fees78 7 142 3 
Contribution$33,742 $16,529 $61,418 $37,954 
Gross margin17.8 %16.2 %18.2 %16.4 %
Contribution Margin18.9 %19.5 %20.1 %19.3 %
Consumer Referrals
We define “Consumer Referral” as any consumer click, call or lead purchased by a buyer on our platform. Click revenue is recognized on a pay-per-click basis and revenue is earned and recognized when a consumer clicks on a listed buyer’s advertisement that is presented subsequent to the consumer’s search (e.g., auto insurance quote search or health insurance quote search). Call revenue is earned and recognized when a consumer transfers to a buyer and remains engaged for a requisite duration of time, as specified by each buyer. Lead revenue is recognized when we deliver data leads to buyers. Data leads are generated either through insurance carriers, insurance-focused research destination websites or other financial websites that make the data leads available for purchase through our platform, or when consumers complete a full quote request on our proprietary websites. Delivery occurs at the time of lead transfer. The data we generate from each Consumer Referral feeds into our analytics model to generate conversion probabilities for each unique consumer, enabling discovery of predicted return and cost per sale across the platform and helping us to improve our platform technology. We monitor the number of Consumer Referrals on our platform in order to measure Transaction Value, revenue and overall business performance across our verticals and platform models.

The following table presents the percentages of total Transaction Value generated from clicks, calls and leads for the three and six months ended June 30, 2024 and 2023:
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Clicks84.6 %70.2 %80.5 %75.4 %
Calls8.9 %17.5 %11.8 %14.7 %
Leads6.5 %12.3 %7.7 %9.9 %
Q2 2024
10
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Adjusted EBITDA
We define “Adjusted EBITDA” as net income excluding interest expense, income tax benefit (expense), depreciation expense on property and equipment, amortization of intangible assets, as well as equity-based compensation expense and certain other adjustments as listed in the table below. We define “Adjusted EBITDA Margin” as Adjusted EBITDA as a percentage of revenue. Adjusted EBITDA is a non-GAAP financial measure that we present to supplement the financial information we present on a GAAP basis. We monitor and present Adjusted EBITDA because it is a key measure used by our management to understand and evaluate our operating performance, to establish budgets and to develop operational goals for managing our business. We believe that Adjusted EBITDA helps identify underlying trends in our business that could otherwise be masked by the effect of the expenses that we exclude in the calculations of Adjusted EBITDA. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects. In addition, presenting Adjusted EBITDA provides investors with a metric to evaluate the capital efficiency of our business.
Adjusted EBITDA is not presented in accordance with GAAP and should not be considered in isolation of, or as an alternative to, measures presented in accordance with GAAP. There are a number of limitations related to the use of Adjusted EBITDA rather than net income, which is the most directly comparable financial measure calculated and presented in accordance with GAAP. These limitations include the fact that Adjusted EBITDA excludes interest expense on debt, income tax benefit (expense), equity-based compensation expense, depreciation and amortization, and certain other adjustments that we consider to be useful to investors and others in understanding and evaluating our operating results. In addition, other companies may use other measures to evaluate their performance, including different definitions of “Adjusted EBITDA,” which could reduce the usefulness of our Adjusted EBITDA as a tool for comparison.
The following table reconciles Adjusted EBITDA with net income (loss), the most directly comparable financial measure calculated and presented in accordance with GAAP, for the three and six months ended June 30, 2024 and 2023:
Three Months Ended June 30,Six Months Ended June 30,
(in thousands)2024202320242023
Net income (loss)$4,420 $(19,980)$2,929 $(34,564)
Equity-based compensation expense9,221 15,148 17,855 29,489 
Interest expense3,751 3,874 7,596 7,450 
Income tax expense130 150 157 228 
Depreciation expense on property and equipment65 92 126 188 
Amortization of intangible assets1,609 1,729 3,218 3,458 
Transaction expenses(1)559 254 1,217 548 
Impairment of cost method investment— — — 1,406 
Contract settlement(2)(1,725)— (1,725)— 
Changes in TRA related liability— — — 6 
Changes in Tax Indemnification Receivable(1)(14)(2)(28)
Settlement of federal and state income tax refunds— — — 3 
Legal expenses(3)711 1,106 1,788 1,439 
Reduction in force costs (4)— 1,233 — 1,233 
Adjusted EBITDA$18,740 $3,592 $33,159 $10,856 
(1)Transaction expenses consist of $0.6 million and $1.2 million of legal and accounting fees incurred by us for the three and six months ended June 30, 2024, respectively, in connection with resale registration statements filed with the SEC. For the three and six months ended June 30, 2023, transaction expenses consist of $0.3 million and $0.5 million of expenses, respectively, in connection with the amendment to the 2021 Credit Facilities, the tender offer filed by the Company's largest shareholder in May 2023, and a resale registration statement filed with the SEC.
(2)Contract settlement consists of $1.7 million of income for the three and six months ended June 30, 2024 recorded in connection with a one-time contract termination fee receivable from one of our partners in the Health vertical that ceased operations during the three months ended June 30, 2024.
(3)Legal expenses of $0.7 million and $1.8 million for the three and six months ended June 30, 2024, respectively, and $1.1 million and $1.4 million for the three and six months ended June 30, 2023, respectively, consist of legal fees incurred in connection with the civil investigative demand received from the Federal Trade Commission (FTC) in February 2023.
(4)Reduction in force costs for the three and six months ended June 30, 2023 consist of $1.2 million of severance benefits provided to the terminated employees in connection with the RIF Plan. Additionally, equity-based compensation expense includes $0.3 million of charges related to the RIF Plan for the three and six months ended June 30, 2023.
Q2 2024
11
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Forward-Looking Statements
This shareholder letter contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including without limitation statements regarding our belief that the recovery in our P&C vertical is gaining significant momentum; our expectation that the increase in spending by P&C carriers will continue; our belief that we will deliver outsized top-line performance in our P&C vertical, both in the near term as the market continues to recover, and over the long term as carriers shift more of their business to online direct-to-consumer distribution; our expectation that our Health vertical will represent around 20% of total Transaction Value for full year 2024; our optimism that the ongoing FTC investigation will be resolved sooner rather than later; our belief that we have compelling opportunities to create significant shareholder value moving forward; and our financial outlook for the third quarter of 2024. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “would,” and “outlook,” or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements.
There are or will be important factors that could cause our actual results to differ materially from those indicated in these forward-looking statements, including those more fully described in MediaAlpha’s filings with the Securities and Exchange Commission (“SEC”), including the Form 10-K filed on February 22, 2024 and the Forms 10-Q filed on May 2, 2024 and to be filed on or about August 1, 2024. These factors should not be construed as exhaustive. MediaAlpha disclaims any obligation to update any forward-looking statements to reflect events or circumstances that occur after the date of this shareholder letter.
Q2 2024
12
v3.24.2
Cover
Jul. 31, 2024
Cover [Abstract]  
Document Type 8-K
Document Period End Date Jul. 31, 2024
Entity Registrant Name MediaAlpha, Inc.
Entity Incorporation, State or Country Code DE
Entity File Number 001-39671
Entity Tax Identification Number 85-1854133
Entity Address, Address Line One 700 South Flower Street
Entity Address, Address Line Two Suite 640
Entity Address, City or Town Los Angeles
Entity Address, State or Province CA
Entity Address, Postal Zip Code 90017
City Area Code 213
Local Phone Number 316-6256
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Class A common stock, $0.01 par value
Trading Symbol MAX
Security Exchange Name NYSE
Entity Emerging Growth Company false
Entity Central Index Key 0001818383
Amendment Flag false
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