Exzeo Group, Inc. (XZO) Q1 2026 Earnings Report, Transcript and Summary

Good afternoon, and welcome to Exzeo Group, Inc.'s first quarter 2026 earnings call. My name is Angela, and I will be your conference operator. Before we begin today’s call, I would like to remind everyone that this conference is also being broadcast live via webcast and is available for webcast replay approximately four hours after the call through 05/06/2027 on the investor relations section of Exzeo Group, Inc.’s website at axio.com. I would now like to turn the call over to William Broomall. William, please go ahead.

Thank you, and good afternoon. Welcome to Exzeo Group, Inc.’s first quarter 2026 earnings call. To access today’s webcast, please visit the Investor Information section of our corporate website at exeo.com. Before we begin, I would like to remind our listeners that today’s presentation and responses to questions may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “anticipate,” “estimate,” “expect,” “intend,” “plan,” and “project,” and other similar words and expressions are intended to signify forward-looking statements. Forward-looking statements are not guarantees of future results and conditions, but rather are subject to various risks and uncertainties. Some of these risks and uncertainties are identified in the company’s filings with the Securities and Exchange Commission. Should any risks or uncertainties develop into actual events, developments could have material adverse effects on the company’s business, financial condition, and results of operation. Exzeo Group, Inc. disclaims all obligations to update any forward-looking statements. I will now turn the call over to Suela Bulku.

Thank you, William. Good evening, everyone, and thank you for joining us for Exzeo Group, Inc.’s first quarter earnings call. Exzeo Group, Inc. continues to deliver on its core objectives. Managed premium on the platform experienced another quarter of growth to $1.43 billion and exceeded our expectations. We delivered continued bottom-line growth, including strong cash flows and a 49% adjusted EBITDA margin in the quarter. Pretax income in the quarter was over $27 million, an increase from $24 million in the prior-year quarter and above our previous guidance range. Diluted earnings were 22¢ per share. For the first quarter, revenue increased to $56 million from $52 million in the prior-year quarter, driven by the increase of managed premium on the platform. The growth in managed premium reflects continued diversification across the business, with managed premium from non-ACI clients reaching approximately $105 million, a positive step forward. Our adjusted EBITDA margin was over 49% in the quarter, and we believe our margins are repeatable in the future. This quarter reflected continued investment in growth initiatives and personnel, and as our model continues to expand, we expect to make additional investments going forward. A few additional highlights for the quarter: our annual recurring revenue was $216 million in the first quarter, an increase from about $1.199 billion in the prior-year quarter. Free cash flow generation remains strong. For the first quarter, we generated free cash flow of about $25 million with net income of about $20 million; that represents a free cash flow conversion rate of 123%. Turning to the balance sheet, we ended the year with $330 million of investment assets, which includes cash, cash equivalents, and fixed income securities, and we remain debt-free. Shareholders’ equity increased to $275 million, an increase from $254 million at the end of the year. Our shareholders’ equity is now eight times higher than it was a year ago. Excluding the IPO impact, it has more than tripled over the same period, reflecting strong underlying growth in the business. Before turning the call over to Kevin, I want to quickly touch on our guidance expectations. For the second quarter, we expect pretax income to be between $27 million and $30 million. For the full year 2026, we are leaving our guidance unchanged at between $115 million and $125 million. With respect to managed premium, we expect managed premium to remain stable in the second quarter at approximately $1.4 billion, consistent with the anticipated timing of growth across our existing client base. We continue to expect managed premium of $1.55 billion at year-end 2026. In closing, we are very pleased with our strong start to 2026, as Exzeo Group, Inc. delivered another quarter marked by continued execution across premium expansion, revenue growth, solid profitability, and a solid balance sheet. I will now turn the call over to Kevin Mitchell.

Thank you, Suela. Exzeo Group, Inc. has made meaningful progress towards its strategy in early 2026. To remind those new to the Exzeo Group, Inc. story, the composition of managed premium continues to evolve as Exzeo Group, Inc. expands beyond its historical client base. At the end of 2025, all $1.2 billion of managed premium on the Exzeo Group, Inc. platform was generated from HCI-sponsored carriers. That has grown to approximately $1.3 billion as of the first quarter of 2026. Additionally, over the past six months, we have added three new carriers to the platform, and these carriers added $105 million of managed premium as of the first quarter. These new carriers account for over 7% of managed premium, marking an important milestone in diversifying revenue sources and validating the platform’s ability to attract and support external partners. Because of the validation we are seeing in the market, we are investing in our business and infrastructure to ensure we have everything in place to pursue our future growth ambitions. This includes investing in talent and platform capabilities. Through April, the company added about 20 new full-time employees. These new team members will focus on supporting the scaling of operations, onboarding new clients, and expanding product capabilities. This buildout reflects both the increasing demand for the Exzeo Group, Inc. platform and management’s confidence in the company’s growth trajectory. In closing, we continue to build momentum. The existing carriers on our platform are growing, the new carriers added to the platform are having success scaling and now contribute to the total managed premium on our platform, and we are investing in infrastructure to put us in a position to take advantage of the next phase of growth. I will now turn the call over to Pareshbhai Patel.

Thanks, Kevin. As Suela highlighted in her remarks, we are successfully scaling our platform. With tremendous efficiency. Out of every dollar we are adding to the platform, 50¢ is dropping to pretax income. Because of these attractive economics, Kevin is working to add more managed premium to the platform, and I think we have a fabulous team to execute that strategy. In addition to that, we have an additional strategy that is now developing. It requires a deep understanding of the broader industry and market trends. Let me elaborate. First, we know that the insurance industry, our potential clients, generally are behind in adopting the latest technology. Most of them have IT teams who can implement and maintain software tools and systems. But what they cannot do is develop new tools. Second, the Exzeo Group, Inc. platform was developed entirely in-house from the ground up. We have developers and insurance experts under the same roof, and it shows that we know how to develop, deploy, and maintain systems at scale. This is a key differentiator. Third, insurers are facing a shortage of skilled talent, and that talent gap continues to widen across the industry. Finally, there is AI. The industry recognizes that AI has the potential to significantly improve operational efficiency. While there has been considerable discussion about how carriers can leverage AI, most companies are just adding AI to their toolset as an additional expense. Exzeo Group, Inc. is doing something different. Exzeo Group, Inc. is using AI to build solutions. Let me give you a concrete example. Starting April 1, insurance regulators in Florida implemented new wind mitigation requirements. These updated regulations, which include additional documentation requirements, create a meaningful operational burden for all carriers. Insurers must also find the talent and expertise needed to manage these new requirements. These challenges not only place additional strains on operations, but also introduce incremental costs. While many in the industry view these changes as a challenge, Exzeo Group, Inc. saw them as an opportunity. The Exzeo Group, Inc. team was able to combine its deep expertise in building solutions with internally developed AI tools to design and deploy a solution in less than a month. It is called WinForm Pro. By eliminating manual workflows, WinForm Pro streamlines the process and significantly reduces the operational and frictional burden on carriers. In fact, multiple carriers outside the Exzeo Group, Inc. platform are already testing WinForm Pro, and one carrier has already signed up to use it. What this demonstrates is that by combining AI capabilities with our in-house talent, we can quickly identify challenges and design and deploy solutions in a highly cost-effective manner. We believe we are only beginning to tap into the broader opportunities that this approach can create. In summary, we already have a profitable platform that is a strong generator of cash flow and continues to scale. At the same time, we are identifying and solving new industry challenges that can lead to additional revenue streams in the future. We will now open the call for questions.

Thank you. We will now open the call for questions. Your first question comes from the line of Matthew Carletti with Citizens Capital Markets. Your line is now open.

Hey, thank you. Maybe I would start with a two-part question. First, can you update us on the newer clients you have announced the past few quarters—how the onboarding and integration and getting up to speed is going? Then alongside that, how the pipeline is looking, conversations and so forth for customers eight, nine, and beyond?

Sure, Matt. From a new client standpoint, or ones that we have recently onboarded, it is going as planned. As I think Suela and I both mentioned, from a standing start in December to around $105 million of premium on the platform, I think that is a strong uptake when you consider that those two clients—one was signed in September and the other in October. So all is on solid footing there. As far as new clients, the pipeline continues to build. As we mentioned last quarter, we have team members that are focused and, each day and each week, are building on that pipeline. We feel confident that we will continue to execute and bring on new clients in standard fashion.

Great. And then if I could just maybe follow up for Pareshbhai. You talked a bit about WinForm Pro. Can you help us with the order of magnitude—what that can mean if it gets traction in terms of revenue, how it is priced, whether based on premiums, things like that? And secondly, are you viewing this as a one-off product, or more as a hook or opportunity to bring potential new customers into the broader Exzeo Group, Inc. ecosystem?

Yes, Matt. The product, because of the need the industry had, was built very quickly, and it solves a current problem that everybody is facing. As such, the way we have deployed it, it is very inexpensive—about 10% of what it would cost to do manually. What it is doing is opening doors for new carriers to appreciate what Exzeo Group, Inc. is capable of. From that sense, it is a very good way to further spread the Exzeo Group, Inc. brand. In terms of revenue, I do not think this in and of itself, especially because of the prices we are charging, is going to be meaningful in terms of revenue. I do not think Suela is adjusting her financial models because of it. But the big thing is how this was developed, the speed at which it was developed, and how it is being deployed. This is monetizing AI capabilities in a manner that both reduces our expenses to develop by orders of magnitude and enhances value to potential clients. It is a real thing that we were not even thinking of when we had the last earnings call two months ago. To be fair, our developers have been monitoring developments in the AI space for almost three years at this point, pretty much since the week ChatGPT came out, but it is about waiting for the moment when it is ready for prime time. With WinForm Pro, we are demonstrating how AI can be used and utilized and turned into a product and turned into revenue—all in two months.

That is great color. Thank you very much.

Your next question comes from the line of Terrell Tillman with Securities. Your line is now open.

Hey, good afternoon, Pareshbhai, Kevin, Suela, and William. My first question builds on the last set of questions about AI. It seems like almost daily something dramatic is happening, and we are hearing CEOs say they are spending billions of dollars on this. Beyond the ability to light up new solutions really quickly like WinForm, is AI becoming a call to arms for even traditional insurers or upstarts that is driving incremental sales funnel activity because they need to transform the whole business—underwriting, policy management, etc.? Are you seeing any incremental tailwinds from “AI is the real deal and we need to get going yesterday”? And then I have a couple of follow-ups.

Terry, yes, all of those possibilities in underwriting, quoting, claims management, etc., have always been part of the conversation—AI could do things. The issue has always been how do you do it? A lot of insurance carriers probably want a packaged solution as opposed to a “code your own” solution. That was my point earlier: just because it is available does not mean everybody can assemble it and turn it into a solution they can use repeatedly. It turns out the Exzeo Group, Inc. technology team can, and they do it in a controlled manner—being able to design, deploy, and maintain things at scale is quite a need that still exists. We are starting to see a unique niche that we can fill. In theory, anybody can fill that niche, but in theory, anybody could have built a copy of Google search—Microsoft even tried with all of its resources, but Bing does not quite cut it. Having the idea and being able to put it into production are two different things.

Got it. Maybe just one and a half more questions. Kevin, you were talking about investing in 20 FTEs. I know you hired a key long-term veteran in the industry. Is that team built out now, or does it have enough substance and size, and how are they doing? I know it is early days, but any progress there? And then a model question for Suela.

Yes, Terry, we continue to build the team—hence the 20 folks since January 1. We continue to build around them to drive growth and drive ever-increasing pipeline activity.

Terry, to put a different context around this, I am sure you have been on lots of earnings calls, and the recurring theme has been: add AI—license stuff—and run up an expense, and cut headcount. We are doing the opposite. We are using AI as a revenue generator and a lead generator. We are already monetizing it. Secondly, Kevin is adding people. To be fair, it is not an apples-to-apples comparison because we started from such a lean, efficient operation. The people Kevin is adding should have a material impact on accelerating our growth rate going forward. That is why I am excited that he is adding people.

For sure. I will turn it over after this, but I really wanted to get this in. Managed premium and ARR were strong in the quarter—well ahead of our expectations. I know it takes time for that to move to revenue from operations and revenue. Can you share anything about how that played out in 1Q versus what you thought? Or commentary around timing from that large add of premium in 1Q as we move into 2Q and beyond? Thanks again.

Thank you for the question, Terry. The timing of when managed premium gets added to our platform obviously matters. What we saw in Q1 is that the new additional premium, especially from the new client, joined the platform mid to late quarter. Also keep in mind that we recognize upfront about 25–30% of the revenue and the remainder is recognized over time. That said, new premium is still not a large enough share of our total managed premium currently on our platform to materially distort quarterly revenue on its own. On a normalized basis, you can think of the ARR conversion into revenue as generally fairly flat and consistent over the quarters. Just a reminder that we do have some seasonality on the margin based on the renewal cycle of the policy and the product mix, and then how we recognize revenue along with expenses. Historically, you will see higher-margin renewals tend to be in the middle of the year, which drives the Q2 peak that we have seen historically.

Okay. Thanks.

Thank you. Your next question comes from the line of Dylan Becker with William Blair. Your line is now open.

Hey, everybody, appreciate it. Maybe, Pareshbhai—double-clicking on the prior points, or for Kevin as well—on the opportunity to dedicate more resources given the opportunity at hand and the ability for AI to superpower that in some context. I know the cadence of getting WinForm into market is notable. How do you think about the balance of compounding the existing platform value proposition to compel more customers to come online, while also scaling that outside of Florida and into new territories and regions—kind of a breadth-and-depth question from a platform functionality perspective?

Great question. That is why, in our prepared remarks, we tried to talk about plans and growth for the existing platform and adding managed premium in that fashion, while at the same time exploring these new capabilities and door-opening projects we are doing. They will not have impact immediately, but they will create long-term opportunity and differentiation for Exzeo Group, Inc. over other solutions in the marketplace. We have short-term, medium-term, and long-term initiatives. From my perspective, the long-term things are the most exciting as to what they could mean down the road. If you think of WinForm Pro as a universal way of filling out this OIR requirement, it is very specific. But the same architecture and method we developed could be used to create a digital agent for reviewing claims, a digital agent for compliance—which is a big thing with insurance carriers—or a digital agent for generating a rate filing. We can see that at this point, and we know how to use AI to develop those tools and capabilities. The beauty of AI is it does not mean it will only work on the Exzeo Group, Inc. platform—one of these agents could also work on any other software platform that a carrier might have implemented. Think about what that opens up as a door. Again, very early days. We did not want to talk about AI in a material way previously—not because we were not aware or doing anything—but because we wanted to speak when we actually had something. WinForm Pro shows we have something, and it is only a sample of what is to come.

Very helpful. Excited to keep an ear out for what is to come. Thank you, Pareshbhai. Maybe for Suela on the premium growth dynamic—still very impressive. You said you expect it to be flat next quarter and reiterated the full-year outlook. Could you remind us of the seasonal components? And, given the Florida exposure, any broader update on how underwriting cycles are impacted or how carriers think through those as we enter hurricane season—anything to be aware of from a seasonal perspective?

That is a very good question. As I mentioned, we expect managed premium to remain stable next quarter, which is consistent with the growth pattern of our client base. Our clients are primarily based in Florida, where growth is usually more back-end weighted, so you tend to see managed premium growth more in the fourth quarter.

Yes, you have it right in the sense that it is not set by us—it is set by clients. We are just explaining what clients typically do and what their normal cadence is.

Very helpful. Thank you.

Again, if you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. At this time, this concludes our question and answer session. I would now like to turn the call back over to Pareshbhai Patel, who has a few closing remarks.

Thank you. I want to thank everyone who joined the call today, and I also want to thank the Exzeo Group, Inc. team for their continued hard work. Before we wrap up, I should provide a quick update on the Rule 10b5-1 purchase plan that is underway for me to buy shares. As of today, I have bought about 72 thousand shares since the plan went into effect a couple of months ago, and it still continues. I look forward to it being filled out, hopefully sometime in the current quarter. With that, we will end the call. Thank you.

At this time, this concludes today’s call. Thank you all for joining. You may now disconnect.