QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
|
||
(Address of principal executive offices) |
(Zip Code) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
Value Per Share |
☒ | Accelerated filer | ☐ | ||||
Non-accelerated filer |
☐ | Smaller reporting company | ||||
Emerging growth company |
• | The Cautionary Note Regarding Forward-Looking Statements is being amended and restated to update the Summary of Risk Factors included therein to add an additional risk factor regarding the material weaknesses in the Company’s ICFR; |
• | Part I, Item 4 “Controls and Procedures” is being amended and restated to reflect management’s conclusion that the Company’s disclosure controls and procedures were not effective as of March 31, 2021 due to the material weaknesses referred to above, and to describe the Company’s remediation plan for addressing such material weaknesses; and |
• | Part II, Item 1A “Risk Factors” is being amended and restated to add an additional risk factor regarding the material weaknesses in the Company’s ICFR and revise the risk factor included in the Original Filing regarding the Company’s obligation to maintain a system of effective ICFR to reflect the identification of the material weaknesses. |
Page |
||||||
PART I. |
||||||
Item 4. |
5 | |||||
PART II. |
||||||
Item 1A. |
7 | |||||
Item 6. |
30 | |||||
31 |
• | our future financial performance, including our expectations regarding our revenue, cost of revenue, variable marketing margin, operating expenses, cash flows and ability to achieve, and maintain, future profitability; |
• | our ability to attract and retain consumers and insurance providers using our marketplace; |
• | our dependence on our relationships with insurance providers with no long-term contracts; |
• | our reliance on a single insurance provider for a significant portion of our revenue; |
• | our ability to attract consumers searching for insurance, including through search engines, display advertising, email and social media; |
• | our ability to develop new and enhanced products and services to attract and retain consumers and insurance providers, and our ability to successfully monetize them; |
• | our anticipated growth and growth strategies and our ability to effectively manage that growth; |
• | our ability to maintain and build our brand; |
• | our ability to properly collect, process, store, share, disclose and use consumer information and other data; |
• | our reliance on our third-party service providers; |
• | the impact of competition in our industry and innovation by our competitors; |
• | our ability to hire and retain necessary qualified employees to expand our operations; |
• | our limited experience acquiring quote requests from third-party sources; |
• | our ability to stay abreast of and comply with new or modified laws and regulations that currently apply or become applicable to our business; |
• | the material weaknesses in our internal control over financial reporting that we and our independent registered public accounting firm have identified which, if not remediated, may cause us to not be able to accurately or timely report our financial condition or results of operations; |
• | failure to maintain an effective system of internal controls necessary to accurately report our financial results and prevent fraud; and |
• | the future trading prices of our Class A common stock. |
Item 4. |
Controls and Procedures. |
• | User access controls to ensure appropriate segregation of duties and that adequately restrict user and privileged access to certain financial applications, programs, and data to appropriate company personnel; |
• | Program change management controls for certain financial applications to ensure that IT program and data changes affecting financial IT applications and underlying accounting records are identified, tested, authorized and implemented appropriately; and |
• | Controls over the completeness and accuracy of data relevant to certain automated revenue calculations. |
Item 1A. |
Risk Factors. |
• | the ability of our insurance provider customers to earn an attractive return on investment from their spending with us; |
• | our ability to increase the number of consumers using our marketplace; |
• | our ability to compete effectively with other media for advertising spending; and |
• | our ability to keep pace with changes in technology and the practices and offerings of our competitors. |
• | our ability to maintain a marketplace for consumers and insurance providers that efficiently captures user intent and effectively delivers relevant quotes to each individual insurance buyer; |
• | our ability to continue to innovate and improve our marketplace; |
• | our ability to launch new vertical offerings that are effective and have a high degree of consumer and insurance provider engagement; and |
• | our ability to access a sufficient amount of data to enable us to provide relevant quotes to consumers. |
• | companies that operate, or could develop, insurance search websites; |
• | media sites, including websites dedicated to providing multiple quote insurance information and financial services information generally; |
• | internet search engines; and |
• | individual insurance providers, including through the operation of their own websites, physical storefront operations and broker arrangements. |
• | increase the number of consumers using our marketplace; |
• | maintain and expand the number of insurance providers that use our marketplace or our revenue per provider; |
• | further improve the quality of our marketplace, and introduce high-quality new products; and |
• | increase the number of insurance shoppers acquired by insurance providers on our marketplace. |
• | diversion of management time and focus from operating our business to addressing acquisition integration challenges; |
• | coordination of technology, research and development, and sales and marketing functions; |
• | transition of the acquired company’s consumers and data to our marketplace; |
• | retention of employees from the acquired company; |
• | cultural challenges associated with integrating employees from the acquired company into our organization; |
• | integration of the acquired company’s accounting, management information, human resources and other administrative systems; |
• | the need to implement or improve controls, procedures and policies at a business that prior to the acquisition may have lacked effective controls, procedures and policies; |
• | potential write-offs of intangibles or other assets acquired in such transactions that may have an adverse effect on our operating results in a given period; |
• | potential liabilities for activities of the acquired company before the acquisition, including patent and trademark infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities; and |
• | litigation or other claims in connection with the acquired company, including claims from terminated employees, consumers, former stockholders or other third parties. |
• | 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; |
• | increasing our vulnerability to adverse changes in general economic, industry and market conditions; |
• | subjecting us to restrictive covenants that may reduce our ability to take certain corporate actions or obtain further debt or equity financing (for example, the covenants in the loan and security agreement for our revolving line of credit include limitations on our ability to incur additional indebtedness and engage in certain fundamental business transactions, such as mergers or acquisitions of other businesses); |
• | limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we compete; and |
• | placing us at a competitive disadvantage compared to our competitors that have less debt or better debt servicing options. |
• | price and volume fluctuations in the overall stock market from time to time; |
• | volatility in the market price and trading volume of comparable companies; |
• | actual or anticipated changes in our earnings or fluctuations in our operating results or in the expectations of securities analysts; |
• | announcements of new service offerings, strategic alliances or significant agreements by us or by our competitors; |
• | loss of key personnel; |
• | litigation involving us or that may be perceived as having an adverse effect on our business; |
• | changes in general economic, industry and market conditions and trends; |
• | investors’ general perception of us; |
• | sales of large blocks of our stock; and |
• | announcements regarding industry consolidation. |
• | the level of demand for our product and service offerings and our ability to maintain and increase our customer base; |
• | the level of consumer traffic to our websites and the volume of quote requests generated by consumer traffic; |
• | the timing and success of new product and service introductions by us or our competitors or any other change in the competitive landscape of our market; |
• | bind rates by consumers; |
• | pricing pressure as a result of competition or otherwise; |
• | our ability to reduce costs; |
• | errors in our forecasting of the demand for our product and service offerings, which could lead to lower revenue or increased costs; |
• | seasonal or other variations in purchasing patterns by customers; |
• | increases in and timing of sales and marketing and other operating expenses that we may incur to grow and expand our operations and to remain competitive; |
• | adverse litigation judgments, settlements or other litigation-related costs; |
• | regulatory proceedings or other adverse publicity about us or our product and service offerings; |
• | costs related to the acquisition of businesses, talent, technologies or intellectual property, including potentially significant amortization costs and possible write-downs; and |
• | general economic conditions. |
• | a majority of the board of directors consist of independent directors; |
• | director nominees be selected or recommended for the board’s selection by independent directors constituting a majority of the independent directors or by a nominations committee with prescribed duties and a written charter and comprised solely of independent directors; and |
• | the board of directors maintain a compensation committee with prescribed duties and a written charter and comprised solely of independent directors. |
• | providing that directors may be removed by stockholders only for cause and only with a vote of the holders of shares representing a majority of the voting power of all shares that stockholders would be entitled to vote for the election of directors; |
• | limiting the ability of our stockholders to call and bring business before special meetings of stockholders and to take action by written consent in lieu of a meeting; |
• | requiring advance notice of stockholder proposals for business to be conducted at meetings of our stockholders and for nominations of candidates for election to our board of directors; |
• | authorizing blank check preferred stock, which could be issued with voting, liquidation, dividend and other rights superior to our Class A common stock; and |
• | limiting the liability of, and providing indemnification to, our directors and officers. |
Item 6. |
Exhibits. |
Exhibit Number |
Description | |
31.1** | Certification of Chief Executive Officer of the Registrant Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
31.2** | Certification of Chief Financial Officer of the Registrant Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
32.1†** | Certification of Chief Executive Officer of the Registrant Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
32.2†** | Certification of Chief Financial Officer of the Registrant Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
101.INS* | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |
101.SCH* | Inline XBRL Taxonomy Extension Schema Document | |
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
101.LAB* | Inline XBRL Taxonomy Extension Labels Linkbase Document | |
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
104** | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
* | Previously filed. |
** | Filed herewith. |
† | The certifications attached as Exhibits 32.1 and 32.2 that accompany this Quarterly Report on Form 10-Q, are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of EverQuote, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing. |
EVERQUOTE, INC. | ||||||
Date: August 9, 2021 | By: | /s/ Jayme Mendal | ||||
Jayme Mendal Chief Executive Officer and President (Principal Executive Officer) |