0001193125-21-240637.txt : 20210809 0001193125-21-240637.hdr.sgml : 20210809 20210809171627 ACCESSION NUMBER: 0001193125-21-240637 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 60 CONFORMED PERIOD OF REPORT: 20210630 FILED AS OF DATE: 20210809 DATE AS OF CHANGE: 20210809 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EverQuote, Inc. CENTRAL INDEX KEY: 0001640428 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING, DATA PROCESSING, ETC. [7370] IRS NUMBER: 263101161 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-38549 FILM NUMBER: 211157456 BUSINESS ADDRESS: STREET 1: 210 BROADWAY CITY: CAMBRIDGE STATE: MA ZIP: 02139 BUSINESS PHONE: 617-245-0615 MAIL ADDRESS: STREET 1: 210 BROADWAY CITY: CAMBRIDGE STATE: MA ZIP: 02139 10-Q 1 d160568d10q.htm 10-Q 10-Q
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
 
FORM
10-Q
 
 
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2021
OR
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
    
    
        
    
to
    
        
    
    
.
Commission File Number:
001-38549
 
 
EverQuote, Inc.
(Exact name of registrant as specified in its charter)
 
 
 
Delaware
 
26-3101161
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer

Identification No.)
   
210 Broadway
Cambridge, Massachusetts
 
02139
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code: (855)
522-3444
 
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
 
Trading
Symbol(s)
 
Name of each exchange
on which registered
Class A Common Stock, $0.001 Par
Value Per Share
 
EVER
 
The Nasdaq Global Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    
Yes
  ☒    No  ☐ 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    
Yes
  ☒    No  ☐ 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule
12b-2
of the Exchange Act.
 
Large accelerated filer      Accelerated filer  
       
Non-accelerated
filer
     Smaller reporting company  
       
         Emerging growth company  
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  
As of June 30, 2021, the registrant had 22,668,643 shares of Class A common stock, $0.001 par value per share, issued and outstanding and 6,407,678 shares of Class B common stock, $0.001 par value per share, issued and outstanding. 
 
 
 
 
Table of Contents
 
 
 
 
  
Page
 
PART I.
 
  
 
4
 
Item 1.
 
  
 
4
 
 
 
  
 
4
 
 
 
  
 
5
 
 
 
  
 
6
 
 
 
  
 
7
 
 
 
  
 
8
 
Item 2.
 
  
 
17
 
Item 3.
 
  
 
27
 
Item 4.
 
  
 
27
 
PART II.
 
  
 
29
 
Item 1.
 
  
 
29
 
Item 1A.
 
  
 
29
 
Item 2.
 
  
 
50
 
Item 6.
 
  
 
51
 
  
 
52
 
 
2

Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form
10-Q
contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact contained in this Quarterly Report on Form
10-Q,
including statements regarding our future results of operations and financial position, business strategy and plans, and objectives of management for future operations and statements regarding the anticipated impact on our business of the outbreak of the novel strain of coronavirus
(COVID-19)
and related public health measures, are forward-looking statements. These statements involve known and unknown risks, uncertainties, and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements.
In some cases, you can identify forward-looking statements by terms such as “may,” “should,” “expects,” “might,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” “seek,” “would” or “continue,” or the negative of these terms or other similar expressions. The forward-looking statements in this Quarterly Report on
Form 10-Q
are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. These forward-looking statements speak only as of the date of this Quarterly Report on Form
10-Q
and are subject to a number of risks, uncertainties and assumptions described in the “Risk Factors” section and elsewhere in this Quarterly Report on Form
10-Q.
Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. While we may elect to update these forward-looking statements at some point in the future, whether as a result of any new information, future events, or otherwise, we have no current intention of doing so except to the extent required by applicable law.
Summary of Risk Factors
In addition to the other information in this Quarterly Report on
Form 10-Q,
the following risk factors should be considered carefully in evaluating our company and our business. A summary of the principal factors that create risk in investing in our securities and might cause actual results to differ is set forth below:
 
 
 
our future financial performance, including our expectations regarding our revenue, cost of revenue, variable marketing margin, operating expenses, cash flows and ability to achieve, and maintain, future profitability;
 
 
 
our ability to attract and retain consumers and insurance providers using our marketplace;
 
 
 
our dependence on our relationships with insurance providers with no long-term contracts;
 
 
 
our reliance on a single insurance provider for a significant portion of our revenue;
 
 
 
our ability to attract consumers searching for insurance, including through search engines, display advertising, email and social media;
 
 
 
our ability to develop new and enhanced products and services to attract and retain consumers and insurance providers, and our ability to successfully monetize them;
 
 
 
our anticipated growth and growth strategies and our ability to effectively manage that growth;
 
 
 
our ability to maintain and build our brand;
 
 
 
our ability to properly collect, process, store, share, disclose and use consumer information and other data;
 
 
 
our reliance on our third-party service providers;
 
 
 
the impact of competition in our industry and innovation by our competitors;
 
 
 
our ability to hire and retain necessary qualified employees to expand our operations;
 
 
 
our limited experience acquiring quote requests from third-party sources;
 
 
 
our ability to stay abreast of and comply with new or modified laws and regulations that currently apply or become applicable to our business;
 
 
 
the material weaknesses in our internal control over financial reporting that we and our independent registered public accounting firm have identified which, if not remediated, may cause us to not be able to accurately or timely report our financial condition or results of operations;
 
 
 
failure to maintain an effective system of internal controls necessary to accurately report our financial results and prevent fraud; and
 
 
 
the future trading prices of our Class A common stock.
 
3

PART I—FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (Unaudited)
EVERQUOTE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share and per share amounts)
 
    
June 30,
 
2021
   
December 31,
 
2020
 
Assets
                
Current assets:
                
Cash and cash equivalents
   $ 54,520     $ 42,870  
Accounts receivable, net
     45,832       46,079  
Prepaid expenses and other current assets
     8,546       8,452  
    
 
 
   
 
 
 
Total current assets
     108,898       97,401  
Property and equipment, net
     5,892       6,173  
Goodwill
     9,969       9,794  
Acquired intangible assets, net
     2,761       3,366  
Operating lease
right-of-use
assets
     8,463       9,621  
Other assets
     2,860       2,695  
    
 
 
   
 
 
 
Total assets
   $ 138,843     $ 129,050  
    
 
 
   
 
 
 
Liabilities and Stockholders’ Equity
                
Current liabilities:
                
Accounts payable
   $ 25,955     $ 32,964  
Accrued expenses and other current liabilities
     16,963       9,421  
Deferred revenue
     1,836       1,869  
Operating lease liabilities
     2,757       2,593  
    
 
 
   
 
 
 
Total current liabilities
     47,511       46,847  
Operating lease liabilities, net of current portion
     6,833       8,093  
Other long-term liabilities
     2,844       3,128  
    
 
 
   
 
 
 
Total liabilities
     57,188       58,068  
    
 
 
   
 
 
 
Commitments and contingencies (Note 9)
            
Stockholders’ equity:
                
Preferred stock, $0.001 par value; 10,000,000
 shares authorized; no shares issued and outstanding
     —         —    
Class A common stock, $0.001 par value; 220,000,000 shares authorized; 22,668,643 shares and 20,784,065 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively
     23       21  
Class B common stock, $0.001 par value; 30,000,000 shares authorized; 6,407,678 shares and 7,429,502 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively
     6       7  
Additional
paid-in
capital
     205,504       189,172  
Accumulated other comprehensive income (loss)
     15       (7
Accumulated deficit
     (123,893     (118,211
    
 
 
   
 
 
 
Total stockholders’ equity
     81,655       70,982  
    
 
 
   
 
 
 
Total liabilities and stockholders’ equity
   $ 138,843     $ 129,050  
    
 
 
   
 
 
 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
 
4

EVERQUOTE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
(In thousands, except per share amounts)
 
 
  
Three Months Ended June 30,
 
 
Six Months Ended June 30,
 
 
  
2021
 
 
2020
 
 
2021
 
 
2020
 
Revenue
   $ 105,063     $ 78,302     $ 208,885     $ 159,666  
    
 
 
   
 
 
   
 
 
   
 
 
 
Cost and operating expenses:
                                
Cost of revenue
     5,811       4,977       11,764       10,312  
Sales and marketing
     85,610       64,561       173,179       131,065  
Research and development
     9,053       6,966       17,626       13,425  
General and administrative
     6,200       4,754       11,796       9,473  
Acquisition-related
     265       —         186       —    
    
 
 
   
 
 
   
 
 
   
 
 
 
Total cost and operating expenses
     106,939       81,258       214,551       164,275  
    
 
 
   
 
 
   
 
 
   
 
 
 
Loss from operations
     (1,876     (2,956     (5,666     (4,609
    
 
 
   
 
 
   
 
 
   
 
 
 
Other income (expense):
                                
Interest income
     10       47       24       158  
Other income (expense), net
     (15     101       (40     201  
    
 
 
   
 
 
   
 
 
   
 
 
 
Total other income (expense), net
     (5     148       (16     359  
    
 
 
   
 
 
   
 
 
   
 
 
 
Net loss
   $ (1,881   $ (2,808   $ (5,682   $ (4,250
    
 
 
   
 
 
   
 
 
   
 
 
 
Net loss per share, basic and diluted
   $ (0.07   $ (0.10   $ (0.20   $ (0.16
    
 
 
   
 
 
   
 
 
   
 
 
 
Weighted average common shares outstanding, basic and diluted
     28,895       27,136       28,665       26,888  
    
 
 
   
 
 
   
 
 
   
 
 
 
Comprehensive loss:
                                
Net loss
   $ (1,881   $ (2,808   $ (5,682   $ (4,250
Other comprehensive income:
                                
Foreign currency translation adjustment
     7       —         22       —    
    
 
 
   
 
 
   
 
 
   
 
 
 
Comprehensive loss
   $ (1,874   $ (2,808   $ (5,660   $ (4,250
    
 
 
   
 
 
   
 
 
   
 
 
 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
 
5

EVERQUOTE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
(in thousands, except share amounts)
 
 
  
 
 
  
 
 
  
 
 
 
 
 
 
 
 
 
Accumulated
 
 
 
 
 
 
 
 
  
Class A
 
  
Class B
 
 
Additional
 
 
Other
 
 
 
 
 
Total
 
 
  
Common Stock
 
  
Common Stock
 
 
Paid-in
 
 
Comprehensive
 
 
Accumulated
 
 
Stockholders’
 
 
  
Shares
 
  
Amount
 
  
Shares
 
 
Amount
 
 
Capital
 
 
Income (Loss)
 
 
Deficit
 
 
Equity
 
Balances at December 31, 2020
    20,784,065     $ 21       7,429,502     $ 7     $ 189,172     $ (7   $ (118,211   $ 70,982  
Issuance of common stock upon exercise of stock options
    213,317                —         —         1,272       —         —         1,272  
Vesting of restricted stock units
    332,311       —         —         —         —         —         —         —    
Stock-based compensation expense
    —         —         —         —         7,520       —         —         7,520  
Transfer of Class B common stock to Class A common stock
    1,021,824       1       (1,021,824     (1     —         —         —         —    
Foreign currency translation adjustment
    —         —         —         —         —         15       —         15  
Net loss
    —         —         —         —         —         —         (3,801     (3,801
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balances at March 31, 2021
    22,351,517       22       6,407,678       6       197,964       8       (122,012     75,988  
Issuance of common stock upon exercise of stock options
    56,786                —         —         452       —         —         452  
Vesting of restricted stock units
    260,340       1       —         —         (1     —         —         —    
Stock-based compensation expense
    —         —         —         —         7,089       —         —         7,089  
Foreign currency translation adjustment
    —         —         —         —         —         7       —         7  
Net loss
    —         —         —         —         —         —         (1,881     (1,881
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balances at June 30, 2021
    22,668,643     $ 23       6,407,678     $ 6     $ 205,504     $ 15     $ (123,893   $ 81,655  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
  
  
 
 
  
 
 
  
 
 
 
 
 
 
 
 
  
Accumulated
 
  
 
 
 
 
 
 
  
Class A
 
  
Class B
 
 
Additional
 
  
Other
 
  
 
 
 
Total
 
 
  
Common Stock
 
  
Common Stock
 
 
Paid-in
 
  
Comprehensive
 
  
Accumulated
 
 
Stockholders’
 
 
  
Shares
 
  
Amount
 
  
Shares
 
 
Amount
 
 
Capital
 
  
Income (Loss)
 
  
Deficit
 
 
Equity
 
Balances at December 31, 2019
    14,635,834     $ 15       11,802,341     $ 12     $ 158,752     $ —       $ (107,009   $ 51,770  
Issuance of common stock upon exercise of stock options
    214,179                —         —         1,364       —         —         1,364  
Vesting of restricted stock units
    329,897       —         —         —         —         —         —         —    
Stock-based compensation expense
    —         —         —         —         4,540       —         —         4,540  
Transfer of Class B common stock to Class A common stock
    1,388,536       2       (1,388,536     (2     —         —         —         —    
Net loss
    —         —         —         —         —         —         (1,442     (1,442
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balances at March 31, 2020
    16,568,446       17       10,413,805       10       164,656                (108,451     56,232  
Issuance of common stock upon exercise of stock options
    126,375                —         —         954       —         —         954  
Vesting of restricted stock units
    254,265       —         —         —         —         —         —         —    
Stock-based compensation expense
    —         —         —         —         6,250       —         —         6,250  
Transfer of Class B common stock to Class A common stock
    1,983,220       2       (1,983,220     (2     —         —         —         —    
Net loss
    —         —         —         —         —         —         (2,808     (2,808
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balances at June 30, 2020
    18,932,306     $ 19       8,430,585     $ 8     $ 171,860     $        $ (111,259   $ 60,628  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
 
6

EVERQUOTE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
 
 
  
Six Months Ended June 30,
 
 
  
2021
 
 
2020
 
Cash flows from operating activities:
                
Net loss
   $ (5,682   $ (4,250
Adjustments to reconcile net loss to net cash provided by operating activities:
                
Depreciation and amortization expense
     2,310       1,443  
Stock-based compensation expense
     14,609       10,790  
Change in fair value of contingent consideration
     (289     —    
Provision for (recovery of) bad debt
     (50     17  
Unrealized foreign currency transaction losses
     23       —    
Changes in operating assets and liabilities, net of effects from acquisition:
                
Accounts receivable
     297       (4,292
Prepaid expenses and other current assets
     (92     3,636  
Operating lease
right-of-use
assets
     1,400       —    
Other assets
     (340     (57
Accounts payable
     (7,123     3,293  
Accrued expenses and other current liabilities
     7,538       (3,250
Deferred revenue
     (33     132  
Operating lease liabilities
     (1,337     —    
Other long-term liabilities
     4       446  
    
 
 
   
 
 
 
Net cash provided by operating activities
     11,235       7,908  
    
 
 
   
 
 
 
Cash flows from investing activities:
                
Acquisition of property and equipment, including costs capitalized for development of
internal-use
software
     (1,310     (1,871
    
 
 
   
 
 
 
Net cash used in investing activities
     (1,310     (1,871
    
 
 
   
 
 
 
Cash flows from financing activities:
                
Proceeds from exercise of stock options
     1,724       2,318  
    
 
 
   
 
 
 
Net cash provided by financing activities
     1,724       2,318  
    
 
 
   
 
 
 
Effect of exchange rate changes on cash, cash equivalents and restricted cash
     1       —    
    
 
 
   
 
 
 
Net increase in cash, cash equivalents and restricted cash
     11,650       8,355  
Cash, cash equivalents and restricted cash at beginning of period
     43,120       46,304  
    
 
 
   
 
 
 
Cash, cash equivalents and restricted cash at end of period
   $ 54,770     $ 54,659  
    
 
 
   
 
 
 
Supplemental disclosure of noncash investing and financing information:
                
Acquisition of property and equipment included in accounts payable
   $ 114     $ —    
Operating lease liabilities arising from obtaining
right-of-use
assets
   $ 240     $ —    
Reconciliation of cash, cash equivalents and restricted cash:
                
Cash and cash equivalents
   $ 54,520     $ 54,409  
Restricted cash (included in other assets)
     250       250  
    
 
 
   
 
 
 
Total cash, cash equivalents and restricted cash shown in the statement of cash flows
   $ 54,770     $ 54,659  
    
 
 
   
 
 
 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
 
7
EVERQUOTE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Nature of the
 
Business and
 
Basis of Presentation
EverQuote, Inc. (the “Company”) was incorporated in the state of Delaware in 2008. Through its internet websites, the Company operates an online marketplace for consumers shopping for auto, home and renters, life, health and commercial insurance. The Company generates revenue by selling consumer referrals to insurance provider customers, consisting of carriers and agents, and indirect distributors in the United States.
The Company is subject to a number of risks and uncertainties common to companies in similar industries and stages of development including, but not limited to, rapid technological changes, competition from substitute products and services from larger companies, protection of proprietary technology, customer concentration, patent litigation, the need to obtain additional financing to support growth and dependence on third parties and key individuals.
In addition, the Company is subject to risks and uncertainties relating to the ongoing outbreak of the novel strain of coronavirus
(“COVID-19”),
which the World Health Organization declared a pandemic in March 2020. The
COVID-19
pandemic has continued to spread throughout the United States and the world and has resulted in authorities implementing numerous measures to contain the virus, including travel bans and restrictions, quarantines,
shelter-in-place
orders, and business limitations and shutdowns. Work-from-home and other measures have introduced additional operational risks, including cybersecurity risks, and may adversely affect the way the Company and its customers and insurance providers conduct business. The extent to which the
COVID-19 pandemic
impacts the Company’s workforce, business, financial condition, results of operations and the Company’s use of estimates in preparation of its condensed consolidated financial statements will depend on future developments, which are highly uncertain and cannot be predicted at this time.
The accompanying condensed consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the ordinary course of business. Since inception, the Company has incurred operating losses, including net losses of $5.7 million for the six months ended June 30, 2021 and $11.2
 million for the year ended December 31, 2020. As of June 30, 2021, the Company had an accumulated deficit of $
123.9 million. As of the issuance date of these condensed consolidated financial statements, the Company expects that its cash and cash equivalents will be sufficient to fund its operating expenses and capital expenditure requirements for at least the next 12 months from the issuance date of the condensed consolidated financial statements, without considering borrowing availability of up to $25.0 million under the Company’s revolving line of credit.
The Company’s condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”). The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
2. Summary of Significant Accounting Policies
Unaudited Interim Financial Information
The condensed consolidated balance sheet at December 31, 2020 was derived from audited consolidated financial statements but does not include all disclosures required by GAAP. The accompanying unaudited condensed consolidated financial statements as of June 30, 2021 and for the three and six months ended June 30, 2021 and 2020 have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2020 included in the Company’s Annual Report on Form
10-K for
the year ended December 31, 2020 on file with the SEC. In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the Company’s financial position as of June 30, 2021 and results of operations for the three and six months ended June 30, 2021 and 2020 and cash flows for the six months ended June 30, 2021 and 2020 have been made. The Company’s results of operations for the three and six months ended June 30, 2021 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2021 or any other period.
 
8

Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Significant estimates and assumptions reflected in these condensed consolidated financial statements include, but are not limited to, revenue recognition and collectability of accounts receivable, the expensing and capitalization of website and software development costs, goodwill and acquired intangible assets, commissions receivable, the contingent consideration liability, the valuation of stock-based awards and income taxes. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates, as there are changes in circumstances, facts and experience. Changes in estimates are recorded in periods in which they become known. Actual results may differ from those estimates or assumptions. Due to the COVID-19 pandemic, there has been uncertainty and disruption in the global economy and financial markets. The Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of the date of issuance of these condensed consolidated financial statements. These estimates may change, as new events occur and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or conditions.
Concentrations of Credit Risk and of Significant Customers
Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company maintains its cash and cash equivalents at three accredited financial institutions. The Company does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships.
The Company sells its consumer referrals to insurance provider customers, consisting of carriers and agents, and indirect distributors in the United States. For the three months ended June 30, 2021, two customers represented 18% and 11% of total revenue, respectively. For the six months ended June 30, 2021, one customer represented 19% of total revenue. For the three months ended June 30, 2020, one customer represented 19% of total revenue. For the six months ended June 30, 2020, one customer represented 21% of total revenue. As of June 30, 2021, three customers accounted for 13%, 11% and 11% of the accounts receivable balance, respectively. As of December 31, 2020, one customer accounted for 12% of the accounts receivable balance. 
Fair Value Measurements
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:
•    Level 1—Quoted prices in active markets for identical assets or liabilities.
•    Level 2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.
•    Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.
The Company’s cash
 equivalents of $
34.5
 million and $15.8 million as of June 30, 2021 and December 31, 2020, respectively, consisting of money market funds, are carried at fair value based on Level 1 inputs. The carrying values of the Company’s accounts receivable, commissions receivable and commissions payable, accounts payable and accrued expenses and other current liabilities approximate their fair values due to the short-term nature of these assets and liabilities. The Company’s contingent consideration included in other long-term liabilities is carried at fair value based on Level 3 inputs (see Note 3). 
Restricted Cash
As of both June 30, 2021 and December 31, 2020, restricted cash consisted of $0.3 million deposited in a separate restricted bank account as a security deposit for the Company’s corporate credit cards. Restricted cash accounts are classified within other assets. Cash, cash equivalents and restricted cash as of December 31, 2020 as shown in the condensed consolidated statement of cash flows of $43.1 million includes cash and cash equivalents of $42.9 million and restricted cash of $0.3 million.
 
9
Accounts Receivable
The Company provides credit to customers in the ordinary course of business and believes its credit policies are prudent and reflect industry practices and business risk. The Company monitors economic conditions to identify facts or circumstances that may indicate that its receivables are at risk of collection. The Company provides reserves against accounts receivable for estimated losses, if any, that may result from a customer’s inability to pay based on the composition of its accounts receivable, current economic conditions, and historical credit loss activity. Amounts determined to be uncollectible are charged or written-off against the reserve. As of June 30, 2021, the Company’s allowance for credit losses was less than $0.1 million. As of December 31, 2020, the Company’s allowance for credit losses was $0.1 million. 
Commissions
 
Receivable
Commissions receivable are contract assets that represent estimated variable consideration for commissions to be received from insurance carriers for performance obligations that have been satisfied. The current portion of commissions receivable (included within prepaid expenses and other current assets) are estimated commissions expected to be received within one year, while
the non-current portion
of commissions receivable (included within other assets
(non-current))
are expected to be received beyond one year. The Company assesses impairment for uncollectible consideration when information available indicates it is probable that an asset has been impaired. There were no impairments recorded during the three and six months ended June 30, 2021 and 2020.
While the Company is exposed to credit losses due to the
non-payment
by insurance carriers, it considers the risk of this to be remote.
Commissions
 
Payable
Commissions payable represent the estimated share of policy commissions earned by the Company’s agents. The current portion of commissions payable (included within accrued expenses and other current liabilities) are estimated commissions expected to be paid within one year, while
the non-current portion
of commissions payable (included within other long-term liabilities) are expected to be paid beyond one year.
Goodwill and Acquired Intangible Assets
The Company records goodwill when consideration paid in a business acquisition exceeds the value of the net assets acquired. The Company’s estimates of fair value are based upon assumptions believed to be reasonable at that time but that are inherently uncertain and unpredictable. Assumptions may be incomplete or inaccurate, and unanticipated events or circumstances may occur, which may affect the accuracy or validity of such assumptions, estimates or actual results. During the measurement period, which extends no later than one year from the acquisition date, the Company may record certain adjustments to the carrying value of the assets acquired and liabilities assumed with the corresponding offset to goodwill. After the measurement period, all adjustments are recorded in the consolidated statements of operations and comprehensive loss as operating expenses or income.
Goodwill is not amortized, but rather is tested for impairment annually, or more frequently if facts and circumstances warrant a review, such as significant underperformance of the business in relation to expectations, significant negative industry or economic trends and significant changes or planned changes in the use of the assets. The Company assesses both the existence of potential impairment and the amount of impairment loss by comparing the fair value of the reporting unit with its carrying amount, including goodwill. Intangible assets are recorded at their estimated fair values at the date of acquisition. The Company amortizes acquired intangible assets over their estimated useful lives based on the pattern of consumption of the economic benefits or, if that pattern cannot be readily determined, on a straight-line basis.
Revenue Recognition
The Company derives its revenue by selling consumer referrals to its insurance provider customers, including insurance carriers and agents. To determine revenue recognition for arrangements that the Company determines are within the scope of the revenue standard, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation.
The Company only applies the five-step model to contracts when collectability of the consideration to which the Company is entitled in exchange for the goods or services it transfers to the customer is determined to be probable. Amounts are recorded as accounts receivable when the Company’s right to consideration is unconditional. The Company does not assess whether a contract has a significant financing component if the expectation at contract inception is that the period between payment by the customer and the transfer of the promised goods or services to the customer will be one year or less. The Company recognizes revenue when it satisfies its performance obligations by delivering the referrals to its customers in an amount that reflects the consideration to which it expects to be entitled in exchange for those referrals.
 
10
The Company presents disaggregated revenue from contracts with customers by distribution channel as the distribution channel impacts the nature and amount of the Company’s revenue and by vertical market segment.
Total revenue is comprised of revenue from the following distribution channels:
 
 
  
Three Months

Ended June 30,
 
 
Six Months

Ended June 30,
 
 
  
2021
 
 
2020
 
 
2021
 
 
2020
 
Direct channels
     91     93     90     93
Indirect channels
     9       7       10       7  
    
 
 
   
 
 
   
 
 
   
 
 
 
       100     100     100     100
    
 
 
   
 
 
   
 
 
   
 
 
 
Total revenue is comprised of revenue from the following insurance verticals (in thousands):
 
  
Three Months

Ended June 30,
 
  
Six Months

Ended June 30,
 
 
  
2021
 
  
2020
 
  
2021
 
  
2020
 
Automotive
   $ 86,358      $ 64,594      $ 170,839      $ 132,235  
Other
     18,705        13,708        38,046        27,431  
    
 
 
    
 
 
    
 
 
    
 
 
 
Total Revenue
   $ 105,063      $ 78,302      $ 208,885      $ 159,666  
    
 
 
    
 
 
    
 
 
    
 
 
 
The Company has elected to apply the practical expedient in ASC 606 to expense incremental direct costs of obtaining a contract, consisting of sales commissions, as incurred as the expected period of benefit of the sales commissions is one year or less. At June 30, 2021, the Company had not capitalized any costs to obtain its contracts.
Amounts received prior to satisfying the revenue recognition criteria are recorded as deferred revenue in the accompanying balance sheets. Amounts expected to be recognized as revenue within 12 months of the balance sheet date are classified as current deferred revenue. Deferred revenue was $1.8 million and $1.9 million as of June 30, 2021 and December 31, 2020, respectively. During the six months ended June 30, 2021, the Company recognized revenue of $1.3 million that was included in the contract liability balance (deferred revenue) at December 31, 2020. The Company recognizes deferred revenue by first allocating from the beginning deferred revenue balance to the extent that the beginning deferred revenue balance exceeds the revenue to be recognized. Billings during the period are added to the deferred revenue balance to be recognized in
future periods.
Advertising Expense
Advertising expense
 consists of variable costs that are related to attracting consumers to the Company’s marketplace and generating consumer
 
quote requests, and promoting its marketplace to insurance carriers and agents. The Company expenses advertising costs as incurred and such costs are included in sales and marketing expense in the accompanying statements of operations and comprehensive loss. During the three months ended June 30, 2021 and 2020, advertising expense totaled $72.2 million and $54.8 million, respectively. During the six months ended June 30, 2021 and 2020, advertising expense totaled $144.6 million and $112.4 million, respectively.
Net Income (Loss) per Share
Basic net income (loss) per common share is computed by dividing the net income (loss) by the weighted average number of shares of common stock outstanding for the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period, including potential dilutive common shares assuming the dilutive effect of outstanding stock options and unvested restricted stock units. For periods in which the Company reported a net loss, diluted net loss per common share is the same as basic net loss per common share, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.
The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect:
 
    
June 30,
 
    
2021
    
2020
 
Options to purchase common stock
     1,903,499        2,975,988  
Unvested restricted stock units
     2,737,475        3,619,167  
    
 
 
    
 
 
 
       4,640,974        6,595,155  
    
 
 
    
 
 
 
11
The Company may also issue up to 97,922 shares of common stock as contingent consideration in connection with its acquisition of Crosspointe Insurance & Financial Services, LLC (see Note 3). These shares were not included in the Company’s calculation of basic or diluted net income (loss) per common share or in the table above.
 
The Company has two classes of common stock outstanding: Class A common stock and Class B common stock. As more fully described in Note 7, the rights of the holders of Class A and Class B common stock are identical, except with respect to voting and conversion. Each share of Class B common stock is convertible into one share of Class A common stock at the option of the holder at any time. The Company allocates undistributed earnings attributable to common stock between the common stock classes on a
one-to-one
basis when computing net income (loss) per share. As a result, basic and diluted net income (loss) per share of Class A common stock and share of Class B common stock are equivalent.
Recently
 
Adopted
 
Accounting Pronouncements
In December 2019, the FASB issued ASU
No. 2019-12,
Income Taxes—Simplifying the Accounting for Income Taxes (Topic 740). The amendments in this update simplify the accounting for income taxes by removing certain exceptions to the general principles as well as clarifying and amending existing guidance to improve consistent application. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. Depending on the amendment, adoption may be applied on the retrospective, modified retrospective or prospective basis. The Company adopted this guidance on a prospective basis as of January 1, 2021 and the adoption had no impact on the Company’s financial position, results of operations or cash flows.
3. Acquisition
On September 1, 2020, the Company completed the acquisition of Crosspointe Insurance & Financial Services, LLC (“Crosspointe”), a health insurance agency headquartered in Evansville, Indiana. Crosspointe is a sales and decision support contact center that connects consumers to high quality health insurance in a customer-centric environment and serves the individual and family health, Medicare, and ancillary health product markets. This acquisition enables the Company to accelerate and expand its opportunity in the health insurance market, by providing insurance shoppers with a broader range of health insurance products through access to a greater number of carrier partners, and an improved and more personalized customer buying experience.
The Crosspointe acquisition was accounted for as a purchase of a business under ASC Topic 805,
 Business Combinations
. Under the acquisition method of accounting, the assets and liabilities of Crosspointe were recorded as of the acquisition date, at their respective fair values. The purchase consideration of $16.7 million reflected a cash payment of $14.9 million and contingent consideration of $1.8 million representing the fair value of Class A common stock issuable to the former owners of Crosspointe upon achievement of certain revenue targets over three years. The former owners of Crosspointe are eligible to receive up to 97,922
 shares of Class A common stock upon achievement of certain revenue targets. These revenue targets are measured in annual intervals. Shares of Class A common stock issuable upon achievement of the first two annual targets are for a fixed number of shares of Class A common stock of 39,168 shares and, as such, the Company has recorded the fair value of these shares within stockholders’ equity based on the number of shares issuable and the fair market value of Class A common stock on the acquisition date. Achievement of the third annual target will result in the issuance of a variable number of shares of Class A common stock of up to 58,754 shares and, as such, the Company has recorded the fair value of these shares as a long-term liability. The Company’s consolidated financial statements as of December 31, 2020 reflected the preliminary allocation of the purchase price to the assets and liabilities assumed based on fair value as of the date of the acquisition. The Company’s preliminary estimate of the fair value of specifically identifiable assets acquired and liabilities assumed as of the date of acquisition was subject to change upon finalizing its valuation analysis. During the three months ended March 31, 2021, the Company recorded an adjustment to goodwill of $
0.2
 million, representing an adjustment to its estimate of the fair value of commissions receivable as of the acquisition date. As of June 30, 2021, the preliminary estimates have been finalized, with no further changes to the allocation of the purchase price to the assets and liabilities assumed. 
The Company estimated the fair value of the shares of Class A common stock issuable upon achievement of the three annual targets as of the acquisition date. The Company remeasures the fair value of the shares of Class A common stock issuable upon the estimated achievement levels of the third annual target at each subsequent reporting date until the liability is fully settled. The Company uses a Monte Carlo simulation model in its estimates. Significant assumptions and estimates utilized in the model include the forecasted revenue, revenue volatility and discount rate. As of September 1, 2020, the acquisition date, the estimated fair value of the contingent consideration included in other long-term liabilities was $0.4 million. The Company recognizes changes in the fair value of the liability in earnings until the liability is fully settled. As of December 31, 2020, the Company estimated the fair value of the contingent consideration included in other long-term liabilities to be $2.2 million. As of June 30, 2021, the Company estimated the fair value of the contingent consideration included in other long-term liabilities to be $1.9 million, and as a result recorded the decrease in the liability of $0.3 million to acquisition-related costs for the six months ended June 30, 2021.
 
12

The following tables summarize the purchase price for Crosspointe and the allocation of the purchase price (in thousands):
 
Cash paid
   $ 14,930  
Fair value of contingent consideration to be settled in stock
     1,751  
    
 
 
 
Total purchase price consideration
   $ 16,681  
    
 
 
 
Assets Acquired and Liabilities Assumed:
        
Commissions receivable (current and long-term)
   $ 3,285  
Customer Relationships
     3,600  
Other identifiable intangible assets
     270  
Operating lease
right-of-use
assets
     1,469  
Goodwill
     9,969  
Total assets acquired
     18,593  
Accounts payable and accrued expenses (current and long-term)
     (443
Operating lease liabilities
     (1,469
    
 
 
 
Total allocation of purchase price consideration
   $ 16,681  
    
 
 
 
Customer relationships were valued using the income approach.
Significant assumptions and estimates utilized in the model include the customer attrition rate and discount rate.
Acquired intangible assets are amortized over their estimated useful lives of three to five years based on the pattern of consumption of the economic benefits of the intangible asset.
Commissions receivable were recorded at constrained lifetime values.
Goodwill was recognized for the excess purchase price over the fair value of the net assets acquired. Goodwill is primarily attributable to the workforce of the acquired business (which is not eligible for separate recognition as an identifiable intangible asset) and future growth. Goodwill resulting from the acquisition of Crosspointe is deductible for tax purposes.
The Company incurred costs of $0.5 million for third-party professional services utilized for the acquisition, which were expensed as incurred within acquisition-related costs on the Company’s consolidated statements of operations and comprehensive loss in 2020. The operating results of the acquired entity have been included in the consolidated financial statements beginning on the acquisition date but have not been disclosed as the Company does not account for the results of the acquired entity separate from its own results. Pro forma results of operations for the acquisition have not been presented as they are not material to the Company’s consolidated results of operations.
4. Goodwill and Acquired Intangible Assets
Goodwill is not amortized, but instead is reviewed for impairment at least annually or more frequently when events and circumstances occur indicating that the recorded goodwill may be impaired. The Company considers its business to be one reporting unit for purposes of performing its goodwill impairment analysis. To date, the Company has had no impairments to goodwill.
Acquired intangible assets consisted of the following (in thousands):
 
 
  
 
 
  
June 30, 2021
 
 
  
Weighted
Average
Useful Life
 
  
Gross
Amount
 
  
Accumulated
Amortization
 
  
Carrying
Value
 
 
  
(in years)
 
  
 
 
  
 
 
  
 
 
Customer relationships
     5      $ 3,600      $ (1,006    $ 2,594  
Other identifiable intangible assets
     3.7        270        (103      167  
             
 
 
    
 
 
    
 
 
 
              $ 3,870      $ (1,109    $ 2,761  
             
 
 
    
 
 
    
 
 
 

 
   
           
December 31, 2020
 
    
Weighted
Average
Useful
 
Life
    
Gross
Amount
    
Accumulated
Amortization
    
Carrying
Value
 
    
(in years)
                      
Customer relationships
     5      $ 3,600      $ (464    $ 3,136  
Other identifiable intangible assets
     3.7        270        (40      230  
             
 
 
    
 
 
    
 
 
 
              $ 3,870      $ (504    $ 3,366  
             
 
 
    
 
 
    
 
 
 
 
Future amortization expense of the intangible assets as of June 30, 2021, is expected to be as follows (in thousands):
 
13

Year Ending December 31,
      
2021 (Remaining six months)
   $ 577  
2022
     826  
2023
     609  
2024
     440  
2025
     309  
 
 
$
 
2,761
 
    
 
 
 
5. Accrued
 
Expenses and
 
Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following (in thousands):
 
 
  
June 30,
 
  
December 31,
 
 
  
2021
 
  
2020
 
Accrued employee compensation and benefits
   $ 3,034      $ 4,105  
Accrued advertising expenses
     10,732        2,596  
Other current liabilities
     3,197        2,720  
 
 
$
 
16,963
 
 
$
 
9,421
 
    
 
    
 
 
 
 
6. Loan and Security
 
Agreement
As of June 30, 2021, the Company had available borrowings of $25.0 million under its amended Loan and Security Agreement (the “2020 Loan Agreement”). Pursuant to the 2020 Loan Agreement, borrowings under the revolving line of credit cannot exceed 80% of eligible accounts receivable balances, bear interest at the greater of 3.25% or the prime rate and mature in August 2022. Borrowings are collateralized by substantially all of the Company’s assets and property.
Under the 2020 Loan Agreement, the Company is subject to specified affirmative and negative covenants until maturity. These covenants include limitations on the Company’s ability to incur additional indebtedness and engage in certain fundamental business transactions, such as mergers or acquisitions. In addition, the Company is required to maintain a financial performance covenant: a minimum asset coverage ratio of 1.5 to 1, calculated as the sum of unrestricted cash and qualified accounts receivable divided by borrowings outstanding under the revolving line of credit. As of June 30, 2021, the Company was in compliance with these covenants. Events which would meet the criteria of a default under the 2020 Loan Agreement include failure to make payments when due, insolvency events, failure to comply with covenants or material adverse events with respect to the Company.
As of June 30, 2021, the Company had no amounts outstanding on the revolving line of credit.
7. Equity
Each share of Class A common stock entitles the holder to one vote for each share on all matters submitted to a vote of the Company’s stockholders at all meetings of stockholders and written actions in lieu of meetings. Each share of Class B common stock entitles the holder to ten votes for each share on all matters submitted to a vote of the Company’s stockholders at all meetings of stockholders and written actions in lieu of meetings.
Holders of both classes of common stock are entitled to receive dividends, when and if declared by the board of directors.
Each share of Class B common stock is convertible into one share of Class A common stock at the option of the holder at any time. Automatic conversion shall occur upon the occurrence of a transfer of such share of Class B common stock or at the date and time, or the occurrence of an event, specified by a vote or written consent of the holders of a majority of the voting power of the then outstanding shares of Class B common stock. A transfer is described as a sale, assignment, transfer, conveyance, hypothecation or disposition of such share or any legal or beneficial interest in such share other than certain permitted transfers as described in the Restated Certificate of Incorporation, including a transfer to a holder of Preferred Stock. Each share of Class B common stock held by a stockholder shall automatically convert into one fully paid and
non-assessable
share of Class A common stock nine months after the death or incapacity of the holder of such Class B common stock.
8. Stock-Based Compensation
The Company has outstanding awards under its 2008 Stock Incentive Plan, as amended (the “2008 Plan”), but is no longer granting awards under this plan. Shares of common stock issued upon exercise of stock options granted prior to September 8, 2017 will be issued as either Class A common stock or Class B common stock. Shares of common stock issued upon exercise of stock options granted after September 8, 2017 will be issued as Class A common stock.
 
14

The Company’s 2018 Equity Incentive Plan (the “2018 Plan” and, together with the 2008 Plan, the “Plans”) provides for the grant of incentive stock
options, non-qualified stock
options, stock appreciation rights, restricted stock awards, restricted stock units (“RSUs”), and other stock-based awards. The number of shares initially reserved for issuance under the 2018 Plan is the sum of 2,149,480 shares of Class A common stock, plus the number of shares of Class A common stock (up to 5,028,832 shares) equal to the sum of (i) the 583,056 shares of Class A common stock and Class B common stock that were available for grant under the 2008 Plan upon the effectiveness of the 2018 Plan and (ii) the number of shares of Class A common stock and Class B common stock subject to outstanding awards under the 2008 Plan that expire, terminate or are otherwise surrendered, canceled, forfeited or repurchased by the Company at their original issuance price pursuant to a contractual repurchase right (subject, in the case of incentive stock options, to any limitations of the Internal Revenue Code). The number of shares of Class A common stock that may be issued under the 2018 Plan will automatically increase on the first day of each fiscal year until, and including, the fiscal year ending December 31, 2028, equal to the least of (i) 2,500,000 shares of Class A common stock; (ii) 5% of the sum of the number of shares of Class A common stock and Class B common stock outstanding on the first day of such fiscal year; and (iii) an amount determined by the Company’s board of directors. The shares of common stock underlying any awards that are forfeited, canceled, held back upon exercise or settlement of an award to satisfy the exercise price or tax withholding, repurchased or are otherwise terminated by the Company under the 2018 Plan will be added back to the shares of common stock available for issuance under the 2018 Plan. The number of authorized shares reserved for issuance under the 2018 Plan was increased by 1,410,678 shares effective as of January 1, 2021 in accordance with the provisions of the 2018 Plan described above. As of June 30, 2021, 2,264,762 shares remain available for future grants under the 2018 Plan.
Options and restricted stock units granted under the Plans vest over periods determined by the board of directors. Options granted under the Plans expire no longer than ten years from the date of the grant. The exercise price for stock options granted is not less than the fair value of common shares based on quoted market prices.
Award Issuances
During the six months ended June 30, 2021, the Company granted 548,885 service-based RSUs with an aggregate grant date fair value of $22.7 million.
During the six months ended June 30, 2021, the Company granted 26,788 service- and performance-based RSUs with an aggregate grant date fair value of $1.3 million.
Stock-Based Compensation
The Company recorded stock-based compensation expense in the following expense categories of its statements of operations and comprehensive loss (in thousands):
 
  
Three Months

Ended June 30,
 
  
Six Months

Ended June 30,
 
 
  
2021
 
  
2020
 
  
2021
 
  
2020
 
Cost of revenu
e
  
$
83
 
  
$
88
 
  
$
174
 
  
$
142
 
Sales and marketin
g
  
 
2,459
 
  
 
2,547
 
  
 
5,850
 
  
 
4,242
 
Research and development
  
 
2,321
 
  
 
1,862
 
  
 
4,648
 
  
 
3,138
 
General and administrative
  
 
2,226
 
  
 
1,753
 
  
 
3,937
 
  
 
3,268
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
  
$
7,089
 
  
$
6,250
 
  
$
14,609
 
  
$
10,790
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Stock-based compensation expense for the three and six months ended June 30, 2021 included a total of $0.5
 million and $
0.9 million, respectively, related to unvested RSUs and option awards with performance-based vesting conditions, including options with performance- and market-based vesting conditions, for which the performance-based condition has not yet been achieved but has been deemed probable of being achieved.
As of June 30, 2021, unrecognized compensation expense for RSUs and option awards with service-based vesting conditions and RSUs and option awards with performance-based vesting conditions either achieved or deemed probable of being achieved was $52.4 million, which is expected to be recognized over a weighted average period of 2.9 years. Additionally, the Company had unrecognized compensation expense of $3.7 million related to unvested awards with performance-based vesting conditions, which have not been deemed probable.
 
15

9. Commitments
 
and Contingencies
Leases
The Company leases office space under various
non-cancelable
operating leases. There have been no material changes to the Company’s leases during the three or six months ended June 30, 2021. For additional information, please read Note 11,
 Leases,
 to the consolidated financial statements in the Company’s Form
10-K
for the year ended December 31, 2020.
Indemnification Agreements
In the normal course of business, the Company may provide indemnification of varying scope and terms to third parties and enters into commitments and guarantees (“Agreements”) under which it may be required to make payments. The duration of these Agreements varies and, in certain cases, is indefinite. Furthermore, many of these Agreements do not limit the Company’s maximum potential payment exposure.
In addition, the Company has entered into indemnification agreements with members of its board of directors and executive officers that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers.
Through June 30, 2021 and December 31, 2020, the Company has not incurred any material costs as a result of such indemnifications. The Company does not believe that the outcome of any claims under indemnification arrangements will have a material effect on its financial position, results of operations or cash flows, and it has not accrued any liabilities related to such obligations in its financial statements as of June 30, 2021 and December 31, 2020.
Legal Proceedings and Other Contingencies
The Company was contacted by a representative from a state tax assessor’s office requesting remittance of uncollected sales taxes. The Company does not believe its services are taxable in this state and is investigating this request and intends to vigorously defend this position. If the Company does not prevail in its position, uncollected sales taxes due for the period could amount to approximately $1.5 million, including interest and penalties. The Company has not recorded any liabilities related to this matter as the loss has not been deemed probable.
The Company is from time to time subject to various other legal proceedings and claims, either asserted or unasserted, which arise in the ordinary course of its business. While the outcome of these other claims cannot be predicted with certainty, management does not believe that the outcome of any of these other legal matters will have a material adverse effect on the Company’s results of operations or financial condition.
10. Retirement Plan
The Company has established a defined-contribution plan under Section 401(k) of the Internal Revenue Code (the “401(k) Plan”). The 401(k) Plan covers all employees who meet defined minimum age and service requirements, and allows participants to defer a portion of their annual compensation on a
pre-tax
basis. As currently established, the Company is not required to make any contributions to the 401(k) Plan. The Company contributed $0.3
 million and $
0.1 million for the three months ended June 30, 2021 and 2020, respectively, and contributed $0.5 million and $0.3 million during the six months ended June 30, 2021 and 2020, respectively.
11. Related Party Transactions
The Company has, in the ordinary course of business, entered into arrangements with other companies who have shareholders in common with the Company. Pursuant to these arrangements, related-party affiliates receive payments for providing website visitor referrals. During the three months ended June 30, 2021 and 2020, the Company recorded expense of $0.9 million and $0.6 million, respectively, related to these arrangements. During the three months ended June 30, 2021 and 2020, the Company paid $1.0 million and $0.9 million, respectively, related to these arrangements. During the six months ended June 30, 2021 and 2020, the Company recorded expense of $1.9 million and $1.5 million, respectively, related to these arrangements. During the six months ended June 30, 2021 and 2020, the Company paid $1.8 million and $1.9 million, respectively, related to these arrangements. As of June 30, 2021, and December 31, 2020, amounts due to related-party affiliates totaled $0.6 million and $0.5 million, respectively, which were included in accounts payable on the balance sheets.
12. Subsequent Events
On July 20, 2021, the Company signed a definitive agreement to acquire PolicyFuel, LLC and its affiliated entities, a
policy-sales-as-a-service
provider, with principal offices in Austin and San Antonio, Texas for approximately $16.0 million of cash at closing and, in addition, common stock contingently issuable over three years upon achieving certain growth targets. The acquisition is expected to close by the end of the third quarter of 2021 subject to customary closing conditions.
 
16

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion of our financial condition and results of operations should be read together with our condensed consolidated financial statements and related notes and other financial information included elsewhere in this Quarterly Report on Form
10-Q
and our consolidated financial statements and the related notes and other financial information included in our Annual Report on Form
10-K
for the year ended December 31, 2020, on file with the Securities and Exchange Commission. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Quarterly Report on Form
10-Q,
particularly in the section titled “Risk Factors.”
Overview
EverQuote makes insurance shopping easy, efficient and personal, saving consumers and insurance providers time and money.
We operate a leading online marketplace for insurance shopping, connecting consumers with insurance providers. Our mission is to empower insurance shoppers to better protect life’s most important assets—their family, property, and future. Our vision is to become the largest online source of insurance policies by using data and technology to make insurance simpler, more affordable and personalized, ultimately reducing cost and
risk. Our results-driven marketplace, powered by our proprietary data and technology platform, is reshaping the insurance shopping experience for consumers and improving the way insurance providers, which we view as including both carriers and agents, attract and connect with customers shopping for insurance.
Finding the right insurance product is often challenging for consumers, who face limited online options, complex, variable and opaque pricing, and myriad coverage configurations. We present consumers with a single starting point for a comprehensive and cost-effective insurance shopping experience. Our marketplace reduces the time consumers spend searching across multiple sites by delivering broader and more relevant results than consumers may find on their own. Our service is free for consumers, and we derive our revenue from sales of consumer referrals to insurance providers and, in select verticals, directly from commissions on the sale of policies.
Insurance providers operate in a highly competitive and regulated industry and typically
specialize on pre-determined subsets of
consumers. As a result, not every consumer is a good match for every provider, and some providers struggle to efficiently reach the segments that are most desirable for their business models. Traditional offline and online advertising channels reach broad audiences but lack the fine-grained consumer acquisition capabilities needed for optimally matching consumers to specific insurance products. We connect providers to a large volume
of high-intent, pre-validated consumer referrals
that match the insurers’ specific requirements. The transparency of our marketplace, as well as the campaign management tools we offer, make it easy for insurance providers to evaluate the performance of their marketing spend on our platform and manage their own return on investment.
Since 2011, our core mission has been to make finding insurance easy and more personal, saving consumers and insurance providers time and money. We are working to build the largest and most trusted online insurance marketplace in the world. In pursuing this goal, we have consistently innovated through our disruptive data driven approach. Highlights of our history of innovation include:
 
 
 
In 2011, we launched the EverQuote marketplace for auto insurance.
 
 
 
In 2013, we launched EverQuote Pro, our provider portal, for carriers.
 
 
 
In 2015, we launched EverQuote Pro for agents.
 
 
 
In 2016, we added home and life insurance in our marketplace.
 
 
 
In 2018, we exceeded 46 million cumulative quote requests since launch of our marketplace.
 
 
 
In 2019, we added health, renters and commercial insurance in our marketplace.
 
 
 
In 2020, we launched our
direct-to-consumer
insurance offerings in our life vertical and in our health vertical via the acquisition of Crosspointe Insurance & Financial Services, LLC, or Crosspointe.
In the three months ended June 30, 2021 and 2020, our total revenue was $105.1 million and $78.3 million, respectively, representing year-over-year growth of 34.2%. We had net losses of $1.9 million and $2.8 million for the three months ended June 30, 2021 and 2020, respectively, and had $6.6 million and $4.0 million in adjusted EBITDA for the three months ended Jun 30, 2021 and 2020, respectively. In the six months ended June 30, 2021 and 2020, our total revenue was $208.9 million and $159.7 million, respectively, representing year-over-year growth of 30.8%. We had net losses of $5.7 million and $4.3 million for the six months ended June 30, 2021 and 2020, respectively, and had $11.4 million and $7.8 million in adjusted EBITDA for the six months ended June 30, 2021 and 2020, respectively. See the section
titled “—Non-GAAP Financial
Measure” for information regarding our use of adjusted EBITDA and its reconciliation to net income (loss) determined in accordance with generally accepted accounting principles in the
United States, or GAAP.
 
17

COVID-19
In March 2020, the World Health Organization declared the outbreak of
COVID-19
a pandemic. The
COVID-19
pandemic has continued to spread throughout the United States and the world and has resulted in authorities implementing numerous measures to contain the virus, including travel bans and restrictions, quarantines,
shelter-in-place
orders, and business limitations and shutdowns. While we are unable to accurately predict the full impact that
COVID-19
will have on our results from operations, financial condition, liquidity and cash flows due to numerous uncertainties, including the duration and severity of the pandemic and containment measures, our compliance with these measures has impacted our
day-to-day
operations and could disrupt our business and operations, as well as that of our customers and consumer traffic to our marketplace for an indefinite period of time. For example, we believe that immediately after
shelter-in-place
orders went into effect consumers performed less searches for insurance online. To support the health and well-being of our employees, customers, partners and communities, a majority of our employees continue to work remotely, however our offices are open for use. While such disruptions have not had a material adverse impact on our financial results through June 30, 2021, such disruptions may impact consumer insurance shopping behavior. We continue to monitor and are managing our operations for the ongoing impact of
COVID-19.
Factors Affecting Our Performance
We believe that our performance and future growth depend on a number of factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and in the section titled “Risk Factors.”
Auto insurance industry risk
We derive a significant portion of our revenue from auto insurance providers and our financial results depend on the performance of the auto insurance industry. For example, in 2016, the U.S. commercial auto insurance industry experienced its worst underwriting performance in 15 years, with higher loss ratios that were driven by both adverse claim severity and frequency trends. As a result, our auto insurance carrier customers reduced marketing spend and cost per sale targets the following year, ultimately impacting our revenue growth in the auto insurance vertical in 2017.
Expanding consumer traffic
Our success depends in part on the growth of our consumer traffic, as measured by quote requests. We have historically increased consumer traffic to our marketplace by expanding existing advertising channels and adding new channels. We plan to continue to increase consumer traffic by leveraging the features and growing data assets of our platform. While we plan to increase consumer traffic over the long term, we also have the ability to decrease advertising, which would likely result in a decrease in quote requests from consumers targeted by such advertising, if we believe the revenue associated with such consumer traffic does not result in incremental profit to our business.
Increasing the number of insurance providers and their respective spend in our marketplace
Our success also depends on our ability to retain and grow our insurance provider network. We have expanded both the number of insurance providers and the spend per provider on our platform. While not a factor in our historical increases in revenue per quote request, we believe we have an opportunity to increase the number of referrals per quote request while increasing the bind rate per quote request, which would allow us to increase our revenue at low incremental cost.
Revenue per quote request
We seek to increase our revenue per quote request by attaining higher insurance provider bids and by increasing the number of referrals per quote request. Insurance provider bids are influenced by competition in our marketplace auctions, the performance of our consumer referrals for insurance providers relative to other consumer acquisition channels, as well as by market conditions, insurance provider budgets and insurance providers’ new customer acquisition targets. Increases in revenue per quote request allow us to increase advertising and consumer traffic to our marketplace while maintaining or increasing variable marketing margin.
Cost per quote request
We seek to efficiently acquire consumers by increasing the effectiveness of our consumer advertising and insurance marketplace. Cost per quote request is influenced by the cost and mix of advertising and the conversion rate of marketplace visitors who request an insurance quote. While we seek to minimize cost per quote request, we may incur increased cost per quote request in order to achieve profitability at relative volumes of quote requests and revenue per quote request.
 
18

Key Business Metrics
We regularly review a number of metrics, including GAAP operating results and the key metrics listed below, to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections, and make operating and strategic decisions. Some of these
metrics are non-financial metrics or
are financial metrics that are not defined by GAAP.
Quote Requests
Quote requests are consumer-initiated requests for an insurance quote that result from a website form, telephones calls with a consumer, or other interactions we have with consumers through third-party websites that result in a revenue generating transaction.
Variable Marketing Margin
We define variable marketing margin, or VMM, as revenue, as reported in our consolidated statements of operations and comprehensive loss, less advertising costs (a component of sales and marketing expense, as reported in our statements of operations and comprehensive loss). We use VMM to measure the efficiency of individual advertising and consumer acquisition sources and
to make trade-off decisions to
manage our return on advertising. We do not use VMM as a measure of profitability.
Adjusted EBITDA
We define adjusted EBITDA as net income (loss), adjusted to exclude: stock-based compensation expense, depreciation and amortization expense, acquisition-related costs, interest income and the provision for (benefit from) income taxes. Adjusted EBITDA
is a non-GAAP financial measure
that we present in this Quarterly Report
on Form 10-Q 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 and board of directors to understand and evaluate our operating performance, to establish budgets and to develop operational goals for managing our business. Adjusted EBITDA should not be considered in isolation from, or as an alternative to, measures prepared in accordance with GAAP. Adjusted EBITDA should be considered together with other operating and financial performance measures presented in accordance with GAAP. Also, adjusted EBITDA may not necessarily be comparable to similarly titled measures presented by other companies. For further explanation of the uses and limitations of this measure and a reconciliation of adjusted EBITDA to the most directly comparable GAAP measure, net income (loss), please see “—Non GAAP Financial Measure”.
Key Components of Our Results of Operations
Revenue
We generate our revenue by selling consumer referrals to insurance provider customers, consisting of carriers and agents, as well as to indirect distributors. To simplify the quoting process for the consumer and improve performance for the provider, we are able to provide consumer-submitted quote request data along with each referral. We support three secure consumer referral formats:
 
   
Clicks: An
online-to-online
referral, with a handoff of the consumer to the provider’s website.
 
   
Data: An
online-to-offline
referral, with quote request data transmitted to the provider for
follow-up.
 
   
Calls: An
online-to-offline
referral for outbound calls and an
offline-to-offline
referral for inbound calls, with the consumer and provider connected by phone.
We recognize revenue from consumer referrals at the time of delivery. Our revenue is comprised of consumer referral fees from the automotive and other insurance verticals, which includes home and renters, life, health and commercial insurance verticals, as follows:
 
    
Three Months

Ended June 30,
    
Six Months

Ended June 30,
 
    
2021
    
2020
    
2021
    
2020
 
     (in thousands)      (in thousands)  
Automotive
   $ 86,358      $ 64,594      $ 170,839      $ 132,235  
Other
     18,705        13,708        38,046        27,431  
  
 
 
    
 
 
    
 
 
    
 
 
 
Total Revenue
   $ 105,063      $ 78,302      $ 208,885      $ 159,666  
  
 
 
    
 
 
    
 
 
    
 
 
 
Cost and Operating Expenses
Our cost and operating expenses consist of cost of revenue, sales and marketing, research and development, and general and administrative expenses.
 
19

We allocate certain overhead expenses, such as rent, utilities, office supplies and depreciation and amortization of general office assets, to cost of revenue and operating expense categories based on headcount. As a result, an overhead expense allocation is reflected in cost of revenue and each operating expense category. Personnel-related costs included in cost of revenue and each operating expense category include wages, fringe benefit costs and stock-based compensation expense.
Cost of Revenue
Cost of revenue is comprised primarily of the costs of operating our marketplace and delivering consumer referrals to our customers. These costs consist primarily of technology service costs including hosting, software, data services, and third-party call center costs. In addition, cost of revenue includes depreciation and amortization of our platform technology assets and personnel-related costs.
Sales and Marketing
Sales and marketing expenses consist primarily of advertising and marketing expenditures as well as personnel-related costs for employees engaged in sales, marketing, data analytics and consumer acquisition functions and amortization of sales and marketing-related intangible assets. Advertising expenditures consist of variable costs that are related to attracting consumers to our marketplace, generating consumer quote requests, and promoting our marketplace to carriers and agents. Advertising costs are expensed as incurred. Marketing costs consist primarily of content and creative development, public relations, memberships, and event costs. In order to continue to grow our business and brand awareness, we expect that we will continue to commit substantial resources to our sales and marketing efforts. We expect our sales and marketing expense will increase in the near term, both as a percentage of revenue and in absolute dollars, but decrease in the longer term as a percentage of revenue due to efficiencies of scale and improvements in our marketplace technology.
Research and Development
Research and development expenses consist primarily of personnel-related costs for software development and product management. We have focused our research and development efforts on improving ease of use and functionality of our existing marketplace platform and developing new offerings and internal tools. We primarily expense research and development costs. Direct development costs related to software enhancements that add functionality are capitalized and amortized as a component of cost of revenue. We expect that research and development expenses will increase as we continue to enhance and expand our platform technology.
General and Administrative
General and administrative expenses consist of personnel-related costs and related expenses for executive, finance, legal, human resources, technical support and administrative personnel as well as the costs associated with professional fees for external legal, accounting and other consulting services, insurance premiums and payment processing and billing costs. We expect general and administrative expenses to increase as we continue to incur the costs of compliance associated with being a publicly traded company, including legal, audit, insurance and consulting fees.
Acquisition-related
Acquisition-related costs include expenses associated with third-party professional services we utilize for the evaluation and execution of acquisitions as well as changes in the fair value of our contingent consideration liability recorded as the result of the Crosspointe acquisition.
Other Income
Other income consists of interest income and other income. Interest income consists of interest earned on invested cash balances. Other income consists of miscellaneous income unrelated to our core operations.
Income Taxes
We have not recorded income tax benefits for the net losses we have incurred in the six months ended June 30, 2021 and 2020 or for our research and development tax credits generated, as we believe, based upon the weight of available evidence, that it is more likely than not that all of our net operating loss carryforwards and tax credits will not be realized. As of December 31, 2020, we had federal net operating loss carryforwards of $72.9 million, which may be available to offset future taxable income, of which $9.0 million of the total net operating loss carryforwards expire at various dates beginning in 2029, while the remaining $63.9 million do not expire but are limited in their usage to an annual deduction equal to 80% of annual taxable income. As of December 31, 2020, we had state net operating loss carryforwards of $60.7 million, which may be available to offset future taxable income and expire at various dates beginning in 2027. As of December 31, 2020, we also had federal and state research and development tax credit carryforwards of $4.5 million and $2.4 million, respectively, which may be available to reduce future tax liabilities and expire at various dates beginning in 2030 and 2029, respectively. We have recorded a full valuation allowance against our net deferred tax assets at each balance sheet date.
 
20

Non-GAAP Financial
Measure
To supplement our financial statements presented in accordance with GAAP and to provide investors with additional information regarding our financial results, we present in this Quarterly Report on
Form 10-Q
adjusted EBITDA as a
non-GAAP financial
measure. Adjusted EBITDA is not based on any standardized methodology prescribed by GAAP and is not necessarily comparable to similarly titled measures presented by other companies.
Adjusted EBITDA
. We define adjusted EBITDA as our net income (loss), excluding the impact of stock-based compensation expense; depreciation and amortization expense; acquisition-related costs; interest income; and our provision for (benefit from) income taxes. The most directly comparable GAAP measure to adjusted EBITDA is net income (loss). We monitor and present in this Quarterly Report on
Form 10-Q adjusted
EBITDA because it is a key measure used by our management and board of directors to understand and evaluate our operating performance, to establish budgets and to develop operational goals for managing our business. In particular, we believe that excluding the impact of these expenses in calculating adjusted EBITDA can provide a useful measure
for period-to-period comparisons
of our core operating performance.
We use adjusted EBITDA to evaluate our operating performance and trends and make planning decisions. We believe 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 calculation 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.
Adjusted EBITDA is not prepared in accordance with GAAP and should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP. There are a number of limitations related to the use of adjusted EBITDA rather than net income (loss), which is the most directly comparable financial measure calculated and presented in accordance with GAAP. Some of these limitations are:
 
   
adjusted EBITDA excludes stock-based compensation expense as it has recently been, and will continue to be for the foreseeable future, a significant
recurring non-cash expense
for our business;
 
   
adjusted EBITDA excludes depreciation and amortization expense and, although this is
a non-cash expense,
the assets being depreciated and amortized may have to be replaced in the future;
 
   
adjusted EBITDA excludes acquisition-related costs that affect cash available to us and the change in fair value of
non-cash
contingent consideration;
 
   
adjusted EBITDA does not reflect the cash received from interest income on our investments, which affects the cash available to us;
 
   
adjusted EBITDA does not reflect income tax expense (benefit) that affects cash available to us; and
 
   
the expenses and other items that we exclude in our calculation of adjusted EBITDA may differ from the expenses and other items, if any, that other companies may exclude from adjusted EBITDA when they report their operating results.
In addition, other companies may use other measures to evaluate their performance, all of which could reduce the usefulness of adjusted EBITDA as a tool for comparison.
The following table reconciles adjusted EBITDA to net income (loss), the most directly comparable financial measures calculated and presented in accordance with GAAP.
Reconciliation of Net Loss to Adjusted EBITDA:
 
    
Three Months

Ended June 30,
    
Six Months

Ended June 30,
 
    
2021
    
2020
    
2021
    
2020
 
     (in thousands)      (in thousands)  
Net loss
   $ (1,881    $ (2,808    $ (5,682    $ (4,250
Stock-based compensation
     7,089        6,250        14,609        10,790  
Depreciation and amortization
     1,136        594        2,310        1,443  
Acquisition-related
     265        —          186        —    
Interest income
     (10      (47      (24      (158
  
 
 
    
 
 
    
 
 
    
 
 
 
Adjusted EBITDA
   $ 6,599      $ 3,989      $ 11,399      $ 7,825  
  
 
 
    
 
 
    
 
 
    
 
 
 
 
21

Results of Operations
Comparison of the Three and Six Months Ended June 30, 2021 and 2020
The following tables set forth our results of operations for the periods shown:
 
    
Three Months

Ended June 30,
    
Six Months

Ended June 30,
 
    
2021
    
2020
    
2021
    
2020
 
     (in thousands)      (in thousands)  
Statement of Operations Data:
           
Revenue(1)
   $ 105,063      $ 78,302      $ 208,885      $ 159,666  
  
 
 
    
 
 
    
 
 
    
 
 
 
Cost and operating expenses(2):
           
Cost of revenue
     5,811        4,977        11,764        10,312  
Sales and marketing
     85,610        64,561        173,179        131,065  
Research and development
     9,053        6,966        17,626        13,425  
General and administrative
     6,200        4,754        11,796        9,473  
Acquisition-related
     265        —          186        —    
  
 
 
    
 
 
    
 
 
    
 
 
 
Total cost and operating expenses
     106,939        81,258        214,551        164,275  
Loss from operations
     (1,876      (2,956      (5,666      (4,609
  
 
 
    
 
 
    
 
 
    
 
 
 
Other income (expense):
           
Interest income
     10        47        24        158  
Other income (expense), net
     (15      101        (40      201  
Total other income (expense), net
     (5      148        (16      359  
  
 
 
    
 
 
    
 
 
    
 
 
 
Net loss
   $ (1,881    $ (2,808    $ (5,682    $ (4,250
  
 
 
    
 
 
    
 
 
    
 
 
 
Other Financial and Operational Data:
           
Quote requests
     6,781        6,777        14,501        14,169  
Variable marketing margin
   $ 32,830      $ 23,478      $ 64,268      $ 47,293  
Adjusted EBITDA(3)
   $ 6,599      $ 3,989      $ 11,399      $ 7,825  
 
(1)
Comprised of revenue from the following distribution channels:
 
                                       
      
Three Months

Ended June 30,
      
Six Months

Ended June 30,
 
      
2021
      
2020
      
2021
      
2020
 
Direct channels
    
 
91
    
 
93
    
 
90
    
 
93
Indirect channels
    
 
9
 
    
 
7
 
    
 
10

    
 
7
 
    
 
 
      
 
 
      
 
 
      
 
 
 
    
 
100
    
 
100
    
 
100
    
 
100
    
 
 
      
 
 
      
 
 
      
 
 
 
 
(2)
Includes stock-based compensation expense as follows:
 
      
Three Months

Ended June 30,
      
Six Months

Ended June 30,
 
      
2021
      
2020
      
2021
      
2020
 
       (in thousands)        (in thousands)  
Cost of revenue
     $ 83        $ 88        $ 174        $ 142  
Sales and marketing
       2,459          2,547          5,850          4,242  
Research and development
       2,321          1,862          4,648          3,138  
General and administrative
       2,226          1,753          3,937          3,268