MediaAlpha (MAX)

Insurance customer acquisition platform MediaAlpha (NYSE:MAX) fell short of the market’s revenue expectations in Q4 CY2025, with sales falling 3.2% year on year to $291.2 million. On the other hand, next quarter’s outlook exceeded expectations with revenue guided to $295 million at the midpoint, or 4.9% above analysts’ estimates. Its GAAP profit of $0.50 per share was significantly above analysts’ consensus estimates.

Company Overview

Powering nearly 10 million consumer referrals each month in the insurance marketplace, MediaAlpha (NYSE:MAX) operates a technology platform that connects insurance carriers with high-intent consumers shopping for property, casualty, health, and life insurance products.

The sector is on the precipice of both disruption and growth as AI, programmatic advertising, and data-driven marketing reshape how things are done. For example, the advent of the Internet broadly and programmatic advertising specifically means that brand building is not a relationship business anymore but instead one based on data and technology, which could hurt traditional ad agencies. On the other hand, the companies in the sector that beef up their tech chops by automating the buying of ad inventory or facilitating omnichannel marketing, for example, stand to benefit. With or without advances in digitization and AI, the sector is still highly levered to the macro, and economic uncertainty may lead to fluctuating ad spend, particularly in cyclical industries.

MediaAlpha's competitors include EverQuote (NASDAQ:EVER), GoHealth (NASDAQ:GOCO), SelectQuote (NYSE:SLQT), and private companies like QuinStreet and Insurance.com that facilitate insurance comparison shopping and customer acquisition for carriers.

Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but many enduring ones grow for years.

With $1.11 billion in revenue over the past 12 months, MediaAlpha is a small player in the business services space, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and numerous distribution channels. On the bright side, it can grow faster because it has more room to expand.

As you can see below, MediaAlpha’s sales grew at an exceptional 13.7% compounded annual growth rate over the last five years. This is a great starting point for our analysis because it shows MediaAlpha’s demand was higher than many business services companies.

We at StockStory place the most emphasis on long-term growth, but within business services, a half-decade historical view may miss recent innovations or disruptive industry trends. MediaAlpha’s annualized revenue growth of 69.4% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated.

This quarter, MediaAlpha missed Wall Street’s estimates and reported a rather uninspiring 3.2% year-on-year revenue decline, generating $291.2 million of revenue. Company management is currently guiding for a 11.6% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 10% over the next 12 months, a deceleration versus the last two years. Still, this projection is commendable and indicates the market is forecasting success for its products and services.

MediaAlpha was roughly breakeven when averaging the last five years of quarterly operating profits, one of the worst outcomes in the business services sector.

On the plus side, MediaAlpha’s operating margin rose by 1.6 percentage points over the last five years, as its sales growth gave it operating leverage.

This quarter, MediaAlpha generated an operating margin profit margin of 7.7%, up 1.6 percentage points year on year. This increase was a welcome development, especially since its revenue fell, showing it was more efficient because it scaled down its expenses.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

MediaAlpha’s EPS grew at an astounding 15.9% compounded annual growth rate over the last five years, higher than its 13.7% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into MediaAlpha’s earnings quality to better understand the drivers of its performance. As we mentioned earlier, MediaAlpha’s operating margin expanded by 1.6 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For MediaAlpha, its two-year annual EPS growth of 56.3% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.

In Q4, MediaAlpha reported EPS of $0.50, up from $0.08 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects MediaAlpha’s full-year EPS of $0.39 to grow 139%.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

MediaAlpha has shown decent cash profitability, giving it some flexibility to reinvest or return capital to investors. The company’s free cash flow margin averaged 5.4% over the last five years, slightly better than the broader business services sector.

Taking a step back, we can see that MediaAlpha’s margin expanded by 1.5 percentage points during that time. This is encouraging because it gives the company more optionality.

MediaAlpha burned through $7.49 million of cash in Q4, equivalent to a negative 2.6% margin. The company’s cash flow turned negative after being positive in the same quarter last year, but we wouldn’t read too much into the short term because investment needs can be seasonal, leading to temporary swings. Long-term trends trump fluctuations.

MediaAlpha reported $46.88 million of cash and $153.4 million of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $113.7 million of EBITDA over the last 12 months, we view MediaAlpha’s 0.9× net-debt-to-EBITDA ratio as safe. We also see its $6.02 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

It was good to see MediaAlpha beat analysts’ EPS expectations this quarter. We were also glad its revenue guidance for next quarter trumped Wall Street’s estimates. On the other hand, its revenue missed. Overall, we think this was a decent quarter with some key metrics above expectations. The stock traded up 8.2% to $8.40 immediately following the results.

Updated: February 24, 2026 at 12:42 AM EST

Are you wondering whether to buy MediaAlpha or pass? We urge investors to not only consider the latest earnings results but also longer-term business quality and valuation as well.

MediaAlpha is a fine business. To kick things off, its revenue growth was exceptional over the last five years. And while its projected EPS for the next year is lacking, its rising cash profitability gives it more optionality.

MediaAlpha’s P/E ratio based on the next 12 months is 6.6x. Looking across the spectrum of business services businesses, MediaAlpha’s fundamentals shine bright. We like the stock at this bargain price.

Wall Street analysts have a consensus one-year price target of $15.93 on the company (compared to the current share price of $8.66), implying they see 84% upside in buying MediaAlpha in the short term.