Back-to-Back Buybacks at EverQuote Amid AI Disruption Threat – Buyback Wednesdays

During one of our recent internal meetings where we discuss events and patterns across all the strategies we follow, we noticed a recurring theme. Several fundamentally good companies were struggling. Not necessarily because of anything they were doing, but because the industries they were operating in were either out of favor or in the wrong part of the business cycle. Floor & Decor (FND), Mohawk Industries (MHK), and CRH (CRH) are examples of companies facing varying degrees of pressure from the housing slowdown. Even a well-run business can struggle when demand across its industry weakens.

Considering we are mostly bottoms up investors, this is a useful reminder to us that identifying a good company is only half the battle. Understanding where its industry is in the cycle is just as important. Industry headwinds can overwhelm strong company fundamentals, while a recovery can provide a powerful tailwind.

That brings us to EverQuote, an online insurance marketplace whose fortunes have been closely tied to the financial health of the insurers it serves. We had previously invested in a very similar business (GoHealth) and lost a significant amount of money on that investment. In light of that experience, we are approaching EverQuote with eyes wide open and an abundance of caution. 

Insurance is often a necessity, but buying it has become complicated. As premiums rise, consumers have more reason to shop around. EverQuote helps them compare options and connects them with insurers looking for new customers. However, its business depends heavily on how much insurers are willing to spend to acquire those customers.

In 2022 and 2023, insurers faced mounting claims and underwriting losses, forcing them to cut marketing budgets. EverQuote’s adjusted EBITDA fell to roughly break-even in 2023. As underwriting conditions improved and the industry’s combined ratio recovered to approximately 93 by 2025, insurers resumed spending, driving a recovery in EverQuote’s revenue and profitability. The combined ratio measures underwriting profitability by comparing claims and expenses with premiums collected. A ratio above 100% indicates an underwriting loss, while anything below 100% indicates a profit.

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