Exzeo Group (NYSE:XZO) reported what management described as another strong quarter, highlighted by continued growth in Managed Premium, expanding profitability, and a debt-free balance sheet. On the company’s fourth-quarter 2025 earnings call, executives also outlined early progress on adding third-party clients and products to the platform and discussed how they believe AI-driven change in insurance could accelerate demand for modern, automated systems.
Fourth-quarter and full-year financial results
Chief Financial Officer Suela Bulku said fourth-quarter pre-tax income was approximately $29 million, with diluted earnings per share of $0.25. For the full year, pre-tax income was over $110 million and diluted EPS was $0.99.
Bulku said adjusted EBITDA margins increased to over 54% in the fourth quarter and for the full year, attributing the performance to operating leverage in Exzeo’s model, where the company can add Managed Premium with “very little incremental expense.”
Key operating metrics and cash flow
Bulku highlighted several KPIs, including Managed Premium of approximately $1.39 billion at the end of the fourth quarter. She said this was ahead of expectations and up from about $580 million in the prior year.
Annual recurring revenue (ARR) was $215 million in the fourth quarter, up from about $139 million in the prior-year quarter, Bulku said.
For full-year 2025, Bulku said Exzeo generated free cash flow of about $97 million, compared with net income of about $83 million. She characterized that as a free cash flow conversion rate of 117%.
Balance sheet and guidance update
Exzeo ended the year with $305 million in cash and cash equivalents and “no debt,” Bulku said. She added that stockholders’ equity increased 16-fold to $254 million.
Management also provided updated expectations for the first quarter and full year 2026:
- First-quarter pre-tax income: expected to be between $23 million and $26 million.
- Full-year 2026 pre-tax income: continued expectation of $115 million to $125 million.
- Managed Premium: expected to be over $1.4 billion by the end of the first quarter.
- 2026 Managed Premium outlook: raised to $1.55 billion by year-end, based on current momentum.
Asked about free cash flow conversion for 2026, Bulku said the company expects conversion to continue to be over 100%, driven primarily by growth and a working capital cycle in which Exzeo gets paid cash upfront while it takes more than 12 months to recognize revenue.
Client additions and product expansion, including flood insurance
President Kevin provided an update on goals the company previously discussed for 2026. He said Exzeo aimed to add non-HCI clients and grow them to meaningful size, noting that the two startups added in the fourth quarter are expected to represent approximately $100 million of premium by the end of the first quarter.
Kevin also pointed to a press release issued the same evening announcing a new client and a new product on the platform. The new product is water, and the new client is Tokio Marine Highland, a wholly owned subsidiary of Tokio Marine Kiln and part of Tokio Marine Group. Management said Tokio Marine Highland selected the Exzeo platform to offer a flood insurance product and that the company has already added its first policy.
In response to an analyst question, Paresh said Exzeo had a previous relationship with Tokio Marine and emphasized the speed at which the deal came together and the first policy was issued. He added that Tokio Marine is licensed to sell the product in 42 states, which he said expands the “scope and reach” of what Exzeo can do on its platform. Kevin described Tokio Marine as having a long history in flood and said partnering with an established player with credibility was a positive.
Kevin also said the company is taking steps to widen its sales funnel, including hiring a seasoned industry executive with significant software sales experience.
Management’s view of AI as an industry catalyst
Kevin and Chief Executive Officer Paresh described what they view as an approaching inflection point for AI in the insurance industry. Kevin said much of the industry still relies on human underwriters to manually review nearly every policy, and he expects that to change in an “AI-driven world” as friction is removed from the system.
He argued that the technology bar is being raised and that AI will drive a new “upgrade super cycle” that will modernize platforms, reduce human touch per policy, lower operating costs, and improve underwriting performance. Kevin positioned Exzeo as already operating in the direction he expects the industry to move, describing its platform as fully automated and scalable, with shorter implementation cycles, a consumption-based fee model, and reduced execution risk.
During Q&A, Kevin said Exzeo has been building its platform and data capabilities since 2012, including sourcing, curating, and ensuring the accuracy of data sets used for underwriting decisions. He said Exzeo believes its technology and curated data sets have contributed to client performance in recent years.
Paresh said that a few months after the IPO, the company is delivering operating margins, growing earnings, and generating positive cash flow, while also broadening product offerings, signing third-party clients, and investing in the team. He said the company’s focus is execution—adding clients, products, and premium to the platform—and reiterated his view that Exzeo was designed for the future operating model of insurance shaped by AI.
In closing remarks, Paresh also noted that a Rule 10b5-1 pre-arranged purchase plan he referenced on the prior quarter’s call will become effective next month.
About Exzeo Group (NYSE:XZO)
Exzeo provides turnkey insurance technology and operations solutions to insurance carriers and their agents based on a proprietary platform of purpose-built software and data analytics applications that are specifically designed for the property and casualty, or P&C, insurance ecosystem. Exzeo’s Insurance-as-a-Service (IaaS) platform, which we refer to as the “Exzeo Platform,” currently includes nine highly configurable software and data analytics applications that are purpose-built to serve insurance companies and other customers in the insurance value chain.
