EverQuote (EVER) Q2 2025: Carrier Spend Up 61% as AI-Driven Efficiency Lifts Margins
EverQuote’s Q2 saw a sharp acceleration in carrier spend and record profitability, underpinned by AI-driven operational leverage and a broadening recovery in the P&C insurance advertising market. Management’s confidence is reflected in a $50 million share buyback, while new AI initiatives and channel diversification are positioning the business for sustainable, high-margin growth. Investors should watch for the pace of carrier reactivation and the impact of competitive search dynamics into the second half.
Summary
- Carrier Budget Expansion: Major enterprise carrier spend surged, signaling broad market health and EverQuote’s growing strategic relevance.
- AI-Driven Margin Gains: Rapid adoption of AI across product and operations drove record efficiency and profitability.
- Capital Allocation Shift: Launch of a $50 million buyback underscores confidence in cash flow and long-term trajectory.
Performance Analysis
EverQuote delivered a standout Q2, with total revenue up 34% year-over-year, led by a 61% surge in enterprise carrier spend. The auto insurance vertical, the company’s core business, grew 36% year-over-year, while home and renters insurance rose 23%. Variable marketing dollars (VMD), a key indicator of customer acquisition investment, increased 25%. Variable marketing margin (VMM) improved sequentially, reflecting resilient monetization despite intensifying competition in advertising channels.
Operating leverage was a defining feature this quarter, as adjusted EBITDA margin reached a record 14% and net income more than doubled year-over-year. Cash flow from operations hit a new high, and the company ended with no debt and a robust cash position. Notably, operating expenses declined sequentially, benefiting from deferred hiring and project timing, as well as expanding use of AI-driven productivity tools.
- Carrier Spend Shift: One major carrier ramped to record levels while another remained cautious, but overall carrier demand is stable and trending up.
- Agent Channel Expansion: Paid products per agent rose 15% over six months, with a third of agents now multi-product, signaling deeper wallet share.
- Channel Diversification: Social and video platforms are scaling as EverQuote offsets search competition and broadens acquisition sources.
EverQuote’s ability to both grow top-line and expand margins in a more competitive environment underscores the strength of its marketplace model and data-driven execution. Management’s guidance points to continued double-digit growth and stable profitability in the coming quarters.
Executive Commentary
"Our data scale enables us to deploy AI throughout our traffic and distribution bidding and routing systems. For example, as another major carrier adopted our ML-driven Smart Campaigns product, it drove immediate improvement in their spend efficiency by about 20%."
Jamie Mendel, Chief Executive Officer
"We delivered a strong second quarter as we further enhanced our operating performance and focused on driving expanding levels of profitability... Our performance to date this year reflects our steadfast commitment to strong execution and a clear strategy."
Joseph Sanborn, Chief Financial Officer
Strategic Positioning
1. Carrier Panel Recovery and Market Share
EverQuote is approaching a “full carrier panel” by year-end, with most major carriers back in growth mode and laggards signaling reactivation. This broadening participation strengthens EverQuote’s position as a critical growth partner for P&C (Property & Casualty) insurance providers, enabling a more robust marketplace and deeper data advantage.
2. AI as a Competitive Lever
AI-driven products, such as Smart Campaigns, are delivering measurable efficiency gains for carriers and internal teams. The company’s investment in a dedicated AI team and deployment of AI agents in call centers and engineering workflows is driving both customer outcomes and operating cost reductions, reinforcing EverQuote’s flywheel of performance and budget capture.
3. Multi-Product Agent Strategy
Transitioning from a leads vendor to a strategic partner, EverQuote is increasing product penetration among local agents, capturing more of their marketing budgets and consolidating its role as an indispensable growth platform. The rise in multi-product adoption supports both revenue diversification and stickier agent relationships.
4. Channel Diversification and Resilience
EverQuote is actively expanding into social and video acquisition channels, both reactivating pre-downturn platforms and testing new ones as monetization improves. This reduces dependence on increasingly competitive search channels and positions the company for more balanced, scalable growth.
5. Capital Allocation and Balance Sheet Strength
The launch of a $50 million share repurchase program and a new $60 million credit facility reflect EverQuote’s confidence in its cash flow and future prospects. Management remains open to M&A as an accelerant but is focused on organic growth and maintaining a “fortress balance sheet.”
Key Considerations
This quarter’s results highlight EverQuote’s ability to scale profitably as carrier budgets rebound and AI investments compound. Investors should weigh the following:
Key Considerations:
- Carrier Budget Momentum: Broad-based carrier recovery, with only a few laggards left, supports visibility into H2 growth.
- AI-Driven Efficiency: Early returns from AI initiatives are driving both customer value and cost leverage, with further operational upside possible.
- Competitive Traffic Environment: Search channel pressure is rising, but diversification into social and video is showing traction.
- Capital Deployment Optionality: Share buybacks and a new credit facility provide flexibility for both shareholder returns and opportunistic M&A.
Risks
Competitive intensity in digital advertising channels, especially search, may pressure acquisition costs or margins if not offset by AI and channel expansion. Regulatory changes, such as tariffs impacting carrier profitability, could dampen budget growth in unpredictable ways. The pace of carrier reactivation, especially in challenging states like California, remains a variable for near-term revenue visibility. Management’s bullish tone is contingent on continued market health and successful execution of AI-driven initiatives.
Forward Outlook
For Q3 2025, EverQuote guided to:
- Revenue between $163 million and $169 million (15% YoY growth at midpoint)
- VMD between $47 million and $50 million (10% YoY growth at midpoint)
- Adjusted EBITDA between $22 million and $24 million (22% YoY growth at midpoint)
For full-year 2025, management reiterated its long-term targets:
- ~20% annual revenue growth
- ~20% adjusted EBITDA margin (long-term model)
Management highlighted incremental investments in AI and technology for H2, with a focus on maintaining current profitability levels while scaling growth initiatives. Expense step-ups are expected, but discipline remains a priority.
- Carrier participation should reach historical norms by year-end
- Further AI-driven efficiency gains are targeted
Takeaways
EverQuote’s Q2 performance validates its AI-enabled marketplace model and positions the company for continued profitable growth as carrier budgets rebound and channel diversification efforts scale.
- Marketplace Model Strength: Record revenue and margin expansion demonstrate the power of EverQuote’s data-driven platform and carrier relationships.
- AI Execution: Early AI adoption is already improving both customer outcomes and internal cost structure, with more upside as initiatives mature.
- H2 Watchpoints: Investors should monitor carrier reactivation pace, competitive channel dynamics, and the impact of incremental AI investments on both growth and margin.
Conclusion
EverQuote’s Q2 marked a decisive inflection, with robust carrier demand and AI-driven operational leverage fueling record profitability. The company’s strategic focus on AI, channel expansion, and disciplined capital allocation positions it well for sustained, high-margin growth as the P&C insurance market continues to normalize.
Industry Read-Through
EverQuote’s results highlight a broad-based recovery in P&C insurance advertising budgets, with carriers prioritizing growth and digital acquisition following recent profitability improvements. The rapid adoption of AI-driven bidding and routing solutions sets a new bar for efficiency and performance in insurance lead generation, signaling that data scale and AI capabilities are becoming critical competitive differentiators. Channel diversification beyond search is increasingly necessary as competition intensifies, a dynamic likely to impact other digital marketplaces and performance marketing players. Finally, the willingness to deploy capital for buybacks and M&A reflects a maturing sector with rising cash generation and strategic optionality.