Ethos Technologies Inc. Class A Common Stock Q1 2026 Earnings Call Transcript

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Provided by Quartr
May 6, 2026

Key Takeaways

  • Positive Sentiment: Q1 results were exceptional — $193M revenue (+104% YoY), $34M adjusted EBITDA, ~88,373 policies activated, and a Rule of 40 score of 121, which management says shows strong scalable economics.
  • Positive Sentiment: Direct channel accelerated with direct revenue up 136% YoY; the company more than doubled sequential ad spend while maintaining ROAS, indicating unit economics that scale with higher marketing investment.
  • Negative Sentiment: Management recorded a one-time non‑cash charge tied to updated third‑party agent compensation and persistency assumptions (disclosed as a $16.5M charge related to a ~$60.5M reduction in a prepaid asset), which raises agent compensation expense and lowers near‑term margins.
  • Positive Sentiment: Product and partnership momentum — Ethos now offers 12 products across six carriers, reports early product‑market fit for its accumulation IUL, launched two new whole‑life products, and announced a non‑exclusive licensing partnership with Liberty Mutual plus a ChatGPT integration to extend distribution.
AI Generated. May Contain Errors.
Earnings Conference Call
Ethos Technologies Inc. Class A Common Stock Q1 2026
00:00 / 00:00

Transcript Sections

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Operator

Thank you for standing by. Welcome to the Ethos Technologies Q1 2026 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Aaron Turner, Vice President of Investor Relations. Please go ahead.

Aaron Turner
VP of Investor Relations at Ethos Technologies

Good afternoon, and welcome everyone to Ethos Technologies' first quarter of fiscal year 2026 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 Event section of our Investor Relations website.

Aaron Turner
VP of Investor Relations at Ethos Technologies

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 second quarter of 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 white label platform arrangements, 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.

Aaron Turner
VP of Investor Relations at Ethos Technologies

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. 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.

Aaron Turner
VP of Investor Relations at Ethos Technologies

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.

Peter Colis
CEO at Ethos Technologies

Good afternoon, everyone, and welcome to our first quarter 2026 earnings call. Q1 is our seasonally strongest quarter, and this was an exceptional one. We delivered $193 million in revenue, representing 104% year-over-year growth, more than doubling our top line year-over-year. This is on the back of three straight years of over 50% revenue growth. We generated adjusted EBITDA of $34 million, and we protected over 88,000 new families, bringing our cumulative total to over 600,000 activated policies to date. We also achieved a Rule of 40 score of 121, a result that reflects both the velocity of our growth and the discipline of our execution. Put simply, this quarter demonstrated that Ethos is a business that gets better as it gets bigger.

Peter Colis
CEO at Ethos Technologies

Our goal at Ethos is to become the largest provider 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 simply do not exist in the legacy life insurance industry. Turning to the business highlights that drove this quarter's performance. In our direct channel, the virtuous data cycle is spinning faster than ever. By continuing to refine every layer of our vertical stack from initial user experience to our core underwriting algorithms, we've driven meaningful compounding improvements in our conversion rates and maintained strong unit economics at higher levels of ad spend. Q1's direct revenue growth of 136% reflects that compounding advantage.

Peter Colis
CEO at Ethos Technologies

In our third-party channel, the agencies we added through 2025 are now ramping in a meaningful way. Those newer agencies now represent a double-digit percentage of third-party revenue, their contributions are accelerating. Revenue in the third-party channel reached $47 million in Q1, representing 42% year-over-year growth, demonstrating that our agency recruitment strategy and onboarding is translating directly to results. On the product front, we saw early indicators of product market fit for our accumulation indexed universal life insurance product, which continues to exhibit healthy growth in our third-party channel. We deepened our relationship with Banner Life to launch two new whole life products, a simplified issue whole life and guaranteed issue whole life. These products expand our coverage of the final expense market.

Peter Colis
CEO at Ethos Technologies

We also demonstrated our ability to rapidly launch new products as we went from concept to launching in market in under five months. With these additions, Ethos now offers 12 products across six carriers, including multiple term life, multiple whole life, and multiple IUL products. That breadth strengthens our value proposition to both consumers and agents and expands our addressable market and improves the redundancy of our product portfolio. We also announced our new partnership with Liberty Mutual, one of the most recognized insurance brands in the country. Liberty Mutual will leverage Ethos' proprietary underwriting engine and platform to deliver a digital-first life insurance experience, instant decisions, no medical exams, and just a few simple health questions. When companies with the scale, resources, and brand recognition of Liberty Mutual select Ethos as their partner, it speaks directly to the strength of what we have built.

Peter Colis
CEO at Ethos Technologies

Most recently, we became the first life insurance provider to build a dedicated experience directly inside the world's most used AI assistant, ChatGPT. We're focused on removing the friction that people experience throughout the life insurance purchase process and meeting people where they are to initiate that purchase. As more consumers turn to AI to get answers, Ethos will be there for them. We look to the rest of 2026, we remain focused on three durable growth vectors. First, growing our ecosystem by bringing more consumers into our direct channel and recruiting more agents to our platform. Second, enhancing our platform by making agents more productive and increasing our share of their sales. Third, expanding our product portfolio to broaden our addressable market. Every new client improves our risk models, client and agent experience, and the machine learning models that power our advertising spend.

Peter Colis
CEO at Ethos Technologies

Better risk models improve our pricing and unit economics for our clients, our carrier partners, and Ethos. More scale and underwriting experience allows us to grow our product portfolio and carrier panel. A broader product portfolio enables us to capture more of an agent's sales and recruit different types of agencies. Our unified end-to-end platform captures and analyzes granular data across the consumer and agent journeys. While the legacy industry is hindered by on-prem technology and manual processes, our vertically integrated digital platform fuels a virtuous data cycle that is spinning faster and faster. With that, I'll pass it to Chris for a review of our first quarter 2026 financial results.

Chris Capozzi
CFO at Ethos Technologies

Thanks, Peter, and good afternoon, everyone. I'll begin with a review of our first quarter results, walk through our outlook for the second quarter and the full-year 2026 before opening up for questions. As Peter noted, Q1 was an exceptional quarter. We more than doubled revenue year-over-year, achieved strong profitability, and raised full-year guidance, all while absorbing a one-time non-cash charge that I'll walk you through in detail. Before reviewing the details of our results, I'd like to remind everyone that some of the financial measures and metrics 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.

Chris Capozzi
CFO at Ethos Technologies

In the first quarter, we delivered $193 million in revenue, representing 104% growth from the same period last year. In our direct channel, first quarter revenue increased to $146 million, representing 136% year-over-year growth. This performance reflects the compounding advantage of our vertically integrated platform. By continuously refining everything from the initial user experience to our core underwriting algorithms, we've expanded the universe of consumers that we can profitably reach. In the first quarter, we more than doubled our advertising spend versus the fourth quarter of 2025 while maintaining consistent efficiency, demonstrating that our unit economics scale with our growth. In our third-party channel, first quarter revenue was $47 million, representing 42% year-over-year growth.

Chris Capozzi
CFO at Ethos Technologies

This growth was driven in part by new agencies onboarded throughout 2025, which accounted for a double-digit percentage of third-party revenue in Q1. Moving to our non-financial metrics, we activated 88,373 policies in the first quarter. The average revenue per policy was $2,185. Our first quarter contribution profit was $59 million, representing a 30% contribution margin. Included in this result is a one-time non-cash charge of $16.5 million related to third-party agent compensation expense, which flows through the sales and marketing line on the income statement. This charge reflects updates to our agent compensation expense and persistency estimates, reflecting both maturing cohort experience and the impact of recent operational improvements.

Chris Capozzi
CFO at Ethos Technologies

As these cohorts matured and additional observed experience was accumulated, we were able to identify that early-stage policy persistency was better than had originally been projected and that there were opportunities to increase the precision of our clawback billing and the methodology for estimating clawback events. Together, these factors resulted in lower agent compensation clawbacks and therefore higher agent compensation expense than had originally been projected for policies activated through the company's third-party channel in the second half of 2024 and throughout 2025. Collectively, these factors are positive developments for the long-term health of our third-party business.

Chris Capozzi
CFO at Ethos Technologies

To understand why fewer compensation clawbacks lead to higher compensation expenses, it helps to briefly walk through the mechanics. When a third party policy is activated, we record the gross compensation paid to the agent as an expense and then estimate and book an offsetting amount representing the portion of that gross compensation that we expect to recover through a clawback of unearned compensation if the policy lapses within the first year. That offsetting amount is carried on the balance sheet as a prepaid asset. As previously disclosed, these estimates and the process for arriving at them involve a degree of judgment and complexity, particularly in our third party channel, which has scaled rapidly and where our ability to predict agent compensation clawbacks continues to mature alongside our growing cohort history.

Chris Capozzi
CFO at Ethos Technologies

In this case, the combination of additional observed experience and a series of operational improvements resulted in a lower rate of estimated compensation clawbacks than we had originally projected for these cohorts, requiring a $16.5 million dollar reduction in our prepaid asset balance, which is the source of the one-time non-cash charge. The updated agent compensation expense estimate is embedded in our go-forward guidance. For modeling purposes, we expect blended contribution margins to be in the mid 30% range going forward. Moving to adjusted EBITDA. Our first quarter adjusted EBITDA was $34 million, representing a margin of 17% and 42% year-over-year growth, both of which reflect the impact of the $16.5 million charge I discussed earlier.

Chris Capozzi
CFO at Ethos Technologies

Combined with our 104% revenue growth, this quarter's Rule of 40 score of 121 demonstrates that even in a quarter that included a one-time charge of this magnitude, our underlying platform economics remain exceptionally strong. Regarding stock-based compensation, our Q1 SBC and related taxes were $196 million. Included in this amount is $183 million related to a vesting condition that was satisfied upon the completion of our IPO in January. As of March 31st, 2026, our cash equivalents, and investments totaled $224 million, including $33.5 million in net proceeds from the IPO. We ended the quarter with a commission receivable balance of $345 million, up 19% from the prior quarter, representing estimated future cash flows already earned but not yet received.

Chris Capozzi
CFO at Ethos Technologies

This balance is a direct reflection of the scale and quality of our activated policy base, and we view it as an important indicator of the embedded cash generation potential of our platform. Our Q1 cash flow from operating activities was $31 million, representing 189% year-over-year growth. During Q1, we amended the payment terms with one of our carrier partners, which provided a one-time $13.9 million timing benefit to CFOA. Excluding this item, CFOA was approximately $17 million. Now I'll walk through our expectations for the second quarter and full fiscal year 2026. Our updated guidance reflects the revised agent compensation expense assumptions that I walked through earlier. The strength of our Q1 performance and our confidence in the trajectory of both channels give us the conviction to raise our full-year revenue and adjusted EBITDA outlook.

Chris Capozzi
CFO at Ethos Technologies

For the second quarter of 2026, we expect total revenue in the range of $114 million-$118 million. At the midpoint, this represents 31% year-over-year growth. We also expect adjusted EBITDA in the range of $20 million-$22 million. For the full-year 2026, we're raising our total revenue guidance and now expect revenue in the range of $561 million-$565 million. At the midpoint, this represents 45% year-over-year growth. We also expect adjusted EBITDA in the range of $103 million-$107 million. In 2026, we're focused on driving sustainable revenue growth by further diversifying our revenue sources through the continued ramp of our new product lines, the strategic expansion of our third party channel, and the continued market share gains in our direct channel.

Chris Capozzi
CFO at Ethos Technologies

Our new partnership with Liberty Mutual is an early proof point of a broader opportunity, licensing our proprietary underwriting engine and platform to establish brands that want to compete in the digital first life insurance market. By deepening our brand recognition and leveraging the inherent efficiencies of our vertically integrated platform, we are well-positioned to capture significant market opportunity while meeting our profitability targets. With that, I'll turn the call over to the operator to begin the Q&A session. Operator?

Operator

Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Colin Sebastian of Baird. Your line is now open.

Colin Sebastian
Colin Sebastian
Analyst at Baird

Hey, guys. Thanks very much for taking the question. Impressive results in Q1. Was hoping you could unpack a bit more the incremental marketing spend or the unlocks that you were able to find that allowed you to add scale and in customer acquisition spend. I guess given the Q2 guidance, that implies that maybe you sort of hit the upper limits of that ROAS or maybe there was some more seasonality factors that I think, Peter, you might have mentioned. If you could go into that, it would be helpful. Thank you.

Peter Colis
CEO at Ethos Technologies

Hi, Colin. Thanks for the question. It's important to remember that Q1 is one of our strongest seasonal quarters, and Q2 one of the less strong ones. You know, I'll say that we've, you know, set a prudent guidance philosophy. We're still early into Q2, but we've seen just continued strength and momentum throughout April and early May into Q2. Generally, when I think about what drove the outsized direct growth, it's more than just marketing innovations and spend unlocks, you know, in and of itself. Because we are a vertically integrated, you know, end-to-end technology company, we have a lot of real estate to keep optimizing.

Peter Colis
CEO at Ethos Technologies

It could be marketing, but it also could be gains in data infrastructure, the end-to-end conversion funnel, underwriting, pricing, persistency, mortality. All these things eventually influence our unit economics, and then, as you described, our ability to reinvest in incremental spend. We see so we do not think that we are encountering the upper bounds of spend in short.

Colin Sebastian
Colin Sebastian
Analyst at Baird

Got it. Maybe one quick follow-up on the, on the average revenue per policy expanding. Was that specifically related to the new accumulation product, or is there something broader in the platform that you're seeing?

Peter Colis
CEO at Ethos Technologies

Colin, that's primarily attributed to channel mix. As you note, if you contrast sequential performance Q4 to Q1, you'll note that direct mixed up as a percentage of revenue, and that's generally gonna be the driver of the increase in ARPU that you're seeing there. We've seen some early signs of product market fit with that accumulation IUL product that we launched with Sammons back in the fourth quarter, but still too nascent to materially impact ARPU at this point.

Colin Sebastian
Colin Sebastian
Analyst at Baird

Got it. Thank you very much.

Operator

Thank you. Our next question comes from the line of Ross Sandler of Barclays. Your line is now open.

Ross Sandler
Ross Sandler
Analyst at Barclays

Hey, guys. Two questions. Could we talk about the advertising cost in the first quarter, like what the expense was, and then what the, you know, I guess the efficiency that you saw in the DTC channel, like kind of what was the key driver of that? I know we had sort of an easy comp from 1Q a year ago when Meta made some of those policy changes. Just can you walk us through the, you know, the upside that you saw in DTC? What was the driver of that? Then I have to ask the obligatory ChatGPT question. We saw the app within the app concept from a couple days ago. Just overall thoughts on, you know, what you want to accomplish with this new channel and, you know, how important you think it will be to Ethos in the future. Thanks a lot.

Peter Colis
CEO at Ethos Technologies

Hey, Ross. Thanks for the question. I'll take the ChatGPT one first. You know, generally, as the end-to-end digital buying platform, I think we are best positioned in the industry to capture any changes of consumer behavior. At the minimum, I expect LLMs will play a bigger and bigger role in consumer research ahead of a purchase, and could be one day a material source of client origination for us. We do have a sophisticated GEO initiative focused on taking advantage of this. We're excited about the app. We'll have to wait and observe how the LLM's monetization strategy evolves, and how they augment the customer experience.

Peter Colis
CEO at Ethos Technologies

What I would point to is historically, you know, including the Meta change that you referenced last year, our data models and our intelligent acquisition engine have an exceptional track record of adapting quickly at the cutting edge of changes in the digital acquisition landscape. I think we're best prepared for whatever does come at us. Life insurance funnels generally are very complex, right? We've got identity verification, reflexive questioning, third-party data pulls for underwriting, you know, really lengthy funnels where chat may not be the best interface for client engagement. It's not necessarily intuitive that the entire transactional process will move into LLMs as the default. We're excited to experiment with this and see where it goes.

Chris Capozzi
CFO at Ethos Technologies

Ross, in terms of the return on ad spend, we'll plan to disclose that going forward on an annual basis. To help frame up the Q1 performance, I'd highlight that our return on ad spend was consistent on both a sequential and year-over-year basis. As we noted earlier, you know, we were really pleased by our ability to more than double the ad spend on a sequential basis while maintaining unit economics, demonstrating of course, that we're not only able to scale revenue, but profits as well.

Operator

All right. Thank you. Our next question comes from the line of Eric Sheridan of Goldman Sachs. Your line is now open.

Eric Sheridan
Eric Sheridan
Analyst at Goldman Sachs

Thanks so much for taking the question. Wanted to know if we can go a little bit deeper in how you're thinking about the product pipeline evolving over the next 12 to 18 months. What visibility do you have into that pipeline today? How much might be assumed in some of your forward commentary, and how much could potentially be upside dynamic relative to forecasts? What you would expect the receptivity to that pipeline to be against the broader end demand market. Thank you so much.

Peter Colis
CEO at Ethos Technologies

Thanks, Eric, for the question. You know, we have a track record of launching around three to four new products per year. The team is hard at work on new products that we're not yet ready to disclose. What I would say is, you know, it's important to understand our guidance philosophy. We ascribe very little revenue in our forecasting to newer, less proven products. We like to see it before we put it into the plan. If we look at our last couple of products, accumulation IUL is off to a great start. It's demonstrating, you know, early signs of clear product market fit within a variety of different third-party agencies.

Peter Colis
CEO at Ethos Technologies

You know, just as a reminder, that's a permanent life insurance product with very compelling investment feature performance and delivering that incredible Ethos 10-minute purchase process. We also recently launched a cancer insurance product with Aflac. That's still in the early innings of testing and iteration, it's too early to make a judgment call on its impact. You know, cancer insurance is typically not sold outside of the workplace in the U.S., we think it's a really compelling value proposition given the rate of cancer diagnoses. More to come over the subsequent quarters on the new product front.

Operator

Thank you. Our next question comes from the line of Ron Josey of Citi. Your line is now open.

Ron Josey
Ron Josey
Analyst at Citi

Great. Thanks for taking the question. I wanted to follow up. I think, Peter, you were just talking about IUL off to a great start, particularly with the third-party partners here and early days with the cancer product. Talk to us a little bit more about IUL in terms of the results thus far, what lessons learned you have here so that as newer products launch, you can implement to see sort of continued overall strength. When it comes to obviously direct had a pretty impressive quarter, and I know we talked about channel mix and marketing spend. Any additional insights on perhaps newer channels that you went after this quarter would be helpful. Thank you.

Peter Colis
CEO at Ethos Technologies

Got it. Great questions. On IUL, you know, if you take a step back, IUL is the largest, you know, subcategory within life insurance. You know, it combines the ability to, you know, grow investment returns with tax-deferred properties while also delivering protection for your family. You know, historically, it's been more of a product just dedicated to the high net worth market. With Ethos, we're making it more and more accessible to the mass affluent market, which is really important because there's not only demand from clients, there's demand for it from agents for this. Whenever we launch a new complicated product like accumulation IUL, there's some period after launch of iteration and testing and refinement, then launching day two features that, you know, are fast follows that are requested from agents.

Peter Colis
CEO at Ethos Technologies

We've been going through all those motions and just watching very clear month-over-month-over-month sequential growth with the product. You know, we're happy with the early experience. We're very happy with the agent receptivity. It's also worth noting we have a direct-to-consumer IUL selling initiative that we're excited to roll this product out to as well, which has been a nice growing part of our direct business.

Peter Colis
CEO at Ethos Technologies

On the direct marketing mix, what I would say, you know, we talked about last quarter is over time, a larger and larger percentage of Ethos' marketing spend has been shifting towards what I call top of funnel channels, where clients are not necessarily looking for life insurance, but we are approaching them and, you know, presenting the concept of life insurance and showing them that they can buy it easily and simply, right? These are channels like television, radio, social media, et cetera. In Q1, we saw a continued, you know, a continued trend where more and more of the spend is able to shift into those upper funnel channels, while not compromising on ROAS and efficiency.

Peter Colis
CEO at Ethos Technologies

We love that because it's really showing that it's a scalable model that is not constrained by the implicit number of people who have intent to buy life insurance on a various given day. We're able to generate demand. Our teams are hard at work at continuing to improve marketing and open up more channel scale within those large top of funnel channels, and then continue to be the winner in all bottom of funnel channels like search and affiliates.

Ron Josey
Ron Josey
Analyst at Citi

Great. Thank you.

Operator

Thank you. Our next question comes from the line of Michael McGovern of Bank of America.

Michael McGovern
Michael McGovern
Analyst at Bank of America

Hey, guys. Thanks for taking my question. Could you just talk about kind of the big beat in revenue that you had in Q1 relative to the rest of the full-year guidance, which kind of implies a deceleration in revenue growth from here? I hear you that you're not encountering the upper bound in marketing spend, but is there anything else driving a level of deceleration in revenue growth from here? Any sort of pull forward or macro change or anything to call out there?

Chris Capozzi
CFO at Ethos Technologies

Mike, nothing to call out on the macro front. We're really pleased to see the level of acceleration in both channels here in the first quarter. As Peter noted, you know, the quarter is off to a strong start. We've got a good April behind us here. I think what you're seeing in the go-forward revenue guide there is really just us navigating the seasonal deceleration as we transition from the first quarter to the second quarter and of course, an appropriate level of prudence in terms of our forward guide.

Michael McGovern
Michael McGovern
Analyst at Bank of America

Got it. Thank you. Can you speak to the Liberty Mutual partnership a little bit more when it comes to licensing your proprietary engine to them? When does that layer into the model more meaningfully? Given it's such a meaningful carrier, can you just discuss how that impacts the flywheel overall from here? Thank you.

Peter Colis
CEO at Ethos Technologies

Mike, great question. We're excited about it. Strategically, this allows us to reach more customers by, you know, utilizing Liberty Mutual's brand awareness and trust that they've built up in the marketplace. It allows them to amortize the technology and the product suite and the just incredible life insurance experience that we've built. Even though it's early days, it's contributing nicely. Both of us are excited to keep growing together. I think thematically, Ethos simplifies life insurance buying so much that it allows non-life insurance experts, like Liberty Mutual, to confidently sell the product knowing that, hey, it's gonna deliver a great experience, it's gonna have high approval rates, great prices, it's gonna be fast and easy. They don't have to worry about disappointing their customers, right?

Peter Colis
CEO at Ethos Technologies

Where they have an existing relationship and financial, you know, incentive to do well by. Ethos kinda uniquely unlocks a lot of potential partnerships like this. We're excited to keep digitally embedding our experience on other platforms, which we think is a fairly replicable model. We will seek more partnerships like this in the future.

Michael McGovern
Michael McGovern
Analyst at Bank of America

Thank you.

Operator

Thank you. Our next question comes from the line of Pablo Singzon of JPMorgan. Your line is now open.

Pablo Singzon
Pablo Singzon
Analyst at JPMorgan

Hi, good evening. First question, the change in assumption that resulted in the charge, did that have any effect on revenues or are you using a different lapse schedule for revenues than, I guess, agent comp?

Chris Capozzi
CFO at Ethos Technologies

Yeah, Pablo, it did have a small effect on revenue this quarter. We did record a small favorable persistency adjustment to revenue. We didn't call it out because it was not material, so think of it as a low single-digit percentage effect on revenue. As you think about that $16.5 million one-time non-cash charge that we alluded to in our prepared remarks, improved early stage persistency was one of multiple contributing factors to the charge. The largest factor I would say was just the absence of substantial experience, which of course we gained over the course of the first quarter and what ultimately informed our decision to update our estimate.

Chris Capozzi
CFO at Ethos Technologies

Other contributing factors were some of the operational enhancements that I alluded to earlier in my comments, specific to how we bill, chargebacks to agents, as well as just increasing the overall precision of our forecasting methodology now that we have a more substantial base of accumulated experience.

Pablo Singzon
Pablo Singzon
Analyst at JPMorgan

Makes sense. Then second question I had was on the guidance. I think, you know, revenues, roughly speaking, went up, full-year revenue guidance went up by like 9%, 10%. EBITDA went up by 4% or 5%. Is the drag there mostly from the, you know, this change in assumptions for clawbacks or are there other parts of the operations like, I don't know, like marketing efficiency overall or just a general investments that are contributing to the drag in EBITDA? Thank you.

Chris Capozzi
CFO at Ethos Technologies

Yeah, that's correct, Pablo. If you, if you were to back out the one-time charge, you know, contribution margins would have been 39%. If you back that one-time charge out, at the EBITDA line, we would have reported 26% EBITDA. As we mentioned earlier, as you think about the go-forward run rate contribution margins, we think mid-30% makes sense there, which reflects a couple of points of erosion due to the change in estimate. That's the go-forward run rate impact. Otherwise, you know, ex that charge, incredibly strong margins here in Q1.

Pablo Singzon
Pablo Singzon
Analyst at JPMorgan

Thank you.

Operator

Thank you. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. Our next question comes from the line of Carol Jamil of Citizens. Your line is now open.

Carol Jamil
Carol Jamil
Analyst at Citizens

Yes. Hi. Just a quick follow-up on the Liberty Mutual deal. Can you comment if there's any exclusivity around this deal, or do you think you can strike similar deals with other carriers? Thank you.

Peter Colis
CEO at Ethos Technologies

That's a great question. There is not exclusivity around this deal.

Carol Jamil
Carol Jamil
Analyst at Citizens

Okay.

Operator

Okay. Thank you. I'm showing no further questions at this time. I would now like to turn it back to management for closing remarks.

Peter Colis
CEO at Ethos Technologies

Great. Thank you all for joining us today, and we will speak with you again next quarter.

Operator

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

Analysts
    • Aaron Turner
      VP of Investor Relations at Ethos Technologies
    • Carol Jamil
      Analyst at Citizens
    • Chris Capozzi
      CFO at Ethos Technologies
    • Colin Sebastian
      Analyst at Baird
    • Eric Sheridan
      Analyst at Goldman Sachs
    • Michael McGovern
      Analyst at Bank of America
    • Pablo Singzon
      Analyst at JPMorgan
    • Peter Colis
      CEO at Ethos Technologies
    • Ron Josey
      Analyst at Citi
    • Ross Sandler
      Analyst at Barclays
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