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EverQuote, Inc. (EVER) Q3 2020 Earnings Call Transcript – Motley Fool


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EverQuote, Inc.  (NASDAQ:EVER)
Q3 2020 Earnings Call
Nov 2, 2020, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the EverQuote Third Quarter 2020 Earnings Conference Call. [Operator Instructions]

I would now like to hand the conference over to Brinlea Johnson of the Blueshirt Group. Thank you. Please go ahead, ma’am.

Brinlea JohnsonManaging Director

Thank you. Good afternoon, and welcome to EverQuote’s Third Quarter 2020 Earnings Call. We’ll be discussing the results announced in our press release issued today after the market closed. With me on the call this afternoon is Seth Birnbaum, EverQuote’s Chief Executive Officer and Co-Founder; and John Wagner, Chief Financial Officer of EverQuote. During the call, we will make statements related to our business that may be considered forward-looking statements under federal securities laws, including statements considering our financial guidance for the fourth quarter and full year 2020, our growth strategy and our plans to execute on our growth strategy, key initiatives, our investments in the business, the growth levers that we expect to drive our business, our ability to maintain existing and acquire new customers, our recent acquisition and interest or ability to acquire other companies, our goals for integrations and other statements regarding our plans and prospects.

Forward-looking statements may be identified with words and phrases such as we expect, we believe, we intend, we anticipate, we plan, may, upcoming and similar words and phrases. These statements reflect our views only as of today and should not be considered our views as of any subsequent date. We specifically disclaim any obligation to update or revise these forward-looking statements, except as required by law. Forward-looking statements are not promises or guarantees of future performance and are subject to a variety of risks and uncertainties that could cause the actual results to differ materially from our expectations. For a discussion of material risks and other important factors that could affect our actual results, please refer to those contained in the heading Risk Factors in our most recent quarterly report on Form 10-Q, which is on file with the Securities and Exchange Commission and available on the Investor Relations section of our website at investor.everquote.com, and on the SEC’s website at sec.gov. Finally, during the course of today’s call, we refer to certain non-GAAP financial measures, which we believe are helpful to investors. Reconciling GAAP to non-GAAP measures is included in the press release we issued after the close of market today, which is available on the Investor Relations section of our website at investors.everquote.com.

With that, I’ll turn the call over to Seth.

Seth BirnbaumCo-Founder, Chie Executive Officer

Thank you, Brinlea. Good afternoon, and thank you, everyone, for joining us today. Our strategy continues to yield excellent results. Our tech and data-driven marketplace flywheel continues to drive network effects with more consumers and providers having deeper engagement across multiple insurance verticals. In Q3, we reported another strong quarter across all of our key financial metrics, delivering 34% year-on-year revenue growth and 41% year-on-year VMM growth. We also delivered positive adjusted EBITDA expansion year-over-year, consistent with our model and successfully closed the acquisition of Crosspointe, accelerating and expanding our opportunity in the health insurance market. We continue to have strong momentum in the business, which is allowing us to raise our full year 2020 guidance, which John will cover in more detail. So what is the big picture that we are seeing in the market right now? First, the American consumer is further embracing the convenience and safety of shopping online for a wide range of products, including insurance. We believe that this trend will continue in insurance consumer demand as life resumes post-COVID. Second, insurance distribution dollars are migrating to digital channels as the industry begins to experience an increased level of digital spend as seen in other areas of financial services.

We believe that COVID is advancing this long-term trend within the insurance industry, and we continue to see high levels of demand in the carrier and agent or provider side of our insurance marketplace. And finally, perhaps most interesting to us, the insurance industry is beginning to make products easier to buy and sell through digital channels, through integration and digitization of the actual insurance products. And this is occurring across numerous segments of the insurance industry. We’re confident this is one of the key trends within insurance where EverQuote is very well positioned to capture the market opportunity. Turning back to Q3. Our strong financial performance was achieved while also continuing to invest and execute across the four growth levers we outlined in the beginning of the year: Attracting more high intent consumers to our marketplace; growing and expanding across insurance verticals; deepening consumer provider engagement; and growing provider coverage and budget. First, attracting more high intent consumers to our marketplace. Our traffic teams executed well this quarter and focused on delivering enhanced monetization as reflected in our Variable Marketing Margin expanding to a record 33% of revenues, revenue per quote request increasing 18% over Q3 2019 and a growth in consumer quote request volume of 14% year-over-year. Our initiatives this quarter placed greater emphasis on driving improved performance in the marketplace to maximize the volume of high-quality, high-value referrals shared with our distribution partners.

Examples of these initiatives are as follows: introducing expanded targeting options for our enterprise carriers that we see as driving better monetization for our partners and our marketplace and contributing to higher-margin operating point in dollars; delivering significant workflow improvements, which led to a greater than 10% increase in conversion rate for consumers, on average, across our insurance verticals; successfully growing our higher monetizing and converting traffic, which resulted in enhanced efficiency in our marketplace, as reflected in our variable marketing margin as a percent of revenues expanding to 33%. Next, growing and expanding across insurance verticals. In Q3, we had another strong quarter in our non-auto verticals, with revenues increasing 55% year-over-year with improving unit economics. These verticals continue to benefit from the network effects of our marketplace and from disciplined investments to support their growth. In our health vertical, we closed the Crosspointe acquisition in early September, which provided us with direct appointments with large carriers such as UnitedHealthcare, Anthem and Humana, increasing our health carrier coverage by tenfold. Since announcing this acquisition in early August, our health vertical leadership team has been working to prepare for this year’s open enrollment period, which includes substantially expanding the Crosspointe agent team. In our live vertical, our revenue per quote request is over 3.5 times higher for customers served through our direct-to-consumer, or DTC agency offering, than we have experienced in our traditional life marketplace model, as the improved consumer experience leads to a greater conversion into a bound policy as well as enhanced monetization. In our home vertical, we continue to build on our success with bundled offerings, which led to growth in the Variable Marketing Margin and margin percentage for auto and home insurance. Our third growth lever, deepening consumer provider engagement.

These initiatives center on improving customer experiences for both consumers and providers, while increasing performance as measured by enhanced monetization and retention, reduced cost per consumer and higher LTV per customer. We are continuing our work to get the consumer one click or one call away from quotes with our focus on deep integrations with our carrier partners. We established the goal of completing deep integrations with 100% of our carriers by the end of this year to improve consumer experience and increase provider bind rates or policy purchase rates to drive up our marketplace efficiency. At the end of our third quarter, we are deeply integrated with 72% of our carrier partners, and we continue to make steady progress. We have also prioritized integrations around larger partners, which has resulted in 92% of referrals by volume being with deeply integrated carriers by the end of Q3. Additionally, we have been able to isolate performance on integrations with some of our larger carriers, and many are seeing sizable lifts based on recent performance as they can improve both the quote and bind rate. As example of the benefits of deep integrations, two carriers improved their bind rate in our marketplace by 69% and 82%, respectively. We are also deepening consumer provider engagement through our DTC agency experiences, where we are creating a more personalized and streamlined end-to-end consumer shopping journey with enhanced product selection and less friction from arrival to policy sale. Fourth, growing provider coverage and budget.

We continue to add more providers and expand our relationship with existing carriers and agents. We grew carriers on the platform by over 25% from a year ago as we expanded coverage in our non-auto verticals. Over 90% of Q3 revenue from carriers came from those who have been on our platform for more than a year. Driving efficiency for both carriers and EverQuote is our smart campaigns platform, where we use machine learning to automate bidding for our carriers. Year-over-year, our agency business grew 64% in Q3 and represented 34% of revenues this quarter. Our investments to expand agent demand via content marketing, consultative sales, top-notch service and carrier partnerships to name just a few, are paying off. We believe these same initiatives will benefit our direct-to-consumer agency distribution by attracting more agents and consumers to our marketplace. Finally, we are continuing to win the war for talent. During Q3, Greg O’Brien joined us as SVP of Business Development from an education tech company he had led. Greg joins our already strong leadership team, including talent from top-tier technology companies such as Amazon, Wayfair, TripAdvisor, CarGurus and many others who complement the entrepreneur spirit of the early team that drove our success. Together, we are challenging ourselves to think bigger and be bolder. In summary, we delivered an excellent third quarter with strong execution across our verticals. As a company, we are continuing to meet the challenges brought about by the unprecedented combination of a global health crisis and significant economic disruption while continuing to execute on our growth initiatives and commitments to our customers.

Our marketplace flywheel is demonstrating progress and resilience with increasing diversity across our team, traffic, verticals, distribution and customer experiences, including direct-to-consumer agency initiatives in life and health insurance. We continue to capitalize on the shift of insurance online, and I’m very excited about what the future holds. Our thoughts continue to be with all the individuals and businesses impacted around the world by the COVID-19 pandemic. I would like to thank our team, customers, partners and shareholders for believing in our vision.

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

John WagnerChief Financial Officer

Thank you, Seth, and good afternoon, everyone. I’ll start by discussing our financial results for the third quarter of 2020, highlight our current financial performance and then provide guidance. We are pleased to report a strong third quarter of 2020, with results ahead of our guidance across all of our key financial metrics. Third quarter revenue was $90 million, up 34% year-over-year driven by a balance of growth in consumer volume and monetization. Third quarter revenue in our auto insurance vertical increased to $74.8 million, a growth rate of 30% year-over-year, reflecting our continued success capturing share as the insurance industry shifts online. Third quarter revenue from our other insurance verticals, which includes home and renters, life, health, and commercial insurance, increased to $15.2 million, a growth rate of 55% year-over-year, reflecting our ability to grow these smaller verticals faster due to our relatively early stage in these huge market segments. These non-auto segments represented 17% of total revenue, providing important diversity in our revenue mix. In the third quarter, our revenue growth was driven by a balance of increased consumer quote requests, which were up 14% year-over-year to $6.3 million, and increased revenue per quote request, which was up 18% year-over-year to $14.30. We continue to focus on sourcing profitable, high-intent consumer traffic, which drives higher conversion for our insurance providers which in turn delivers higher carrier bids for our consumer referrals in our marketplace.

The significant increase in revenue per quote request was the result of multiple factors, including: Recent enhancements to our targeting options that allow our carriers to more accurately bid to expected conversion, which results in higher referral pricing for high converting consumer referrals; increased carrier data integrations, which improve policy sale rates for our carriers, which the carrier then may reflect in referral pricing as carriers often compute their bids based on expected cost per new policy sold; strong demand from carriers and a specific desire to acquire new consumers online during the pandemic; higher referral bids on the newly introduced insurance bundling referrals; and higher monetization associated with our newest direct-to-consumer agency operations which, although still small in revenue contribution, produced higher revenue per referral as compared to marketplace monetization alone. Overall, our improved monetization reinforces the marketplace flywheel by allowing us to bid more competitively on higher converting traffic, leading to a cycle of higher marketplace performance and further improvements in monetization. The benefits of these improvements is most evident in our key metric, Variable Marketing Margin, which we define as revenue less advertising expense. In the third quarter, Variable Marketing Margin, or VMM, was $29.4 million, an increase of 41% year-over-year. As a percentage of revenue, VMM expanded 150 basis points year-over-year to a record 32.7%. We managed our marketplace to increase Variable Marketing Margin dollar contribution, but this focus on performance also generally results in improvements to VMM as a percentage of revenue.

This quarter, our monetization gains reflected as an improvement in revenue per quote request outpaced the relative increase in acquisition costs. This was true even as we sourced more expensive, higher intent and higher converting insurance shopping consumers in a competitive insurance advertising market. Our growing VMM is the result of our data and technology advantage in consumer acquisition and our scale and monetization leverage in distribution. We believe we are directly benefiting from network effects as we scale our marketplace. While factors such as volume of quote requests or revenue per quote request are largely a result of managing the business for VMM dollar contribution, we do believe that higher revenue per quote request and the resulting higher VMM as a percentage of revenue is sustainable. And you’ll see we’ve reflected this in our guidance for the balance of the year. We expect traffic volumes to remain steady and revenue growth in Q4 to be fueled by increases in revenue per quote request, reflecting the performance and value insurance providers recognized in our referrals. Turning to the bottom line. Third quarter GAAP net loss was $3.2 million or a loss of $0.12 per share-based on approximately 27.5 million weighted average shares outstanding. This compares to a GAAP net income of $173,000 in the prior year period. Our GAAP net loss was impacted by $7.2 million in stock compensation expense, in line with our previous guidance of $15 million to $16 million of stock compensation for the second half of 2020. We delivered adjusted EBITDA of $5.2 million or 5.8% of revenue for the third quarter, above the high end of our guidance range. Excluded from adjusted EBITDA this quarter was $480,000 in costs related to the acquisition of our DTC agency Crosspointe insurance advisors and approximately $100,000 of related purchased intangibles amortization.

We expect the amortization of the purchased intangibles to be approximately $600,000 in Q4. We generated $6 million in positive cash flow from operating activities in the quarter, ending the quarter with $46.1 million in cash and cash equivalents on the balance sheet. This includes using $14.9 million in cash from the balance sheet to fund the acquisition of Crosspointe insurance advisors. To note, Q3 represents the second full quarter since the emergence of COVID-19, and we continue to closely monitor the impact of the pandemic. Though the current environment has become more than norm, we’re cognizant that we are weathering an unusual combination of both a pandemic and a major election, both of which can impact advertising and consumer traffic and acquisition. While we are aware of the spike of COVID-19 cases presents risk, we are cautiously optimistic that the resilience demonstrated by our business model will continue. Now turning to our Q4 guidance, which reflects these operational trends as follows: We expect revenue to be between $90.4 million and $92.4 million, a year-over-year increase of 24% at the midpoint; we expect variable marketing margin to be between $29.3 million and $30.3 million, a year-over-year increase of 37% at the midpoint; and we expect adjusted EBITDA to be between $4 million and $5 million, a year-over-year improvement of 7% at the midpoint.

For the full year 2020, we are pleased to be, again, increasing our guidance, reflecting our strong Q3 performance and our improved Q4 guidance as follows: We expect revenue to be between $340 million and $342 million, a year-over-year increase of 37% at the midpoint and an increase from our prior guidance of $331 million to $336 million; we expect variable marketing margin to be between $106 million and $107 million, a year-over-year increase of 45% at the midpoint and an increase from our prior guidance of $101 million to $104.5 million; and we expect adjusted EBITDA of between $17 million and $18 million, a year-over-year increase of 111% at the midpoint and an increase from our prior guidance of $15 million to $17.5 million. In summary, we delivered strong third quarter financial results ahead of our prior guidance. We are experiencing continued momentum reflected in our improved outlook and expect to close a record year at EverQuote.

Seth and I look forward to answering your questions.

Questions and Answers:

Operator

[Operator Instructions] Your first question in queue is from Ron Josey with JMP Securities.

Ron JoseyJMP Securities — Analyst

Thanks for taking the question. Maybe two, please. Bigger picture on RPQR. I think, John, you mentioned several factors that drove that 18% growth overall. As we think about 2021 and beyond, can you just talk about the sustainability here? And in your opening remarks, Seth, I think you talked — or maybe it was John, you talked about targeting enhancements, bundling benefits. And maybe just if you could double-click a little more on those targeting and bundling benefits, that would be helpful. And then as you think about quote requests, they were down sequentially in the quarter. Anything you do to help us understand sort of the progress throughout the quarter? And John, I think you’ve guided sort of stable quote request for 4Q. Can you just provide just — you’re talking that sequential, provide any more insights on that, that would be helpful.

Seth BirnbaumCo-Founder, Chie Executive Officer

Maybe I’ll lead off just — hi Ron, Seth. Thanks a lot for joining us. So in terms of targeting, we’ve had a focus now, and we talked about it for several calls on targeting higher converting consumers in our traffic operations. The traffic teams have just done and the marketing teams have just done an exceptional job executing that. It has been — they’re compounded with some targeting options that we’ve added for our provider partners, where in addition to targeting economic ROI, they can also target conversion rate, which also drove up RPQR on higher converting traffic. That’s allowing us to source or to deliver more high converting traffic to the marketplace. It also puts — it sort of buffers or moderate — the lower converting traffic, which has, for us, a lower margin profile. So overall, it doesn’t just drive up the, sort of, conversion rate, it also drove up the compounding effect of both traffic operations. And those increased targeting options drove up Variable Marketing Margin operating point and variable marketing dollars in a way that we believe is sustainable. Assuming I take bundling or should you take it?

John WagnerChief Financial Officer

Sure, go ahead.

Seth BirnbaumCo-Founder, Chie Executive Officer

And so bundling, that is auto and home, providing the option for consumers and providers to attach discounts related to bundling, auto and home insurance, which simply put basically provides a higher value consumer or higher value referral to our provider partners, which is just one of the elements which drove up RPQR in the quarter.

John WagnerChief Financial Officer

And then, Ron, I think the kind of outstanding question of those that Seth didn’t hit on was around next quarter and giving maybe a little bit of color on what we expect and where we think revenue growth will come from. Certainly, the story for the second half of this year is certainly one that’s colored by the comps from last year. You know that this time last year, we had 80% growth in traffic. So we certainly are up against some strong comps. Even with those strong comps, we’re continuing to grow quote requests and grow traffic. We think that continues in Q4. So we still look for year-over-year growth in quote request. But certainly, with our success that we’ve had with higher performing, higher intentful consumer traffic, more of the growth will come from revenue per quote request. So I guess if you’re looking for color there, we would say, look for year-over-year increases in revenue in the number of quota requests. But a lot of the growth will be driven by the success we’ve had in revenue per quote request based on our traffic.

Ron JoseyJMP Securities — Analyst

Got it. Thank you.

Operator

Your next question is from Jed Kelly with Oppenheimer.

Jed KellyOppenheimer — Analyst

Great, guys. Thanks for taking my call. Can you hear me?

John WagnerChief Financial Officer

Sure.

Jed KellyOppenheimer — Analyst

Yes. So I guess, John or Seth, can you sort of talk about your traffic acquisition strategy? I know you had some issue — or temporary issues with some of the unrest. Can you talk about sort of how you’re managing that? And then can you talk about any insight to how EverQuote’s competing relative to its competitors? I think one of your competitors recently reported, I guess, they had strong growth in auto insurance. So any update on just your performance relative to the competition?

Seth BirnbaumCo-Founder, Chie Executive Officer

Sure. Again, we executed well in traffic, both prior quarter and this quarter. I think you’re referring to sort of the ins and outs around the pandemic and the election. And again, I think traffic execution and strategy hasn’t changed outside of the continued progress we’ve made to drive higher converting traffic, which is resulting not only in an increasing RPQR, but an increasing performance on Variable Marketing Margin and variable marketing margin dollars. We haven’t seen any distinct competitive changes in the insurance advertising environment. Overall, it is a competitive environment. And again, I think we expected and saw some headwinds from the pandemic and the elections. It’s a hotly contested election season. A lot of advertisers pouring in, and we’ve modeled for that, reflected it in our guidance. But nothing out of the ordinary. And traffic teams have really executed well, both last quarter and this quarter against our strategy of higher converting traffic.

Jed KellyOppenheimer — Analyst

Got it. And then just one more question. We are seeing some more insured techs go public. I think just went public. Any opportunities for you to sort of work with some of these newer insurance models and the ability to streamline a more digitized, I guess, streamlined process?

Seth BirnbaumCo-Founder, Chie Executive Officer

Yes. It’s one of the more exciting, sort of, changes in the market from our perspective, Jed. So Route is a great partner of ours. And we’ve said before, in fact, a number of the insurer tech, I believe you’re referring to our partners or customers of ours. And we’ve said now for several quarters, if not the year that these insure techs basically represent a new class of budget for EverQuote as they seek to expand their specific books of business in their target populations. And so great new budget for us. One of the contributors to strong RPQR is some of these insurtech coming online and spending more year-on-year. We expect that trend to continue, and we expect to be an excellent partner for them.

The other exciting aspect, I think some of these folks like Ruth and others are bringing to the marketplace, is the improved digitized experiences that support not just online integration for quoting, but also online integration for binding and seamless off-line experiences, which we can integrate and do in our marketplace. And so that’s really exciting from a customer perspective as well. We expect it to drive the business in both ways: increase conversion rate; and increased performance, both for the consumer as well as for Everquote and our partners.

John WagnerChief Financial Officer

And Jed, I’d probably just add that because of a lot of these insurtechs, are very focused on specific areas, they have disruptive models, but often very specific to certain consumer sets. They tend to do very well on the EverQuote platform because the primary value that we give to them is the ability to target very specifically on whatever their underwriting preferences or their strengths of. So that ability to target on the platform is kind of unmatched when you go into even digital advertising. So we often see them get good traffic on the platform because they have a very specific need.

Seth BirnbaumCo-Founder, Chie Executive Officer

I think it’s worth mentioning, just in general, Jed, before you check out for next question, the opportunity and the shift to the insurance business online is just massive. And I’ll give you some examples. And so if we look at all the revenue of the insurer techs inclusive of EverQuote, sort of marketplaces, it’s probably roughly 2% of the distribution spend, 1% of premiums is with the insurtech space, so — and shift it online. So we think that the opportunity to grow is just abundant across the market space, and we’re not competitively constrained. For us, it’s really an execution story, and our team has really executed well, both across the verticals and the levers this past quarter.

Jed KellyOppenheimer — Analyst

Thank you. Great quarter.

John WagnerChief Financial Officer

Thanks.

Operator

Your next question is from Michael Graham with Canaccord.

Michael GrahamCanaccord — Analyst

Hey, thanks, guys. A quick follow-up on Ron’s question earlier, just on RPQR. If you have a bundled consumer, does that count as one or two quote requests? And then 2, sort of, more substantial questions. The first one, it seems like this year was a pretty good year for the auto insurance industry with not a lot of miles driven, not a lot of claims activity. Wondering if we could look back to whether or not you feel like that has loosened up some budgets here? And just are you getting any hints about people are thinking about next year? And then lastly, you mentioned you had great growth from agents. And I just wonder if you could unpack that a little bit in terms of, like, is that from new products or a new orientation? Or is it just a natural evolution of that demand?

Seth BirnbaumCo-Founder, Chie Executive Officer

So I’ll take it, Michael. Good to hear from you. Good evening. It’s Seth. So we would count these bundled referrals as one quote request typically, so it’s a single floor request. And in terms of driving value, right, just significant incremental value. And if we talked about it on the last call, both in terms of the overall premium for a bundled consumer, but also in terms of retention and risk profiles. As far as what we’re seeing in the industry, we do see driving levels coming back up. But the — what we’ve seen so far is the P&C, the auto and home insurers remain outside of some storm activities. Certainly, in autos, they remain quite profitable, leaned in on growth.

We’d expect that to continue, certainly into next year. There’s also a compounding effect, which we’re excited by. It’s early days. But with the pandemic sort of ongoing and potentially even reramping, I think the public in general doesn’t want to take public transportation. There hasn’t been really any kind of increase in flying. But it’s led to at least early days, the increase in car ownership, and people are driving more. And so there is an opportunity for increasing auto premiums at a time when you have kind of reduced losses or incremental profitability, which bodes really well for the distribution environment into next year for us, from our perspective.

Michael GrahamCanaccord — Analyst

Okay. That’s great. And then any comment on the strong growth from agents?

Seth BirnbaumCo-Founder, Chie Executive Officer

Oh, sure. I mean, that’s been a focus area for us for some time, agents increasing. And I’d say it’s twofold. One is it’s certainly superb execution. I would call out our Head of Agency, Nick Graham, who — him and the whole team have just done an outstanding job across the board in terms of customer service, support, building new products for agents, which we’ve spoken about, again, Michael, things like agency call programs. They really get the agents interacting and engaged with the online consumer in seamless ways. And really help increase consumer choice, but also get that online consumer into the agent’s hands in a way that helps them grow their business. And I think the team has just done an outstanding job in executing. And it’s worth sort of shouting them out on this call. It is also compounded with the fact that agents increasingly are viewing the online channel generally and EverQuote specifically as a great place to grow their business.

Michael GrahamCanaccord — Analyst

Awesome. Thank you, sir. Appreciate it.

Operator

Your next question is from Ralph Schackart with William Blair.

Ralph SchackartWilliam Blair — Analyst

Greeting. Seth, in the prepared remarks, you talked about the insurance industry making products easier to both buy and sell to the channels. I think you highlighted numerous segments. Just curious if you could kind of drill into that a little bit more, give us some color on what you’re seeing there. Is it something happening, is it COVID or part of a longer-term trend? And then just maybe one more. Crosspointe, I note is early, but just curious how that’s doing versus your expectations?

Seth BirnbaumCo-Founder, Chie Executive Officer

Sure. So in terms of — when we talked about insurance products are being streamlined and digitized and some of the great examples are folks like Routes and Lemonade who are wonderful partners. And then streamlining is in two ways. It’s making the entire insurance experience sort of readily accessible online, everything from shopping, through quoting and binding as well as claims. And so that makes some sort of very good partners for integrating into our direct-to-consumer marketplace. And I’ll give you a very specific example. What we’ve seen in life insurance has probably been the sort of furthest forward, if you will, the most leaned in. There are a growing number of life insurance products that are — so a streamlined issue don’t require a medical visit. And folks can just sort of buy them and complete their purchase online and off-line, but without seeing a medical rep or going to a doctor’s visit.

And so these kinds of streamlined underwriting, integrating, quoting and binding, obviously enable us to do two things: full integration to give the consumers a very low friction experience when shopping; and it increases the overall product diversity available to our online consumers. So there it’s very exciting. The life one is probably the most explicit examples. And a lot of times, they call these simplified issue products. With regards to Crosspointe, I’ll certainly let Wagner, John chime in a bit. But it’s going to plan. We’ve completed the integration and really happy with the progress that both the Crosspointe team has made, but really integrating with our existing vertical healthcare initiatives to grow the business.

John WagnerChief Financial Officer

Sure. So Ralph, I’d just add that, obviously, in this quarter, Crosspointe contribution was limited to one month of the quarter. So obviously, not significant in this quarter. But very pleased with how fast that team has integrated into our health vertical and looking forward to their contribution in Q4 during the open enrollment period.

Ralph SchackartWilliam Blair — Analyst

Thanks, Jeff.

John WagnerChief Financial Officer

Thanks, Ralph.

Operator

Your next question is from Mayank Tandon with Needham.

Mayank TandonNeedham — Analyst

Thank you. Good evening. I wanted to start with healthcare, John. Just — sorry, Seth, maybe for you, and then I’ll come back to John. Just some insight into who the typical consumer is shopping for healthcare on your platform, who the providers are. And just the value proposition how it works for both the consumer and your healthcare providers.

Seth BirnbaumCo-Founder, Chie Executive Officer

Sure. So as you know, an increasing swath of consumers in the U.S. are shopping for healthcare. And that’s everything from new 65, which is typically short-term or under 65-year-old consumer to the over 65 with Medicare Advantage and Medicare supplemental. If you think about it, Mayank, and this is part of why we’re excited about the healthcare vertical, in general, is somebody who’s turning 65 or 55, which is the sort of typical age when shopping, is looking — is very comfortable online, right? So these are folks who grew up with the Internet or sort of 15, 20 years of Internet, e-commerce. And so they’re increasingly comfortable shopping for healthcare products online. What’s particularly exciting to us about the Crosspointe acquisition and integration, is it’s literally increased our carrier coverage across the consumer segment. So we sort of have a product for literally, more nominally, nearly all the types of consumers that will be and are shopping for healthcare online. It increased our carrier representation in healthcare, our carrier panel product by 10 times. So really exciting to have a very broad offering for the online healthcare shopping consumer given CP.

Mayank TandonNeedham — Analyst

Got it. That’s helpful, Seth. And then, John, just moving back to the quote request volume. Just trying to get a handle on the sequential drop. I guess the fact that the year-on-year comps are really hard, given the outperformance last year. But could you maybe just walk through the trend line through the quarter? And then sort of pivoting off that into ’21, given that comps do sort of level off, should we expect maybe a more balanced growth between quote request and revenue per quote looking out into ’21?

John WagnerChief Financial Officer

Sure. So why don’t I take the back half of that first. 2021, I would say, yes, that, first of all, it would be reasonable to expect that we would take this momentum around revenue per quote request into 2021. And certainly, that would probably lend itself to a balanced growth between quote requests and revenue per quote request next year. Obviously, we plan on guiding to 2021 next year. But we’re excited about — as Seth mentioned, the strength that we’re seeing within the industry backdrop. And that next year looks to be prime for a good year for us. I think if you look at the traffic in terms of what we’re seeing in Q3 and Q4 and first, I’d always start with the idea that we’re going to manage the business for variable marketing dollars. And I think that’s very much what you saw this quarter. We had tremendous success being able to capture higher intent, higher-performing traffic, and that led to the higher revenue per quote request. It really drove that, and that is very much a kind of a virtuous cycle that allowed us to be more competitive on higher-performing traffic and leads to higher revenue per quote request and then, in turn, leads to higher-margin percentage and more importantly, higher variable marketing dollars. So Q3, we see as really strong performance.

We expect, as we go into Q4, that strength in revenue per quote request will continue. And that has been a focus on higher, higher converting, higher-performing targets. Clearly, part of the story is the comps that were up again for last year, when, you’ll remember we were growing the business on a traffic basis, 80% year-over-year. So just maintaining that is a sign of strength. But we believe that we’re going to continue to grow that year-over-year as well. So we’re going to manage the business for variable marketing dollars. But I think next quarter, you’ll see a continued blend of growth from traffic volumes as well as revenue per quote request. But certainly, given the success we’ve had on higher converting traffic, you should expect to see more of it come — more of our growth coming from revenue per quote request.

Seth BirnbaumCo-Founder, Chie Executive Officer

Mayank, just some incremental color. You also saw Variable Marketing Margin dollars grew at 41% year-on-year — I mean variable marketing margin percentage. We saw leverage increase in the business to just shy of 33%, which is a high for us. We’re obviously optimistic that, that continues. That’s reflected in the guidance that John gave. But just as importantly, right, headed into next year, ideally, we see some progress with clearing the pandemic. And for the election year will, for better or for worse, be over. And so I think some of those, if you will, headwinds will subside, which gives us sort of a great platform headed into 2021 on both the traffic and the revenue per quote request side.

Mayank TandonNeedham — Analyst

That makes sense. Thanks, Seth. Thanks, john. Good job.

John WagnerChief Financial Officer

Thanks, Mayank.

Operator

Your final question in queue is from Douglas Anmuth with JPMorgan.

Douglas AnmuthJPMorgan — Analyst

Great, thanks. for taking question. I have two. First, just on the deep integrations. I think you’ve mentioned 72% at this point. I just want to check if you’re still on track, sort of, 100% by year-end? And then just how are you thinking about the buying rate improvements from here? Is there still room to go higher? Do you think you’ve achieved kind of full benefits at this point? And then just second, also curious on your log-in user experience, where you are in terms of launching that. And if there’s any kind of early thoughts or takeaways on traffic or engagement there?

Seth BirnbaumCo-Founder, Chie Executive Officer

Sure. Thanks for joining. What’s super critical — so we are making good progress on the integrations. I mean one of the things — and I’m both impressed and excited by it is we added 20 more than new carriers to the platform this quarter. I think that was an unexpected upside surprise, which certainly puts some pressure on our goal of all carriers integrated. But the great, or the even better news, is that 92% of our consumer referrals now have a deep integration. So that’s — we prioritize the larger integration. First, we’ll continue to do so, and we feel really good about that goal, and we’ll keep pushing on it even as new carriers flow on to the platform.

The other, sort of, upside for us is that these deep integrations. And I quoted just two of our larger partners seeing significant bind rate increases. You can still go all the way, and we see a growing swath of our referrals that are fully integrated to a quote. We will add to that integrations that allow consumers to bind right online from our workflow to our providers. So we’d expect continued progress in going to click the quote, find a quote and that we will see a continued increase in bind rate with the current, deeply connected or deeply integrated providers as well as getting to that 100% mark.

Douglas AnmuthJPMorgan — Analyst

Any thoughts on the log-in experience?

Seth BirnbaumCo-Founder, Chie Executive Officer

Sure. Sorry, my apologies. So on the log-in user experience, that’s in our sprint cycles now. Making good progress on that. No data report, but we will update you on the next call as planned.

Douglas AnmuthJPMorgan — Analyst

Okay, thank you.

Operator

There are no further questions in queue at this time. Management, I’ll turn the call back over to you for closing remarks.

Seth BirnbaumCo-Founder, Chie Executive Officer

Sure. Thank you, everybody, so much for joining us today. We delivered a strong quarter with solid execution across both our verticals and all of our growth levers. We really are well positioned and confident that we’ll close out a record year here at EverQuote, both in terms of growth but also Variable Marketing Margin, which is sort of our North Star business metric. We will continue to capitalize on the shift of insurance online, build up our great team, and I’m genuinely optimistic and excited about our future market opportunity as this massive insurance industry shifts online. Thanks so much.

Operator

[Operator Closing Remarks]

Duration: 45 minutes

Call participants:

Brinlea JohnsonManaging Director

Seth BirnbaumCo-Founder, Chie Executive Officer

John WagnerChief Financial Officer

Ron JoseyJMP Securities — Analyst

Jed KellyOppenheimer — Analyst

Michael GrahamCanaccord — Analyst

Ralph SchackartWilliam Blair — Analyst

Mayank TandonNeedham — Analyst

Douglas AnmuthJPMorgan — Analyst

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