XZO

Exzeo is a rare combination of hyper-growth and genuine profitability priced like neither. Revenue has compounded from $88.3M (FY2023) to $134M (FY2024) to $217M (FY2025) — that's +62% in the latest year and accelerating in absolute terms — while net income grew +82.6% to $82.7M. Crucially, this isn't growth bought with margin: gross profit rose +146% (margin now 60.4%) and operating income +179% (operating margin 48.8%), so the business is showing strong operating leverage as it scales. ROE of 32.6%, operating cash flow of $100M against just $2.84M of capex (~$97M free cash flow), and liabilities/equity of only 0.37x describe a high-quality, asset-light IaaS platform. The post-IPO balance sheet is a fortress: $305M cash (+460%, lifted by the November 2025 S-1 offering) against $93.6M total liabilities. For all of that, the stock trades at 17.2x trailing diluted EPS ($0.99) and 7.1x sales — a PEG well under 1. A quality compounder growing 60%+ with ~38% net margins rarely changes hands this cheaply, which is the core of the bullish case.

The reason it's cheap is written plainly in the filing, and it's a real risk, not a quibble. The MD&A flags 'our dependence on a limited number of customers for a substantial portion of our revenue' and 'our continued reliance on affiliated customers.' The glossary makes the relationship explicit: HCI Group and its insurance subsidiaries (HCPCI, TypTap/TTIC, Tailrow, CORE) pervade the business, and even Exzeo's Tampa and Ocala offices are leased from HCI subsidiaries (Century Park Holding, Silver Springs Property Investment). This is a carve-out whose explosive growth is at least partly a function of captive, related-party demand. If those affiliate relationships, pricing (governed by a Tax Allocation Agreement and MGA agreements), or HCI's own P&C fortunes shift, the revenue and margin picture could deteriorate quickly — and the low multiple is the market's discount for exactly that single-thread dependency.