Hagerty 2025 Q1 Earnings Strong Performance as Net Income Surges 233%

Hagerty (HGTY) reported its fiscal 2025 Q1 earnings on May 07th, 2025. hagerty surpassed analysts' expectations for Q1 2025, reflecting robust performance across key metrics. The company's revenue growth of 17.6% and a significant 233% increase in net income underscore its strong operational execution. Hagerty reaffirmed its 2025 guidance, projecting continued growth in revenue and profitability. The outlook remains in line with previous estimates, showcasing confidence in its strategic initiatives and market positioning.

Revenue
Hagerty's revenue for Q1 2025 saw an impressive increase of 17.6% year-over-year, reaching $319.59 million compared to $271.71 million in Q1 2024. This growth was driven by several business segments, with commission and fee revenue contributing $100.29 million, earned premium at $169.35 million, and membership, marketplace, and other revenue adding $49.95 million. The overall rise in revenue is attributed to strategic expansion and increased customer engagement.

Earnings/Net Income
Hagerty returned to profitability in Q1 2025, achieving an EPS of $0.07, a reversal from the previous year's loss of $0.04 per share. The company's net income surged to $27.29 million, marking a 232.9% growth from $8.20 million in 2024 Q1. This represents a record high for fiscal Q1 net income in the past five years. The EPS improvement reflects positive financial health and strong performance.

Post Earnings Price Action Review
The strategy of purchasing hgty shares post-revenue increase and holding them for 30 days resulted in a -1.77% return, underperforming the benchmark significantly. The strategy's Sharpe Ratio stood at -0.03, indicating a poor risk-adjusted return, compounded by a maximum drawdown of -30.04%. The Compound Annual Growth Rate (CAGR) over the past five years was -0.52%, suggesting a decline in value. High volatility, at 19.65%, further highlights the risk associated with this investment strategy, emphasizing the need for cautious approach amidst market fluctuations.

CEO Commentary
McKeel Hagerty, Chief Executive Officer and Chairman, expressed optimism about Hagerty's performance, stating, "We appreciate you taking the time to join Hagerty's First Quarter 2025 Earnings Call." He highlighted an 18% increase in total revenue and attributed growth to a record number of new members and a 12% rise in written premium. Hagerty emphasized strategic priorities including expanding specialty insurance offerings, simplifying the membership experience, and international marketplace expansion. He noted, "We believe that we are well positioned to deliver high rates of profitable growth for many years to come," indicating a positive leadership outlook as the company aims for long-term value creation.

Guidance
Hagerty reaffirmed its 2025 guidance, projecting revenue growth of 12% to 13%, driven by a 13% to 14% increase in written premium. The company expects net income between $102 million and $110 million, representing a 30% to 40% increase, and adjusted EBITDA of $150 million to $160 million, indicating a growth of 21% to 29%. The outlook reflects confidence in continued business momentum and effective execution of strategic priorities.

Additional News
In recent weeks, Hagerty has announced a strategic acquisition aimed at bolstering its marketplace offerings, enhancing its ability to service and engage car enthusiasts globally. Additionally, the company has seen changes in its executive team, with the appointment of a new Chief Operating Officer to drive operational efficiency and growth. Hagerty has also declared a dividend payout, underscoring its commitment to returning value to shareholders amidst strong financial performance. These developments highlight Hagerty's focus on expanding its market presence and reinforcing its leadership within the automotive insurance sector.

Ask Aime: What's next for Hagerty after Q1 earnings?