Ethos Technologies Inc. (LIFE) Earnings

Management highlights

- Overall Company Performance * Delivered the second consecutive quarter of over 100% year-over-year revenue growth, and is on pace for the fourth consecutive year of over 50% annual growth * Activated 107,847 new policies in Q2, bringing cumulative total activated policies to over 700,000; reached this milestone of 100,000 new policies in three months, compared to 54 months for the first 100,000 policies * Maintains a vertically integrated end-to-end platform covering the full consumer journey, powered by a proprietary automated data-driven underwriting engine that achieves a 95% instant decision rate - Direct Channel Progress * The virtuous data cycle of product and marketing experimentation continues to accelerate, with higher user volumes enabling more experimentation that drives incremental unit economic improvements * Increased marketing spend driven by unit economic gains has solidified Ethos' position as the leading D2C life insurance brand - Third-Party Channel Progress * Growth is accelerating for the second consecutive quarter (up from 27% YoY in Q4 2025 to 42% YoY in Q1 2026 to 90% YoY in Q2 2026), driven by growth in both the number of agents using the platform and improving agent productivity, with broad-based adoption across new and existing agencies - Product Development Highlights * Expanded the accumulation IUL product with North American Salmons to include juvenile coverage, responding to a top request from the distribution network * Began early-stage investment in D2C annuities, optimizing the client experience, growing the sales team, and expanding the annuity carrier panel; no material 2026 revenue contribution expected from this new initiative - Strategic Positioning * The company's vertically integrated, fully digital tech stack and leading D2C platform leave it uniquely positioned to benefit from AI-driven consumer demand and the shift to agentic commerce, allowing it to capture demand efficiently and expand market share * Three reinforcing durable growth drivers: ecosystem (growing direct consumers and recruiting platform agents), platform (improving distribution network productivity), and product (broadening the portfolio to expand addressable audience)

Guidance

- Third Quarter 2026: Expects total revenue in the range of $160 to $164 million, with 73% year-over-year growth at the midpoint, and adjusted EBITDA in the range of $23 to $25 million - Full Year 2026: Management raised guidance, now expects total revenue of $727 to $731 million (88% year-over-year growth at the midpoint, an acceleration over 2025's growth rate), and adjusted EBITDA of $119 to $123 million - The board of directors authorized a new $100 million Class A common stock share repurchase program, which management will deploy opportunistically when share price does not reflect underlying business value

Segment performance

Ethos Technology reported total Q2 2026 revenue of $189.6 million, representing 113% year-over-year growth. The Direct segment generated $116.5 million in revenue, accounting for 61.4% of total revenue, with 131% year-over-year growth. The Third-Party segment generated $73.1 million in revenue, accounting for 38.6% of total revenue, with 90% year-over-year growth. The company achieved 113% revenue growth alongside adjusted EBITDA of $35.2 million, for a Rule of 40 score of 132. Contribution profit grew 66% year-over-year to $62.3 million, for a 33% contribution margin. Cash flow from operating activities was $35.7 million, and total cash, cash equivalents, and investments stood at $252.9 million as of June 30, 2026.

Risks & headwinds

- Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from current expectations, including risks related to growth execution, changing consumer behavior, carrier partner capacity, and evolving AI market dynamics - The third-party channel has structurally lower margins than the direct channel, and ongoing acceleration of third-party growth will drive mixed downward pressure on overall company margins

Analyst Q&A

• Q: How sustainable is Ethos' above-industry growth, and how should investors think about growth normalization as the company faces tougher annual comparables moving into 2027?

  A: Ethos currently holds only a single-digit share of the large 10 million annual U.S. individual life insurance market, with massive room for further penetration. The company's virtuous data cycle, unmatched agent and client experience, and ability to draw incremental new consumers to the market support durable long-term growth. Third-party revenue also has embedded recurring growth from existing agency networks. 2027 guidance will be provided in February 2027.

• Q: Why authorize share repurchases when the company has strong unit economics, high growth, and low market share, which would justify faster marketing investment to accelerate growth further?

  A: Ethos maintains a threshold of first-year cash profitability on a fully burdened variable basis for growth investment across both channels. As a recently public company, management believes the current balance between disciplined unit economic growth and returning excess capital to shareholders is appropriate, and will remain open to re-evaluating this balance going forward.

• Q: What is driving the sharp acceleration in third-party agent channel growth, and how much runway remains for this segment?

  A: The growth is broad-based across both new agency partners that joined in 2025-2026 and long-standing partners, with strong product-market fit for Ethos' agent platform and portfolio. Referral-driven organic agency recruitment keeps acquisition costs low, and operational systems for payments, commissions, and fraud management have matured. Ethos still only has a single-digit share of U.S. life insurance agents on its platform, leaving significant room for further market share and wallet share gains.

• Q: What is driving expected margin compression between the first and second half of 2026, even after raising the revenue guidance?

  A: The margin compression is driven almost entirely by channel mix: the faster-growing third-party channel has structurally lower margins than the direct channel, and its share of total revenue has fallen 14 points in Q2 alone. All third-party policies are still independently profitable and cash flow positive within 60 days of activation, and management prioritizes growing total absolute contribution profit and EBITDA over hitting specific margin targets.