Neptune Insurance Reports Q3 Revenue Growth, Raises 2026 Guidance

Neptune Insurance Hldgs (NYSE: NP ) reported third-quarter financial results on Tuesday. The transcript from the company's third-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.

View the webcast at Summary Neptune Insurance Hldgs reported a 34% year-over-year increase in revenue to $59.6 million and a 38% increase in adjusted EBITDA to $36.8 million, with a margin improvement to 62%. The company is leveraging AI to enhance agent productivity and reduce distribution costs, with AI tool Atlas showing significantly higher binding rates for quotes. Future guidance has been raised for 2026 to $204 million in revenue and an adjusted EBITDA margin above 61%. Initial guidance for 2027 projects $238 million in revenue.

Operational highlights include a significant increase in premium in force (32%) and policies in force (29%), alongside productivity improvements without increasing headcount. Strategic initiatives focus on expanding distribution channels, enhancing AI capabilities, and introducing new products like the Indemnity Earthquake product. Management noted the strong performance despite a weak housing market and absence of major hurricanes, emphasizing growth without reliance on favorable external conditions. The company reported strong cash flow with plans for continued investment, share repurchases, and debt reduction, supported by a low leverage ratio of 1.7 times.

Leadership changes include new board member and upcoming CFO transition, indicating a focus on strengthening management capabilities. Full Transcript Trevor Burgess (Chief Executive Officer) Apparent in our financial and operating results. We're growing revenue substantially faster than our team size. We're making our distribution partners more productive.

We're attracting greater demand from risk—taking partners. And we're doing all of that at a time when the broader environment hasn't been helpful. That's important because we're not building a business that depends on favorable market conditions to succeed. The fact that it's a soft insurance market and a slow housing market hasn't impeded our ability to execute or grow.

We're building a business with the capabilities to consistently take share, expand the market, and compound our advantages over time. I want to walk through the evidence of that today, including what we're seeing from our investments in AI, the evolution of our distribution network, the strength of our capacity relationships, and the opportunities we see ahead. But first, let me turn to our third quarter results. The third quarter was another record for Neptune Insurance Hldgs.

Revenue grew 34% year over year to $59.6 million. Adjusted EBITDA grew 38% to $36.8 million. That's a 62% margin, an improvement of 147 basis points from a year ago. Premium in force reached $450 million, up 32%.

And we now have more than 336,000 policies in force, up 29%. October 1st marked the anniversary of our first day of trading on the New York Stock Exchange, and it's worth reflecting on how far we've come in that short period. Our trailing twelve—month revenue is now 44% higher than at June 30, 2025, the figure reported in our S—1. We've achieved that growth while maintaining exceptional profitability with a rule of 40 of 94.

And the growth is broad—based. It's coming from the expansion of our distribution network, increasing productivity among our existing agents, and the continued development of our products and technology as we get into operations. Let me start with distribution because I know the impact of AI on insurance purchasing is top of mind for many investors. Our view is straightforward.

Greater price transparency and easier access to insurance are opportunities for Neptune Insurance Hldgs, not threats. There are more than 100 million buildings in the United States and approximately 25 million face meaningful flood risk. Yet there are only around 4 million flood insurance policies. The biggest obstacle to selling flood insurance isn't price discovery.

It's that millions of property owners don't know they need it or mistakenly believe they're already covered. AI has the potential to change that by helping consumers understand their exposure and identify coverage gaps. And Neptune Insurance Hldgs is exceptionally well positioned to serve that demand. Whether a consumer purchases through an insurance agent, directly through neptuneflood.com, or eventually through a personal AI assistant, our technology can support the transaction.

In the near term, we expect AI to make our existing distribution partners substantially more productive over time. As more consumers transact directly, there's also an opportunity to lower our distribution costs, which today represent our largest expense. We're already seeing tangible evidence of the opportunity through Atlas. During the third quarter, 7,000 agents used Atlas, exchanging more than 75,000 messages with the platform.

And perhaps most importantly, quotes involving Atlas are binding at three and a half times the rate of quotes without an Atlas interaction. That is a powerful indication of the value we're delivering. Let me give you an example of what that looks like in practice. We recently held a call with a large group of insurance agents, and during the discussion, one agent told us they'd just sold their first ever flood insurance policy.

They'd come to Neptune Insurance Hldgs, run a quote, and started a conversation with Atlas. The tool gave them a sales script, helped them understand the property's flood exposure, and provided the background they needed to explain the coverage to the customer. They told us that conversation gave them the confidence to present the policy and ultimately close the sale. I love that story because it gets to the heart of what we're trying to accomplish.

There are tens of thousands of insurance agents across the country who have customers exposed to flood risk but who don't routinely sell flood insurance. Often it's because they don't have the expertise or confidence to have that conversation, and Atlas changes that. It puts flood insurance expertise in the hands of every agent, regardless of their experience. We recently heard from Garrett Mitchell with Rocket Flood, a HUB International company, who said, and I quote, Atlas is making a real difference in our business.

The chatbot on Neptune Insurance Hldgs' quote page is like having an underwriter alongside us through the entire sales process. And with the new Atlas cards, in just three weeks, we've bound dozens of endorsements and renewals, generating tens of thousands of dollars of premium. Garrett's comments show that we're not simply making our partners more efficient. We're also helping drive demand for those partners so they can grow their business.

More than 65,000 insurance professionals have now created verified Neptune Insurance Hldgs accounts, and over 43,000 of them were active during the quarter, compared to 39,000 in Q2. We're not just adding distribution partners. We're making each relationship more productive and giving agents more reasons to do business with Neptune Insurance Hldgs. The same productivity gains are happening inside our organization.

During Q3, our engineering team delivered two and a half times the amount of work it delivered in the same quarter last year with broadly the same number of people. And our service organization operated an average of one human representative for every 30,000 policies in force, a 50% productivity improvement year over year, while improving response times and customer satisfaction. These are meaningful improvements, and they demonstrate how we're growing the capabilities of the business considerably faster than its headcount, all while continuing to invest in new products, technology, and underlying infrastructure.

I've spent a considerable amount of time with capacity partners over the last several months, and the quality of those conversations reflects how far the business has come. These are sophisticated counterparties with their own models, their own views of risk, and many choices about where to deploy capital. They understand our portfolio, they monitor its performance, and increasingly they want to participate in its growth. During the quarter, we renewed another capacity program on improved terms, and with that renewal effective December 1st, none of our active capacity programs will include contingent commissions.

When existing partners want to grow alongside Neptune Insurance Hldgs and new partners want to access the business, that's meaningful external validation of what we've built. Let me turn to the external environment and the broader opportunity ahead. The housing market remains weak, and we've now gone through two consecutive years without a major hurricane creating a substantial demand event for flood insurance. Both of those factors have historically supported new business demand, and their absence has created a headwind.

Despite that, our premium in force has grown at 32% year over year, and our new business premium during Q3 was up 50, 51% year over year. That's an important indicator of the underlying strength of the business. We're growing our distribution, taking market share, and expanding the insured base without relying on an improvement in those external conditions. A recovery in housing activity would certainly be beneficial, but it isn't required to deliver on our growth expectations.

We're also monitoring the potential impact of a strong El Niño this winter. We don't expect it to have a material impact on either overall demand or the underwriting performance of our portfolio. But increased awareness of flood risk is good for the industry. Significant weather events create opportunities to remind property owners of their exposure and of the importance of having flood insurance.

We'll continue working closely with our fantastic distribution partners, particularly on the West Coast and in Hawaii, to translate that awareness into greater insurance adoption and helping to close the protection gap. We are often asked about potential changes at FEMA around the NFIP. While we have no additional information and don't expect significant changes in the immediate term, our latest research highlights the opportunity for growth, showing that nearly half of NFIP policies are still priced below their full risk level, representing approximately $2.6 billion in annual subsidies that will continue to burn off in the coming years.

Meaningful reform would accelerate that opportunity, but it isn't a prerequisite for our success. We're also continuing to expand our addressable market through new products. Our Indemnity Earthquake product is progressing through beta testing, and we anticipate a formal launch in Q4. Let me finish with our outlook.

Shortly after our IPO last year, we introduced initial 2026 revenue guidance of $186 to $189 million. Today, we're raising that guidance for the fourth time to $204 million, which, if achieved, will result in approximately 28% year over year growth with an adjusted EBITDA margin above 61%. We're also announcing initial guidance for the full year 2027. We expect approximately $238 million in revenue at an adjusted EBITDA margin of approximately 61%.

That outlook assumes neither a recovery in the housing market nor an above—average hurricane season. It also excludes any inorganic growth and any substantial contribution from new product lines. In other words, we expect to continue delivering strong, highly profitable growth without needing the external environment to improve. And that brings me back to where I started.

The strength of Neptune Insurance Hldgs isn't any single product, technology, or distribution relationship. It's how those advantages work together and become more powerful as the business grows. One year after our IPO, Neptune Insurance Hldgs is materially larger, more productive, and more capable. Our distribution network is expanding.

Our technology is improving productivity across the business. Our capacity relationships are stronger than ever. We're serving 336,000 customers nationwide, and we've demonstrated that those advantages translate into sustained growth and exceptional profitability. That's what gives us confidence in our outlook and in the significant opportunity still ahead of us.

With that, I'll hand it over to Jim. Jim Steiner (Chief Operating Officer & Chief Financial Officer) Thanks, Matt. I'll spend a few minutes on the financial results, the underlying economics of the business and our balance sheet and capital allocation. Starting with the quarter, revenue was 59.6 million, up about 34% year over year.

Adjusted EBITDA was a record 36.8 million, up about 38% for an adjusted EBITDA margin of about 62%. So once again, adjusted EBITDA grew faster than revenue and our margin expanded while we kept investing across the business. A few things are driving that. First, the in-force book keeps growing.

We ended the quarter with about $450 million of premium in force and each year, the renewal book contributes more of our revenue. Our revenue retention rate over the last 12 months is about 89%. Retention matters a great deal to our financial model. Each year we start with a larger base of policies already in force.

With strong retention, much of that book keeps earning revenue before we write a single dollar of new business. Second, the operating leverage in the business continues to show through. We don't retain underwriting risk. As premium grows, we don't need to provide additional insurance capital, and much of our infrastructure doesn't need to grow in step with premium.

That includes our underwriting platform, our policy administration technology, our data science capabilities, and our corporate functions. Our largest variable expense is distribution commission. Beyond that, as premium and revenue grow, a meaningful share of additional revenue can convert to adjusted EBITDA while we keep investing in the platform. That's why we believe margins above 60% and continued investment and growth are entirely compatible.

You can see the same dynamic in our productivity numbers. Over the last 12 months, revenue per employee was about 3.2 million and adjusted EBITDA per employee was about 2 million. Those figures keep rising because revenue is growing much faster than the organization. Turning to cash flow, during the quarter we generated 25.9 million of operating cash flow.

For the first nine months of the year, operating cash flow was 69.3 million. That cash gives us a lot of flexibility in how we allocate capital. At quarter-end, we had 215 million outstanding on the revolver. Our total net leverage ratio as defined in our credit facility was about 1.7 times, compared with about 2.9 times a year ago.

Over the last 12 months, we've reduced leverage while also returning capital to shareholders. Our approach to capital allocation remains straightforward. The first call on capital is attractive opportunities to grow Neptune Insurance Hldgs. Beyond that, we intend to continue our share repurchase program opportunistically and to reduce debt over time.

We don't view those as fixed buckets. Our cash generation and capital-light structure give us the flexibility to put capital wherever we see the best expected return. One more item. When RSUs vested on September 30th, we withheld some of the shares to cover employee taxes; that avoided additional dilution.

After quarter-end, we paid about 14.2 million in related taxes. Because that cash went out after the quarter closed, it will show up in our fourth-quarter cash flow. With that, I'll turn it over to Trevor for closing remarks. Trevor Burgess (Chief Executive Officer) We recently celebrated the one-year anniversary of our IPO.

Over this past year, I'm incredibly proud that we have grown our revenue by 34%, our adjusted EBITDA by 38%, our premium in force by 32%, our policies in force by 29%—all while our number of employees has actually fallen from 60 to 59. In the last year, we have generated $82 million in operating cash flow and have used $49 million to delever and nearly $32 million to buy back stock. Our leverage ratio has fallen from 2.9 to 1.7 times in the last year, giving us incredible flexibility to look at a wide range of strategic opportunities.

I will reiterate that, absent investment opportunities that will grow our business even more quickly, our bias will be to opportunistically buy back stock. There is a paradox at the center of insurance distribution right now. The better AI gets at doing an agent's job, the more valuable the human agent becomes. The tools to disrupt how insurance is sold are here, but the typical American homeowner is now about 57 and a half, up more than three years since 2010, and homeowners are aging faster than the country as a whole—that's according to the National Association of Realtors.

Even the people buying homes today are older than ever, with a median age of 59. Those homeowners aren't going to walk away from an agent they've trusted for 20 years just because an AI could do the same job. My own mother isn't going to. When advice is cheap and everywhere, trust is the scarce thing.

So we don't see AI replacing the agent in the short term. We see AI working through the agent. That's why we built Atlas Plus. It puts the speed of AI behind the agent, so the relationship stays with the agent and the work gets faster, smarter, and more accurate.

Now, none of this is permanent. The futurist Roy Amara said, we overestimate the effect of technology in the short run and underestimate it in the long run. That still holds. The gap between what AI can do and what customers are ready for will close.

Today, Neptune Insurance Hldgs wins by powering the agent.