MediaAlpha, Inc. (MAX)

Item 2. Management’s discussion and analysis of financial condition and results of operations

The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited consolidated financial statements and related notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

This discussion, particularly information with respect to our future results of operations or financial condition, business strategy and plans, and objectives of management for future operations, includes forward-looking statements that involve risks and uncertainties as described under the heading "Cautionary Statement Regarding Forward-Looking Statements" in this Quarterly Report on Form 10-Q. You should review the disclosure under the heading "Risk Factors" in Part II, Item 1A of this Quarterly Report on Form 10-Q for a discussion of important factors that could cause our actual results to differ materially from those anticipated in these forward-looking statements.

Management overview

We connect insurance carriers with online shoppers through the most efficient customer acquisition marketplace. We help insurance carriers and distributors target and acquire consumers more efficiently and at greater scale through technology and data science. Our technology platform brings together leading insurance carriers and high-intent consumers through a real-time, programmatic, transparent, and results-driven ecosystem. We believe we are the leading customer acquisition infrastructure for insurance carriers, supporting $1.2 billion in Revenue across our platform from our core verticals of property & casualty ("P&C") insurance, health insurance, and life insurance over the twelve-month period ended June 30, 2026.

We have multi-faceted relationships with top-tier insurance carriers and distributors. A buyer or a Demand Partner within our ecosystem is generally an insurance carrier or distributor seeking to reach high-intent insurance consumers. A seller or a Supply Partner is typically an insurance carrier looking to maximize the value of non-converting or low expected LTV consumers, or an insurance-focused research destination or other financial website looking to monetize high-intent users on their websites. During the twelve-month period ended June 30, 2026, consumers shopping for insurance products through the websites of our diversified group of Supply Partners and our proprietary websites drove an average of 11.3 million Consumer Referrals on our platform each month.

We generate revenue by earning a fee for each Consumer Referral sold on our platform. A transaction becomes payable upon a qualifying consumer action, such as a click, call or lead, and is generally not contingent on the sale of a product to the consumer.

We believe our technology is a key differentiator and a powerful driver of our performance. We maintain deep, custom integrations with partners representing the majority of our revenue, which enable automated, data-driven processes that optimize our partners’ customer acquisition spend and revenue. Through our platform, our P&C insurance carrier partners can target and price across over 35 separate consumer attributes to manage customized acquisition strategies.

Executive Summary

Highlights

1.Adjusted EBITDA, Contribution, and Contribution Margin are non-GAAP financial measures. See “Management’s discussion and analysis of financial condition and results of operations-Key business and financial metrics” for additional information regarding the Company’s Non-GAAP metrics.

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For the three months ended June 30, 2026, revenue was $316.9 million, an increase of 25.9% compared with the three months ended June 30, 2025, driven primarily by significant increases in customer acquisition spending by P&C Demand Partners, including higher participation by a broader group of carriers, as they continue to focus on growth and increasing market share in response to strong underwriting profitability, offset in part by a decline in revenue from our Health insurance vertical, in both under-65 health and Medicare, due primarily to our decision to scale back the under-65 health sub-vertical.

Contribution, which generally represents revenue less revenue share payments and online advertising costs, was $47.2 million for the three months ended June 30, 2026, a year-over-year increase of 18.4%, driven primarily by a higher mix of Open Marketplace transactions, offset in part by the scaling back in the under-65 health sub-vertical. Contribution Margin was 14.9% in the three months ended June 30, 2026, compared with 15.8% in the three months ended June 30, 2025.

Net income for the three months ended June 30, 2026 was $41.8 million, compared with a net loss of $22.5 million for the three months ended June 30, 2025, due primarily to a $37.7 million gain on extinguishment of a portion of the liability under the tax receivables agreement resulting from our repurchase of Insignia's interest in the TRA and an increase in gross profit, offset in part by higher income tax expense. In addition, during the three months ended June 30, 2025, we incurred a charge of $33.0 million to increase our reserve related to the FTC Matter.

Adjusted EBITDA for the three months ended June 30, 2026 was $29.3 million, a year-over-year increase of 19.5%, due primarily to higher contribution.

Other developments

On June 25, 2026, we entered into an Assignment, Assumption and Termination Agreement with Insignia, pursuant to which we purchased Insignia's interest in the TRA for $31.0 million in cash ("TRA Settlement"). As of March 31, 2026, our estimated future liability under the TRA was $123.4 million, of which $68.7 million related to Insignia. The TRA Settlement resulted in a gain of $37.7 million.

Key factors affecting our business

Revenue

We believe that our future performance will depend on many factors, including those described below and in Part I, Item 1A "Risk Factors" in our 2025 Annual Report on Form 10-K and under Part II, Item 1A "Risk Factors" in this Quarterly Report on Form 10-Q.

Secular trends in the insurance industry

Our technology platform was created to serve and grow with our core insurance end markets. We believe secular trends in the insurance industry are critical drivers of our revenue and will continue to provide strong tailwinds for our business over the long term. Customer acquisition spending by insurance carriers is growing over time, and as more consumers shop for insurance online, direct-to-consumer marketing, which fuels our revenue, has become the fastest growing insurance distribution channel. As mass-market customer acquisition becomes more costly, insurance carriers and distributors are increasingly focusing on optimizing customer acquisition spend, which is at the core of the service we deliver on our platform. As long as these secular trends persist, we expect digital insurance customer acquisition spending to continue to grow over time, and we believe we are well-positioned to benefit from this growth.

In our health vertical, we aim to drive deeper adoption and integration of our platform within the Medicare Advantage ecosystem. We believe that the Medicare Advantage market represents a substantial opportunity for us, but this market is currently facing challenges due primarily to fluctuating carrier loss ratios and reimbursement rate increases. These underlying market pressures have created a difficult environment for customer acquisition, with carriers pulling back or reallocating marketing spend in response to volatile plan economics.

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. Effective with the first quarter of 2026, we have discontinued reporting of Transaction Value to simplify our reporting structure. As our scale advantage has become well-established, we believe that Revenue, Contribution and Contribution Margin, and Adjusted EBITDA are the most relevant metrics for evaluating our performance relative to our peers.

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Our Demand and Supply Partners

Our success depends on our ability to retain and grow the number of high-quality Demand Partners and Supply Partners on our platform. We retain and attract Demand Partners in part by finding high-quality sources of Consumer Referrals to make available to our Demand Partners. We obtain these Consumer Referrals from our diverse network of Supply Partners as well as from our proprietary properties. We seek to develop, acquire and retain relationships with high-quality Supply Partners by developing flexible platforms to enable our Supply Partners to maximize their revenue, manage their demand side relationships in scalable and flexible ways and focus on long-term sustainable economics with respect to revenue share. Our relationships with our partners are deep and long standing and involve most of the top-tier insurance carriers in the industry. In terms of Demand Partners, during the six months ended June 30, 2026, 16 of the top 20 largest auto insurance carriers by customer acquisition spend in 2025 were active on our platform.

Consumer Referrals

We define "Consumer Referral" as any consumer click, call or lead purchased by a Demand Partner on our platform. 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 revenue and overall business performance across our verticals and platform models.

Our results depend in large part on the number of Consumer Referrals purchased on our platform and the pricing of such Consumer Referrals. The aggregate number of consumer clicks, calls, and leads purchased by Demand Partners on our platform decreased to 28.6 million and 62.8 million for the three and six months ended June 30, 2026, respectively, from 34.0 million and 69.0 million for the three and six months ended June 30, 2025, respectively, due primarily to our actions to scale back the under-65 Health sub-vertical. We seek to increase the number and scale of our supply relationships and drive consumers to our proprietary properties through a variety of paid traffic acquisition sources. We continuously look to diversify our paid media sources to extend beyond search engine marketing, which has historically represented the bulk of our paid media spend. We expect artificial intelligence (AI) based platforms, including large language models, to become significant traffic acquisition sources for us and our Supply Partners and drive incremental traffic to our marketplace.

Cyclicality

Our results are also subject to fluctuations as a result of business cycles experienced by companies in the P&C insurance industry. These cycles in the P&C insurance industry are characterized by periods of “soft” market conditions, when carriers are profitable and are focused on increasing capacity and building market share, and “hard” market conditions, when carriers are experiencing lower or even negative underwriting profits and are seeki

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with our audited consolidated financial statements and related notes included in “Financial Statements and Supplementary Data.” Some of the information contained in this discussion and analysis, including information with respect to our plans and strategy for our business, includes forward-looking statements involving significant risks and uncertainties. As a result of many factors, such as those set forth in “Risk Factors,” our actual results may differ materially from the results described in, or implied by, these forward-looking statements.

We have omitted discussion of 2023 results where it would be redundant to the discussion previously included in Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations," of our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the Securities and Exchange Commission and is incorporated by reference, and should be referred to for information regarding this period.

Overview

Our mission is to help insurance carriers and distributors target and acquire consumers more efficiently and at greater scale through technology and data science. Our technology platform brings together leading insurance carriers and high-intent consumers through a real-time, programmatic, transparent, and results-driven ecosystem. We believe we are the leading customer acquisition infrastructure for insurance carriers, supporting $2.2 billion in Transaction Value across our platform from our core verticals of property & casualty ("P&C") insurance, health insurance, and life insurance in the year ended December 31, 2025.

We have multi-faceted relationships with top-tier insurance carriers and distributors. A buyer or a Demand Partner within our ecosystem is generally an insurance carrier or distributor seeking to reach high-intent insurance consumers. A seller or a Supply Partner is typically an insurance carrier looking to maximize the value of non-converting or low expected LTV consumers, or an insurance-focused research destination or other financial website looking to monetize high-intent users on their websites. During the year ended December 31, 2025, consumers shopping for insurance products through the websites of our diversified group of Supply Partners and our proprietary websites drove an average of 11.8 million Consumer Referrals on our platform each month.

We generate revenue by earning a fee for each Consumer Referral sold on our platform. A transaction becomes payable upon a qualifying consumer action, such as a click, call or lead, and is generally not contingent on the sale of a product to the consumer.

We believe our technology is a key differentiator and a powerful driver of our performance. We maintain deep, custom integrations with partners representing the majority of our Transaction Value, which enable automated, data-driven processes that optimize our partners’ customer acquisition spend and revenue. Through our platform, our P&C insurance carrier partners can target and price across over 35 separate consumer attributes to manage customized acquisition strategies.

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Executive Summary

Highlights

1.Transaction Value is an operating metric not presented in accordance with GAAP. Adjusted EBITDA, Contribution, and Contribution Margin are non-GAAP financial measures. See “Management’s discussion and analysis of financial condition and results of operations-Key business and operating metrics.” for additional information regarding the Company’s operating metrics and Non-GAAP metrics.

For the year ended December 31, 2025, we generated $1.1 billion of revenue and $2.2 billion of Transaction Value, representing increases of 28.8% and 44.5%, respectively, compared with the year ended December 31, 2024, driven primarily by significant increases in customer acquisition spending by P&C Demand Partners as they continued to focus on growth and increasing market share in response to improving underwriting profitability, offset in part by a decline in revenue from our Health insurance vertical, in both under-65 health and Medicare, due primarily to our decision to scale back the under-65 health sub-vertical and the ongoing industry-wide headwinds within Medicare due to high carrier loss ratios.

Contribution, which generally represents revenue less revenue share payments and online advertising costs, was $176.3 million for the year ended December 31, 2025, a year-over-year increase of 14.2%, driven primarily by the higher revenue, offset in part by lower margins due to reductions in Transaction Value from our Health vertical and a higher mix of Private Marketplace transactions in our P&C vertical. Contribution Margin was 15.8% for the year ended December 31, 2025, compared with 17.9% for the year ended December 31, 2024.

Net income for the year ended December 31, 2025 was $26.8 million, compared with net income of $22.1 million for the year ended December 31, 2024, due primarily to higher income tax benefit consisting primarily of reduction of the valuation allowance against our deferred tax asset, and to the higher gross profit, offset in part by an increase in our non-current liability pursuant to the Tax Receivables Agreement (“TRA”), a charge of $38.0 million to increase our reserve related to FTC Matter, and a write-off of $13.4 million of certain acquired intangible assets.

Adjusted EBITDA for the year ended December 31, 2025 was $113.7 million, a year-over-year increase of 18.3%, due primarily to higher gross profit.

Key factors affecting our business

Revenue

We believe that our future performance will depend on many factors, including those described below and in the section titled Part I, Item 1A “Risk factors” included in this Annual Report on Form 10-K.

Secular trends in the insurance industry

Our technology platform was created to serve and grow with our core insurance end markets. We believe secular trends in the insurance industry are critical drivers of our revenue and will continue to provide strong tailwinds for our business over the long term. Customer acquisition spending by insurance carriers is growing over time, and as more consumers shop for insurance online, direct-to-consumer marketing, which fuels our revenue, has become the fastest growing insurance distribution channel. As mass-market customer acquisition becomes more costly, insurance carriers and distributors are increasingly focusing on optimizing customer acquisition spend, which is at the core of the service we deliver on our platform. As long as these secular trends persist, we expect digital insurance customer acquisition spending to continue to grow over time, and we believe we are well-positioned to benefit from this growth. In the P&C industry advertising spend increased at a 7% CAGR for the period from 2006-2024 and according to William Blair, advertising spend by P&C insurance carriers in the U.S. is expected to reach approximately $14 billion in 2026, growing at a 10% CAGR from 2024 levels.

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In our health vertical, we aim to drive deeper adoption and integration of our platform within the Medicare Advantage ecosystem. The Medicare Advantage market represents a substantial opportunity with approximately over $423 billion in annual premiums, capitation payments, and rebates. Further, Medicare Advantage enrollment now exceeds 50% of eligible beneficiaries and continues to grow and outpace original Medicare products, supported by a growing and increasingly online savvy population aging into Medicare. However, this market is facing challenges, driven by fluctuating carrier loss ratios and variable CMS reimbursement rate increases. These underlying market pressures have created a difficult environment for customer acquisition, with carriers pulling back or reallocating marketing spend in response to volatile plan economics.

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. Transaction Value from Open Marketplace transactions is a direct driver of our revenue, while Transaction Value from Private Marketplace transactions is an indirect driver of our revenue (see “Key business and operating metrics” below). Transaction Value on our platform increased to $2.2 billion for the year ended December 31, 2025 from $1.5 billion for the year ended December 31, 2024, due primarily to an increase in customer acquisition spending by P&C insurance carriers in response to improvements in their underwriting profitability. We have developed multi-faceted, deeply integrated partnerships with insurance carriers and distributors, who may be both Demand Partners and Supply Partners on our platform. We believe the versatility and breadth of our offerings, coupled with our focus on high-quality products, provide significant value to insurance carriers and distributors, leading many of them to use our platform as their central hub for broadly managing digital customer acquisition and monetization, resulting in strong retention rates. For the year ended December 31, 2025, 99% of total insurance Transaction Value executed on our platform came from Demand Partner relationships in existence during 2024.

Our Demand and Supply Partners

Our success depends on our ability to retain and grow the number of high-quality Demand Partners and Supply Partners on our platform. The aggregate number of Demand Partners and Supply Partners active on our platform, in addition to our agent partners, was approximately 1,160 and 1,230 for the years ended December 31, 2025 and 2024, respectively. We retain and attract Demand Partners in part by finding high-quality sources of Consumer Referrals to make available to our Demand Partners. We obtain these Consumer Referrals from our diverse network of Supply Partners as well as from our proprietary properties. We seek to develop, acquire and retain relationships with high-quality Supply Partners by developing flexible platforms to enable our Supply Partners to maximize their revenue, manage their demand side relationships in scalable and flexible ways and focus on long-term sustainable economics with respect to revenue share. Our relationships with our partners are deep and long standing and involve most of the top-tier insurance carriers in the industry. In terms of Demand Partners, during the year ended December 31, 2025, 16 of the 20 largest auto insurance carriers by customer acquisition spend in 2024 were active on our platform.

Consumer Referrals

Our results depend in large part on the number of Consumer Referrals purchased on our platform and the pricing of such Consumer Referrals. The aggregate number of consumer clicks, calls, and leads purchased by Demand Partners on our platform increased to 141.5 million for the year ended December 31, 2025 from 118.8 million for the year ended December 31, 2024. We seek to increase the number and scale of our supply relationships and drive consumers to our proprietary properties through a variety of paid traffic acquisi

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