I started a new position in a company I am still learning about called Ethos Technologies with the symbol LIFE. The company produces a technology platform for life insurance which is disrupting this legacy industry. It is described as a “three sided” platform for consumers, agents, and carriers. Ethos’ Agent OS greatly simplifies the life cycle for a life insurance agent and is gaining a lot of traction in the marketplace.
Most of the policy generation is automated and the company also targets the direct to consumer market looking to transform life insurance similar to how Geico and Progressive did for car insurance. The company approves policies, but other insurance companies actually do the underwriting leading Ethos to having a 98% gross margin. Headquartered in Austin, Texas the company has about 860 employees.
Ethos IPO’d in January 2026 reaching up to $19 a share, but currently trades around $10 a share with a market cap of 630M. The stock appears quite cheap with a trailing P/E of 9, and a runrate P/S of 1.4
Revenue in the latest quarter was 110.1M +65% yoy, with GAAP EBITDA of 29.2M and net income of 24.6M. The guidance for next quarter seems strong with a projected 144 - 146M +53%, with their next quarter looking to be the strongest seasonally.
Top concerns include the company not being through the lockup period yet which will be on July 28, 2026. Additionally, back in 2021 the company did a funding round with SoftBank at a 2.7B valuation. The company was doing an estimated 50M of annual revenue, meaning SoftBank was paying a top tier valuation of 50x+ on P/S valuing it like a hyper growth SaaS company. However, the company IPO’d 5 years later now at a 1.3B valuation or closer to a 3x P/S ratio. The company is currently priced like an insurance company rather than a technology provider, and this is where I see an opportunity with the stock.
So far I have looked at their first earnings call and a JP Morgan tech conference that was on the Quartr app. Next I am planning to review the S1 but I found enough compelling details on the company to want to have a position.
Here are some standouts from the earnings call and the JPMorgan conference,
- Democratizing access to life insurance and empowering agents at scale
- Activated over 54,000 new policies in the quarter, bringing total to over 500k
- Generated a Rule of 40 score of 75
- Transforming the buying, selling, and underwriting process of life insurance
- Goal is to become the largest issuer of life insurance in the world
- Vertically integrated platform that owns the full consumer journey
- Automated data-driven underwriting engine processes pharma records, medical claims, billing data, and more
- Revenue scales without proportional head count growth
- Underwriting accuracy improves with data density
- Ethos transforms what can be an 8 week purchase process into as little as 10 minutes online
- Working with 6 carriers today who take the policy risk
- “Historically, we’ve introduced 3 to 4 new products a year. And in Q4, we brought 2 new products to market with 2 new carriers”
- Launched supplementary health product with Aflac for additional coverage on cancer insurance
- Legacy industry hindered by on-prem technology, manual processes
- Three sided technology platform has strong product market fit with consumers, agents and carriers alike
- Direct channel in Q4 increased to 74.2M + 93% yoy
- Third party channel revenue of 35.9M +27% yoy
- Diversifying product portfolio to reach historically underserved segments
- Cash of 157M (debt listed as 2.4M)
- Q1 calendar 2026 guided for 144 - 146M +53% yoy
- Full year fiscal year 2026 guided for 510 - 514M +32% yoy (current quarter is Q3 fiscal 2026, one critique of management is they sometimes are not clear on calendar vs fiscal year in their statements)
- NPS score of over 70 for the past year
- 15,000 agents on the platform, “notable step up from the last disclosure”
- Drivers of agent growth on platform, combination of adding new agencies and growth of more tenured agency partners
- “Q1 guidance reflects very strong operational momentum that we’ve carried into 2026. The new policy activations in January were strong. February is pacing ahead of internal targets”
- “Before Ethos, Direct was very difficult to do” innovations up and down the stack allow accelerated underwriting, “first demonstration of scaled, profitable unit economics in the category”
- Traditionally the process in the industry took 6-8 week with exams and blood tests, management now compares to buying a plane ticket online in 10 minutes
- Agents get paid next day for a sale
- The top 20 life insurance companies are all over 100 years old
- No balance sheet risk, “non-risk bearing company”, policies issued by 3rd party carriers
- “Ethos never touches the money”
- Collects a commission for each policy sold and renewed
- Carriers are often manually checking parts by underwriting team
- 95% of applications instantly decisioned, over 90% receive some risk adjusted offer
- Being able to automate direct sales is huge competitive advantage, “don’t really have competitors”, others tried direct and then shut down
- Licensed in 49 states in US
- Have own, 1) application engine 2) underwriting engine 3) admin system 4) payments and commission infra 5) Agent OS
- Model has gotten more and more efficient as getting larger
- Give agents tech stack, very fast adoption and workflows
- 15k agents vs 10k agents last year, 15k agents still low single digits of market
- Improving productivity per agent
Overall I am finding that Ethos is on a strong revenue growth trajectory with impressive profitability and margins. Unlike most insurance companies, this is more of a platform play than a traditional insurance company that comes with balance sheet risk. The valuation looks quite attractive as the stock price has come down from the IPO debut.
Feedback is always welcome on the company, as I’m planning to do some additional research from my side as well.