Hagerty Inc Class A ((HGTY)) has held its Q1 earnings call. Read on for the main highlights of the call.
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Hagerty Inc Class A’s recent earnings call painted a largely positive picture, highlighting significant revenue and profitability growth. The company demonstrated strong retention rates and successful strategic initiatives, although it faced challenges such as the impact of natural disasters and slower-than-expected growth in new customer acquisition.
Record Revenue Growth
Hagerty Inc reported an impressive 18% increase in total revenue, reaching $320 million in the first quarter of 2025. This growth was primarily driven by new business gains and robust retention rates, underscoring the company’s ability to attract and maintain its customer base effectively.
Significant Profitability Improvement
The company achieved a notable improvement in profitability, with the operating margin increasing by 360 basis points to 8%. Net income saw a remarkable rise of 233%, while adjusted EBITDA grew by 45%, reflecting Hagerty’s efficient cost management and operational strategies.
Success in Membership and Marketplace
Hagerty’s Membership, Marketplace, and Other revenue segments experienced a 60% increase, fueled by successful auction events at Amelia Concours and the Academy of Art University. This success highlights the company’s strong presence and performance in niche markets.
Strong Retention and Expansion Initiatives
With an industry-leading retention rate of 89%, Hagerty is focusing on expanding its specialty insurance offerings and launching the Enthusiast Plus program. These initiatives are expected to further strengthen customer loyalty and broaden the company’s market reach.
Strategic Technology Investments
The company is making significant strides in its technology transformation, notably transitioning to the Duck Creek platform. This project is progressing on schedule and within budget, positioning Hagerty for enhanced operational efficiency and future growth.
Impact of Southern California Wildfires
Hagerty’s loss ratio was adversely affected by $10 million in losses due to the Southern California wildfires, highlighting the challenges posed by natural disasters on the company’s financial performance.
Slower Growth than Anticipated
The company experienced slightly slower growth in new customer acquisition than expected, attributed to a prolonged winter and internal changes. Despite this, Hagerty remains optimistic about its growth prospects.
High Initial Costs for Technology and Expansion
Hagerty incurred significant initial investments in technology and expansion, amounting to $20 million. These expenses impacted margins but are viewed as necessary for long-term growth and efficiency improvements.
Forward-Looking Guidance
Hagerty’s guidance for 2025 remains robust, with projected top-line revenue growth of 12% to 13%. The company anticipates net income between $102 million and $110 million, and adjusted EBITDA is expected to reach $150 million to $160 million. Strategic priorities include expanding specialty insurance offerings, enhancing membership integration, and investing in technology to drive future growth.
In conclusion, Hagerty Inc’s earnings call reflects a positive sentiment with substantial growth in revenue and profitability. Despite facing challenges such as natural disasters and slower customer acquisition, the company remains focused on strategic initiatives and technology investments to sustain its growth trajectory.