EverQuote (EVER) Q1 2021 Earnings Call Transcript

EverQuote  (NYSE: EVER) Q1 2021 earnings call dated May. 03, 2021

Corporate Participants:

Brinlea Johnson — Managing Director

Jayme Mendal — Chief Executive Officer

John Wagner — Chief Financial Officer

Analysts:

Jed Kelly — Oppenheimer — Analyst

Michael Graham — Canaccord — Analyst

Ron Josey — JMP Securities — Analyst

Ralph Schackart — William Blair — Analyst

Aaron Kessler — Raymond James — Analyst

Mayank Tandon — Needham — Analyst

Dae Lee — JP Morgan — Analyst

Ben Rose — Battle Road Research — Analyst

Presentation:

Brinlea Johnson — Managing Director

Good afternoon. Thank you for joining us for the First Quarter 2021 EverQuote Earnings Call. With me today is Jayme Mendal, CEO of EverQuote; and John Wagner, CFO of EverQuote.

During the call, we will make statements related to our business that may be considered forward-looking statements under federal securities laws, including statements concerning our financial guidance for the second quarter and full-year 2021, our growth strategy, our plans to execute on our growth strategy, key initiatives, our investments in the business, the growth levers we expect to drive our business, our ability to maintain existing and acquire new customers, our recent acquisition, and interest or ability to acquire other companies, our goals for integrations, and other statements regarding our plans and prospects.

Forward-looking statements may be identified with words and phrases such as we expect, we believe, we intend, we anticipate, we plan, may, upcoming and similar words and phrases. These statements reflect our views only as of today. It should not be considered our views as of any other subsequent date. We specifically disclaim any obligation to update or revise these forward-looking statements, except as required by law.

Forward-looking statements are not promises or guarantees of future performance, and are subject to a variety of risks and uncertainties that could cause the actual results to differ materially from our expectations. For a discussion of material risks and other important factors that could affect our actual results, please refer to the material risks and other important factors under the heading Risk Factors in our most recent annual report on Form 10-K, which is on file with the Securities and Exchange Commission and available on our Investor Relations section of our website at investor.everquote.com and on the SEC’s website at sec.gov.

With that, I’ll turn the call over to Jayme Mendal, CEO of EverQuote.

Jayme Mendal — Chief Executive Officer

Thank you, Brinlea, and thank you everyone for joining us today. As I reflect on my first full quarter as CEO, I would first like to say that I’m grateful for our team who, in spite of an unexpected leadership transition and ongoing challenging circumstances in the pandemic, has continued to execute so well. I’m grateful for our late Founder and friend Seth Birnbaum who imparted in me a clear sense of what’s possible, given the enormity of the market opportunity in front of us and who prepared me to lead EverQuote’s remarkable team in building what I’m increasingly confident will become an industry-changing company over the long term.

EverQuote’s vision is to become the largest online source of insurance policies by using data and technology to make insurance simpler, more affordable and personalized. My confidence continues to grow and our ability to realize our vision, as our team executes consistently against our long-term plan. Nearly a year after drafting and several quarters into executing this plan, I am encouraged by our ability to balance consistent operational execution quarter after quarter with methodical investments in new growth platforms like our verified partner network on the consumer side of the marketplace and our direct-to-consumer agency on the distribution side.

Turning to the quarter. We delivered favorable results across all key metrics in Q1. We achieved year-over-year growth in revenue and variable marketing margin or VMM of 28% and 32% respectively and generated expanding adjusted EBITDA, while continuing to invest in strategic initiatives. We are proud of this performance, especially in the context of the strong first quarter of 2020.

Let me provide you an update on each of our four growth levers, which include: Number 1, attracting more shoppers; Number 2, growing insurance provider coverage and budget; Number 3, optimizing and deepening consumer provider engagement; and Number 4, expanding non-auto verticals.

So let me begin with our first growth lever, attracting more shoppers. As a reminder, on the traffic or consumer side of the marketplace, we have two platforms. First, our owned and operated first-party performance marketing platform. And second, our fast-growing third-party traffic platform referred to as the verified partner network or VPN through which we provide third parties access to our insurance provider network. Investments in our traffic platform continue to grow the volume of high intent insurance shoppers to our marketplace. In our performance marketing platform, we invested in expanding both offline and digital channels, improving our ability to target high intent insurance shoppers.

In our VPN platform, we launched new products that enable third-party websites and media companies to access our extensive insurance provider network in a variety of innovative ways. Under one recently launched offering, we already have 13 verified partners who are ramping up quickly, and we have developed a robust pipeline of additional partners to be added over the balance of the year, increasing our confidence in VPN as a reliable pillar of continued traffic growth moving forward.

Next, we had success in growing provider coverage and budget. We continue to add third-party marketplace providers and expand relationships with existing carriers and agents. One trend worth highlighting is the continued growth and strength of insurtech digital carriers, which have emerged as a significant segment within the marketplace.

With shared DNA for using technology and data to improve the insurance shopping experience, they have been fast to adopt the full range of consumer targeting and deep integration capabilities offered by EverQuote. As a result, they are finding EverQuote to be an effective customer acquisition partner with whom to grow their business. We continue to have success growing with this segment. And in Q1, digital carriers increased their spending on our platform by over 200% year-over-year.

The third growth lever is optimizing and deepening consumer provider engagement. We are implementing a number of initiatives that reduce friction from the shopping experience and improve performance for providers. One key focus has been on the connection of online shoppers to local third-party agents. We are investing in new products, which enable us to control the online to offline connection on behalf of local agents. This solves for a pain point felt by both consumers and agents. For consumers, we can deliver a more unified shopping experience and better control the outreach to them. For providers, we can deliver better performance by applying best practices and technology to optimize the process of getting a consumer quoted. In Q1, 11% of active third-party agents were enrolled in our new online to offline connection offering, indicating that we have significant room for growth within our existing client base.

Finally, we continued to expand non-auto verticals. In Q1, our non-auto verticals continued growing fast, with revenues increasing 41% year-over-year. In our home vertical, we are seeing greater efficiency as we scale and leverage bundling opportunities, leading to a VMM percent for home that is comparable to auto insurance, our largest vertical.

Within our life and health verticals, we continue to be pleased with the strong performance of Crosspointe, the health insurance agency that we acquired last fall. After delivering another strong quarter in which they exceeded their operating plan, we unified the leadership of our life and health direct-to-consumer agency operations with the Crosspointe founders who have become integral members of our leadership team. This change will accelerate our ability to operate as a single pool of agent capacity across multiple verticals that can better response surges in consumer demand, such as around the open enrollment period in Q4.

This change will also enable us to invest in more highly leveraged shared technology, analytics and reporting infrastructure to drive better performance across our now unified health and life direct-to-consumer agency as it grows. Looking ahead, we remain excited about the opportunity to expand our non-auto verticals and feel confident that over time, we can grow non-auto verticals to 50% or more of our revenue.

In summary, we are pleased with our Q1 performance and remain bullish on the road ahead. With continued execution to our plan, including targeted investments in our team, technology, experiences, and operational platform, we believe that EverQuote is well positioned to become an industry-defining company as the $2 trillion insurance industry moves into the digital age. I’m energized by our progress by the challenging work ahead and by the privilege to pursue our vision with the amazing team that we’ve assembled. Thank you all again for your time.

Now I will turn the call over to John to provide more details on our financial results.

John Wagner — Chief Financial Officer

Thank you, Jayme, and good afternoon, everyone. I’ll start by discussing our financial results in the first quarter and then provide guidance for the second quarter and updated guidance for our full-year 2021.

We’re pleased to report solid first quarter 2021 results, with performance at the high-end or above our guidance range for all our key financial metrics. Our revenue for the quarter was $103.8 million, an increase of 28% year-over-year and building on last year’s strong growth in the comparable period.

Revenue in our auto insurance vertical increased to $84.5 million, a growth rate of 25% year-over-year, reflecting our continued strong performance and a healthy auto insurance market. Revenue from our other insurance verticals, which includes home and renters, life, health, and commercial insurance, increased to $19.33 million, a growth rate of 41% year-over-year and representing 19% of revenue. So still small in scale, our growth rate in the health vertical led the pack, reflecting the integration benefits of our Crosspointe direct-to-consumer agency acquisition. Overall, we continue to see strong demand from our insurance providers.

As we emerged from COVID, carrier participation in the marketplace has continued without any notable reduction in advertising spend. Revenue from agents also continues to grow, accounting for at least 35% of total revenue for the past five quarters, reflecting the growing participation of agents in the marketplace. In consumer acquisition, we focused on attracting increased volumes of high intent consumers, which drove significant monetization expansion. Revenue per quote request increased 22%, while quote request grew 4% year-over-year to 7.7 million.

In Q1, our focus continued to be on delivering end-market consumers with a high propensity to shop and purchase insurance. Our emphasis on the quality of our referrals, which our providers reflect in their premium bids is captured in our strong growth in revenue per quote request.

We delivered first quarter variable marketing margin or VMM, which we define as revenue less advertising expense, of $31.4 million, an increase of 32% year-over-year, which was at the high end of the guidance range provided last quarter. As a percentage of revenue, first quarter VMM expanded to 30%, up from 29% in Q1 of last year. Though we manage for VMM in absolute dollars and not as a percentage of revenue, we did benefit from favorable revenue per quote request, only partially offset by higher traffic costs as the market for insurance-related search advertising tightened. We anticipate VMM as a percentage of revenue at similar levels in the next couple of quarters before expanding in Q4 with the influence of open enrollment within our health direct-to-consumer agency.

Turning to profitability. GAAP net loss was $3.8 million, a loss of $0.13 per share based on 28.4 million weighted average shares outstanding. We delivered adjusted EBITDA of $4.8 million or 4.6% of revenue for the first quarter, which was at the high-end of the guidance range provided last quarter.

Operating expenses were largely as forecasted and reflected the continued investment begun in 2020 in developing our direct-to-consumer agency and expanding our offerings in our verified partner network.

On the balance sheet, we ended the quarter with $46.9 million in cash and cash equivalents, reflecting $3.5 million of positive operating cash flow during the quarter.

Turning to our outlook for Q2 and the balance of the year, we anticipate an increased revenue growth rate in Q2 and we have reflected this in our Q2 guidance as follows. We expect revenue to be between $101 million and $103 million, a year-over-year increase of 30% at the midpoint. We expect variable marketing margin to be between $31 million and $32 million, a year-over-year increase of 34% at the midpoint. And we expect adjusted EBITDA to be between $5 million and $6 million, a year-over-year improvement of 38% at the midpoint.

Our first quarter performance reflects that we are executing and tracking well against our full year guidance. As a result, we are raising our full year revenue guidance and increasing the low-end of our VMM and adjusted EBITDA guidance as follows. We expect revenue to be between $434 million and $442 million, a year-over-year increase of 26% at the midpoint and an increase from our prior guidance of between $430 million and $440 million. We expect variable marketing margin to be between $136 million and $140 million, a year-over-year increase of 27% at the midpoint and an increase from our prior guidance of between $135 million and $40 million. And we expect adjusted EBITDA of between $26 million and $30 million, a year-over-year increase of 52% at the midpoint and increased from our previous guidance of between $25 million and $30 million.

In summary, we delivered solid first quarter financial results and have commenced 2021 executing well against our plan. We are focused on our growth levers, and our early performance has positioned us well for continued growth in 2021.

And with that, Jayme and I look forward to answering your questions.

Questions and Answers:

Operator

[Operator Instructions] Your first question is from the line of Jed Kelly with Oppenheimer.

Jed Kelly — Oppenheimer — Analyst

Hey, great. Thanks for taking my question and nice quarter. John, just one question around the guidance. Sort of when I look at the back half of the year, it looks like guidance accelerates into the mid-20s despite easing comps. And then it also looks that VMM margins would contract year-over-year. Can you just provide a little further color? And then, Jayme, I guess with the success with Crosspointe and some of the direct-to-consumer. Does that increase your appetite for acquisitions?

John Wagner — Chief Financial Officer

Sure. So thanks, Jed. Let’s see, I’ll kick that off by — with regards to the kind of what’s implied in the back half of the year, we do imply some of the new seasonality that we’ve talked about in terms of the health vertical and the fact that we’d see growth there. So we have reflected growth the back end of the year. It is well above our kind of long-term 20% or more above and it’s still our third open enrollment, our second with the Crosspointe. So we are being judicious in how we guide for kind of our second major open enrollment, but it is still a strong Q4, and we do reflect higher revenue per quote request as well in the back half of the year. So, we’re reflecting the impact of the direct to consumer within health primarily in the back half of the year.

Jayme Mendal — Chief Executive Officer

And then Jed to address your second question, the short answer is yes. We’re very pleased with the integration of Crosspointe. We spoke in the last call about the performance in Q4 during the open enrollment period. They continued to perform well above plan in Q1. And the general sentiment is we’ve probably accelerated our progress in health and Medicare by a good 12, 18, maybe 24 months through the acquisition. So as we think about continuing to execute against our strategy, I think we have increasing confidence that acquisitions can serve that function and acceleration of our existing strategy, and we remain sort of active in our efforts surveilling the market for the next opportunity.

Jed Kelly — Oppenheimer — Analyst

Okay, that’s helpful. John, just one more, just a follow-up. Just on the VMM margins and the expansion year-over-year in 1Q, what’s driving that? Is that being driven more by the home and life vertical, or is that being driven by execution in autos?

John Wagner — Chief Financial Officer

Yeah. Primarily, really execution in autos. It is — we’ve seen the demand in autos continue to remain strong coming into Q1, continue to see providers willing to bid, especially for high performing traffic. So some of that — some of the dynamic that we saw in the back half of 2020, we’ve seen continued into 2021. So even as we head into Q2, we continue to think we’ll see something similar for Q2 where we see increases in quote request and volume in Q2, but revenue per quote request is still the larger driver of revenue growth. And then as we move through the year, we’ll see quote requests play an increasing role in the back half of the year. But really what we’re seeing for revenue per quote request is just good monetization primarily coming from autos.

Jed Kelly — Oppenheimer — Analyst

Thank you.

Operator

Your next question is from the line of Michael Graham with Canaccord.

Michael Graham — Canaccord — Analyst

Hey, thanks. Guys, I just wanted to kind of go ask another question on the revenue per quote request versus the quote request volume and just wonder if you could share like it’s clear that, that you’re doing some great things with your consumer traffic initiatives and bringing in higher intent consumers, just wondering if you could give us a little more depth as to kind of how you’re doing that? And then really trying to get a handle on and John you just touched on this, but like — is this divergence in growth rate is something that should persist for a long time, or is it really just more of a temporary situation?

And then the other — somewhat related question, I just wanted to get your thoughts on this. You’ve got — your new vertical is now growing still much more quickly than auto. You’re adding strength in newer verticals. So can you just comment on how the seasonality of the business is changing? You mentioned open enrollment a couple of times, but maybe just talk about how the seasonality of the business is changing sort of this year and next year relative to what we’ve seen in the past. Thanks.

Jayme Mendal — Chief Executive Officer

Thanks, Mike. I’ll take the first part of the question around what is driving the elevated levels of revenue per quote request. If you kind of decomposed the metric, there are two things that drive it. One is the number of connections we’re able to make per consumer, and that’s — we refer to that as coverage. And then Number 2 is the value of each of those connections. And so starting — taking the first one first, our coverage is driven by adding more carriers and agents and expanding their coverage in the marketplace.

And what we have seen over the last year is just that. We’ve seen a lot of expansion of appetite from — particularly from our carriers and specifically that segment of digital carriers that we spoke about who have increased quite a bit over the last year. And then within our agent landscape, we’ve also seen a substantial increase in agent demand and capacity. And so, that’s resulted in higher levels of coverage.

With respect to the value per connection, there is a few things that can help drive that up. Number 1 is us sending out higher LTV referrals, so through things like bundling, the deep integrations that we went through, improved provider performance and therefore they’re willing to pay more for those integrated referrals and then the last piece which get that a little bit what John was talking about is better aligning the way that carriers bid for traffic to give them more the ability to target and price more granularly based on the intent level of the expected bind rate of that traffic.

And we are then able to flow that through to go target and acquire more of the high intent traffic and pay the right price for it and less[Phonetic] the below intent traffic and pay the right price for it.

John Wagner — Chief Financial Officer

Mike, I can give a little more color on the guidance kind of what we’re implying, as we move through the year. For Q2, again, we think that it’s primarily driven by — growth is primarily driven through revenue per quote request. But again, we continue to have balanced growth. There will be growth in volume of quote request as well. And then as you move through the year, in Q3 and Q4, you have comps from Q3 and Q4 in terms of quote request that are a little more tangible for us. And so, you should see volume of quote requests play a larger role.

And then getting into Q4, we do reference kind of what is the new seasonal pattern where Q4 has historically been a weak quarter in P&C, it is actually a very strong quarter for the health vertical. With our initiatives in DTC agency around health, we think that plays an increasing role. And so, you can see that in the guidance if you look at how we’ve guided for the year and for Q2. So really as you roll into Q4, it’s both volume as well as we should see benefit from revenue per quote request in Q4, simply because the DTC agency approach has higher revenue per quote request. There is more monetization through that model. And so, you’ll see some expansion in revenue per quote request in Q4 as well. So, generally, the gains we’ve seen in revenue per quote request are sustainable, and I think specifically, you’ll see that in Q2 with additional revenue per quote request growth.

Michael Graham — Canaccord — Analyst

Okay, thanks so much. That’s very helpful. I appreciate that.

Jayme Mendal — Chief Executive Officer

Thanks, Mike.

Operator

Your next question is from the line of Ron Josey with JMP Securities.

Ron Josey — JMP Securities — Analyst

Great. Thanks for taking the question. I wanted to ask a little bit more about traffic overall and realizing 1Q had the hardest comps for[Phonetic] year and we’ve talked a little bit about QR and RPQR, but I wanted to get dive a little bit more into the verified partner network. Jayme, you mentioned a strong pipeline of the network. Just — can you provide a little bit more details on the process here, the breakdown of the contribution to traffic growth maybe this quarter or perhaps how you’re thinking about it going forward just because I think this is a relatively new product overall?

And then maybe the follow-up to a prior question, Jayme, on the acquisition front, when you think about the acceleration in the business that happened in home and life, when you think about other non-auto verticals and acquisitions, is this more DTC — D2CA-type acquisitions and just different verticals or something else? Thank you.

Jayme Mendal — Chief Executive Officer

Great. So, to your first question, Ron, the verified partner network launched in earnest in 2019 and contributed meaningful growth in 2019 and in 2020. And what we’re really describing in the script is continued expansion of the product offerings within that platform. So if you take a step back, what is it, right, is maybe the right place to start. There are a bunch of publishers, media companies, websites out there with elevated — with users who have elevated levels of intent for insurance. And so, an example might be a real estate website. People there are browsing, shopping for homes. They may be in market for home insurance.

That company, that site may want to offer a full suite of services around buying a home in addition to just connecting them with a realtor, right, anyone to offer home services and insurance services and so on and so forth. But they are not going to go out and build the network of insurance providers that we have. So, they would come to EverQuote and we would provide them access to our insurance provider network.

Now, when we talk about different products, it’s really technical products there, it’s just different ways to accomplish that, right. They want — they may want their user to be able to submit a form and get contacted by an agent, they may want their user to be able to click via an API directly into an online workflow from one of the carriers. And so, we’re kind of thinking about what are our unique assets in distribution and how can we bring those to bear and package them up in a way that delivers value for these partners and for their users.

So, the rollout of new products is just us creating new ways to make those connections. And in the latest suite of products that we have rolled out, we’re seeing good adoption and we have a very healthy pipeline. And so, we expect it to continue to contribute materially to traffic volume and revenue growth as we progress through the year. Does that answer your question?

Ron Josey — JMP Securities — Analyst

It does. Yes, thank you.

Jayme Mendal — Chief Executive Officer

Great.

Ron Josey — JMP Securities — Analyst

And then on the [Speech Overlap] yeah, M&A.

Jayme Mendal — Chief Executive Officer

With respect — so, the second question around M&A. And maybe you can just clarify for me was the question around what we are — what types of targets we would be looking for or was it something else?

Ron Josey — JMP Securities — Analyst

Sort of yes. Wondering if D2CA is sort of like the new way forward here and maybe using that as a way to build up your non-auto verticals even more or what else, how else are you thinking about M&A to just further accelerate the business by years, which I think you mentioned on the call for life.

Jayme Mendal — Chief Executive Officer

Yeah. So I think anything that fits cleanly within our strategy, we would consider as an accelerator period. DTCA checks a number of the boxes of our strategy, right. It helps us expand our distribution and improve sort of consumer provider alignment and optimize their engagement. And so, that’s why DTCA is one category of target that would be attractive to us in this effort. There are others. As you mentioned, we are eager to continue growing our non-auto verticals. Our goal is to get non-auto up at or above 50% of our revenue by the time we crossed the $1 billion of revenue.

And so, to the extent, we find other companies playing in the non-auto space, we would consider those. They don’t necessarily need to be an agency though. They could be traffic platform. They could be other businesses, but to the extent, they help drive that tenant of our strategy, we’re open to evaluating them.

Ron Josey — JMP Securities — Analyst

That’s helpful. Thank you, Jayme.

Jayme Mendal — Chief Executive Officer

Yeah.

Operator

Your next question is from the line of Ralph Schackart with William Blair.

Ralph Schackart — William Blair — Analyst

Hi. Good evening. Thanks for taking the question. Jayme, during the prepared remarks, you talked about on the carrier side, you have not seen any reduction spend and then gave some updated stats on the agent growth, which I think is about 35% or so for the last few quarters. And as you — as we sort of look forward as vaccines rollout and the US focuses on reopening, do you expect the carriers to continue to divert more dollars in the digital channels and marketplaces? I think there has been a broader concern within very specific verticals that verticals maybe such as insurance that were forced to move online as the world reopens, perhaps go and move those dollars back to offline. So we just love your sort of overall thoughts on that.

Jayme Mendal — Chief Executive Officer

Yeah. So there are two forces at play. I mean, there are many forces at play, but I’ll highlight sort of two big ones. One is with the onset of COVID, carriers lost access to a number of acquisition channels that were previously available to them, whether that’s the in-person agents or whether that sponsoring a sporting event or whatever it may be. Number 2 is, carriers have been quite profitable, right. And as a result of miles driven having gone down that experienced high levels of profitability and they’ve been able to reinvest that in customer acquisition. So I can share our perspective on where these two things will go moving forward and what we’re starting to see.

With respect to them shifting budget into digital channels, what came along with that was some structural investment in change to get more performance out of those channels. So we saw carriers integrating with us at an accelerated rate. We saw carriers providing support and training and technology to enable their agents to get more — to get more performance out of online referrals. And as they’re seeing performance in channels like ours, we’re seeing no signals that they’re going to divert dollars away back into the other channels, even as they open up. And so, we feel pretty good that the gains that we’ve seen are stable and will persist.

With respect to the second effect, which is that the profitability. What we are seeing so far in Q1 in the data — in the carrier data is that combined ratios — loss ratios are still favorable. What we’re seeing more qualitatively in terms of the demand from our carriers is that they’re still hungry for growth. And so, while as people get vaccinated and things return to whatever the new normal is, we’ll keep a close eye on this, but all signs right now point to continued health from the carriers continued appetite for growth. And even if we get back to a place where miles driven come up, but there is still slightly less miles driven during commuting hours, that can have an outsized impact on losses. And so, it’s unclear that there’s going to be any fast return to lower profitability for the carriers we see — we sort of see it the other way.

Ralph Schackart — William Blair — Analyst

That’s helpful perspective. Maybe one more if I could. In our prior calls, you’ve talked about investments in brand advertising and testing some channels — new channels such as TV, just love to get some updated thoughts on how these investments are going versus your expectations? Thank you.

Jayme Mendal — Chief Executive Officer

Yeah. Thanks, Ralph. So, we continued — we continue to test. We are finding pockets of performance, particularly as it pertains to driving traffic directly into our agencies. And so, as we progress through the year, optimize and see the performance come in line with where we needed to be, we hope to be in a position to scale some of these channels, and we hope to be able to do so as we head into the open enrollment period in Q4.

Ralph Schackart — William Blair — Analyst

Great, that’s helpful. Thank you, Jayme.

Jayme Mendal — Chief Executive Officer

Thank you, Ralph.

Operator

Your next question is from the line of Aaron Kessler with Raymond James.

Aaron Kessler — Raymond James — Analyst

Great. Thanks, guys. Maybe just following up, you talked obviously a lot last year about deeper carrier integrations and made a lot of progress in 2020. Maybe just kind of talk a little bit about what’s left to do in terms of some of the integration work. And then I think John — I think you mentioned kind of the market tightens a little bit. Can you maybe double click on that a little bit what you’re referencing, was that increased competition or other factors there? Thank you.

Jayme Mendal — Chief Executive Officer

Yeah, I’ll start with the integration piece. So, we’ve sort of completed the journey to get carriers integrated with a deep pre-fill for all of our direct click advertisers. As we think about what’s next, we sort of bifurcate the shopping journey into two paths. You’ve got the online path. So, there is that consumer that wants to get their quotes and or buy insurance online. And then you’ve got the offline path, which is the majority of shoppers who actually ultimately will fall off to the phone to ask questions, make sure they understand their coverage and what they’re buying. So we’re looking at — we have roadmaps to further integrate and smooth out the experience down both of those paths.

With respect to the online path, we are planning — we plan to continue integrating more deeply, and ultimately, want to get to a place where the majority of consumers are landing fully be prefilled and or on a quote on a path to enable online binding in specific segments and for specific insurance products where it makes sense to do so.

Down the offline path, we’ve invested quite a bit in basically taking over the process of getting the consumer connected with the local agent. And in doing so, it creates for a more sort of unified — a more unified process for the consumer. And for the provider, we’re able to apply some technology or data and some best practices to improve the performance and the connection rates between them and the consumer.

So, those are kind of the two dimensions and we’ve got a number of efforts on both fronts to continue pushing and smoothing out that process for both consumers and for providers.

John Wagner — Chief Financial Officer

And I’d say on the higher traffic costs, I referenced that we have seen specifically higher costs on search in Q1. We’re seeing that as well in this quarter[Phonetic] as well. And it’s always hard to parse whether that is where that’s coming from in terms of competitive landscape. I think more than anything, it really reflects the strength of the insurance industry, specifically autos at this time as well.

So I think as with all of our competition for advertising, we’re generally seeing the carriers in those first positions and that’s I think the biggest influence from the market. And I think that dovetails well into what we’re seeing on the demand side from the carriers as well. So I think it really just reflects a little bit of what Jayme talked about, which is we’re not seeing a reduction in demand or any pullback in spending from the carriers. Instead, the advertising landscape still seems very healthy for the insurers, especially for auto.

Aaron Kessler — Raymond James — Analyst

Got it. That’s helpful. Thanks guys.

Operator

Your next question — I’m sorry if I mispronounce it, Mayank Tandon with Needham.

Mayank Tandon — Needham — Analyst

Thank you. Good evening all. Hi, Jayme and John, congrats on the quarter. Thanks for taking the question. I wanted to actually — Jayme ask you about the — is there a way to maybe size what percentage of the budget you’ve been able to capture of your say, core carriers where that number can go to over time? And then maybe been sort of software parlance, is there a way to think about this In terms of land and expand within the carrier base you have today and the contribution from new logos over time?

Jayme Mendal — Chief Executive Officer

Yeah. Thanks, Mayank. The percent of budget is a tough one for me to answer because many of the carriers don’t really expressed to us a budget. What they expressed to us is effectively an unlimited budget so long as we’re meeting their cost per sale or whatever their performance targets are. And they’re sort of open and willing to spend sort of untapped or unlimited way with us so long, as we are meeting their performance targets. So, I don’t have a good sense. I think in some respect, you can probably in our sort of category and the marketplace category you might be able to take a look at just overall revenue of the various players in the market and maybe take that as a proxy across many of the big carriers. But that’s just sort of how I would run the thought exercise. I don’t have any more informed perspective than that.

With respect to landing and expanding, yes, absolutely, Mayank. And what we are finding is, there are — there is that — when you build a relationship with the carrier, we have an enterprise team that is really focused on building kind of deep trust understanding those carriers’ needs, understanding how they are best configured to distribute insurance and then increasingly customizing and building new solutions that enable us to deliver more policies to them within their profitability goals.

And so, examples of that might be, you have someone who is buying quick traffic from us into their website, right, and that’s performing and that program is going great. But now, they’re staffing up their call center and they need a way to drive more volume into that call center, while we would work for that — work with them to find solutions to get some of the web traffic that we have and those consumers that specifically prefer to connect through an offline channel to connect with some of the agents in their call center and we made to facilitate that through — other channels through remarketing or SMS or lead sales. But this is sort of exactly how we think about managing the carrier base, as we build and grow with them.

Mayank Tandon — Needham — Analyst

That’s very helpful, Jayme, perspective. I wanted to ask John a quick follow-up. John, in terms of the EBITDA goals, could you talk about the key leverage points on the opex line, as you’ve[Phonetic] got to focus on the near-term and also maybe longer term, what are some of the levers that you have to get to that? I think long-term model that you talked about 20%, 25% EBITDA. So maybe, yeah, both short term and long-term, that would be helpful. Thank you.

John Wagner — Chief Financial Officer

Sure. So, I guess — I’d start with saying that for us, really — profitability is really a managed outcome for us because we really can’t control the level of investment. So, our story continues to be one of both growth and increased profitability. We’re the biggest governor on our growth is creating additional variable marketing margin dollars. And then from there, those additional dollars really in a position where we can manage how many of those — how much of that additional VMM flows down to adjusted EBITDA and how much of it flows into operating expense. It’s actually a lot more leverage within all of the operating categories within the model. It’s just a question of how much are we making investments into new topline in order to make sure that we’re not missing out on what is a very, very large market opportunity moving online. So it’s a bit of a balancing act.

And so, I think when you look at both in the short-term and in the long term, you would still continue to see us make trade-off decisions between how much we’re investing for topline, things like the investments in DTCA, the investments in verified partner network that we’ve mentioned this year and then how much are we letting flowed down to the bottom line. We think it is important to continue to deliver on what is our long-term promise of adding 1 point to 2 points of adjusted EBITDA on a yearly basis, simply to kind of show the path to profitability and show the path to show that we manage the levers in getting to that mid-20s adjusted EBITDA target. And so, I think you saw that in the last couple of years since we’ve been public and you’re seeing that in as well in the guide as we guide about a point of additional adjusted EBITDA for the full year this year.

Mayank Tandon — Needham — Analyst

Great. Thank you so much.

Operator

Your next question is from the line of Doug Anmuth with JP Morgan.

Dae Lee — JP Morgan — Analyst

Hi. Good afternoon. This is Dae Lee on for Doug, and thanks for taking the question. First one I have is on the request growth. Was there a way to parse that between like autos and non-autos? Just wondering how that’s been growing from a vertical perspective? And then secondly, you talked about non-autos becoming more than 50% of revenue over time and you’ve clearly seen [Technical Issues] life vertical. I’m wondering if and what kind of growth you’re contemplating within other verticals within non-autos to get to that 50% plus levels?

John Wagner — Chief Financial Officer

Sure, Dae. I’ll just kick it off. We don’t parse out the growth between the autos and non-autos in quote request. But suffice to say, we’re seeing growth in both. And again, I think you’d expect that most pronounced as we come through the back half of the year within the non-autos.

Jayme Mendal — Chief Executive Officer

And then, with respect to what’s driving the growth of non-autos, the question was what vertical specifically? Just want to make sure…

Dae Lee — JP Morgan — Analyst

Longer term, you talked about that becoming 50% plus. It feels like in the health and life will drive a good portion of that, but just wondering what other verticals you guys might be contemplating into that?

Jayme Mendal — Chief Executive Officer

Yeah. So certainly health and life, we have pretty strong data to suggest they can support very high growth for continued — for years out in the future relative to that long-term road map. And so, as we continue to invest over time, we do expect health and life to contribute a meaningful amount of that growth. We believe home will continue to grow as well. What we’re seeing with home now is — as it picks up some scale and we roll out bundled offerings, we’re starting to see margin come up a bit and it’s beginning to resemble sort of the growth and profitability profile that’s more analogous to auto.

And so, we’ll see how that — whether that persist. But I think we can expect home to continue growing, although maybe not at the rates of health and life. And then, we haven’t spoken about small business, commercial in some time, but I figure most of all[Phonetic] address it. We made — we launched it in, I believe, 2019. In 2020, with the onset of COVID, it didn’t feel like a particularly strong climate in which to ramp investment into small business commercial lines. So, we continue to perceive a lot of opportunity in that vertical, but given the progress we’re making in health and life and home, it continues to sit at a basket of potential investments we can make — we can ramp. And so, that’s not accounted for in the roadmap to the levels that health, life and home might be.

Dae Lee — JP Morgan — Analyst

Got it. Okay. Thank you.

Operator

Your next question is from the line of Ben Rose with Battle Rose.

Ben Rose — Battle Road Research — Analyst

Hi, that’s Battle Road Research. Question for Jayme. With regard to other verticals, I think you’ve said in the past that you believe that — you believe that commission fees from other verticals could exceed 50% of revenue by the end of the year. I’m not sure if I have that right, but is that currently you’re thinking?

Jayme Mendal — Chief Executive Officer

Well, I might sort of slightly just characterize that slightly differently. I think it is possible that commission revenues could comprise the majority — more than 50% of revenues within the verticals in which they exist, so it’s in life and health. I think that is possible, especially in Q4, given what we expect to see with open enrollment.

Ben Rose — Battle Road Research — Analyst

Okay. And given the comments that you’ve made around the home vertical, is it logical to conclude that would be the next sort of DTC marketplace that you would enter?

Jayme Mendal — Chief Executive Officer

We don’t quite think about it that way. The DTC agency solves for a very specific customer need. It’s where we don’t have sufficient marketplace distribution, local agents and carriers to deliver on our customer promise to the consumer. DTCA is one of the tools that we can use to plug those coverage gaps. And so, it was — in health and life, where we had less robust distribution, that was sort of the obvious place to start.

In auto and home, our third-party — our marketplace distribution is stronger. But there are still pockets within P&C segments of the market where we don’t have a strong coverage. And so, we think about it not really at the vertical level, but a bit more granularly like what are the segments within the vertical where we need coverage, and then that’s where we would consider layering on the DTCA capabilities to solve for that customer promise.

Ben Rose — Battle Road Research — Analyst

Okay, that’s very helpful. Thank you.

Jayme Mendal — Chief Executive Officer

Thanks, Ben.

Operator

I’d now like to turn the call back over to management for closing remarks.

Jayme Mendal — Chief Executive Officer

Thank you. Well, thank you all again for joining us today. We’re pleased with our Q1 performance. We remain bullish on our outlook for the remainder of 2021 and beyond. We are in the early innings in the shift of $150 billion of insurance distribution spend online. And with that as our backdrop, EverQuote is laser-focused on our vision to become the largest online source of insurance policies by using data and technology to make insurance simpler, more affordable and personalized.

I’m increasingly encouraged by our ability to balance consistent operational execution quarter after quarter with methodical investments in new growth platforms. And I’m confident that with our continued execution, the strength of our team and our strategy, EverQuote will become an industry-defining company as the $2 trillion dollar insurance industry moves into the digital age.

So thank you all again and have a great evening.

Operator

[Operator Closing Remarks]