MediaAlpha Announces Third Quarter 2024 Financial Results
MediaAlpha (NYSE: MAX) reported strong Q3 2024 financial results with revenue reaching $259.1 million, up 247% year over year. The company's Transaction Value increased 314% to $451.8 million, driven by a 766% growth in Property & Casualty insurance to $387 million. Net income was $11.9 million, compared to a net loss of $(18.7) million in Q3 2023. Adjusted EBITDA rose to $26.3 million from $3.6 million year over year. For Q4 2024, MediaAlpha expects Transaction Value between $470-495 million and revenue between $275-295 million, with Adjusted EBITDA projected at $29.5-32.5 million.
MediaAlpha (NYSE: MAX) ha riportato risultati finanziari solidi nel terzo trimestre del 2024, con un fatturato che ha raggiunto $259,1 milioni, in aumento del 247% rispetto all'anno precedente. Il valore delle transazioni dell'azienda è aumentato del 314%, arrivando a $451,8 milioni, grazie a una crescita del 766% nell'assicurazione contro i danni a beni e persone, arrivando a $387 milioni. L'utile netto è stato di $11,9 milioni, rispetto a una perdita netta di $(18,7) milioni nel terzo trimestre del 2023. L'EBITDA rettificato è salito a $26,3 milioni, rispetto a $3,6 milioni dell'anno precedente. Per il quarto trimestre del 2024, MediaAlpha prevede un valore delle transazioni compreso tra $470 e $495 milioni e un fatturato tra $275 e $295 milioni, con un EBITDA rettificato previsto tra $29,5 e $32,5 milioni.
MediaAlpha (NYSE: MAX) reportó resultados financieros sólidos en el tercer trimestre de 2024, con ingresos que alcanzaron los $259.1 millones, un aumento del 247% en comparación con el año anterior. El valor de las transacciones de la empresa aumentó un 314%, alcanzando los $451.8 millones, impulsado por un crecimiento del 766% en el seguro de Propiedades y Accidentes, que llegó a $387 millones. La ganancia neta fue de $11.9 millones, en comparación con una pérdida neta de $(18.7) millones en el tercer trimestre de 2023. El EBITDA ajustado se incrementó a $26.3 millones desde $3.6 millones en el año anterior. Para el cuarto trimestre de 2024, MediaAlpha espera un valor de transacción entre $470 y $495 millones e ingresos entre $275 y $295 millones, con un EBITDA ajustado proyectado entre $29.5 y $32.5 millones.
미디어알파 (NYSE: MAX)는 2024년 3분기에 강력한 재무 실적을 보고했으며, 수익이 2억 5천 9백 10만 달러에 달했습니다, 전년 대비 247% 증가한 수치입니다. 회사의 거래 가치는 3,148% 증가하여 4억 5천 1백 80만 달러에 이르렀으며, 이는 자산 및 사고 보험 부문에서 766% 성장하여 3억 8천 7백만 달러로 증가한 데 기인합니다. 순이익은 1천 1백 90만 달러였으며, 2023년 3분기의 순손실 $(1천 8백 70만 달러)에 비해 긍정적인 결과를 나타냈습니다. 조정된 EBITDA는 3억 6백만 달러에서 2천 6백 30만 달러로 증가했습니다. 2024년 4분기 동안 미디어알파는 거래 가치를 4억 7천만에서 4억 9천 5백만 달러 사이, 수익은 2억 7천 5백만에서 2억 9천 5백만 달러 사이, 조정된 EBITDA는 2천 9백 50만에서 3천 2백 50만 달러로 예상하고 있습니다.
MediaAlpha (NYSE: MAX) a annoncé des résultats financiers solides pour le troisième trimestre 2024, avec des revenus atteignant 259,1 millions de dollars, en hausse de 247 % par rapport à l'année précédente. La valeur des transactions de l'entreprise a augmenté de 314 %, atteignant 451,8 millions de dollars, grâce à une croissance de 766 % dans le domaine de l'assurance des biens et des accidents, s'élevant à 387 millions de dollars. Le revenu net était de 11,9 millions de dollars, contre une perte nette de 18,7 millions de dollars au troisième trimestre 2023. L'EBITDA ajusté a augmenté pour atteindre 26,3 millions de dollars, contre 3,6 millions de dollars l'année précédente. Pour le quatrième trimestre 2024, MediaAlpha prévoit une valeur de transaction comprise entre 470 et 495 millions de dollars et des revenus entre 275 et 295 millions de dollars, avec un EBITDA ajusté prévu entre 29,5 et 32,5 millions de dollars.
MediaAlpha (NYSE: MAX) hat im dritten Quartal 2024 starke finanzielle Ergebnisse gemeldet, mit Einnahmen von $259,1 Millionen, was einem Anstieg von 247% im Vergleich zum Vorjahr entspricht. Der Transaktionswert des Unternehmens stieg um 314% auf $451,8 Millionen, angetrieben durch ein Wachstum von 766% im Bereich Sach- und Unfallversicherung auf $387 Millionen. Der Nettogewinn betrug $11,9 Millionen, im Vergleich zu einem Nettoverlust von $(18,7) Millionen im dritten Quartal 2023. Das bereinigte EBITDA stieg von $3,6 Millionen auf $26,3 Millionen im Jahresvergleich. Für das vierte Quartal 2024 erwartet MediaAlpha einen Transaktionswert zwischen $470 und $495 Millionen sowie Einnahmen zwischen $275 und $295 Millionen, wobei das bereinigte EBITDA zwischen $29,5 und $32,5 Millionen prognostiziert wird.
- Revenue increased 247% YoY to $259.1 million
- Transaction Value grew 314% YoY to $451.8 million
- P&C insurance vertical grew 766% YoY to $387 million
- Net income of $11.9 million, compared to $18.7 million loss in Q3 2023
- Adjusted EBITDA increased to $26.3 million from $3.6 million YoY
- Gross margin declined to 15.1% from 16.5% YoY
- Contribution Margin decreased to 16.0% from 20.2% YoY
- Expected headwinds in Medicare affecting Health insurance vertical
Insights
MediaAlpha's Q3 2024 results showcase exceptional growth, with
The company's profitability metrics are particularly noteworthy, transitioning from a
Q4 guidance suggests continued momentum with projected Transaction Value of
- Revenue of
$259 million , up247% year over year - Transaction Value of
$452 million , up314% year over year- Transaction Value from Property & Casualty up
766% year over year to$387 million - Transaction Value from Health up
9% year over year to$56 million
- Transaction Value from Property & Casualty up
LOS ANGELES, Oct. 30, 2024 (GLOBE NEWSWIRE) -- MediaAlpha, Inc. (NYSE: MAX), today announced its financial results for the third quarter ended September 30, 2024.
“Our third-quarter performance was excellent, as we achieved record results across all key metrics.” said MediaAlpha co-founder and CEO Steve Yi. “Our P&C insurance vertical once again exceeded our expectations as select carriers increasingly leveraged our marketplace to drive growth. Looking ahead, we are well positioned to deliver sustainable long-term growth and market share gains as the largest and most trusted customer acquisition partner in the insurance industry."
Third Quarter 2024 Financial Results
- Revenue of
$259.1 million , an increase of247% year over year; - Transaction Value of
$451.8 million , an increase of314% year over year; - Gross margin of
15.1% , compared with16.5% in the third quarter of 2023; - Contribution Margin(1) of
16.0% , compared with20.2% in the third quarter of 2023; - Net income was
$11.9 million , compared with a net loss of$(18.7) million in the third quarter of 2023; and - Adjusted EBITDA(1) was
$26.3 million , compared with$3.6 million in the third 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 fourth quarter of 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 insurance vertical to be flat to slightly up as compared to Q3 2024 levels, stronger than typical seasonal trends. We expect fourth quarter Transaction Value in our Health insurance vertical to be down mid-single digits year over year due to headwinds in Medicare.
For the fourth quarter of 2024, MediaAlpha currently expects the following:
- Transaction Value between
$470 million -$495 million , representing a192% year-over-year increase at the midpoint of the guidance range; - Revenue between
$275 million -$295 million , representing a143% year-over-year increase at the midpoint of the guidance range; - Adjusted EBITDA between
$29.5 million and$32.5 million , representing a144% year-over-year increase at the midpoint of the guidance range. We are projecting Contribution less Adjusted EBITDA to be approximately$0.5 -$1.0 million higher than in Q3 2024.
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 third quarter 2024 results and its financial outlook for the fourth 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 (800) 715-9871 or (646) 307-1963, with passcode 2616289. 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 our statement that we are well positioned to deliver sustainable long-term growth and market share gains as the largest and most trusted customer acquisition partner in the insurance industry, and our financial outlook for the fourth 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 August 1, 2024, and to be filed on or about October 31, 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.
About MediaAlpha
We believe we are the insurance industry’s leading programmatic customer acquisition platform. With more than 1,200 active partners, we connect insurance carriers with online shoppers and generated more than 99 million consumer referrals in 2023. Our programmatic advertising technology over the last twelve months powered
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) | |||||||
| September 30, 2024 | December 31, 2023 | ||||||
| Assets | |||||||
| Current assets | |||||||
| Cash and cash equivalents | $ | 32,304 | $ | 17,271 | |||
| Accounts receivable, net of allowance for credit losses of | 126,814 | 53,773 | |||||
| Prepaid expenses and other current assets | 2,936 | 3,529 | |||||
| Total current assets | 162,054 | 74,573 | |||||
| Intangible assets, net | 21,588 | 26,015 | |||||
| Goodwill | 47,739 | 47,739 | |||||
| Other assets | 4,729 | 5,598 | |||||
| Total assets | $ | 236,110 | $ | 153,925 | |||
| Liabilities and stockholders' deficit | |||||||
| Current liabilities | |||||||
| Accounts payable | $ | 109,577 | $ | 56,279 | |||
| Accrued expenses | 14,202 | 11,588 | |||||
| Current portion of long-term debt | 8,839 | 11,854 | |||||
| Total current liabilities | 132,618 | 79,721 | |||||
| Long-term debt, net of current portion | 155,811 | 162,445 | |||||
| Other long-term liabilities | 7,302 | 6,184 | |||||
| Total liabilities | $ | 295,731 | $ | 248,350 | |||
| Commitments and contingencies | |||||||
| Stockholders' (deficit) | |||||||
| Class A common stock, | 551 | 474 | |||||
| Class B common stock, | 116 | 181 | |||||
| Preferred stock, | — | — | |||||
| Additional paid-in capital | 501,543 | 511,613 | |||||
| Accumulated deficit | (510,573 | ) | (522,562 | ) | |||
| Total stockholders' (deficit) attributable to MediaAlpha, Inc. | $ | (8,363 | ) | $ | (10,294 | ) | |
| Non-controlling interest | (51,258 | ) | (84,131 | ) | |||
| Total stockholders' (deficit) | $ | (59,621 | ) | $ | (94,425 | ) | |
| Total liabilities and stockholders' deficit | $ | 236,110 | $ | 153,925 | |||
| MediaAlpha, Inc. and subsidiaries Consolidated Statements of Operations (Unaudited; in thousands, except share data and per share amounts) | |||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Revenue | $ | 259,133 | $ | 74,573 | $ | 564,056 | $ | 270,975 | |||||||
| Costs and operating expenses | |||||||||||||||
| Cost of revenue | 219,907 | 62,277 | 469,465 | 226,545 | |||||||||||
| Sales and marketing | 6,496 | 6,101 | 18,608 | 19,802 | |||||||||||
| Product development | 5,328 | 4,296 | 14,743 | 14,525 | |||||||||||
| General and administrative | 11,794 | 16,648 | 36,767 | 50,473 | |||||||||||
| Total costs and operating expenses | 243,525 | 89,322 | 539,583 | 311,345 | |||||||||||
| Income (loss) from operations | 15,608 | (14,749 | ) | 24,473 | (40,370 | ) | |||||||||
| Other (income) expense, net | (154 | ) | (100 | ) | (1,971 | ) | 1,165 | ||||||||
| Interest expense | 3,562 | 3,947 | 11,158 | 11,397 | |||||||||||
| Total other expense, net | 3,408 | 3,847 | 9,187 | 12,562 | |||||||||||
| Income (loss) before income taxes | 12,200 | (18,596 | ) | 15,286 | (52,932 | ) | |||||||||
| Income tax expense | 312 | 102 | 469 | 330 | |||||||||||
| Net income (loss) | $ | 11,888 | $ | (18,698 | ) | $ | 14,817 | $ | (53,262 | ) | |||||
| Net income (loss) attributable to non-controlling interest | 2,406 | (5,196 | ) | 2,828 | (15,208 | ) | |||||||||
| Net income (loss) attributable to MediaAlpha, Inc. | $ | 9,482 | $ | (13,502 | ) | $ | 11,989 | $ | (38,054 | ) | |||||
| Net income (loss) per share of Class A common stock | |||||||||||||||
| -Basic | $ | 0.17 | $ | (0.29 | ) | $ | 0.23 | $ | (0.84 | ) | |||||
| -Diluted | $ | 0.17 | $ | (0.29 | ) | $ | 0.22 | $ | (0.84 | ) | |||||
| Weighted average shares of Class A common stock outstanding | |||||||||||||||
| -Basic | 54,909,772 | 46,229,672 | 52,293,622 | 45,095,417 | |||||||||||
| -Diluted | 54,909,772 | 46,229,672 | 66,087,041 | 45,095,417 | |||||||||||
| MediaAlpha, Inc. and subsidiaries Consolidated Statements of Cash Flows (Unaudited; in thousands) | |||||||
| Nine Months Ended September 30, | |||||||
| 2024 | 2023 | ||||||
| Cash flows from operating activities | |||||||
| Net income (loss) | $ | 14,817 | $ | (53,262 | ) | ||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
| Equity-based compensation expense | 26,452 | 43,943 | |||||
| Non-cash lease expense | 596 | 508 | |||||
| Depreciation expense on property and equipment | 191 | 275 | |||||
| Amortization of intangible assets | 4,827 | 5,188 | |||||
| Amortization of deferred debt issuance costs | 569 | 597 | |||||
| Impairment of cost method investment | — | 1,406 | |||||
| Credit losses | 519 | (220 | ) | ||||
| Tax receivable agreement liability adjustments | — | 6 | |||||
| Changes in operating assets and liabilities: | |||||||
| Accounts receivable | (73,560 | ) | 27,167 | ||||
| Prepaid expenses and other current assets | 547 | 3,059 | |||||
| Other assets | 375 | 375 | |||||
| Accounts payable | 53,298 | (15,243 | ) | ||||
| Accrued expenses | 2,712 | 1,138 | |||||
| Net cash provided by operating activities | $ | 31,343 | $ | 14,937 | |||
| Cash flows from investing activities | |||||||
| Purchases of property and equipment | (207 | ) | (60 | ) | |||
| Acquisition of intangible assets | (400 | ) | — | ||||
| Net cash (used in) investing activities | $ | (607 | ) | $ | (60 | ) | |
| Cash flows from financing activities | |||||||
| Payments made for / proceeds received from: | |||||||
| Repayments on long-term debt | (10,172 | ) | (7,125 | ) | |||
| Contributions from QLH’s members | 756 | 196 | |||||
| Distributions | (1,111 | ) | (1,572 | ) | |||
| Payments pursuant to tax receivable agreement | — | (2,822 | ) | ||||
| Shares withheld for taxes on vesting of restricted stock units | (5,176 | ) | (2,900 | ) | |||
| Net cash (used in) financing activities | $ | (15,703 | ) | $ | (14,223 | ) | |
| Net increase in cash and cash equivalents | 15,033 | 654 | |||||
| Cash and cash equivalents, beginning of period | 17,271 | 14,542 | |||||
| Cash and cash equivalents, end of period | $ | 32,304 | $ | 15,196 | |||
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, revenue recognized represents the fees paid by our Demand Partners for Consumer Referrals sold and is equal to the Transaction Value 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 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 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 nine months ended September 30, 2024 and 2023:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| (dollars in thousands) | 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Open Marketplace transactions | $ | 253,016 | $ | 73,053 | $ | 546,949 | $ | 263,568 | ||||||||
| Percentage of total Transaction Value | 56.0 | % | 67.0 | % | 55.1 | % | 61.6 | % | ||||||||
| Private Marketplace transactions | 198,759 | 35,963 | 445,742 | 164,524 | ||||||||||||
| Percentage of total Transaction Value | 44.0 | % | 33.0 | % | 44.9 | % | 38.4 | % | ||||||||
| Total Transaction Value | $ | 451,775 | $ | 109,016 | $ | 992,691 | $ | 428,092 | ||||||||
The following table presents Transaction Value by vertical for the three and nine months ended September 30, 2024 and 2023:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| (dollars in thousands) | 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Property & Casualty insurance | $ | 387,451 | $ | 44,715 | $ | 777,521 | $ | 223,305 | ||||||||
| Percentage of total Transaction Value | 85.8 | % | 41.0 | % | 78.3 | % | 52.2 | % | ||||||||
| Health insurance | 55,615 | 51,210 | 179,980 | 161,450 | ||||||||||||
| Percentage of total Transaction Value | 12.3 | % | 47.0 | % | 18.1 | % | 37.7 | % | ||||||||
| Life insurance | 6,261 | 7,566 | 24,384 | 26,042 | ||||||||||||
| Percentage of total Transaction Value | 1.4 | % | 6.9 | % | 2.5 | % | 6.1 | % | ||||||||
| Other(1) | 2,448 | 5,525 | 10,806 | 17,295 | ||||||||||||
| Percentage of total Transaction Value | 0.5 | % | 5.1 | % | 1.1 | % | 4.0 | % | ||||||||
| Total Transaction Value | $ | 451,775 | $ | 109,016 | $ | 992,691 | $ | 428,092 | ||||||||
| (1) Our other verticals include Travel 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 nine months ended September 30, 2024 and 2023:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| (in thousands) | 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Revenue | $ | 259,133 | $ | 74,573 | $ | 564,056 | $ | 270,975 | ||||||||
| Less cost of revenue | (219,907 | ) | (62,277 | ) | (469,465 | ) | (226,545 | ) | ||||||||
| Gross profit | $ | 39,226 | $ | 12,296 | $ | 94,591 | $ | 44,430 | ||||||||
| Adjusted to exclude the following (as related to cost of revenue): | ||||||||||||||||
| Equity-based compensation | 405 | 1,012 | 2,654 | 2,959 | ||||||||||||
| Salaries, wages, and related | 907 | 878 | 2,474 | 2,832 | ||||||||||||
| Internet and hosting | 145 | 138 | 402 | 418 | ||||||||||||
| Other expenses | 170 | 179 | 539 | 513 | ||||||||||||
| Depreciation | 5 | 9 | 15 | 30 | ||||||||||||
| Other services | 549 | 514 | 2,008 | 1,795 | ||||||||||||
| Merchant-related fees | 75 | 11 | 217 | 14 | ||||||||||||
| Contribution | $ | 41,482 | $ | 15,037 | $ | 102,900 | $ | 52,991 | ||||||||
| Gross margin | 15.1 | % | 16.5 | % | 16.8 | % | 16.4 | % | ||||||||
| Contribution Margin | 16.0 | % | 20.2 | % | 18.2 | % | 19.6 | % | ||||||||
Adjusted EBITDA
We define “Adjusted EBITDA” as net income (loss) 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 nine months ended September 30, 2024 and 2023:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| (in thousands) | 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Net income (loss) | $ | 11,888 | $ | (18,698 | ) | $ | 14,817 | $ | (53,262 | ) | ||||||
| Equity-based compensation expense | 8,597 | 14,454 | 26,452 | 43,943 | ||||||||||||
| Interest expense | 3,562 | 3,947 | 11,158 | 11,397 | ||||||||||||
| Income tax expense | 312 | 102 | 469 | 330 | ||||||||||||
| Depreciation expense on property and equipment | 65 | 87 | 191 | 275 | ||||||||||||
| Amortization of intangible assets | 1,609 | 1,730 | 4,827 | 5,188 | ||||||||||||
| Transaction expenses(1) | (45 | ) | 5 | 1,172 | 553 | |||||||||||
| Impairment of cost method investment | — | — | — | 1,406 | ||||||||||||
| Contract settlement(2) | — | — | (1,725 | ) | — | |||||||||||
| Changes in TRA related liability | — | — | — | 6 | ||||||||||||
| Changes in Tax Indemnification Receivable | (84 | ) | (20 | ) | (86 | ) | (48 | ) | ||||||||
| Settlement of federal and state income tax refunds | — | — | — | 3 | ||||||||||||
| Legal expenses(3) | 367 | 1,979 | 2,155 | 3,418 | ||||||||||||
| Reduction in force costs (4) | — | — | — | 1,233 | ||||||||||||
| Adjusted EBITDA | $ | 26,271 | $ | 3,586 | $ | 59,430 | $ | 14,442 | ||||||||
| (1) Transaction expenses consist of immaterial expenses and | ||||||||||||||||
| (2) Contract settlement consists of | ||||||||||||||||
| (3) Legal expenses of | ||||||||||||||||
| (4) Reduction in force costs for the nine months ended September 30, 2023 consist of | ||||||||||||||||
FAQ
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