Hagerty Inc Class A ((HGTY)) has held its Q4 earnings call. Read on for the main highlights of the call.
Hagerty, Inc. has reported a robust earnings call, reflecting strong revenue and membership growth, alongside impressive advancements in technology and digital transformation. Despite facing challenges from catastrophe claims and increased costs due to strategic investments, the company remains optimistic about its future, particularly with a positive outlook for 2025. Hagerty’s efforts to enhance scalability and efficiency signal a promising trajectory.
Record Revenue and Growth
Hagerty, Inc. achieved a remarkable 20% revenue growth in 2024, with written premiums increasing by 15%. The company welcomed a record 279,000 new members, showcasing the strength of its recurring revenue model and its ability to attract and retain customers effectively.
Impressive Operating Income Increase
The company’s operating income saw a sixfold increase, reaching $66 million in 2024, despite a $27 million impact from Hurricane Celine and Milton. This significant growth highlights Hagerty’s resilience and effective management strategies in the face of natural disasters.
Technology and Digital Transformation
Hagerty is making strides in its technology and digital transformation journey by transitioning to a modern cloud-based architecture. With an investment of over $20 million planned for 2025, the company aims to drive future efficiency gains and scalable growth through this replatforming effort.
Strong Membership and Marketplace Growth
The fourth quarter saw a 68% growth in membership, marketplace, and other revenue, reflecting successful expansion efforts. The Broad Arrow team and European business have been pivotal in this growth, demonstrating Hagerty’s effective market penetration strategies.
Positive 2025 Outlook
Hagerty anticipates a 13% to 14% growth in written premiums and 12% to 13% growth in total revenue for 2025. The company is focused on expanding its specialty insurance offerings and the State Farm Classic Plus program, indicating a strategic approach to capturing more market share.
Impact of Catastrophe Claims
The company’s loss ratio was impacted by over a point due to catastrophe claims from the hurricane season, with a full-year loss ratio of 46% including six points from cat losses. This underscores the challenges faced by Hagerty in managing natural disaster impacts.
Increased Costs and Investments
Hagerty anticipates elevated investments in 2025, with $20 million earmarked for technology investments. This will cause a near-term slowdown in profit margin expansion due to operating two redundant systems, but it is a strategic move to support long-term growth.
Forward-Looking Guidance
In the fourth quarter of 2024, Hagerty reported a 19% increase in total revenue, reaching $292 million, and a 13% rise in written premiums. The company achieved a net income surge of 178% to $78 million, with adjusted EBITDA growing by 41% to $124 million. Looking ahead, Hagerty anticipates a 12% to 13% growth in total revenue and a 30% to 40% increase in net income for 2025, aiming for $102 million to $110 million. The company plans significant technology investments to support scalable growth and aims to double its policy count to 3 million by 2030.
In summary, Hagerty, Inc.’s earnings call reflects a strong performance with significant revenue and membership growth, despite challenges from catastrophe claims and increased costs. The company’s positive outlook for 2025, coupled with strategic investments in technology and market expansion, positions it well for future success. Investors and market enthusiasts will find Hagerty’s focus on scalability and efficiency promising as it continues to navigate the financial landscape.