Saturday, 14 September 2024
by BD Banks
Shares of insurance company SelectQuote (NYSE: SLQT) crashed after the company on Friday morning reported earnings for the fourth quarter of fiscal year 2024 ending June 30. The stock was down 37% at noon. SelectQuote reported a net loss of $31 million, which missed the analyst estimate by roughly 31%, according to Visible Alpha. However, keep in mind there was only one analyst with estimates.
Despite the big miss on net income, revenue of $307 million in the quarter beat the estimate of nearly $275 million, although operating costs of roughly $308.6 million came in more than $21 million higher than the estimate.
SelectQuote CEO Tim Danker said in a statement:
On a consolidated basis, our fiscal year revenue and adjusted EBITDA [earnings before interest, taxes, depreciation, and amortization] outperformed the midpoint of our original forecast by 17% and 26%, respectively. This marks the 10th consecutive quarter of outperformance versus our internal expectations, reaffirming our strategy to prioritize profitability and cash efficiency over volume growth.
SelectQuote also guided, at the midpoint, for $1.45 billion of revenue, $105 million of adjusted EBITDA, and a net loss of $24 million for fiscal year 2025. Although there is only one estimate in Visible Alpha, this comes up woefully short of the fiscal 2025 estimates, which were $1.54 billion of revenue, operating EBITDA of nearly $139 million, and a loss of $1.4 million for fiscal 2025.
SelectQuote did beat on revenue and also said that the strategic rationalization of its auto and home business will serve as a headwind to adjusted EBITDA in fiscal 2025. However, it missed big on earnings, and the disappointing guidance is also a major concern.
While I don’t hate the business, the stock is down more than 91% since going public in 2020. I would need to see better execution to get interested.
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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.