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MARKETS LIVE BLOG:

S&P 500, NASDAQ NOTCH BIG WINS WITH TESLA EARNINGS ON DECK

Tech-focused investors prepare for fresh wave of earnings highlighted by struggling Tesla

Why Is EverQuote (EVER) Down 21.7% Since Last Earnings Report?

Zacks Equity Research
·4 min read

It has been about a month since the last earnings report for EverQuote (EVER). Shares have lost about 21.7% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is EverQuote due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

EverQuote Q2 Earnings and Revenues Top Estimates

EverQuote, Inc. reported an adjusted net loss of 7 cents per share for second-quarter 2021, narrower than the Zacks Consensus Estimate of a loss of 10 cents per share. The company had reported a loss of 10 cents per share in the prior-year quarter.

EverQuote witnessed increased revenues from automotive insurance vertical and other insurance verticals in the second quarter, offset by higher expenses.
Behind the Headlines

Total revenues improved 34.6% year over year to $105 million, driven by the solid performance of automotive insurance vertical and other insurance verticals, which include home and renters, life, health, and commercial insurance. Moreover, the top line beat the Zacks Consensus Estimate by 2.9%.

Variable marketing margin grew 39.8% year over year to $32.8 million.
Revenues from Automotive insurance vertical increased 33.7% year over year to $86.3 million.

Revenues from other insurance verticals, which include home and renters, life, health and commercial insurance, increased 36.5% from the year-ago period to $18.7 million.

Total costs and operating expenses increased 31.6% to $106.9 million mainly due to higher cost of revenues, sales and marketing, research and development, and general and administrative expenses as well as acquisition-related. Adjusted EBITDA increased 65.4% year over year to $6.6 million.

Quote requests increased 0.1% year over year in the quarter under review to $6.8 million.

Financial Update

As of Jun 30, 2021, EverQuote had assets worth $138.8 million, up 7.6% from the level at 2020 end. Cash and cash equivalents increased 27.2% from the 2020-end level to $54.5 million. Shareholder equity at the end of the reported quarter increased 15% from the 2020-end to $81.6 million. EverQuote’s cash flow from operations surged 93.8% to $7.7 million year over year.

Q3 Guidance

Revenues are anticipated to be  in the range of $109- $111 million, indicating a year-over-year increase of 22% at the mid-point. Variable marketing margin is projected to be in the range of $33-$34 million, a year-over-year increase of 14% at the mid-point. Adjusted EBITDA is expected to be in the range of $4.5-$5.5 million, a year-over-year decrease of 4% at the mid-point.

2021 Guidance

Revenues are anticipated to be in the range of $440-$446 million, which indicates a 28% year-over-year increase at the mid-point and marks an increase from the previously mentioned $434-$442 million.

Variable marketing margin is projected to be in the range of $138-$141 million, which increased from the previously mentioned $136-$140 million. Also, it indicates an increase of 28% year over year at the mid-point.

Adjusted EBITDA is expected to be in the range of $23-$26 million, which indicates an increae of 33% year over year at the mid-point. However, it declined from the previously stated guidance of $26 - $30 million.

Adjusted EBITDA is anticipated to be impacted by incremental investments in preparation for this year’s health open enrollment period which will take place in the fourth quarter of 2021.

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How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -293.75% due to these changes.

VGM Scores

Currently, EverQuote has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise EverQuote has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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