NP 10-K & 10-Q changes, risk factors and insider trading

Neptune is a leading, high-growth, highly profitable, data-driven Managing General Agent ("MGA") that is revolutionizing the way homeowners and businesses protect against the growing risks of flooding. We offer a range of easy-to-purchase residential and commercial insurance products - —including primary flood insurance, excess flood insurance, and parametric earthquake insurance - —distributed through a nationwide network of agencies. Neptune does not take any balance sheet insurance risk or have claims handling responsibility relating to the policies we sell. We underwrite and administer the issuance of insurance policies on behalf of a diverse panel of insurance and reinsurance companies, whom we refer to as capacity providers, that manage both this risk and the associated claims handling. From day one, we have built our business on a foundation of advanced data science and AI, leveraging proprietary ML algorithms, which has led to superior underwriting results, outsized growth, recurring revenue, and robust margins.

•Our Underwriting Engine: Our entirely digital underwriting engine, Triton, uses advanced technology, including proprietary AI and ML models, without any human underwriters, to assess risk with speed and precision. Powered by predictive analytics and loss estimation, Triton has enabled our policies to consistently outperform the National Flood Insurance Program (“NFIP") in written loss ratio despite 21 landfall hurricanes — including 4 of the 10 largest flood events in U.S. history - —taking place since Neptune’s founding.

•Our Risk Relationships: Our risk relationships are built on performance and trust, and as of MarchJune 31,30, 2026, we had 4245 capacity providers, including 3437 reinsurance providers, backing 8 distinct insurance programs to help minimize concentration risk while delivering consistent returns. In turn, the accuracy of our risk assessment and our precision pricing have delivered hundreds of millions of dollars of underwriting profit for our capacity providers since inception, leading to high rates of capacity renewals and increases in committed capacity.capacity at improved economic terms.

We operate as an MGA, with a highly attractive, recurring, fee-based revenue model derived from two primary sources: commissions paid by capacity providers, and fees paid by policyholders. Commissions are calculated as a negotiated percentage of premium for each policy. Given our strong retention rates to date, we believe that we have a high degree of visibility into our future revenue streams. For the three and six months ended MarchJune 31,30, 2026, our eligible policy retention rate at renewal was 86.2%86.0% and 86.1%, respectively, and our premium retention rate at renewal was 92.9%.92.1% and 92.4%, respectively. The difference between policy and premium retention rates reflects increases to the rates charged to renewing policyholders.

We do not bear the balance sheet insurance risk or claims handling responsibility relating to the policies sold and, as a result, our ability to support and service the policies we provide is dependent on the capacity and appetite of our capacity providers to assume flood risk. If we are unable to maintain profitable portfolios for our capacity providers or if our relationship with them is undermined for any reason, capacity providers may be unwilling to provide insurance capacity to us, or our insurance carriers may seek to amend our agreements with them. This could happen for various reasons, including for competitive or regulatory reasons, because of an insurance carrier’s reluctance to distribute their products through our platform, because they decide to rely on their own internal flood insurance providers or products or elect not to insure or reinsure flood risk generally, or because they decide not to distribute insurance products in individual markets in certain geographies or altogether. Additionally, conditions in the broader insurance and reinsurance markets may influence the ability or willingness of our capacity providers to underwrite flood insurance risk and in turn impact the capacity we receive or the commissions and other terms we are able to negotiate with our capacity providers. For example, in 2023, significant insured losses and increasing demand for reinsurance led the property catastrophe reinsurance market to experience price increases, heightened “attachment points” where primary insurers became responsible for a greater portion of initial losses before reinsurance coverage became available to them, and stricter terms and conditions for reinsurance coverage. These changes were driven by factors such as significant insured losses and increased demand for reinsurance, leading to fewer participants in the property catastrophe reinsurance market. Although this development did not impact the underwriting capacity we were able to secure from our capacity providers in the flood insurance market, industry-wide constraints could limit our growth in the future if capacity providers elect to exit the flood insurance market, limit the capacity they provide, or become more selective in providing insurance or reinsurance coverage. See “Risk Factors - Risks Relating to our Business and Industry - An overall decline in the housing market or general economic conditions could have a material adverse effect on the financial condition and results of operations of our business” and “We may be negatively affected by the cyclicality of the markets and industry in which we operate” in our Annual Report on Form 10-K. Our results benefit from stable, long-term relationships with our capacity providers - —currently, we place our policies through a panel of highly rated insurers and reinsurers who have committed significant capital to our program. If we are not able to effectively manage our relationships with our key capacity providers, if one of our key capacity providers were to reduce its desired exposure, if reinsurance costs spike dramatically, or if we were to otherwise lose one or more of our key capacity providers or were to experience a significant reduction in such provider’s capacity, it might require us to shift business to alternative capacity providers, if any are available, or potentially accept lower commission rates to maintain coverage availability or might otherwise materially and adversely impact our business, financial condition, results of operations, growth potential, reputation in the market, and our ability to sustain our business. See “Risk Factors - Risks Relating to our Business and Industry - Our business may be harmed if one or more of our relationships with capacity providers are terminated or are reduced, if we fail to maintain good relationships with such capacity providers, if we become dependent upon a limited number of capacity providers, or if we fail to develop new capacity provider relationships” in our Annual Report on Form 10-K. We mitigate this risk by diversifying our capacity provider panel and through our ability to continually demonstratedeliver profitable results through our data-driven underwriting. In addition, we have expanded our panel of capacity providers from 2 capacity providers as of December 31, 2018, to 4245 capacity providers as of the date of this Quarterly Report on Form 10-Q.

Additionally, our ability to distribute the policies we offer is dependent on our distribution model, which relies on third-party agents and brokers. As of MarchJune 31,30, 2026, our insurance agent and broker partners were responsible for over 96% of our policies in force, supported by our in-house sales team and technology integrations. This distribution model exposes us to meaningful third-party risks. Any failure by our agents and brokers to consistently promote our products or the loss of any key agent or broker relationships could adversely affect our business. See “Risk Factors - Risks Relating to our Business and Industry - Our distribution model depends on third-party agents and brokers, and any failure by those agents and brokers to consistently promote our products or the loss of any key agent or broker relationships could adversely affect our business” in our Annual Report on Form 10-K. We mitigate this risk by diversifying the third-party agents and brokers that we use in our distribution model.

Our growth and success are dependent on property owners and tenants continuing to purchase flood insurance from us, in turn increasing the revenue we generate from commissions and policy fees. High-profile flood events, including Hurricane Ida (2021), Hurricane Ian (2022), Hurricane Helene (2024), and Hurricane Milton (2024), tend to raise consumer awareness and demand for flood insurance, potentially increasing our policy sales and, as a result, our commissions and fees in subsequent periods. Increases in flood risk, or the perception of increases in flood risk, in areas believed to have lower flood risk today (e.g., non-coastal regions that have not historically been considered to be flood-prone) could also increase demand for flood insurance in those areas. Alternatively, significant increases in insured losses due to increasing frequency and intensity of storms could result in additional governmental regulation aimed at mitigating the impact of natural disasters, including stricter building codes or incentives for risk mitigation measures, that could change the dynamics of the housing markets in which we provide flood insuranceinsurance, orcould lead to incentives for homeowners to seek private flood insurance coverage, or could cause our capacity providers to exit from, or reduce their exposure to, significant flood events and other natural disasters. In contrast, slower than expected storm seasons can limit demand for new flood insurance policies, potentially decreasing our policy sales and, as a result, our commissions and fees and revenues in subsequent periods. However, slower than expected storm seasons are also likely to result in lower insured losses experienced by our capacity providers, which would allow us to deliver further improved written loss ratios for our capacity providers. See also “Risk Factors - Risks Relating to our Business and Industry - Our business may be harmed if one or more of our relationships with capacity providers are terminated or are reduced, if we fail to maintain good relationships with such capacity providers, if we become dependent upon a limited number of capacity providers, or if we fail to develop new capacity provider relationships” in our Annual Report on Form 10-K.

Our success is due in large part to our data science-driven approach to our underwriting technology platform. Our results of operations are favorably impacted by automation in policy quoting, binding, and administration, which allows us to handle a growing book of business with relatively low incremental operating expense. Continued investment in our platform, including the integration of our recently acquired data science capabilities, is important to maintain the efficiency edge we see as a key competitive advantage. However, these investments also lead to higher amortization expense over time as we capitalize software development costs. We expect to continue balancing operating expense growth with revenue growth, and periods of heavy investment in technology or hiring can increase our cost base.

We operate in a highly regulated industry, subject to regulatory oversight in the 50 states and Washington, D.C. where we are qualified to do business, and regulatory factors at the federal and state level may impact our ability to sell insurance policies. This extensive regulatory framework governs consumer protections and data security, exposing our business to significant litigation and compliance risks. See “Risk Factors - Risks Relating to Regulatory and Legal Matters - The insurance business is extensively regulated, and changes in regulation may reduce our profitability and limit our growth” in our Annual Report on Form 10-K. In addition, as an MGA, we are subject to licensing requirements and must maintain insurance licenses in each of the jurisdictions in which we operate. These licenses are subject to periodic renewal and compliance with jurisdiction-specific regulations, including recordkeeping, tax reporting, and Excess & Surplus ("E&S") lines filing requirements. Any failure to meet these obligations could result in fines, penalties, or suspension of our licenses, which would impair our ability to operate in affected jurisdictions. We must also verify that our third-party agents and brokers maintain required licenses and comply with the conditions of our delegated binding authorities. Failure to monitor and verify the licensing status of agents and brokers could result in the termination of carrier binding authorities and/or increased regulatory risk. See “Risk Factors - Risks Relating to Regulatory and Legal Matters - Compliance with insurance licensing requirements for MGAs and E&S lines agencies and individual producers is critical to our operations, and any failure to maintain required licenses could disrupt our business” and “Risk Factors - Risks Relating to Regulatory and Legal Matters - Regulatory and licensing requirement changes could disrupt operations or increase compliance costs and restrict our ability to conduct our business” in our Annual Report on Form 10-K.

Regulatory changes at the federal and state levels, including those affecting floodplain mapping, risk assessment standards, and lender requirements, could also impact private insurers like Neptune. For example, changes to FEMA’s flood zone designations or its risk rating methodologies could affect how we evaluate and price flood risk, necessitating costly updates to our proprietary technology. Prolonged uncertainty about potential regulatory changes could also discourage banks or other lenders from accepting private flood insurance policies, further limiting market growth. However, regulatory changes can also have a positive impact on our business. For example, state insurance regulations related to the placement of E&S policies can influence our ability to sell private flood products within a particular state; in 2021, Florida removed the requirement for insurance agents to complete a diligent search of the admitted market prior to placing personal lines flood insurance policies with surplus lines insurers. This change simplified the sales process for agents distributing our products by no longer requiring them to seek admitted insurance options before completing a Neptune sale. Although recent updates to state insurance regulations have generally supported the growth of the private flood insurance market, there can be no assurance that future federal or state regulatory changes would be similarly favorable. Any unfavorable changes could materially restrict our ability to place private flood insurance policies and could have a material adverse effect on our business, results of operations, and/or financial condition. We closely monitor policymaking efforts that may expand or inhibit the further development of the private flood and E&S markets.

Each policyholder’s insurance contract is for a period of one year and can only be canceled by the policyholder prior to expiration for a limited set of reasons, most often in conjunction with the sale of the underlying insured property. Prior to the expiration of the insurance contract, the risk is re-underwritten using the then-current version of Triton. If the risk still qualifies for an insurance contract, we present the policyholder with a renewal offer. For the three and six months ended MarchJune 31,30, 2026, 86%90% of the eligible renewal offers presented to policyholders were accepted, and the policyholder began a new one-year insurance contract. Upon the effective date of the renewal policy, commission is recognized. As Neptune receives its commission for the full policy year up front, we estimate a cancellation reserve for commissions for those policies that are expected to cancel during the term.

Our amortization expense primarily relates to capitalized software development costs for our proprietary technology platform. We capitalize the direct labor and software costs for developing new features or capabilities of our platform and amortize those costs, typically over a three-year useful life. Amortization expense has increased in recent years as we have continued to invest in our software, with significant additions in 2025, and during the three and six months ended MarchJune 31,30, 2026. These expenses will likely continue to grow modestly as we deploy new technology enhancements.

Transaction costs include professional fees and other expenses related to the IPO, which was completed in October 2025.2025 and the secondary offering for the Company's Class A common stock which occurred in May 2026.

Comparison of the Three And Six Months Ended MarchJune 31,30, 2026 and 2025

The following table provides an overview of our consolidated results of operations for the three and six months ended MarchJune 31,30, 2026 and 2025:

Revenues increased to $37.8$55.9 million for the three months ended MarchJune 31,30, 2026, from $29.4$42.1 million for the three months ended MarchJune 31,30, 2025, representing an increase of $8.4$13.8 million, or 28.8%.32.8%. Revenues increased to $93.7 million for the six months ended June 30, 2026, from $71.4 million for the six months ended June 30, 2025, representing an increase of $22.2 million, or 31.2%. This increase was in each case primarily driven by higher policy counts and premium volume, supported by policy renewals and new policy sales.

Commission income was $29.0$42.5 million for the three months ended MarchJune 31,30, 2026, compared to $22.7$32.1 million for the three months ended MarchJune 31,30, 2025, an increase of 27.9%.32.7%. Commission income was $71.6 million for the six months ended June 30, 2026, compared to $54.8 million for the six months ended June 30, 2025, an increase of 30.7%. The increase was in each case primarily due to growth in written premium.premium and an increase in average ceding commission.

Fee income was $8.8$13.3 million for the three months ended MarchJune 31,30, 2026, compared to $6.6$10.0 million for the same period in 2025, an increase of 31.8%.33.4%. Fee income was $22.1 million for the six months ended June 30, 2026, compared to $16.7 million for the six months ended June 30, 2025, an increase of 32.7%. Although the average policy fee remained relatively stable, increased volumes of new business and higher renewal acceptance rates drove overall growth in fee income.income in both periods.

Total operating expenses were $24.4$29.3 million for the three months ended MarchJune 31,30, 2026, an increase of 77.4%41.1% compared to $13.7$20.8 million for the three months ended MarchJune 31,30, 2025. Total operating expenses were $53.7 million for the six months ended June 30, 2026, an increase of 55.6% compared to $34.5 million for the six months ended June 30, 2025. The primary drivers of these increases were higher share-based compensation costs associated with beingRSUs agranted publicin company,2025, higher agent commission costs, which are directly correlated with growth in our policy portfolioportfolio, and an increase in general and administrative costs.

Agent commission expenses were $11.4$16.5 million for the three months ended MarchJune 31,30, 2026, compared to $8.9$12.7 million for the three months ended MarchJune 31,30, 2025, representing a 27.0%29.7% increase. Agent commission expenses were $27.9 million for the six months ended June 30, 2026, compared to $21.7 million for the six months ended June 30, 2025, representing a 28.6% increase. The increase in commission expenses for the three and six months ended MarchJune 31,30, 2026 was primarily volume-driven, resulting from higher policy sales. Commission ratesexpense remainedas consistenta percentage of revenue declined year-over-year, reflecting normalized agent incentive activities three and thesix increasemonths alignsended withJune our30, overall revenue growth.2026.

Employee compensation and benefits expenses were $1.5 million for the three months ended MarchJune 31,30, 2026, compared to $1.3$1.4 million for the three months ended MarchJune 31,30, 2025, an increase of 16.7%.3.4%. Employee compensation and benefits expenses were $3.0 million for the six months ended June 30, 2026, compared to $2.7 million for the six months ended June 30, 2025, an increase of 8.5%. The increase was primarily related to an increase in salary expense associated with higher employee headcount for the three and six months ended MarchJune 31,30, 2026.

General and administrative expenses were $3.6$3.5 million for the three months ended MarchJune 31,30, 2026, up 81.2%30.2% from $2.0$2.7 million in the same period in 2025. General and administrative expenses were $6.9 million for the six months ended June 30, 2026, up 48.1% from $4.6 million for the same period in 2025. This increase was primarily driven by higher accountingadvertising feesfees, sales-linked policy administration costs, and insuranceLLM costsmaintenance associated with being a public company.costs.

Amortization expense for the three months ended MarchJune 31,30, 2026, was $1.0 million, compared to $0.9 million for the same period in 2025, representing an 11.5% increase. Amortization expense for the six months ended June 30, 2026, was $2.0 million, compared to $1.8 million for the same period in 2025, representing a 14.9%13.2% increase. The increaseincreases iswere attributable to higher amortization of capitalized software development costs, reflecting continued investment in our proprietary technology platform.

IPO Transaction costs recorded in the three and six months ended MarchJune 31,30, 2026, were $(0.1) million and $0.1 million, respectively, representing the Company's portion of the fees associated with the secondary Class A common stock offering that closed in May 2026. IPO Transaction costs recorded in the three and six months ended June 30, 2025, were $0.5$2.9 million and $3.5 million and reflect professional fees and other expenses related to our IPO, which was completed on October 2, 2025. No such IPO-related activities or costs were incurred during the comparable period in 2026.

Interest income for the three months ended MarchJune 31,30, 2026, was $0.2$0.3 million, compared to $0.2 million for the same period in 2025, reflecting a 2.5%6.1% decrease.increase. Interest expense was $3.5$3.6 million for the three months ended MarchJune 31,30, 2026, updown from $2.4$5.9 million in the prior year, reflecting a 47.0%38.2% increase.decrease. The increasedecrease in interest expense was primarily due to a higherlower average debt balance under our credit facilities and a lower average interest rate during the three months ended MarchJune 31,30, 2026, partially offset by a lower average interest rate.2026.

Income tax expense was $2.7$7.4 million for the three months ended MarchJune 31,30, 2026, compared to $3.5$4.0 million for the same period in 2025, representing aan decreaseincrease of 21.1%.82.5%. The decreaseincrease was primarily driven by lowerhigher taxable income in the three months ended MarchJune 31,30, 2026, compared to the prior year period. In addition, the effective tax rate for the three months ended MarchJune 31,30, 2026, was 27.1%,31.9%, compared to 25.8% in the same period in 2025. The change in the effective tax rate reflects the impact of changes in the U.S. federal statutory rate primarily due to limitations on deductions for officer compensation and state apportionmentincome factors.taxes, partially offset by the excess benefits of stock compensation.

The table below compares certain of our KPIs as of and for the three and six months ended MarchJune 31,30, 2026 and 2025, respectively, and our revenue retention rate for the twelve months ended MarchJune 31,30, 2026 and 2025, respectively:

To supplement our condensed consolidated financial statements, which are prepared in conformity with GAAP, we use certain financial measures, including Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBITDA per share (basic and diluted), Adjusted net incomeincome, and Adjusted earnings (basic and diluted) per share, which are not required by, or prepared in accordance with, GAAP. We refer to these measures as “non-GAAP” financial measures. We use these non-GAAP financial measures when planning, monitoring, and evaluating our performance. We consider these non-GAAP financial measures to be useful metrics for management and investors to facilitate operating performance comparisons from period to period and to assess our financial and operating performance. These non-GAAP financial measures should not be considered as substitutes for, or superior to, the financial statements and financial information prepared in accordance with GAAP. In addition, the non-GAAP financial information presented below may be determined or calculated differently by other companies and may not be directly comparable to that of other companies. See below for a description of these non-GAAP financial measures, as well as for more information about the limitations of these non-GAAP financial measures and for reconciliations to their most directly comparable measure reported under GAAP.

In conjunction with Adjusted EBITDA, we also calculate Adjusted EBITDA margin, or Adjusted EBITDA as a percentage of total revenue. We believe that Adjusted EBITDA margin is a useful measurement of operating profitability for the same reasons we find Adjusted EBITDA useful and also because it provides a period-to-period comparison of our operating performance. Below is a reconciliation of Adjusted EBITDA to net income (the most directly comparable GAAP measure), as well as our Adjusted EBITDA margin to net income margin (the most directly comparable GAAP measure), for the three and six months ended MarchJune 31,30, 2026 and 2025, and for the twelve months ended MarchJune 31,30, 2026 and 2025:

Adjusted EBITDA was $21.6$34.5 million for the three months ended MarchJune 31,30, 2026, an increase of $4.5$9.2 million, or 26.0%,36.5%, from $17.1$25.2 million for the three months ended MarchJune 31,30, 2025. Our Adjusted EBITDA margin for the three months ended MarchJune 31,30, 2026, was 57.1%,61.7%, aan decreaseincrease from 58.3%60.0% for the three months ended MarchJune 31,30, 2025. This decreaseincrease was primarily due to thehigher incurrencerevenue ofleading certainto publicincreased company-relatedoperating expenses, including audit costs, which were concentrated in the first quarter.leverage.

Adjusted EBITDA was $99.5$56.0 million for the twelvesix months ended MarchJune 31,30, 2026, an increase of $22.5$13.7 million, or 29.3%,32.2%, from $76.9$42.4 million for the twelvesix months ended MarchJune 31,30, 2025. Our Adjusted EBITDA margin for the twelvesix months ended MarchJune 31,30, 2026, was 59.2%,59.8%, aan decreaseincrease from 60.5%59.3% for the twelvesix months ended MarchJune 31,30, 2025. This increase was primarily due to higher revenue leading to increased operating leverage.

While our revenue and Adjusted EBITDA grew 32.2%33.0% and 29.3%,31.8%, respectively, for the twelve months ended MarchJune 31,30, 2026, from the twelve months ended MarchJune 31,30, 2025, our headcount increased by only around 12.6%10.8% over the same period. The accelerated growth in revenue and Adjusted EBITDA relative to our growth in employees illustrates the scalability of our existing platform and emphasis on efficient growth.

The table below presents a reconciliation of Adjusted EBITDA to net income (the most directly comparable GAAP measure), as well as our Adjusted EBITDA per share (basic and diluted) to basic earnings per share and diluted earnings per share of common stock, respectively (the most directly comparable GAAP measures), for the three and six months ended MarchJune 31,30, 2026 and 2025.

(2)Pursuant to the completion of the Company's IPO on October 2, 2025, the redeemable, convertible preferred stock was no longer outstanding for the three and six months ended MarchJune 31,30, 2026. For comparability purposes, this calculation reflects net income that would be distributable to holders of common stock, assuming all redeemable preferred shares had been converted and no longer impacted the numerator. For the three months ended MarchJune 31,30, 2025, this includes $3.4$3.5 million of accretion adjustments and $54.2 million of cash dividends paid on redeemable preferred stock, totaling $57.6 million. For the six months ended June 30, 2025, this includes $54.2 million of cash dividends paid on redeemable preferred stock, $6.8 million of accretion adjustments and $2.0 million of allocations to participating preferred stock, totaling $5.4$63.0 million. These adjustments were divided by 93,350,000 shares for the three and six months ended MarchJune 31,30, 2025 to calculate the Adjusted EBITDA per share (basic and diluted) amounts.

We define Adjusted diluted earnings per share as(basic and diluted) is Adjusted net income divided by the basic and diluted weighted average shares outstanding,of common stock outstanding for the period, respectively, in each case assuming the full conversion of all outstanding shares of Redeemable Convertible Preferred Stock into an equivalent number of shares of common stock, which occurred upon the consummation of our IPO in 2025. Similarly, we define Adjusted basic earnings per share as Adjusted net income divided by basic weighted average shares outstanding, also assuming the conversion of all outstanding Redeemable Convertible Preferred Stock into an equivalent number of shares of common stock, which occurred upon the consummation of our IPO in 2025. We believe that Adjusted earnings per share (basic and diluted) is a useful measurement for the same reasons we find Adjusted net income useful and also because, byBy implementing the conversion of the Redeemableredeemable Convertibleconvertible Preferredpreferred Stock, westock,we believe Adjusted earnings (basic and diluted) per share provides a clearer representation of operating performance. The most directly comparable GAAP measures are diluted earnings per share and basic earnings per share, respectively.

The table below presents a reconciliation of Adjusted net income to net income (the most directly comparable GAAP measure), as well as our Adjusted earnings (basic and diluted) per share to basic earnings and diluted earnings per share of common stock, respectively (the most directly comparable GAAP measure), for the three and six months ended MarchJune 31,30, 2026 and 2025.

(1)This represents the tax impact using effective tax rates of 26.3%27.3% and 25.8% for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and effective tax rates of 27.0% and 25.8% for the six months ended June 30, 2026 and 2025, respectively. These tax rates exclude items that are non-deductible/non-taxable or subject to a specific tax treatment.

(3)Pursuant to the completion of the Company's IPO on October 2, 2025, the redeemable, convertible preferred stock was no longer outstanding for the three and six months ended MarchJune 31,30, 2026. For comparability purposes, this calculation reflects net income that would be distributable to holders of common stock, assuming all redeemable preferred shares had been converted and no longer impacted the numerator. For the three months ended MarchJune 31,30, 2025, this includes $3.4$3.5 million of accretion adjustments and $54.2 million of cash dividends paid on redeemable preferred stock, totaling $57.6 million. For the six months ended June 30, 2025, this includes $6.8 million of accretion adjustments, $54.2 million of cash dividends paid on redeemable preferred stock and $2.0 million of allocations to participating preferred stock, totaling $5.4$63.0 million. These adjustments were divided by 93,350,000 shares for the three and six months ended MarchJune 31,30, 2025,2025 to calculate the Adjusted earnings (basic and diluted) per share amounts.

As of MarchJune 31,30, 2026 and December 31, 2025, we had $60.4$77.0 million and $40.5 million of cash and cash equivalents and fiduciary cash on the balance sheet, respectively. This consisted of $10.5$17.6 million and $8.0 million of cash and cash equivalents, respectively, and $49.9$59.5 million and $32.5 million of fiduciary cash, respectively. In our capacity as an insurance agent, we typically collect premiums from policyholders and, after deducting the authorized commissions, remit the net premiums to the appropriate insurance company or companies. Accordingly, premiums receivable from policyholders are reported as fiduciary receivables and premiums payable to insurance companies are reported as insurance company payables. Unremitted net insurance premiums are held in a fiduciary capacity until we distribute them. Net insurance premiums payable to insurance companies, together with premium deposits received from policyholders, are held as fiduciary cash on the balance sheet. Cash and cash equivalents held in excess of the amounts required to meet our fiduciary obligations are recognized as cash and cash equivalents. We had operating cash flows of $16.7$43.4 million and $14.3$23.0 million for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. We have historically useduse our excess cash providedto deleverage, by operationspaying down outstanding principal on our Amended 2025 Revolver, and to pre-payreturn portionscapital ofto theshareholders, principalby amount ofrepurchasing our then-outstandingClass loans,A common stock, while retaining sufficient liquidity for working capital needs.

As of MarchJune 31,30, 2026 and December 31, 2025, the Company was allowed to borrow up to $33$20.0 million and $20$20.0 million, respectively, under our $260$260.0 million revolving credit facility effected pursuant to our 2025 Amended and Restated Credit Agreement. The undrawn portion of our revolving credit facility provides flexibility for short-term funding needs or working capital requirements.

Comparison of the ThreeSix Months Ended MarchJune 31,30, 2026 and 2025

For the threesix months ended MarchJune 31,30, 2026, net cash provided by operating activities was $16.7$43.4 million, primarily consisting of our net income of $7.3$23.1 million, adjusted for amortization of intangible assets of $1.0$2.0 million, share-based compensation of $6.9$13.8 million, and an increase in operating liabilities of $0.8$3.3 million.million, These amounts were partially offset byand a $0.6$1.3 million increasedecrease in operating assets. Accounts payable and accruedcommissions expensespayable grew as the Company’s operations expanded, contributing to cash flow.

For the threesix months ended MarchJune 31,30, 2025, net cash provided by operating activities was $14.3$23.0 million, primarily consisting of our net income of $9.9$21.6 million, adjusted for amortization of intangible assets of $0.9$1.8 million, amortization of deferred financing costs of $0.1$0.2 million, share-based compensation of $0.1$0.2 million, and an increase in operating liabilities of $3.3$0.7 million. These amounts were partially offset by a $1.5 million increase in operating assets.

For the threesix months ended MarchJune 31,30, 2026, net cash used in investing activities was $1.1$2.2 million, compared to $0.9$1.9 million for the threesix months ended MarchJune 31,30, 2025. For both periods, the cash used in investing activities all related to capital expenditures for internally developed software. The increase in year-over-year net cash used in investing activities for the threesix months ended MarchJune 31,30, 2026, was primarily driven by the increase in the capitalization of software development cost, reflecting additions to headcount in the technology and data science teams. We expect to continue investing in software development at a similar or slightly greater pace in the future, which is a use of cash that we believe yields high returns in terms of functionality and accretion to future growth.

For the threesix months ended MarchJune 31,30, 2026, net cash providedused byin financing activities was $4.3$4.7 million, which was primarily due to ana $18.1$31.9 million repurchase of our Class A common stock, $24.0 million of repayments of our revolving credit facility, and a $1.4 million change in fiduciary liabilitiesreceivables, partially offset by a $28.3 million change in fiduciary liabilities, $24.0 million of proceeds from drawing on our revolving credit facility and $1.0$1.8 million in proceeds from the exercise of stock options, partially offset by $13.0 million of repayments of our revolving credit facility and a $0.7 million change in fiduciary receivables.options.

For the threesix months ended MarchJune 31,30, 2025, net cash provided by financing activities was $11.2$9.3 million, which was primarily due to a $16.2$26.6 million change in fiduciary liabilities, $301.0 million in proceeds from long-term debt, partially offset by $4.0$135.0 million of repayments of our long-term debtdebt, $175.0 million in dividends paid, and a $1.0$0.8 million change in fiduciary receivables.

As of MarchJune 31,30, 2026, we did not have, and we do not currently have, any off-balance sheet financing arrangements or any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities, that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

There have been no material changes as of MarchJune 31,30, 2026, to our contractual obligations from those described in our Annual Report on Form 10-K.

Our critical accounting policies are described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” in our Annual Report on Form 10-K and the notes to the unaudited condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q. During the three and six months ended MarchJune 31,30, 2026, there were no material changes to our critical accounting policies from those discussed in our Annual Report on Form 10-K.