What changed in this filing

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Item 1A. Risk Factors

2022-08-04 compared with 2022-05-06 · 52 added, 48 removed, 717 unchanged (12% of the section changed)

29 unchanged sentences

Search engines, social media platforms and other online sources often revise their algorithms and introduce new advertising products.

If one or more of the search engines or other online sources on which we rely for website traffic were to modify its general methodology for how it displays our advertisements, resulting in fewer consumers clicking through to our websites, our business could suffer.

If one or more of the search engines or other online sources on which we rely for website traffic were to modify its general

methodology for how it displays our advertisements, resulting in fewer consumers clicking through to our websites, our business could suffer.

In addition, if our online display advertisements are no longer effective or are not able to reach certain consumers due to consumers’ use of ad-blocking software, our

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A significant portion of our revenue in recent periods was derived from two customers, and our results of operations could be adversely affected and stockholder value harmed if we lose business from these customers.

Sales to Progressive Casualty Insurance Company accounted for 14% of our revenue for the three months ended March 31, 2022 and 16% of our revenue for the year ended December 31, 2021.

Sales to State Farm Mutual Automobile Insurance Company accounted for 11% of our revenue for the three months ended March 31, 2022 and less than 10% of our revenue for the year ended December 31, 2021.

Sales to Progressive Casualty Insurance Company accounted for 17% of our revenue for the six months ended June 30, 2022 and 16% of our revenue for the year ended December 31, 2021.

Sales to State Farm Mutual Automobile Insurance Company accounted for 11% of our revenue for the six months ended June 30, 2022 and less than 10% of our revenue for the year ended December 31, 2021.

These customers made purchases from us under short-term agreements and may decrease or cease doing business with us at any time with no notice.

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A substantial majority of the referrals made through our marketplace are for automobile insurance and our financial prospects depend significantly on the larger automotive industry ecosystem.

Revenue from automotive insurance providers accounted for 79% of our total revenue for the three months ended March 31, 2022 and 79% of our total revenue for the year ended December 31, 2021.

Revenue from automotive insurance providers accounted for 80% of our total revenue for the six months ended June 30, 2022 and 79% of our total revenue for the year ended December 31, 2021.

If insurance carriers experience large or unexpected losses through the offering of insurance, these carriers may choose to decrease the amount of money they spend with us.

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Consolidation of internet advertising networks and third-party publishers could eventually lead to a concentration of desirable inventory on websites or networks owned by a small number of individuals or entities, which could limit the supply or impact the pricing of inventory available to us.

Additionally, third-party publishers may use advertising creatives that do not meet our compliance guidelines or that of our insurance provider customers, which could result in loss of revenue and reputational harm.

Additionally, third-party publishers may use advertising creatives that do

not meet our compliance guidelines or that of our insurance provider customers, which could result in loss of revenue and reputational harm.

As a result, we may not be able to acquire media inventory that meets our insurance provider’s performance, price, and quality requirements, in which case our revenue could decline, or our operating costs could increase.

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The operation of these systems is expensive and complex and we could experience operational failures.

Interruptions, delays or failures in these systems, whether due to earthquakes, adverse weather conditions, other natural disasters, power loss, computer viruses, cybersecurity attacks, physical break-ins,

terrorism, errors in our software or otherwise, could be prolonged and could affect the security or availability of our websites and applications, and prevent consumers from accessing our services.

in our software or otherwise, could be prolonged and could affect the security or availability of our websites and applications, and prevent consumers from accessing our services.

Such interruptions also could result in third parties accessing our confidential and proprietary information, including our intellectual property or consumer information.

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In addition, we do not own or control the operation of these facilities.

Our systems and operations are vulnerable to damage or interruption from fire, flood, power loss, telecommunications failure, terrorist attacks, acts of war, electronic and physical break-ins,

computer viruses, earthquakes and similar events.

Our systems and operations are vulnerable to damage or interruption from fire, flood, power loss, telecommunications failure, terrorist attacks, acts of war, electronic and physical break-ins, computer

viruses, earthquakes and similar events.

The occurrence of any of these events could result in damage to our systems and hardware or could cause them to fail.

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Fluctuations and variability across these different verticals may affect our revenue.

As a result of the potential variations in our revenue and results of operations, period-to-period

comparisons may not be meaningful and the results of any one period should not be relied on as an indication of future performance.

As a result of the potential variations in our revenue and results of operations, period-to-period comparisons may

not be meaningful and the results of any one period should not be relied on as an indication of future performance.

In addition, our results of operations may not meet the expectations of investors or public market analysts who follow us, which may adversely affect our stock price.

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We are also subject to payment card association operating rules, certification requirements and rules governing electronic funds transfers, which could change or be reinterpreted to make it more difficult for us to comply.

We are required to comply with payment card industry security standards.

We are required to comply with payment

card industry security standards.

Failing to comply with those standards may violate payment card association operating rules, federal and state laws and regulations, and the terms of our contracts with payment processors.

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Any adverse publicity resulting from actual or potential litigation may also materially adversely affect our reputation, which in turn could adversely affect our results.

We conduct marketing activities, directly and indirectly, via telephone, text messages, email and/or through other online and offline marketing channels, which general marketing activities are governed by numerous federal and state regulations, such as the Telemarketing Sales Rule, state telemarketing laws, federal and state privacy laws, the Controlling the Assault of Non-Solicited

Pornography and Marketing Act of 2003, or CAN-SPAM

Act, the TCPA, and the Federal Trade Commission Act and its accompanying regulations and guidelines, among others.

Marketing Act of 2003, or CAN-SPAM Act, the

TCPA, and the Federal Trade Commission Act and its accompanying regulations and guidelines, among others.

In addition to being subject to action by regulatory agencies, some of these laws, like the TCPA, allow private individuals to bring litigation against companies for breach of these laws, and we have received complaints from individuals that we have violated the TCPA.

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Any future indebtedness could adversely affect our ability to operate our business.

We have $25.0 million available for borrowing under our revolving line of credit with Western Alliance Bank, and in the future we could incur indebtedness beyond our revolving line of credit.

Borrowing on our revolving line of credit, combined with our other financial obligations and contractual commitments, could have significant adverse consequences, including:

We have $35.0 million available for borrowing under our revolving line of credit and $10.0 million available for borrowing under our term loan, each with Western Alliance Bank, and in the future we could incur indebtedness beyond our revolving line of credit and term loan.

Borrowing under our revolving line of credit or term loan, combined with our other financial obligations and contractual commitments, could have significant adverse consequences, including:

requiring us to dedicate a portion of our cash resources to the payment of interest and principal, reducing money available to fund working capital, capital expenditures, product development and other general corporate purposes;

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placing us at a competitive disadvantage compared to our competitors that have less debt or better debt servicing options.

In addition, any indebtedness we incur under our current revolving line of credit will bear interest at a variable rate, which would make us vulnerable to increases in the market rate of interest.

In addition, any indebtedness we incur under our current revolving line of credit or term loan will bear interest at a variable rate, which would make us vulnerable to increases in the market rate of interest.

If the market rate of interest increases substantially, we would have to pay additional interest, which would reduce cash available for our other business needs.

We intend to satisfy any future debt service obligations with our existing cash and cash equivalents.

Under our loan and security agreement with Western Alliance Bank, our failure to make payments when due or comply with specified covenants, as well as the occurrence of an event that would reasonably be expected to have a material adverse effect on our business, operations, assets or condition, is an event of default.

Under our Amended Loan Agreement with Western Alliance Bank, our failure to make payments when due or comply with specified covenants, as well as the occurrence of an event that would reasonably be expected to have a material adverse effect on our business, operations, assets or condition, is an event of default.

If an event of default occurs and the lender accelerates any indebtedness then outstanding, we may need to seek additional financing, which may not be available on acceptable terms, in a timely manner or at all.

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The regulation of domain names in the United States is subject to change.

Regulatory bodies could establish additional top-level

domains, appoint additional domain name registrars, or modify the requirements for holding domain names.

Regulatory bodies could establish additional top-level domains, appoint

additional domain name registrars, or modify the requirements for holding domain names.

As a result, we may not be able to acquire or maintain all domain names that use the name EverQuote.

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Our activities are subject to extensive regulation under the laws of the United States and its various states and the other jurisdictions in which we operate.

We are currently subject to a variety of, and may in the future become subject to additional, international, federal, state and local laws or judicial decisions that are continuously evolving and developing, including laws regarding the insurance industry, mobile- and internet-based businesses and other businesses that rely on advertising, as well as privacy and consumer protection laws, including the TCPA, the Telemarketing Sales Rule, the CAN-SPAM

Act, the Fair Credit Reporting Act, the Health Insurance Portability and Accountability Act, and employment laws, including those governing wage and hour requirements.

Fair Credit Reporting Act, the Health Insurance Portability and Accountability Act, and employment laws, including those governing wage and hour requirements.

We also generate a significant amount of revenue from calls made by our internal call centers as well as, in some cases, by third-party publishers’ call centers.

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obligations on many organizations that handle personal information of consumers or households.

The CCPA requires covered companies to provide new disclosure to consumers about such companies’ data collection, use and sharing practices, provides such consumers a new right to opt-out

of certain sales or transfers of personal information, and provides consumers with a new cause of action for certain data breaches.

The CCPA requires covered companies to provide new disclosure to consumers about such companies’ data collection, use and sharing practices, provides such consumers a new right to opt-out of

certain sales or transfers of personal information, and provides consumers with a new cause of action for certain data breaches.

The CCPA authorized the Attorney General of the state of California to bring enforcement actions for violations beginning July 1, 2020.

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CMS scrutinizes health insurance carriers whose Medicare plans we sell and those health insurance carriers may be held responsible for actions that we and our agents take.

Based on industry guidance, we expect that health insurance carriers will be increasingly evaluating broker performance based on quality of their enrollments, including complaints, retention rates, customer satisfaction and volumes.

Based on industry guidance, we expect that health insurance carriers will be increasingly

evaluating broker performance based on quality of their enrollments, including complaints, retention rates, customer satisfaction and volumes.

As a result, health insurance carriers may terminate their relationships with us or require us to take other corrective action if our Medicare product sales, marketing and operations are not in compliance or give rise to too many complaints.

The termination of or

change in our relationships with health insurance carriers could reduce the products we are able to offer, result in the loss of commissions for past and future sales and otherwise harm our business, operating results and financial condition.

The termination of or change in our relationships with health insurance carriers could reduce the products we are able to offer, result in the loss of commissions for past and future sales and otherwise harm our business, operating results and financial condition.

Changes to the laws, regulations and guidelines relating to the sale of Medicare plans, their interpretation or the manner in which they are enforced could impact the manner in which we conduct our Medicare business, or our sale of Medicare plans, or we could be prevented from operating aspects of our Medicare revenue generating activities altogether, which would harm our business, operating results and financial condition.

13 unchanged sentences

Sales, use, value added and similar tax laws and rates vary greatly by jurisdiction.

Certain jurisdictions in which we do not collect such taxes may assert that such taxes are applicable, which could result in tax assessments, penalties and interest, to us or our end-customers

for the past amounts, and we may be required to collect such taxes in the future.

If we are unsuccessful in collecting such taxes from our end-customers,

we could be held liable for such costs.

Certain jurisdictions in which we do not collect such taxes may assert that such taxes are applicable, which could result in tax assessments, penalties and interest, to us or our end-customers for the

past amounts, and we may be required to collect such taxes in the future.

If we are unsuccessful in collecting such taxes from our end-customers, we could

be held liable for such costs.

Such tax assessments, penalties and interest, or future requirements may adversely affect our operating results.

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The United States regulates marketing by telephone and email.

The TCPA prohibits companies from making certain telemarketing calls to numbers listed in the Federal Do-Not-Call

Registry and imposes other obligations and limitations on making phone calls and sending text messages to consumers.

Act regulates commercial email messages and specifies penalties for the transmission of commercial email messages that do not comply with certain requirements, such as providing an opt-out

mechanism for stopping future emails from senders.

The TCPA prohibits companies from making certain telemarketing calls to numbers listed in the Federal Do-Not-Call Registry and

imposes other obligations and limitations on making phone calls and sending text messages to consumers.

The CAN-SPAM Act regulates

commercial email messages and specifies penalties for the transmission of commercial email messages that do not comply with certain requirements, such as providing an opt-out mechanism for

stopping future emails from senders.

We, along with third parties we acquire consumer referrals from, and the insurance providers who use our marketplace may need to comply with such laws and any associated rules and regulations.

States and other countries have similar laws related to telemarketing and commercial emails.

Additional or modified laws and regulations, or interpretations of existing, modified or new laws, regulations and rules, could prohibit or increase the cost of engaging with consumers and impair our ability to expand the use of our products, including our demand response solution, to more users.

our products, including our demand response solution, to more users.

Alleged failure to comply with obligations and restrictions related to telephone, text message and email marketing could subject us to lawsuits, fines, statutory damages, consent decrees, injunctions, adverse publicity and other losses that could harm our business.

Moreover, over the past several years there has been a

significant amount of litigation alleging violations of laws relating to telemarketing, which has increased the exposure of companies that operate telephone and text messaging campaigns to class action litigation alleging violations of the TCPA.

Moreover, over the past several years there has been a significant amount of litigation alleging violations of laws relating to telemarketing, which has increased the exposure of companies that operate telephone and text messaging campaigns to class action litigation alleging violations of the TCPA.

If we, third parties we acquire quote requests from, or the insurance providers who use our marketplace become subject to such litigation, it could result in substantial costs to and materially adversely affect our business.

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The market price of our Class A common stock has been and could continue to be subject to significant fluctuations.

For example, our Class A common stock traded within a range of a high price of $63.44 per share and a low price of $4.05 per share for the period beginning June 28, 2018, our first day of trading on the Nasdaq Global Market, through March 31, 2022.

Some of the factors that may cause the market price of our Class A common stock to fluctuate include:

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If one or more of these analysts cease to cover our Class A common stock, we could lose visibility in the market for our Class A common stock, which in turn could cause our stock price to decline.

The dual-class structure of our common stock has the effect of concentrating voting control with the holders of our Class B common stock, including our directors, executive officers and Link Ventures and other significant stockholders, who collectively held in the aggregate approximately 77% of the voting power of our capital stock as of April 12, 2022;

and Link Ventures, directly or through a voting agreement, together with Cogo Labs, held approximately 76% of the voting power of our capital stock as of that date.

1 unchanged sentence

Our Class B common stock has 10 votes per share, and our Class A common stock has one vote per share.

Our directors, executive officers and holders of more than 10% of our common stock, and their respective affiliates, held in the aggregate approximately 77% of the voting power of our capital stock as of April 12, 2022;

and Link Ventures, directly or through a voting agreement pursuant to which Tomas Revesz and the heirs and estate of Seth Birnbaum are obligated to vote on all matters presented to our stockholders all voting capital stock held by them in the manner directed by Link Ventures, together with Cogo Labs, held in the aggregate approximately 76% of the voting power of our capital stock as of that date.

Because of the 10-to-one

voting ratio between our Class B and Class A common stock, the holders of our Class B common stock collectively will continue to control a majority of the combined voting power of our common stock and therefore be able to control all matters submitted to our stockholders for approval.

Because of the 10-to-one voting ratio

between our Class B and Class A common stock, the holders of our Class B common stock collectively will continue to control a majority of the combined voting power of our common stock and therefore be able to control all matters submitted to our stockholders for approval.

This concentration of voting power will limit or preclude your ability to influence corporate matters for the foreseeable future, including the election of directors, amendments of our organizational documents, and any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transaction requiring stockholder approval.

This may also prevent or discourage unsolicited acquisition proposals or offers for our capital stock that you may feel are in your best interest as one of our stockholders.

In addition, major stock index providers, such as FTSE Russell and S&P Dow Jones, exclude from their indices non-voting

securities or the securities of companies with unequal voting rights.

In addition, major stock index providers, such as FTSE Russell and S&P Dow Jones, exclude from their indices non-voting securities or

the securities of companies with unequal voting rights.

Exclusion from stock indices could make it more difficult, or impossible, for some fund managers to buy our Class A common stock, particularly in the case of index tracking mutual funds and exchange traded funds, which could adversely affect the trading liquidity and market price of our Class A common stock.

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These sales, or the market perception that the holders of a large number of shares intend to sell shares, could reduce the market price of our Class A common stock.

In addition to our outstanding Class A common stock, as of March 31, 2022, there were 976,188 shares of Class A common stock subject to outstanding options, 593,677 shares of either Class A common stock or Class B common stock subject to outstanding options, 2,891,797 shares of Class A common stock subject to outstanding restricted stock unit awards, or RSUs, and an additional 2,705,526 shares of Class A common stock reserved for future issuance under our equity incentive plan.

In addition to our outstanding Class A common stock, as of June 30, 2022, there were 1,414,237 shares of Class A common stock subject to outstanding options, 588,960 shares of either Class A common stock or Class B common stock subject to outstanding options, 3,173,607 shares of Class A common stock subject to outstanding restricted stock unit awards, or RSUs, and an additional 1,641,768 shares of Class A common stock reserved for future issuance under our equity incentive plan.

Because we have registered 15,949,000 shares of our Class A common stock and Class B common stock that may be issued under our equity incentive plans pursuant to registration statements on Form S-8, any such

shares that we issue can be freely sold in the public market upon issuance, subject to the restrictions imposed on our affiliates under Rule 144.

Moreover, holders of a significant number of shares of our Class A common stock and Class B common stock as of March 31, 2022, have rights, subject to certain conditions, to require us to file registration statements covering their shares or to include their shares in registration statements that we may file for ourselves or other stockholders.

Moreover, holders of a significant number of shares of our Class A common stock and Class B common stock as of June 30, 2022, have rights, subject to certain conditions, to require us to file registration statements covering their shares or to include their shares in registration statements that we may file for ourselves or other stockholders.

Upon registration, such shares would be able to be freely sold in the public market.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors