Neptune Insurance Hldgs Q2 2026 Earnings Call Transcript

Neptune Insurance Hldgs (NYSE: NP ) reported second-quarter financial results on Wednesday. The transcript from the company's second-quarter earnings call has been provided below. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

5 million, achieving a 62% margin. The company attributes growth to strong momentum in its distribution network, impacts from FEMA's Review Council, and enhanced operational execution with AI tools like Atlas improving agent productivity. Neptune is raising its full-year guidance to $199 million in revenue, reflecting 25% growth and a 60-61% adjusted EBITDA margin, not factoring in potential benefits from FEMA initiatives. 5%, showcasing efficient underwriting.

Management emphasized AI's role in enhancing productivity rather than cutting costs, with a focus on expanding distribution and product offerings without proportionate increases in headcount. Full Transcript Jeannie, Operator Good morning and thank you for standing by. My name is Jeannie and I will be your conference operator today. At this time I would like to welcome everyone to the Neptune Insurance Hldgs second quarter earnings conference call.

All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again.

Thank you. I would now like to turn the conference over to John Carlin, Director of Corporate Development. You may begin. John Carlin, Director of Corporate Development Thank you and good morning.

With me here today is Trevor Burgess, Chairman and CEO, Matt Duffy, President and Chief Risk Officer, and Jim Steiner, CFO and COO. Before we begin, I'd like to remind everyone that today's discussion will include forward-looking statements, including among others, statements about our expectations for our future financial performance, growth opportunities, business strategy, market trends and capital allocation plans. These statements are based on our current views and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially. We direct you to our recent SEC filings for a full description of these risks.

We undertake no obligation to update any forward-looking statements, whether as a result of new information or future events or otherwise, except as required by law. We will also reference certain non-GAAP financial measures. These measures should be considered only as supplements to their comparable GAAP measures. com and in our current report on Form 8-K that was publicly filed with the SEC on July 21, 2026.

Now I'd like to turn the call over to Trevor. Trevor Burgess, Chief Executive Officer Good morning and thank you for joining us for Neptune Insurance Hldgs' second quarter earnings call. Let's start with the headline. This was the best quarter in Neptune's history and it wasn't close.

9 million, up 33% year over year. 5 million, up 36% at a 62% margin. That's up 165 basis points from a year ago. Premium in force reached 419 million, up 32%.

And we now have over 316,000 policies in force, up 29%. And so, summing it all up on a trailing 12 month basis, revenue per employee and adjusted EBITDA per employee both reached record new highs. 8 million respectively. However you want to slice it, we grew across nearly every measure of this business.

So what's driving it? I'd point to three things. First, we are seeing real momentum across our distribution network, both with agents who've been with us for years and with new partners we're bringing on. Second, the FEMA Review Council process has put a spotlight on the long term status of the NFIP, and we think that's pushing more agents and their customers to take a serious look at private flood as the more durable option.

I'd like to spend a moment on the FEMA Review Council's report because one of its recommendations is particularly exciting to us, and it's one FEMA can act on without any congressional action. We believe this single action could have the largest impact of any recommendation on our business. I recently wrote an editorial in The Hill that focused on telling the truth to Americans about their flood risk. Research confirms FEMA's current flood maps understate high risk properties by more than two thirds.

If FEMA acts on the Council's recommendations to modernize the maps with data it already has, millions of properties now classified as low risk would move into mandatory purchase zones, giving homeowners accurate information and meaningfully expanding the mandatory purchase requirement for flood insurance. As Matt will mention, more than half of our sales are outside of these mandatory zones, but we'll still be thrilled to have more Americans know the truth about their flood risk. And third, our team has been executing at a pace I haven't seen before across nearly every part of this business all at once.

We're adding to the core product, building entirely new products, completely redesigning the user interface, building Atlas, plus growing our agent outreach, growing how we communicate with the market, and refining how we market ourselves. None of that shows up in a single line item on the income statement. But it's exactly the kind of work that sets us up for the next 24 months, and I think you're already seeing the early returns of it in this quarter's numbers. I want to spend a minute on something that's been on investors minds this year because I think the market had it backwards.

The fear that AI would replace insurance agents outright and that this would somehow be bad for Neptune. Here's what I'd say to that. First, even if that fear played out exactly as people worried, it still wouldn't be bad for us. Paying our agents is the single largest expense we have.

In a world with less need for agent labor is a world with a better cost structure for Neptune, not a worse one. But second, and more importantly, that's not actually the bet we are making. We don't think agents are going away and we're not trying to build the AI that replaces them. We're building the AI that arms them.

Last quarter I talked about turning agents into what we call super agents. This quarter is what that looks like when it starts to work. The first piece of Atlas, the expert sitting right there on the quote screen, answering an agent's questions in real time, drafting the follow up email explaining why a customer needs excess flood coverage, is live today and agents are using it. By the end of the quarter, nearly 3,700 agents had exchanged 33,000 messages with Atlas.

We have placed the best flood underwriter sitting side by side with our agents. The second piece goes live in the next few weeks. Instead of an agent staring at a blank screen wondering what to do next, Atlas will hand them a ranked list of tasks with the single most valuable thing they could be doing right now, as ranked by our data science team, sitting at the top. Then Atlas does a lot of the work of getting that task done.

We are not asking the more than 55,000 agents who have signed up for individual user accounts on our platform to go and build their own AI. We are building it for them. We're handing it to them. We are using AI to help our agents become super agents and to help the US close the massive flood insurance gap.

Remember, there are over 100 million buildings in the US and only about 4 million flood policies. With that, I'll turn things over to Matt to walk us through the business in more detail. Matthew Duffy, President & Chief Risk Officer Thank you, Trevor. The second quarter was another record quarter for Neptune Insurance Hldgs.

But what stood out to me wasn't any single result. It was the pace of execution across the business. We shipped more technology than we ever have. We expanded our product offering, renewed our two largest programs on improved terms, kept growing our distribution network, and started to see the investments we've made in AI change the way the business operates every day.

Before I get into the detail, one point, people often ask whether AI is mainly about reducing costs. That's not how we think about it. Neptune Insurance Hldgs already operates with exceptionally high efficiency. And our objective isn't to grow by adding large numbers of people.

It's to keep growing revenue while increasing headcount far more slowly. You can see that in a single metric. On a trailing twelve-month basis, revenue per employee reached a record $3 million this quarter. That number captures how the business is evolving.

And it's one of the results I'm most excited about. Let me give you the detail behind what Trevor described, starting with technology. If you look at everything the engineering team delivered over the last three months, it's a remarkable amount of work. We launched commercial and condominium earthquake products.

We completed a full redesign of the agent portal and quoting experience, we extended the first phase of ATLAS to all of our distribution partners. We introduced new portfolio insight capabilities for agents. We deployed a new machine learning model in the underwriting process. We expanded our flood products with new coverages, completed major underwriting infrastructure projects, and delivered dozens of additional improvements across the platform.

That's comfortably the most we've ever delivered in a single quarter. Twelve months ago, I'd have looked at that roadmap and assumed we'd need a much larger engineering organization to deliver it. Instead, we changed the way our engineers work. AI now supports our developers throughout the software development process, helping write code, review code, test software, and investigate issues.

Our engineers still make every important decision. They're simply spending far more of their time designing and building products, and far less on repetitive development tasks. The result is that our engineering team delivered more than twice the work it did in the fourth quarter of 2025 and over 50% more than the first quarter of 2026, with a team that's remained broadly the same size. Ultimately, this isn't about writing code faster.

It's about giving the business the ability to launch more products, respond to opportunities more quickly, and keep growing without expanding the organization at the same rate. We're seeing the same thing outside engineering, and our customer success team is a good example. Compared to the second quarter of last year, each customer success representative now manages roughly 25% more policies, while we've reduced customer wait times and improved the quality of the responses customers receive. The goal was never to shrink the team.

It was to let the same highly skilled professionals support a much larger business and deliver an even better experience. Let me turn to underwriting performance, which we report once a year on our second quarter call. 5%, down over 500 basis points from a year ago. For this peril, that's an exceptional number and it's the clearest proof of what our pricing and underwriting platform, Triton, has delivered across eight storm seasons and now into a ninth, and through 21 landfall hurricanes during that time.

It's also one of the reasons our capacity providers continue to grow alongside us. Which brings me to capacity. During the quarter, we renewed our two largest programs, both renewed on improved economic terms, reflecting the confidence our partners have in Neptune Insurance Hldgs' underwriting platform and the results we've delivered together. We also welcomed additional capacity providers, bringing our panel to 45.

Alongside those renewals, we increased building coverage limits to $15 million across every property type and expanded coverage across all of our flood programs. Those enhancements further differentiate the products for our distribution partners and improve the value proposition for policyholders. And late in the quarter, we extended our earthquake platform with the commercial and condominium products I mentioned. It's early, but the response from agents and customers has been encouraging and we'll keep testing that business thoughtfully.

Turning to distribution, since launching individual user accounts in December, more than 55,000 insurance professionals have created verified Neptune Insurance Hldgs accounts, each secured with multifactor authentication. Every interaction helps us understand how agents work, which lets us keep improving Atlas Referral, refining the experience, and building better tools. That momentum continues to translate into growth. One statistic stood out this quarter.

More than 55% of our new business came from properties outside FEMA's Special Flood Hazard Areas, and over 75% came from voluntary, not bank-mandated purchases. We think that's an important signal of where the private flood market is heading. For years we've said the opportunity isn't simply moving policies off the National Flood Insurance Program. The far larger opportunity is expanding the market, protecting properties that historically haven't carried flood insurance at all.

We continue to show great success in that area. The FEMA Review Council report generated a lot of discussion during the quarter and we've had a number of questions about what that means for Neptune Insurance Hldgs. I think it's an encouraging report. It recognizes the role the private market can play in closing America's flood insurance gap and the spotlight that it's put on the long-term future of the NFIP is prompting more agents and customers to take a serious look at private flood.

That's helping demand today. What I'd be clear about is this. Whether the longer-term recommendations are implemented and over what timeframe remains uncertain. And none of that is built into our projections.

The record quarter we're discussing wasn't driven by changes in government policy. It came from executing the same strategy we've followed for years. Better products, better technology, empowering agents, and expanding distribution. If additional opportunities emerge over time, we're best positioned to pursue them.

Before I hand it over to Jim, let me touch on our outlook. We've had a very strong first half. The business continues to perform, distribution continues to grow, and we're seeing the benefits of the investments we've made across the platform. Based on that performance, we are raising our full-year expectations.

We now expect 2026 revenue of $199 million, which would represent top-line growth of 25% and an adjusted EBITDA margin of 60% to 61%. That outlook reflects the momentum in the business today. It does not assume any acceleration from future FEMA initiatives or broader changes to the National Flood Insurance Program. And it also accounts for the below-average Atlantic hurricane season projections released by the National Oceanic and Atmospheric Administration.

When I look across Neptune Insurance Hldgs, what gives me confidence isn't any single launch or metric. It's that every part of the business is moving in the same direction. More technology, more products, teams supporting a larger business without growing at the same pace, better tools for our agents, and capacity partners expanding alongside us. All of it's translating into stronger financial performance.

That's exactly the business we've been building for years. And I think this quarter shows what's possible as those investments begin to compound. With that, I'll hand things over to Jim. Jim Steiner, Chief Operating Officer & Chief Financial Officer Thanks, Matt.

Today I'll cover three things: how the quarter looked financially, why the model produces these results, and how we're deploying capital. Starting with the quarter, we had strong growth. 8% year over year with both record new business and a larger base of in-force premium contributing. 7%, up roughly 165 basis points from a year ago.

We grew and became more profitable in the same quarter, which is a balance we're always trying to strike. Policy retention rate at renewal also improved year over year to 86%. That continues to be a driver of the top line as we compound a larger and larger renewal book which contributes more revenue each passing year. A question we hear often is how margins hold as we grow.

The answer is in the structure of the business. We carry no underwriting risk; our capacity partners do. So growth does not consume capital and the decisions about which risk to bind, for whom, and at what price are made in software. So growth does not require us to add people in proportion.

We expand by writing policies and writing code, not by expanding the balance sheet or payroll. Which is why a quarter like this one lifts margin rather than compressing it. The per-employee numbers tell the same story. 8 million respectively—figures you would expect from a software company rather than an insurer.

To us, that's the clearest evidence of what we have built.