Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited interim Consolidated Financial Statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q ("Quarterly Report") and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 filed with the SEC on February 26, 2026 ("2025 Annual Report"). This section is intended to provide management's perspective on our financial performance, material events, trends, and uncertainties that may affect our business, financial condition, results of operations, and cash flows.

Special Note Regarding Forward-Looking Statements

This Quarterly Report contains forward-looking statements within the meaning of the federal securities laws. All statements contained in this Quarterly Report, other than statements of historical fact, including statements regarding our future results of operations, financial position, market opportunity, business strategy, plans, objectives, and factors affecting our performance are forward-looking statements. In some cases, forward-looking statements can be identified by words such as "may," "will," "should," "expect," "plan," "anticipate," "could," "intend," "target," "project," "contemplate," "believe," "estimate," "predict," "potential," or "continue" or the negative of these terms or other similar expressions.

These forward-looking statements are based on management's current expectations, assumptions, estimates and projections. While we believe these expectations and assumptions are based on reasonable information, forward-looking statements are inherently predictive in nature and involve known and unknown risks and uncertainties, many of which are beyond our control. Actual results, performance or achievements may differ materially from those expressed or implied by these forward-looking statements as a result of various factors, including those discussed or referenced in Part II, Item 1A "Risk Factors" in this Quarterly Report, in our 2025 Annual Report and in other reports we file with the SEC.

Factors that could cause actual results or events to differ materially include, among others, our ability to maintain profitability and manage fluctuations in operating results on a quarterly or annual basis; our dependence on a limited number of customers for a substantial portion of our revenue; our ability to retain existing customers and attract new customers; and our continued reliance on affiliated customers. Our future performance also depends on the successful development, enhancement, and scalability of our proprietary IaaS platform, including the introduction of new features, analytical models and services, as well as the accuracy of estimates regarding market size and growth opportunities.

In addition, we operate in a highly competitive and regulated environment. Competitive pressures, consolidation within the insurance industry, regulatory scrutiny of delegated authority and claims administration functions, and evolving data privacy and cybersecurity requirements could adversely affect our business, financial condition and results of operations. Natural catastrophes, environmental risks and climate-related events, such as hurricanes and other severe weather, may significantly impact our customers' P&C insurance operations, particularly in Florida where a substantial majority of our managed premiums are concentrated, which could in turn affect demand for our products and services. Our business also depends on the reliability and security of our information systems and third-party cloud infrastructure, and any system failures, security breaches or unauthorized disclosures of sensitive data could result in operational disruptions, regulatory action, litigation or reputational harm.

Our ownership structure further presents additional risks. HCI controls the direction of our business through its ownership interests, and this concentrated ownership limits the ability of other shareholders to influence significant corporate decisions. Potential conflicts of interest may arise between HCI and us, including those involving our executive officers and directors who hold positions or financial interests. In addition, if HCI were to sell a controlling interest of the Company in a private transaction, shareholders may not receive a change-of-control premium, and we could become subject to control by an unknown third party. We may also face challenges in realizing the anticipated benefits of operating as a standalone public company, including increased costs, regulatory compliance obligations and demands on management resources.

For further discussion of certain of these factors, see the risk factors disclosed in the section entitled "Risk Factors" in this Quarterly Report and in the 2025 Annual Report.

You are cautioned not to place undue reliance on such forward-looking statements, which are not guarantees of future performance, and our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate, may differ materially from the forward-looking statements contained in this Quarterly Report. Any forward-looking statement in this Quarterly Report speaks only as of the date of such statement, and except as required by applicable securities laws, we do not undertake any obligation to update or revise, or to publicly announce any update or revision to, any of the forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this Quarterly Report.

Company Overview

Exzeo Group, Inc., and its subsidiaries, a majority owned subsidiary of HCI, provide turnkey insurance technology and operations solutions to insurance carriers and their agents (collectively referred to as Exzeo's "customers") through a proprietary platform of internally developed software and data analytics applications designed specifically for the P&C insurance market.

Our Insurance-as-a-Service platform, the Exzeo Platform, is an integrated suite of configurable insurance applications purpose-built to support the entire P&C value chain. The Exzeo Platform delivers integrated technology solutions that streamline operational and administrative functions for insurance carriers, MGAs, reciprocal exchanges, program administrators, and their distribution partners, enabling organizations to modernize operations, improve efficiency, and scale through a single configurable platform which includes quoting and underwriting, policy administration, claims management, data reporting, and financial reporting. Through these capabilities, the Exzeo Platform streamlines and automates insurance operational workflows across carriers, agents and policyholders.

The Exzeo business was established in 2012 as the technology and innovation division of HCI Group, Inc., a leading underwriter of homeowners insurance in Florida that now writes policies in 12 additional states. In 2020, Exzeo became an independent business entity and completed its initial public offering on November 5, 2025. Since inception, Exzeo has been led by experienced technology and insurance professionals with deep domain expertise focused on developing advanced data analytics algorithms and software tools that enable carriers to maximize system efficiency, optimize underwriting outcomes, and serve their customers more effectively.

The Exzeo Platform is a proprietary suite of software, analytics, and visualization tools capable of supporting, enhancing, or replacing legacy operational systems commonly used in the insurance industry. We enter into MGA or policy administration services agreements with our P&C insurance-industry customers under which we serve as an MGA of an insurance carrier or provide services to a carrier's MGA in exchange for fees largely based on a percentage of managed premiums. Under these agreements, we utilize the Exzeo Platform to provide policy issuance and renewal services, as well as management services such as soliciting and negotiating reinsurance for authorized programs, managing and maintaining policy administration, and providing claims management.

Key Factors and Trends Affecting Results of Operations

We believe our performance and future success depend on a number of factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and in the section entitled Item 1A. Risk Factors, included in our 2025 Annual Report.

Presentation of Financial Information

Unless otherwise indicated, all dollar amounts presented in this Management's Discussion and Analysis of Financial Condition and Results of Operations are stated in thousands. Percentages, ratios, and per policy figures are based on the underlying whole dollar amount.

Key Performance Metrics

We review a number of key operating metrics, which we use as we make strategic decisions, measure our performance, evaluate our business, and identify trends in our business. These operational measures are presented as follows:

Managed Premium

Managed premium is defined as the aggregate gross dollar value of in-force premiums that are processed, managed, or administered by our software solutions as of the period end date. This excludes any applicable policy fee income associated with managed policies. Premium pricing may vary by state due to a combination of factors including regulatory requirements; however, the majority of the policies are written in the state of Florida. Revenue is primarily derived from usage-based pricing models, which are structured based on the amount of managed premiums processed, in most cases. We view this as an important metric because it is an indicator of the overall size of our platform. However, managed premium is an operational metric and should not be considered a substitute for revenue or other financial results.

Managed premiums attributable to insurance policies written in Florida represented 91.7% and 90.0% of total managed premiums as of June 30, 2026 and 2025, respectively.

Managed Policies

Managed policies are defined as the number of currently active policies managed by us on our platform as of the period end date. We consider managed policies a key metric for evaluating our financial performance, as growth in the number of managed policies not only drives revenue growth, but we also believe that an increase in managed policies may reflect broader brand awareness and deeper market penetration of our Exzeo Platform.

Premium Per Policy

Premium per policy is defined as the managed premium divided by managed policies. We view premium per policy as an important metric which provides information as to the average size of our customers' policyholder relationships. Growth in the metric can be indicative of increased coverages offered to our customers.

Gross Dollar Retention Rate

Gross dollar retention rate measures the percentage of managed premium retained from our customers' existing policyholders. We calculate gross dollar retention rate by measuring the managed premium attributable to policyholders who remained active as of the end of the current period and dividing this amount by the managed premium attributable to those same policyholders as of the end of the corresponding prior year period (i.e., twelve months earlier). We believe the gross dollar retention rate is a valuable indicator of platform engagement among existing policyholders and provides insight into our ability to retain and sustain premium volume over time through our services.

As of June 30, 2026 and 2025, managed premiums attributable to policyholders active from the end of the prior year period used in the gross dollar retention rate calculation were $1,087,674 and $446,209, respectively.

Net Dollar Retention Rate

We use NRR as a key performance metric to measure the success of our carrier customer relationships and the growth of our revenue from new and existing carrier customers. To calculate NRR, we divide the amount of managed premium from new and existing policyholders of our customers at the end of the current period, by the amount of managed premium attributable to the policyholders active as of the respective prior year period (i.e., twelve months earlier).

Our NRR is influenced by both the growth of existing carrier customers on the platform as well as the addition of new carrier customers. We believe that maintaining a high NRR is critical to achieving sustained long-term growth and reflects the strength of our value proposition to existing as well as future customers.

Annual Recurring Revenue

We use ARR as a key operational metric to assess the scale of our recurring revenue generated from managed premium. ARR is defined as the sum of each customer's managed premiums, multiplied by their respective contractual fee rates, plus any applicable policy fee income associated with managed policies as of the period end date. ARR excludes revenue from nonrecurring sources, such as catastrophe services.

Components of Operating Results

Revenue

We generate revenue from three primary sources: underwriting and management services, claim services, and other technology services. Underwriting and management services include policy issuance and renewal, reinsurance placement, and administrative support, with fees tied to a percentage of premiums written or assumed, plus related policy fees. Claim services involve investigating, adjusting, and settling claims, including catastrophe-related claims, with pricing based on percentage of premiums written or assumed, per-claim fees and/or a percentage of indemnification costs. Other technology services are primarily derived from proprietary software solutions offered through Software-as-a-Service service agreements, with fees based on a combination of policy or claim volumes, fixed charges, or percentages of claims handled.

Cost of Revenue

Our cost of revenue includes expenses directly attributable to providing our services, including salaries and benefits for employees supporting underwriting, management, administrative and claim services. For certain customers, we are responsible for compensating agents supporting underwriting services and recognize related agent commission expenses. Cost of revenue also includes amortization of capitalized internal-use software and other intangible assets used to provide services, information technology expenses supporting policy underwriting, administrative functions, and claim handling services, and allocated overhead. Claim handling costs include adjustment, investigation, defense, recording, and payment functions. Allocated expenses from departments supporting these functions are also included in cost of revenue.

Gross Profit

Gross profit represents revenue less cost of revenue. The increase in gross profit in recent periods was primarily driven by growth in managed premium, which allows us to leverage our relatively fixed cost structure. As we continue to scale and achieve operational efficiencies, we expect gross margins to improve over time, although there can be no assurance that we will achieve these improvements.

Selling, General and Administrative Expenses

Selling, general and administrative expenses represent costs associated with supporting operations and primarily consist of employee compensation, including share-based compensation and benefits for our finance, IT, sales and marketing, human resources, legal and general management functions, as well as facilities and professional services.

Research and Development

Our research and development costs consist primarily of personnel expenses, including salaries and benefits, bonuses, share-based compensation, facilities, and related overhead costs for employees engaged in the design and development of our technology offerings and other internally developed systems and applications.

Depreciation and Amortization

Depreciation and amortization expense reflects the expenses associated with the ongoing use of our tangible long-lived assets, including computer hardware, office furniture and equipment, and leasehold improvements.

Investment Income

Investment income represents interest and returns earned from both short-term and long-term investments. The principal factors that influence investment income include the size and composition of our investment portfolio, the mix of short and long-term duration assets, prevailing market conditions, and the yields generated over time.

Income Tax Expense

Income tax expense primarily consists of domestic corporate federal and state income taxes related to the sale of our services. The effective tax rate can be affected by many factors, including changes in tax laws, states in which we operate, regulations or rates, new interpretations of existing laws or regulations, and changes in our overall levels of income before income taxes.

Results of Operations

Three Months Ended June 30, 2026 and 2025

Selected financial information for the three months ended June 30, 2026, and 2025, including amounts expressed as a percentage of total revenue and the year-over-year change, is presented as follows:

Comparison of the Three Months Ended June 30, 2026 and 2025

Revenue

Revenue increased by $1,696, or 3.0%, to $57,787 for the three months ended June 30, 2026, compared to $56,091 for the same period in 2025. The increase was primarily attributable to growth in underwriting and management services, offset by lower claim services.

Underwriting and management services revenue increased by $3,047, or 6.7%, to $48,342 for the three months ended June 30, 2026, compared to $45,295 for the same period in 2025, representing 83.7% and 80.8% of total revenue, respectively. The increase was primarily driven by higher managed premiums from two new customers that were onboarded at the end of 2025, along with growth in underwriting and management services from our existing customer base. The fee rate charged as a percentage of premium managed was modestly lower in 2026 compared to 2025, reflecting changes in service mix.

Claim services revenue decreased by $1,879, or 21.8%, to $6,744 for the three months ended June 30, 2026, compared to $8,623 for the same period in 2025, representing 11.7% and 15.4% of total revenue, respectively. The decrease was primarily due to lower catastrophe-related claim activity, associated with services delivered through our outsourced claims arrangement, in the current period compared to the same period in 2025. Claim services revenue in future periods will continue to be influenced by the level of managed premiums and the timing and severity of weather events.

Other technology services revenue increased by $528, or 24.3%, to $2,701 for the three months ended June 30, 2026, compared to $2,173 for the same period in 2025, representing 4.7% and 3.9% of total revenue, respectively. The increase was primarily driven by higher catastrophe software service revenue associated with the progression of certain catastrophe events, including Hurricane Ian, in the current period. The current period results reflect the impact of additional revenue recognized as a result of refined claims estimates in the prior year. Because catastrophe-related software activity is event driven, revenue from these services may vary between periods.

Cost of Revenue

Cost of revenue decreased by $1,591, or 7.1%, to $20,949 for the three months ended June 30, 2026, compared to $22,540 for the same period in 2025, representing 36.3% and 40.2% of total revenue, respectively. The decrease in the cost of revenue as a percentage of revenue was primarily driven by a significant reduction in outsourced claim fees, partially offset by higher other operating expenses and direct personnel expense.

Policy commission and related expenses remained relatively flat at $10,038 for the three months ended June 30, 2026, compared to $10,074 for the same period in 2025, representing 17.4% and 18.0% of total revenue, respectively. Policy commission services and related expenses remained relatively unchanged and did not materially impact the change in cost of revenue.

Outsourced claims fees decreased by $2,337, or 61.0%, to $1,494 for the three months ended June 30, 2026, compared to $3,831 for the same period in 2025, representing 2.6% and 6.8% of total revenue, respectively. The decrease was primarily due to lower catastrophe claims handling activity and reduced litigation-related activity in 2026 compared with 2025, when claims handling and related litigation costs were elevated due to activity associated with storms that occurred in late 2024 and other historical storm events. The decrease in fees was attributable to this lower claim volume rather than changes in the cost per claim. Catastrophe-related activity is inherently volatile and may fluctuate significantly from period to period.

Direct personnel expense increased by $324, or 6.4%, to $5,387 for the three months ended June 30, 2026, compared to $5,063 for the same period in 2025, representing 9.3% and 9.0% of total revenue, respectively. The increase was primarily driven by higher headcount to support continued business growth, partially offset by a lower portion of discretionary compensation costs being reflected in cost of revenue as accruals were recognized.

Other operating expenses increased by $487, or 16.4%, to $3,451 for the three months ended June 30, 2026, compared to $2,964 for the same period in 2025, representing 6.0% and 5.3% of total revenue, respectively. The increase was driven by higher postage and related fees resulting from higher policy volumes, increased investment in systems and technology, and an increase to claims management activity. These increases were partially offset by lower bank fees from a system optimization initiative implemented in mid-2025.

Depreciation and amortization remained relatively flat at $579 for the three months ended June 30, 2026, compared to $608 for the same period in 2025, representing 1.0% and 1.1% of total revenue, respectively. Depreciation and amortization were relatively unchanged year-over-year and did not materially impact the change in cost of revenue.

Operating Expenses

Operating expenses increased by $2,951, or 54.4%, to $8,375 for the three months ended June 30, 2026, compared to $5,424 for the same period in 2025, representing 14.5% and 9.7% of total revenue, respectively. The increase was primarily driven by higher selling, general and administrative expenses.

Selling, general and administrative expenses increased by $2,828, or 95.5%, to $5,788 for the three months ended June 30, 2026, compared to $2,960 for the same period in 2025, representing 10.0% and 5.3% of total revenue, respectively. Employee-related costs accounted for approximately half of the increase, primarily due to a higher portion of discretionary compensation costs being reflected in selling, general and administrative expenses rather than in cost of revenue as accruals were finalized, along with higher salary and wage expenses resulting from increased headcount to support continued business growth. In addition, the increase reflects lower overhead allocations to TTIC following the sale of TTIC to HCI in July 2024. The corporate overhead allocation to TTIC included shared services such as HR, IT, legal, accounting, and lease-related costs which were allocated using methodologies appropriate to each cost type and applied consistently for all periods presented. We ceased providing corporate services, and therefore ceased allocating related expenses, to TTIC as of July 1, 2025. The remaining increase reflects higher operating costs associated with being a publicly traded Company and as a result of continued business growth.

Research and development expenses remained relatively flat at $2,440 for the three months ended June 30, 2026, compared to $2,354 for the same period in 2025, representing 4.2% of total revenue in both periods. Research and development was relatively unchanged year-over-year and did not materially affect our cost structure.

Depreciation and amortization remained relatively flat at $147, for the three months ended June 30, 2026, compared to $110 for the same period in 2025, representing 0.3% and 0.2% of total revenue, respectively. Depreciation and amortization were relatively unchanged year-over-year and did not materially affect our cost structure.

Investment Income

Investment income increased by $2,200, or 288.3%, to $2,963 for the three months ended June 30, 2026, compared to $763 for the same period in 2025. The increase was attributable in approximately equal measure to interest income earned on U.S. Treasury available-for-sale fixed-maturity securities acquired during the first half of 2026, for which there was no comparable activity in the prior year period, and to increased income earned on cash and cash equivalents. The increase in income from cash and cash equivalents was primarily due to higher average balances invested in money market funds following our IPO in November 2025. Investment income may fluctuate in future periods based on cash levels, the timing of the deployment of cash proceeds, and market conditions.

Income Tax

Income tax expense increased by $930, or 12.9%, to $8,157 for the three months ended June 30, 2026, compared to $7,227 for the same period in 2025. Our effective tax rate was 26.0% for the three months ended June 30, 2026, compared to 25.0% for the same period in 2025.

Our effective tax rate for both periods differed from the U.S. federal statutory rate of 21.0% primarily due to state income taxes, net of federal tax benefits, and other immaterial nondeductible expenses. The year-over-year increase in our effective tax rate was primarily driven by permanent differences related to nondeductible executive compensation. We expect our effective tax rate to continue to vary from the statutory rate principally as a result of state income taxes, permanent differences, and state tax obligations. There were no material changes in our income tax estimation methodologies for the periods presented. The increase in income tax expense was primarily due to higher income before income taxes and, to a lesser extent, the increase in our effective tax rate.

Six Months Ended June 30, 2026 and 2025

Selected financial information for the six months ended June 30, 2026, and 2025, including amounts expressed as a percentage of total revenue and the year-over-year change, is presented as follows:

Comparison of the Six Months Ended June 30, 2026 and 2025

Revenue

Revenue increased by $4,823, or 4.4%, to $113,321 for the six months ended June 30, 2026, compared to $108,498 for the same period in 2025, driven primarily by new customers along with growth in underwriting and management services from our existing customer base.

Underwriting and management revenue increased by $5,725, or 6.5%, to $94,270 for the six months ended June 30, 2026, compared to $88,545 for the same period in 2025, representing 83.2% and 81.6% of total revenue, respectively. The increase was primarily driven by higher managed premiums from two new customers that were onboarded at the end of 2025, along with growth in underwriting and management services from our existing customer base. The fee rate charged as a percentage of premium managed was modestly lower in 2026 compared to 2025, reflecting changes in service mix.

Claim services revenue decreased by $1,817, or 11.8%, to $13,635 for the six months ended June 30, 2026, compared to $15,452 for the same period in 2025, representing 12.0% and 14.2% of total revenue, respectively. The decrease was primarily due to lower catastrophe-related claim activity, associated with services delivered through our outsourced claims arrangement, in the current period compared to the same period in 2025. Claim services revenue was elevated in 2025 due to higher volumes of catastrophe claims arising from prior storm events, including Hurricane Ian, Milton, and Helene. As claims associated with these events progressed toward resolution and related claim volumes normalized, claim services revenue decreased from the prior year elevated levels. The decrease was partially offset by higher managed premiums from our existing customer base, which increased related claims volume and associated service fees. Claim services revenue in future periods will continue to be influenced by the level of managed premiums and the timing and severity of weather events.

Other technology services revenue increased by $915, or 20.3%, to $5,416 for the six months ended June 30, 2026, compared to $4,501 for the same period in 2025, representing 4.8% and 4.1% of total revenue, respectively. The increase was primarily driven by higher catastrophe software service revenue associated with the progression of certain catastrophe events, including Hurricane Ian, in the current period. The current period results reflect the impact of additional revenue recognized as a result of refined claims estimates in the prior year. Because catastrophe-related software activity is event driven, revenue from these services may vary between periods.

Cost of Revenue

Cost of revenue decreased by $2,382, or 5.2%, to $43,740 for the six months ended June 30, 2026, compared to $46,122 for the same period in 2025, representing 38.7% and 42.5% of total revenue, respectively. The decrease in the cost of revenue as a percentage of total revenue was primarily driven by a significant reduction in outsourced claim fees, partially offset by higher other operating expenses and direct personnel expense.

Policy commission and related expenses decreased by $529, or 2.3%, to $22,212 for the six months ended June 30, 2026, compared to $22,741 for the same period in 2025, representing 19.6% and 21.0% of total revenue, respectively. The decrease was primarily due to lower written premiums associated with the carrier for which we provide policy commission services. The weighted average commission rate was relatively consistent at 9.0% for 2026 and 2025.

Outsourced claims fees decreased by $3,063, or 50.3%, to $3,023 for the six months ended June 30, 2026, compared to $6,086 for the same period in 2025, representing 2.7% and 5.6% of total revenue, respectively. The decrease was primarily due to lower catastrophe claims handling activity and reduced litigation-related activity in 2026 compared with 2025, when claims handling and related litigation costs were elevated due to activity associated with storms that occurred in late 2024 and other historical storm events. The decrease in fees was attributable to this lower claim volume rather than changes in the cost per claim. Catastrophe-related activity is inherently volatile and may fluctuate significantly between periods.

Direct personnel expense increased by $292, or 2.9%, to $10,371 for the six months ended June 30, 2026, compared to $10,079 for the same period in 2025, representing 9.2% and 9.3% of total revenue, respectively. The increase was primarily driven by higher headcount to support continued business growth, partially offset by a lower portion of discretionary compensation costs being reflected in cost of revenue as accruals were recognized.

Other operating expenses increased by $974, or 16.2%, to $6,985 for the six months ended June 30, 2026, compared to $6,011 for the same period in 2025, representing 6.2% and 5.5% of total revenue, respectively. The increase was driven by higher postage and related fees resulting from higher policy volumes in 2026, higher claims management activity, and increased investment in systems and technology. These increases were partially offset by lower bank fees from a system optimization initiative implemented in mid-2025.

Depreciation and amortization remained relatively flat at $1,149 for the six months ended June 30, 2026, compared to $1,205 for the same period in 2025, representing 1.0% and 1.1% of total revenue, respectively. Depreciation and amortization were relatively unchanged year-over-year and did not materially affect our cost structure.

Operating Expenses

Operating expenses increased by $5,591, or 53.5%, to $16,043 for the six months ended June 30, 2026, compared to $10,452 for the same period in 2025, representing 14.2% and 9.6% of total revenue, respectively. The increase was primarily driven by higher selling, general and administrative expenses.

Selling, general and administrative expenses increased by $5,338 or 94.2%, to $11,004 for the six months ended June 30, 2026, compared to $5,666 for the same period in 2025, representing 9.7% and 5.2% of total revenue, respectively. Employee-related costs accounted for approximately half of the increase, primarily due to a higher portion of discretionary compensation costs being reflected in selling, general and administrative expenses rather than in cost of revenue as accruals were finalized, along with salary and wage expenses resulting from higher headcount to support continued business growth. In addition, the increase reflects lower overhead allocations to TTIC following the sale of TTIC to HCI in July 2024. The corporate overhead allocation to TTIC included shared services such as HR, IT, legal, accounting, and lease-related costs which were allocated using methodologies appropriate to each cost type and applied consistently for all periods presented. We ceased providing corporate services, and therefore ceased allocating related expenses, to TTIC

as of July 1, 2025. The remaining increase reflects higher operating costs associated with being a publicly traded Company and as a result of continued business growth.

Research and development expenses remained relatively flat at $4,746 for the six months ended June 30, 2026, compared to $4,575 for the same period in 2025, representing 4.2% of total revenue in both periods. Research and development were relatively unchanged year-over-year and did not materially affect our cost structure.

Depreciation and amortization remained relatively flat at $293, for the six months ended June 30, 2026, compared to $211 for the same period in 2025, representing 0.3% and 0.2% of total revenue, respectively. Depreciation and amortization were relatively unchanged year-over-year and did not materially affect our cost structure.

Investment Income

Investment income increased by $4,314, or 371.6%, to $5,475 for the six months ended June 30, 2026, compared to $1,161 for the same period in 2025. The increase was primarily driven by a combination of interest income earned on U.S. Treasury available-for-sale fixed-maturity securities acquired during the first half of 2026 and increased income earned on cash and cash equivalents, reflecting higher average invested balances and higher overall investment yields.

Income Tax

Income tax expense increased by $1,867, or 13.9%, to $15,338 for the six months ended June 30, 2026, compared to $13,471 for the same period in 2025. Our effective tax rate was 26.0% for the six months ended June 30, 2026, compared to 25.4% for the same period in 2025.

Our effective tax rate for both periods differed from the U.S. federal statutory rate of 21.0%, primarily due to state and foreign income taxes, net of federal tax benefits, and other nondeductible expenses. We expect our effective tax rate to continue to differ from the statutory rate due to state and foreign tax obligations and other permanent differences. There were no material changes in our income tax estimation methodologies during the periods presented, and the year-over-year change in our effective tax rate was not material. The year-over-year increase in income tax expense was primarily driven by higher income before income taxes.

Non-GAAP Financial Measures

In addition to results determined in accordance with GAAP, we use certain non-GAAP financial measures to evaluate our operating performance and make strategic decisions. These non-GAAP financial measures include Adjusted EBITDA, Adjusted Revenue, Adjusted EBITDA Margin, and Free Cash Flow. Management believes these measures provide useful supplemental information for investors by facilitating comparisons of performance across reporting periods and with other companies in the industry, many of which use similar non-GAAP financial measures.

However, these non-GAAP financial measures are not prepared in accordance with GAAP, are not based on a standardized methodology, and may not be comparable to similarly titled measures used by other companies. They should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. These measures exclude items that may be significant to an understanding of our financial condition and results of operations under GAAP. The use of non-GAAP financial measures involves management judgment regarding which items to exclude or include. Accordingly, these measures have limitations and should be viewed as a supplement to, not a replacement for, our GAAP results. Management urges investors to review the reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures included in this report and not to rely on any single financial measure to evaluate our business.

Adjusted EBITDA

We define Adjusted EBITDA as net income adjusted to exclude income tax expense, interest expense, investment income, depreciation and amortization, and share-based compensation expense. Management uses Adjusted EBITDA as a key measure of operating performance and to assess the results of the business excluding certain items that are not considered indicative of core operating results.

Adjusted EBITDA should not be viewed in isolation or as a substitute for net income calculated in accordance with GAAP, and other companies may define Adjusted EBITDA differently.

The reconciliation of net income to Adjusted EBITDA for the periods presented is as follows:

Adjusted Revenue

We define Adjusted Revenue as the portion of revenue earned through services delivered directly via our proprietary platform technology. This metric excludes revenue associated with services primarily within claims management that are outsourced to a subsidiary of HCI. Although this revenue is recognized on a gross basis under GAAP because we are considered the principal in the transaction, the economics are largely neutral, as the related costs incurred from outsourced service providers closely match the revenue recognized. Management believes Adjusted Revenue provides investors with useful insight into the performance and scalability of our core platform services and reflects the revenue generated from internally delivered operations, excluding variability associated with outsourced service arrangements. This non-GAAP measure should not be considered in isolation or as a substitute for total revenue or any other performance measure calculated in accordance with GAAP.

The reconciliation of the Adjusted Revenue for the periods presented is as follows:

Adjusted EBITDA Margin

We define Adjusted EBITDA Margin as Adjusted EBITDA expressed as a percentage of Adjusted Revenue. This non-GAAP measure provides management and investors with additional insight into the Company's operating efficiency and the scalability of our business model, as it reflects our progress toward long-term profitability. The most directly comparable GAAP measure is net income margin, which is calculated as net income divided by GAAP revenue.

The calculation of Adjusted EBITDA Margin for the periods presented is as follows:

Free Cash Flow

We define Free Cash Flow as net cash provided by operating activities less capital expenditures during the period. We believe information regarding Free Cash Flow provides useful information to management and investors because it is an indicator of strength and performance of our business operations after funding capital expenditures. Capital expenditures consist of capitalized software development costs and costs relating to property and equipment, such as computer hardware, office furniture and equipment, and leasehold improvements. Free Cash Flow should not be considered an alternative to net cash provided by operating activities, which is the most directly comparable GAAP measure, or as a measure of liquidity prepared in accordance with GAAP and may not be comparable to similar measures used by other companies.

The reconciliation of Free Cash Flow for the periods presented is as follows:

Liquidity and Capital Resources

General

Our principal sources of liquidity, consisting of cash and cash equivalents and cash generated from operations, are presented as follows:

Cash and cash equivalents decreased during the six months ended June 30, 2026, primarily due to purchases of fixed-maturity securities classified as available-for-sale, partially offset by cash generated from operating activities. Working capital also decreased during the period, primarily reflecting the same investment activity; as the available-for-sale fixed-maturity securities were classified as non-current based on management's intent not to use the investments for current operating purposes.

We do not have any off-balance sheet arrangements that have, or are reasonably likely to have, a material effect on our liquidity, capital resources, or financial condition.

We believe that our existing cash and cash equivalents, together with expected operating cash flows, will be sufficient to meet working capital, capital expenditures, and other liquidity requirements for at least the next 12 months. We have no material long-term contractual obligations other than standard vendor agreements and lease commitments.

Our primary cash requirements include employee compensation and outsourced fees, cloud hosting and infrastructure costs, and ongoing investment in product development. At current operating levels, these requirements are expected to be supported by operating cash flows.

In May 2026, the Board of Directors authorized a Share Repurchase Program to repurchase up to $12.0 million of the Company's common stock. The Share Repurchase Program permits the Company to repurchase shares periodically through open market purchases, block transactions, privately negotiated transactions or other means. During the six months ended June 30, 2026, the Company used $10,029 of cash to repurchase shares of its common stock, excluding broker commissions and excise tax. As of June 30, 2026, approximately $1,971 remained available under the Share Repurchase Program. The timing and amount of any share repurchases are discretionary and may vary based on the Company's liquidity position, capital requirements, business, economic and market conditions, corporate and regulatory requirements, prevailing stock prices and other considerations. The Share Repurchase Program does not obligate the Company to repurchase any specific number of shares of common stock and may be suspended or discontinued at any time without notice.

Based on our current financial position, we also believe that our liquidity sources will be adequate to meet our long-term needs beyond the next twelve months. Over the longer term, our liquidity will depend primarily on our ability to generate cash from operations as our managed premium base scales and we continue to expand our technology and service offerings.

Investments

The primary objective of our investment policy is to maximize our after-tax investment income with a reasonable level of risk given the current financial market. Our excess cash is invested primarily in money market accounts and available-for-sale fixed-maturity securities.

As of June 30, 2026, we had $197,072 of available-for-sale fixed-maturity investments, which are carried at fair value. Changes in the general interest rate environment affect the returns available on new available-for-sale fixed-maturity investments. While a rising interest

rate environment enhances the returns available on new investments, it reduces the market value of existing available-for-sale fixed-maturity investments and thus the availability of gains on disposition. A decline in interest rates reduces the returns available on new available-for-sale fixed-maturity investments but increases the market value of existing available-for-sale fixed-maturity investments, creating the opportunity for realized investment gains on disposition.

Sources of Liquidity

Our capital requirements depend on several factors, including the volume of insurance policies managed on our platform, the level of claims related services we provide, operating expenses, investments in information technology systems, and the expansion of sales and marketing activities.

Our current liquidity sources consist primarily of existing cash and cash equivalents and cash generated from operations.

Cash Flow Summary

A summary of cash flows is as follows:

Operating Activities

Net cash provided by operating activities for the six months ended June 30, 2026 was $40,887, a decrease of $16,639 from $57,526 for the same period in 2025. The decrease was primarily due to changes in the timing of business growth and associated cash collections, partially offset by higher net income. Operating cash flows may vary from period to period based on the timing of customer receipts, vendor payments, and other operating activities.

Investing Activities

Net cash used in investing activities for the six months ended June 30, 2026 was $198,931, compared to $1,252 for the same period in 2025, an increase in cash used of $197,679. The increase was primarily due to purchases of available-for-sale fixed-maturity securities during the 2026 period. Capital expenditures also continued in support of software development and infrastructure, consistent with our strategy to support and enhance core operations.

Financing Activities

Net cash used in financing for the six months ended June 30, 2026 was $10,418, compared to $0 for the same period in 2025. Net cash used in financing activities for 2026 was primarily driven by payments made under the Share Repurchase Program, as well as payments of offering costs related to the Company's November 2025 IPO. Certain IPO-related costs were paid in 2026 due to the timing of invoice receipt and settlement.

Critical Accounting Policies and Estimates

The preparation of our unaudited interim Consolidated Financial Statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures. These estimates are inherently uncertain and require significant judgment, particularly in areas that involve complex or subjective assumptions and often involve matters that are inherently unpredictable.

We regularly evaluate these estimates based on historical experience, current business conditions, and other relevant factors, including inputs from third-party specialists where applicable. Our estimates are subject to change as new events occur, additional information becomes available, or operating environments evolve. Actual results could differ materially from those estimates, and such differences may have a material impact on our financial condition or results of operations.

We believe the following accounting policies involve significant judgment and estimates and are critical to an understanding of our financial condition and results of operations: Revenue recognition, Share-based compensation, Income taxes.

The above and other accounting estimates and their related risks that we consider to be our critical accounting estimates are discussed further in our 2025 Annual Report, filed with the SEC on February 26, 2026. For the six months ended June 30, 2026, there have been no other material changes with respect to any of our critical accounting policies.

Revenue Recognition

We recognize revenue from contracts with customers in accordance with ASC 606. We determine the appropriate amount of revenue to be recognized by applying the five-step model: (i) identifying the contract with customer, (ii) identifying the performance obligations in the contract, (iii) determining the transaction price, (iv) allocating the transaction price to the performance obligations, and (v) recognizing revenue when, or as, the performance obligations are satisfied. Our revenue is primarily usage-based and derived from fees

calculated as a percentage of premiums written by our insurance customers. The nature of our usage-based arrangements and related judgments did not change materially during the periods presented.

We allocate the transaction price to performance obligations based on their relative standalone selling prices. For most performance obligations, we estimate standalone selling prices using an expected cost-plus-margin approach, which requires significant judgment regarding forecasted fulfillment costs and appropriate market-based margins. Changes in these estimates, including changes in product or service mix, or revisions to our assessment of the market-based margins, could affect the standalone selling prices used to allocate consideration in new or renewal of existing contracts and thus result in the impact of the amount and timing of revenue recognized for each performance obligation. Our approach to determining standalone selling prices, including the underlying assumptions regarding fulfillment costs forecasts and margin estimates, remained consistent and did not change materially over the periods presented.

Because our fees are generally usage-based and tied to the underlying insurance policies written by our customers, the transaction price often includes variable consideration. While our customer contracts typically span multiple years, the underlying insurance policies can be canceled by policyholders without penalty. As a result, the uncertainty related to underlying policy volume, not termination of the MGA or customer agreement itself, drives our application of the ASC 606 constraint. We therefore constrain variable consideration to the amounts that are not probable of significant reversal. This assessment requires judgment and involves assumptions about policyholder behavior, seasonality, expected policy retention, and inherent volatility of premiums written. We update these estimates quarterly based on the most recent available information. The assumptions used to evaluate and constrain variable consideration, including expected volume and retention behavior, were applied consistently and did not change materially during the periods presented.

Share-Based Compensation

We account for share-based compensation awards under our shareholder-approved incentive plans in accordance with the fair value recognition provisions of GAAP, recognizing expense based on grant-date fair value over the requisite service period. Our share-based awards primarily consist of restricted stock awards and stock options with service-based or market-based vesting conditions. Restricted stock awards are granted with either time-based or market-based vesting conditions tied to our stock price (e.g., share price thresholds sustained over a defined period) and are expensed over the requisite service period based on grant-date fair value. For awards with market-based vesting conditions, the grant-date fair value incorporates the probability of achieving the market condition and is not subsequently adjusted.

For stock options, we determine grant-date fair value using a Monte Carlo simulation technique and other option pricing models. These methods estimate the fair value of the option by modeling a range of potential future stock prices and associated outcomes and rely on assumptions such as expected volatility, risk-free interest rates, expected term, and dividend yield. These assumptions require significant judgment and can materially impact recognized compensation expense.

For awards granted while we were a private company, we determined the fair value of our common stock using third-party valuations under Internal Revenue Code Section 409A. These valuations incorporated assumptions regarding future performance, market conditions, and comparable company data. Inputs such as estimated stock price and expected price volatility used in these valuation methods were derived from analyses of public peer companies with similar characteristics. For awards granted after our IPO, the grant-date fair value of our common stock is based on the quoted market price of our common stock on the date of grant.

Income Taxes

We account for income taxes in accordance with GAAP, resulting in two components of income tax expense (benefit): current and deferred. The current income tax expense (benefit) reflects taxes payable or refundable for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues.

The realizability of deferred tax assets is evaluated quarterly, and judgment is required in assessing both positive and negative evidence, including recent financial performance, forecasted future earnings, and relevant tax planning strategies.

As a member of a consolidated U.S. federal income tax return with HCI, we are subject to the group's tax-sharing arrangements. Our estimate of tax expense is sensitive to changes in the effective rate applied to our standalone results, which may differ from statutory rates due to business mix or transaction-related effects.

JOBS Act

We are an EGC as defined under the JOBS Act. As an EGC, we may delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to not take advantage of the extended transition period that allows an EGC to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies, which means that the financial statements included in this Quarterly Report on Form 10-Q, as well as financial statements we file in the future, will be subject to all new or revised accounting standards generally applicable to public companies. Our election not to take advantage of the extended transition period is irrevocable.

We will remain an EGC until the earliest to occur of the following: (i) the last day of the fiscal year in which our total annual gross revenues first meet or exceed at least $1.235 billion (as adjusted for inflation), (ii) the date on which we have, during the prior three-year period, issued more than $1.00 billion in non-convertible debt, (iii) the last day of the fiscal year in which we (a) have an aggregate worldwide market value of common stock held by non-affiliates of $700.0 million or more (measured at the end of each fiscal year) as of the last business day of our most recently completed second fiscal quarter and (b) have been a reporting company under the Exchange

Act for at least one year (and have filed at least one annual report under the Exchange Act), or (iv) the last day of the fiscal year following the fifth anniversary of the date of the first sale of our common stock pursuant to an effective registration statement under the Securities Act.

New Accounting Guidance

Refer to Note 2. Summary of Significant Accounting Policies to the Consolidated Financial Statements for a discussion of new accounting standards.