MediaAlpha (MAX) Q2 FY26 earnings call: guidance and Q&A

Can you provide more color on the current state of carrier demand recovery and what factors are holding back carriers that haven't fully re-engaged?

Management stated the market is in a robust growth-oriented soft market cycle, with strong underwriting profitability driving carriers to lower rates and increase ad spend. Broadening demand is seen particularly from agent-based carriers adopting direct-to-consumer distribution. Gating factors are primarily about capability, as many carriers are new to DTC and performance-based online channels, requiring MediaAlpha to provide platform solutions and technology integrations.

“What you're seeing is this broadening happening in particular with a lot of major agent-based carriers who are at various stages of really adopting direct-to-consumer distribution.”

asked by Maria Ripps · answered by Steven Yi

How has LLM-driven insurance shopping evolved since last quarter, is it moving the needle, and how do its conversion characteristics compare to established channels?

LLM-driven search continues to organically scale as a referral source, with some partners reporting volumes comparable to Google organic search. It's considered a high-quality source, typically higher than Google Organic, due to the more granular and detailed nature of consumer queries. While still relatively small in overall impact, it's expected to grow, especially as ad ecosystems are layered onto LLMs like Gemini.

“We continue to hear that it's a high-quality source, typically higher quality than Google Organic. And this makes sense because of just how much more granular these searches tend to be.”

asked by Maria Ripps · answered by Steven Yi

How will the expansion of advertisers beyond the top 2 impact contribution margin, considering the economics of relationships with smaller carriers?

The 3rd, 4th, and 5th largest carriers, and others, primarily transact on MediaAlpha's open marketplace, which typically has markedly higher take rates compared to the private marketplace used by top advertisers. These partners are also more likely to utilize managed services and technology tools, contributing to the higher take rates. Open marketplace revenue is recognized gross, with a typical contribution margin in the teens.

“the take rates we have, so the percentage of transaction value that we recognize are markedly higher in the open marketplace.”

asked by Thomas Mcjoynt-Griffith · answered by Patrick Thompson

Can you explain the nature of the mid-quarter take rate dip and how it was quickly turned around, and if it was AI-related?

The dip in take rates in May and early June was due to partner-specific investments made with existing, long-standing partners. These were short-term costs expected to yield long-term benefits. By the end of Q2, take rates had recovered, and Q3 started strong. The investments were not AI-related but rather strategic moves with existing partners.

“we made a couple of kind of partner-specific investments there. And they were investments that were obviously a short-term cost for us, but we believe had meaningful long-term benefits.”

asked by Randy Binner · answered by Patrick Thompson

Following the successful TRA repurchase, is there more potential for similar transactions, or was this a one-off event?

After the Insignia transaction, the remaining TRA liability is about $55 million, held by founders, early employees, and an external third party. The company would evaluate any future repurchases based on expected IRR versus alternative capital uses. While there's no obligation for holders to sell, MediaAlpha is open to further deals if they make sense for shareholders, requiring mutual willingness to transact at an agreeable price.

“we would evaluate any further TRA repurchases the exact same way we evaluated the one that we completed in June with Insignia, where we look at the expected IRR versus alternative uses of capital.”

asked by Michael Zaremski · answered by Patrick Thompson