Good day. Thank you for standing by, and welcome to the Ethos Technologies, Inc. Fourth Quarter 2025 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first today, Aaron Turner, Head of Investor Relations. Please go ahead.

Good afternoon, and welcome, everyone, to Ethos Technologies fourth quarter of fiscal year 2025 earnings call. We will be discussing the results announced in our press release issued after the market closed today. With me today are Ethos CEO, Peter Colis; and our CFO, Chris Capozzi. Today's call is being webcast and will also be available for replay on our Investor Relations website at investors.ethos.com. A slide presentation accompanies this call and can be viewed in the Events section of our Investor Relations website. During this call, we will make forward-looking statements within the meaning of the federal securities laws, including statements regarding our financial outlook for the first quarter and full fiscal year 2026, our expectations regarding financial and business trends, impacts from go-to-market initiatives, growth strategy and business aspirations and product initiatives, including future product releases and additional carrier partnerships and the expected benefits of such initiatives. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends. These forward-looking statements are subject to a number of risks and other factors. For a discussion of these risks and other factors, please see the information under Forward-Looking Statements in our financial results press release issued today and our presentation materials as well as the more detailed discussion in our SEC filings available on our Investor Relations website and on the SEC website at www.sec.gov. Although we believe that the expectations reflected in the forward-looking statements are reasonable, our actual results may differ materially. All forward-looking statements made during this call are based on information available to us as of today, and we do not assume any obligation to update these statements as a result of new information or future events, except as required by law. In addition to the U.S. GAAP financials, we will discuss certain non-GAAP financial measures. While the company believes these non-GAAP financial measures provide useful information for investors, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. A reconciliation to the most directly comparable U.S. GAAP measures is available in the presentation that accompanies this call, which can be found on our Investor Relations website. Now let me turn the call over to Peter.

Good afternoon, everyone, and welcome to our fourth quarter 2025 earnings call. At Ethos, we are on a mission to protect families by democratizing access to life insurance and empowering agents at scale. And I'm pleased to share that in Q4, we continued our strong execution. We delivered $110.1 million in revenue in Q4, representing a 65% year-over-year revenue growth, and achieved adjusted EBITDA of $26 million and an adjusted EBITDA margin of 23%. We activated over 54,000 new policies this quarter, bringing us to over 500,000 policies activated through Q4. We also ended the year with over 15,000 agents selling on our platform in 2025. For the full year 2025, we generated revenue of $388 million, representing growth of 52%. This marks our third consecutive year with growth over 50%. We also generated a Rule of 40 score of 75, demonstrating our ability to balance growth and profitability. For those of you joining us for the first time and as a refresher for others, I'd like to share an overview of how Ethos is transforming the buying, selling and underwriting process of life insurance. Our goal at Ethos is to become the largest issuer of life insurance in the world. We built a vertically integrated platform that owns the full consumer journey, from marketing and application through underwriting, policy issuance, policy administration and long-term servicing. That control lets us deliver a level of speed, accessibility and approval rates that don't exist in the legacy life insurance industry. Our automated data-driven underwriting engine processes hundreds of thousands of data points per application, leveraging pharmaceutical records, medical claims billing data and more. The engine then applies over 1 million rules of logic and over 800 adaptive questions to make accurate risk-adjusted pricing decisions in real time. Our 95% instant decisioning rate…

Thanks, Peter, and good afternoon, everyone. To begin, I'll review the highlights of our fourth quarter results. Then I'll outline our expectations for the first quarter and the full year 2026 before opening up to your questions. We concluded the fourth quarter with consistent execution across several key strategic priorities. Our financial results demonstrate both strong top line momentum across our direct-to-consumer and third-party channels and the earnings power of our platform. Before reviewing the details of our results, I'd like to remind everyone that some of the financial measures and metrics that I'll discuss today are presented on a non-GAAP basis, which we believe provides additional insight into our performance. With that in mind, let me walk you through the details behind our results. In the fourth quarter, we delivered $110.1 million in revenue, representing a 65% increase from the same period last year. In our direct channel, fourth quarter revenue increased to $74.2 million, representing 93% year-over-year growth. This performance was fueled by optimized advertising spend and innovation up and down our vertical stack. By refining everything from the initial user experience to our core underwriting algorithms, we've driven meaningful compounding improvements in our conversion rates. In our third-party channel, fourth quarter revenue was $35.9 million, representing a 27% increase over the same quarter last year. This growth was driven by an increase in both active agents and revenue per agent. Moving to our nonfinancial metrics. We activated 54,714 policies in the fourth quarter, representing 42% year-over-year growth. The average revenue per policy was $2,012. The fourth quarter was also strong from an efficiency perspective. We recorded a contribution profit of $47.2 million, representing a 43% contribution margin. As a reminder, we define contribution profit as gross profit less sales and marketing expenses. This includes agent payments and…

[Operator Instructions] Our first question comes from the line of Eric Sheridan of Goldman Sachs.

Maybe 2, if I can. First, Peter, what do you see as the biggest strategic priorities for the company when you think about the way you've laid out the potential for revenue growth in 2026 that you're most focused on executing against to deliver against that top line performance? And then maybe a second question would be, as you continue to scale the platform, what is the landscape like in terms of deploying marketing dollars and earning a stable to rising return on marketing dollars as a growth stimulant for the business?

Thanks for the question, Eric. We're glad to be here. We're excited to be on this first earnings call with you all. First, let's talk about our priorities for 2026. I'll talk about our kind of business-as-usual priorities and then AI as well. Business-as-usual priorities. We have 3 very durable vectors for growth. The first is recruit more clients to the platform and recruit more agents to the platform. The second is make agents more productive through optimizations to the agent operating system. And then the third is to broaden our product portfolio and enhance the value that we are delivering on a per product basis. And so when you look at our results over the past year and when we think about the guidance that we've provided going forward, all 3 of those vectors are really firing with full cylinders. So we're excited to just continue executing and doing a great job across all of those. The second is really taking advantage and implementing AI across every vector of the company, whether it's -- and which we have been doing for the past year, whether it's accelerating engineering, analytics, marketing, client service, agent service, fraud management models, agent quality, automating operations, internal tooling and more. This has really been a key driver behind our 98% gross margins and our client satisfaction ratings, if you look at our NPS of over 70 for the past year. So we think there's a lot more opportunity to continue harnessing the power of AI and improve. Second, as far as the landscape of efficient marketing dollar spend, if you look at this past year and if you look at our results in Q4, I really think it's an illustration where we were able to grow our direct business in Q4 at really an eye-popping rate with consistent year-over-year direct-to-consumer unit economics. And that's really the virtuous data cycle spinning at full speed, where we are a business that gets better as we get bigger, our machine learning models that power our marketing become more intelligent. We're able to run more user experience optimization tests that improve the conversion rates and efficiency. We are able to approve more people at better prices as we get better at risk management with underwriting. We're able to negotiate better take rates or better client pricing. We're able to become more efficient at administrating clients and post purchase. So really, the machine is getting more intelligent and more efficient as it gets bigger. The second component of that is really we have a diverse panel of marketing channels where we're not overly reliant on any one given channel. The majority of our spend is in upper funnel channels where the user is not looking for life insurance like television, social media, radio, et cetera. And that's great because those channels are really scalable at the right unit economics for us.

And our next question comes from the line of Ross Sandler of Barclays.

Great. Peter, I was just curious, so the market seems very jittery around the AI topic, not as it relates to how you guys might be using it internally, but more how consumers use agentic AI for research or prospecting in the process of buying various types of insurance, including life insurance. So I was just curious like how are you guys thinking about the opportunity as it relates to partnering or integrating with third-party agentic AI services? Or how you see this playing out as it relates to the purchase funnel for buying life insurance in general?

Yes. Thanks, Ross. It's a great question. So AI is a huge opportunity for us to further accelerate both our growth and our profitability as a company. We have been and will continue to be, I think, uniquely positioned to harness the advancing powers of AI really across all the dimensions of the business that I spoke to earlier, while doing so, operating in a highly regulated industry. If you just take a step back before we talk to the specifics of consumer behavior and online shopping, carriers rely on really -- the incumbent carrier set really relies on a disjointed mix of on-premise and vendor-managed systems built on top of a fragmented data infrastructure, which is oftentimes filled with low quality and conflicting data. Conversely, because we have a native end-to-end technology platform with a cutting-edge data infrastructure, it's really enabled us to embed AI and ML across the entire business. And so I think there's a lot more opportunity to continue harnessing the power of AI to improve. If you think about sales and marketing specifically, which consists for us of advertising spend and agent commissions, it's our largest expense. And so if AI reduces the cost of distribution or changes the medium in which life insurance is bought, as the leading D2C provider in the category, these shifts in consumer behavior should uniquely be an accelerant to our growth and our margin expansion. And I would say that our advantage isn't really just access to AI tools, which are widely available. It's really a native platform, years of structured underwriting data, real-time feedback loops and deeply integrated carrier relationships that are trained into a unified system. Our moat is structural, I would say. Every application engine, underwriting engine, issued policy, retention event and claim feeds back into our system, and it makes our AI and ML models more intelligent and more efficient. Like simply put, our machine gets better as it gets bigger. We have specific initiatives related to GEO, where we are maximizing that opportunity as a source of user acquisition and further building our brand as consumers use LLMs for research. And we have -- we are actively focused on integrating with these LLMs in the manner that you described, where I think we are most uniquely and best able to do that given our incredible native technology platform.

And our next question comes from the line of Colin Sebastian of Baird.

I guess I'm curious, as you move into some of the more adjacent products, what you launched in Q4 as well as what's in the pipeline. Curious how much is embedded in the outlook from those new products, maybe how quickly they're ramping? And then the additional investment necessary to -- from both the perspective of customer acquisition as well as back-end data, the data platform and integrations there, how much is required incrementally as you sort of roll out those additional products? That would be helpful.

That's a great question, Colin. Thanks for it. I'll first talk about our guidance, then I'll talk about the specific products. So just important to understand our guidance philosophy, we ascribe very little revenue in our forecasting to newer or less proven products. We really take a wait-and-see approach. It's early days for both of the products that we launched in Q4. As a reminder, we launched a new accumulation indexed universal life insurance product, and we launched a cancer insurance product. We are seeing healthy agent adoption of our accumulation IUL product. That is a permanent life insurance product with a compelling investment feature performance and the same incredible Ethos 10-minute purchase process. So we're encouraged. It's early days, but we're excited for it to continue growing and compounding. Our cancer insurance product, it's really early innings of testing and iteration. So I think it's too early to make a judgment call on its potential. While cancer insurance is not typically sold outside the workplace in the U.S., we think it's a compelling value proposition given the rate of cancer diagnosis. If you look at our track record historically, we tend to launch around 3 to 4 new products per year. Our teams are actively working on new products with more in the pipeline. As far as the incremental investment needed when we launch a new product, launching a new product can take anywhere from 4 months to up to a year for the more complicated ones. And it's really a company-wide effort across not only building that new product but integrating it with our distribution systems with all of our analytics and our infrastructure. So there is incremental cost to launch each new product. It's not massive. It's more the time and effort to do it right and set up these deep integrations and build the relationships with our carrier partners.

Our next question comes from the line of Ron Josey of Citi.

Peter, I wanted to better understand the 93% growth in D2C revenue from this past quarter. And I know we talked about sales and marketing and advertising and the ability to really target. But specifically, I would love your thoughts on just what changes were made to the product or the application path that drove that and any insights on conversion rates because of these changes. So question number one is on the 93% growth in D2C and product changes that might be driving greater conversion rates. And then I think the second durable vector you mentioned, make agents more productive, optimized through the Agent OS. We now have 15,000 agents on the platform. I think that's a notable step-up from the last disclosure. So just talk to us about the drivers that's attracting more agents to the platform here.

It's a great question. Thank you so much, Ron. So on the first topic, it really wasn't any one change to the platform that drove that exceptional direct growth. It was really the vertically integrated up and down the cycle seeing gains. So we saw gains in efficiency of our marketing models. As they've gotten larger, they've gotten more intelligent. We saw a number of user experiment improvements, which are leading to more people buying life insurance. We saw gains in underwriting being able to approve more people at better prices. So it's really up and down the vertically integrated stack. I think when you think about our direct business in comparison to a lot of other direct businesses, we benefit from having a very deep stack of real estate on which to optimize. And there's -- and so we've been able to really consistently improve our unit economics, and we expect to be able to going forward, which allows us to then go and increase our marketing spend across a myriad of channels. And if you look at year-over-year, we've increased marketing spend really across the portfolio of marketing channels, both our upper funnel channels where people are not looking for life insurance as well as bottom-of-funnel channels where people are looking for life insurance. And within our category, we're really winning in both of those parts of the advertising market. Drivers of agent growth to the platform, it's really a combination of adding new agencies and growth of our more tenured agency partners. And if you think about our agency business, it's a highly reoccurring model where we benefit not only from the new agencies, but the more tenured partners on the platform, right? When we add a new partner, they roll Ethos out to their existing agents. And then those agents repeatedly sell policies and that agency is constantly recruiting more new agents onto the platform at no incremental cost to us. And then Ethos can make those agents more productive through enhancements to our operating system. And then ultimately, we attempt to grow our share of that agency sales by broadening and enhancing our product portfolio. And so if you look at this past year's results, we saw excellent growth both in the more tenured cohort of agencies as well as productive new agencies who are joining the platform.

Our next question comes from the line of Lee Horowitz of Deutsche Bank.

So you mentioned sort of impressive unit economic stability in the quarter despite the really fast growth in the D2C business. I guess can you expand upon that and how you're looking at perhaps unit economics on a go-forward basis? Why is this maybe not the right time to lean into growth given sort of the competitive landscape that you're playing against as the only scaled digital player left in the market? And then secondly, there's certainly some opportunities to expand the monetization of the platform over the longer term into perhaps some more traditional recurring revenue streams. I guess how are you thinking about that opportunity set and where that may sit in sort of your list of many priorities as you grow your business?

That's a great question, Lee. Thanks for asking it. So I'll start on how we think about the right balance between growth and profitability in our direct business. If you take a step back, really the standard that we hold ourselves to is whether or not we're selling through our direct business or our third-party business and whether or not we're selling a term or a whole life or an indexed universal life product, we really attempt to be cash profitable by month 2 of the policy's life cycle, right? And so we have a very efficient working capital cycle, and we build up a contribution margin over that life of the policy. And so we take that in -- we think about that as a constraint to the growth model. In all direct businesses, unit economics are the governor. And so we're looking at how efficiently can we grow at the standard of unit economics that we want to achieve. So that's how I would think about just generally the rate at which we grow our advertising spend. And remember, we're constantly improving our platform, improving unit economics, which then allows us to increase advertising spend or bench higher unit economic gains. As far as our revenue model, we don't have any near-term plans to change it. We're really focused on becoming the largest issuer of life insurance. And it's an incredibly important market where we have a unique opportunity and advantage by virtue of having built this modern digital machine that is vertically integrated that is a 3-sided platform, delivering incredible value proposition to clients, agents and carriers. And so we're accumulating great momentum and advantage in this market, and that's really our focus going forward at this point.

And our next question comes from the line of Michael McGovern of Bank of America.

I have 2. First, could you speak to your carrier relationship dynamics underpinning guidance for the full year of 2026? Like for example, do you have any multiyear contracts that might be coming up and there's any assumptions around the negotiations or anything on that front? And then secondly, could you speak to kind of the relative strength in your revenue growth guidance in Q1 relative to the full year? Are there any assumptions throughout the second half of the year that changed relative to Q1?

Mike, thank you for the question. Our carrier partner contracts are typically evergreen. I wouldn't think about any material upcoming negotiations that are influential in our guidance. If you think about our existing panel of carrier partners, there's much more demand and capacity for Ethos premiums than there is supply of Ethos premiums today. Now we don't want a panel of 30 off-the-shelf carrier products. We've intentionally built a focused panel of carriers where we really work to co-develop custom proprietary products with deep technical and operational integrations from the carriers into our unified platform. Importantly, scale with our partners provides Ethos the necessary position in negotiating the economics we have today. And that scale in the relationship puts our priorities at the front of the carriers' IT and operational road maps, where we often have to dislodge some other important work on their road map related to maintaining a legacy system or some other initiative they have. Now when the 10-K flips in the near future, you'll see our carrier concentration disclosure decline by around 10 percentage points within our existing 6 partners, and we've built a considerable amount of redundancy into our business among our 10 products in the portfolio, given that we have multiple products in multiple categories. It's also important to remember that in our contracts, we typically have an extended notice of cancellation period that lasts well beyond the time that's required for us to build a new product with a new carrier. So we expect to continue building more products with more partners in the future, and we're very happy with our existing panel of carriers.

And Mike, in terms of the revenue guidance, the Q1 guidance reflects very strong operational momentum that we've carried into 2026. The new policy activations in January were strong. February is pacing ahead of internal targets. So I think when we look beyond Q1, we continue to be very encouraged by the momentum of growth in the direct channel, and as Peter noted, the contributions that we're starting to see from new agencies that we brought on to the platform in 2026 that are fueling revenue growth -- I'm sorry, we brought on the platform in 2025 that are helping fuel revenue growth here in 2026. And I think you're seeing some of that confidence flow through these gains in the full year revenue guidance that we shared with you. Other things to think about just as you model revenue throughout the year, as we've noted in the past, our business does exhibit seasonality, with Q1 and Q4 being our strongest quarters from a seasonal perspective and then 2Q and 3Q seeing much less seasonal effects. In terms of revenue mix, you'll tend to see the direct business index up here in the first quarter. You kind of think of it as like a 75-25 split. And then for the year, it probably takes on a profile along the lines of a 2/3, 1/3 mix, again, weighted towards direct. But very consistent, I think what you've seen in terms of our historic performance, it really is what informs our 2026 guidance.

[Operator Instructions] Our next question comes from the line of Pablo Singzon of JPMorgan.

So first question, DTC sales have historically been a minor portion of overall industry sales in life insurance. So the question is, what is your long-term view of the opportunity here and are there differences of note between the customers you cater to in DTC versus the customers that legacy DTC providers have historically served? So that's question one. And then question 2 is about your agency strategy, right? So can you just talk about your strategy for adding agency partners? On the carrier side, it sounds like your approach is to target category leaders for specific verticals, which makes sense if you think about the growth impact you want to deliver. But on the agency side, I'd be interested to hear about your thought process for selecting which agencies to partner with.

Pablo, thanks for the great questions. On the first question about generally what is our long-term view for direct. I think that before Ethos, direct was very difficult to do. And our innovations really up and down the entire stack by building a completely native technology platform, by innovating and being able to accelerate underwriting, by bringing elite level tech execution and go-to-market execution really has made it possible. And Ethos is really the first demonstration of scaled, profitable unit economics in this category. And I think that if you fast forward the future, this market could take a similar dynamic to where the auto market -- the auto insurance market went through over the last couple of decades, where you had a purely agent-dominated high transactional friction-heavy process. And a company like GEICO or Progressive was able to make it simple and easy and online. And over time, direct went from an insignificant part of the market to roughly half or a bit more than half of the market. I really think that Ethos has the potential to deliver the same kind of transformation of the life insurance market. And I think part of it -- a large part of it is also going to be incremental to the existing market today. So one of the things we love about the life insurance business is it's highly reoccurring in that every year, around 10 million Americans are going to buy life insurance whether or not Ethos exists, right? And they're pushed into that purchase journey by virtue of having new children, getting married, taking on a mortgage or debt, having health scares, watching their parents age. And Ethos is really the most efficient way for those families to get protected and we're also the most efficient way for agents…

I'm showing no further questions at this time. I'll now turn it back to Aaron Turner for closing remarks.

Great. Thank you all for joining us today on our first call as a public company, and we'll speak with you all again next quarter.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.