Hagerty Inc Class A ((HGTY)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Hagerty Inc Class A painted a picture of strong growth and strategic advancements, despite some challenges. The company reported significant increases in revenue and profitability, driven by strategic initiatives such as expanding partnerships and enhancing international presence. While there were concerns about lower-than-expected premium growth and rising technology costs, the overall sentiment was positive, indicating robust business momentum.
Revenue and Growth Metrics
Hagerty reported an 18% increase in total revenue, fueled by an 11% rise in Written Premium and a 12% growth in Commission revenue. Notably, Membership, marketplace, and other revenue surged by 68%, showcasing the company’s ability to diversify its income streams and capitalize on new business opportunities.
Profitability Enhancements
The company achieved a 210 basis point increase in operating margins, alongside a 46% gain in net income and a 28% growth in adjusted EBITDA for the first half of 2025. These figures underscore Hagerty’s effective cost management and operational efficiency improvements.
Strategic Expansion Initiatives
Hagerty is making strides in expanding its specialty insurance offerings through the Enthusiast+ program and enhancing its international marketplace presence with successful auctions in Europe. Additionally, investments in technology replatforming are expected to yield efficiency gains, further supporting the company’s growth trajectory.
State Farm Partnership
The partnership with State Farm is proving fruitful, with new business operations in 16 states and plans to expand to 25 states by year-end. This collaboration is a key component of Hagerty’s strategy to broaden its market reach and drive business conversion.
Updated 2025 Outlook
Hagerty has revised its full-year expectations upwards, projecting revenue growth between 13% and 14%, and net income of $112 million to $120 million, marking a 43% to 53% increase. Adjusted EBITDA is expected to rise by 30% to 38% compared to 2024, reflecting the company’s confidence in its strategic direction and financial health.
Below-Expected Premium Growth
Despite the overall positive performance, premium growth in the first half of 2025 fell short of the full-year outlook. This was attributed to a deliberate market deemphasis and a refined direct approach for new business, which the company believes will yield long-term benefits.
Higher Technology and Marketplace Costs
Hagerty faced increased spending of $20 million, with $15 million allocated to technology and $5 million to Marketplace. While these costs impacted short-term profitability, they are seen as necessary investments for future growth and operational enhancements.
Forward-Looking Guidance
Hagerty’s forward-looking guidance remains robust, with expectations of continued strong financial performance and strategic growth. The company aims to expand its specialty insurance offerings, enhance membership experiences, and grow its international marketplace business, particularly in Europe. The new fronting arrangement with Markel, set to take effect in 2026, is anticipated to enhance profitability by allowing Hagerty to control 100% of the premium and risk.
In summary, Hagerty Inc Class A’s earnings call highlighted strong growth and strategic initiatives, despite some challenges in premium growth and rising costs. The company’s positive outlook and strategic partnerships, such as with State Farm, position it well for continued success. Investors and stakeholders can remain optimistic about Hagerty’s future prospects, given its upwardly revised financial expectations and strategic focus.