Hagerty's Q2 2025 Earnings Call: Unpacking Contradictions in Marketplace Growth and State Farm Integration

Marketplace revenue growth drivers, State Farm integration and expansion, marketplace revenue growth expectations, impact of premium growth on business strategy are the key contradictions discussed in Hagerty's latest 2025Q2 earnings call.



Revenue Growth and Strategic Initiatives:
- Hagerty reported 18% growth in total revenue to $369 million for the second quarter of 2025.
- This growth was fueled by an 11% increase in written premium, a 12% growth in commission revenue, and a 68% jump in membership, Marketplace, and other revenue.
- The strategic initiatives of expanding specialty insurance offerings, simplifying member experiences, and expanding marketplace business internationally contributed to this growth.

Profitability and Margin Expansion:
- The company's operating margins improved by 210 basis points, leading to a 46% increase in net income and a 28% rise in adjusted EBITDA for the first half of 2025.
- The increase in profitability was due to double-digit commission gains, cost discipline, and tight control over expenses.

New Business and Marketplace Performance:
- New business count led to a 11% increase in written premium, and membership, Marketplace, and other revenue jumped 78% to $48 million.
- The strong performance in new business and marketplace revenue was driven by high private sales and inventory sales, as well as the launch of the European auction business.

Investment in Technology and Partnership:
- Hagerty spent $20 million on technology and marketplace initiatives, which included migrating to a new platform and launching Enthusiast+.
- The investments are part of a broader strategy to enhance efficiency and expand market reach, with the expectation that top-line growth will accelerate in 2026 and 2027.

Future Growth and Strategic Partnerships:
- Hagerty anticipates accelerated growth in 2026 fueled by State Farm's ramp-up and market share gains, along with a pipeline of partnerships with top 50 carriers.
- The company's partnership with Markel, which includes a move to a new fronting arrangement, will enhance profitability by increasing underwriting and investment income and providing operational control.