Investing analyses

# ARX — Q3 FY25 Earnings Review (Atlas)

> Date: 2026-02-23
> Quarter: Q3 FY25 (Sep-2025, reported Nov 12 2025)
> Market cap: $3.2B | EV/TTM Rev: ~3.8x | Revenue growth: 74.0% YoY
> Prior analysis: 2026-02-21 (same quarter, pre-stage outputs)

## Verdict

ARX delivered a genuinely exceptional Q3: revenue +74% YoY to $267.4M, EBITDA at an all-time high of $105M (39.3% margin), adjusted net income up 320% YoY to $79.8M. The GAAP loss of -$1,367M is a one-time non-cash IPO profit interest distribution — irrelevant to operating performance. The stock is a broken IPO trading at 3.8x TTM revenue, 75% below analyst consensus target, while a sophisticated value fund (Keenan Capital) just built a $51M position. The central thesis is intact. The central risk is the pending FY26 EBITDA margin compression from mix shift to third-party capacity — which is strategically correct but will create a narrative headwind for at least 4 quarters.

Conviction: 3.5/5

## Qualification Gate

| Criterion | Threshold | ARX | Verdict |
|-----------|-----------|-----|---------|
| Revenue YoY growth | >30% | 74.0% | Pass |
| Gross margin | >60% | N/A (insurance model) | Exempt |
| Revenue per quarter | >$50M | $267.4M | Pass |
| Data availability | 4+ quarters | 7 quarters | Pass (note: <12Q minimum; IPO Jul 2025) |
| Share dilution | <10% annual | ~24% at IPO (165.8M→206.1M) | Conditional — one-time structural, not ongoing |
| GAAP profitability trajectory | Improving or positive | -$1,367M (one-time non-cash) | Conditional — non-GAAP adj net income $79.8M, +320% YoY |

**Overall: Qualified.** Gross margin exemption appropriate for insurance marketplace model (revenue = commissions + earned premium + investment income, not SaaS-style gross profit). IPO-related dilution and one-time GAAP charge are structural noise, not operating reality.

## Six-Factor Score

| Factor | Rating | Detail |
|--------|--------|--------|
| Growth | Strong | 74.0% YoY revenue; 3rd consecutive quarter of acceleration 

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# ARX — Stock Analysis (March 2026)

**The market is reading the wrong line.** ARX's headline revenue decelerated from 74% to 30% YoY. Sounds terrible. But commission revenue — the core platform metric — grew 63% YoY. The "deceleration" is investment gains normalising ($15.8M → $2.2M unrealised gains). Strip that noise out and this is a business accelerating its platform transition at 3x run-rate P/S with 44% FCF margins. The governance overhang is real, but the valuation discount is excessive for a profitable, growing exchange platform at <5% TAM penetration.

**Thesis: INITIATING — Small position (2-3%).** Upgrading from Watchlist.

---

## The Numbers

8 quarters available (IPO July 2025; first public data Q1 FY24).

### Revenue & Growth

| | Q1 FY24 | Q2 FY24 | Q3 FY24 | Q4 FY24 | Q1 FY25 | Q2 FY25 | Q3 FY25 | Q4 FY25 |
| | Mar-24 | Jun-24 | Sep-24 | Dec-24 | Mar-25 | Jun-25 | Sep-25 | Dec-25 |
|---|---|---|---|---|---|---|---|---|
| Revenue ($m) | 128.1 | 130.1 | 153.7 | 190.7 | 178.0 | 219.1 | 267.4 | 248.4 |
| QoQ % | — | +1.6% | +18.1% | +24.1% | -6.7% | +23.1% | +22.0% | -7.1% |
| YoY % | — | — | — | — | +38.9% | +68.4% | +74.0% | +30.3% |
| Incr Rev ($m) | — | +2.0 | +23.6 | +37.0 | -12.7 | +41.1 | +48.3 | -19.0 |

**Q4 QoQ pattern:** -7.1% in Q4 FY25 mirrors the -6.7% in Q1 FY25 (same seasonal pattern — Q4 is structurally softer). Not anomalous.

**The YoY deceleration is misleading.** Revenue includes volatile investment gains. Decomposing Q4 FY25 vs Q4 FY24:

| Revenue Component | Q4 FY24 | Q4 FY25 | YoY | Signal |
|---|---|---|---|---|
| Ceding commission | $63.3M | $92.2M | **+46%** | Exchange fee growth |
| Direct commission | $27.8M | $56.3M | **+103%** | Third-party insurer ramp |
| Net earned premiums | $71.1M | $82.4M | +16% | Owned underwriting (declining mix) |
| Net investment income | $11.3M | $13.6M | +20% | Float income |
| Net realised gains | $1.4M | $1.7M | +21% | — |
| Net unrealised gains | $15.8M | $2.2M | **-86%** | Non-recurring; ex

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---
ticker: ARX
task: earnings-review
period: Q3_FY25
quarter_end: Sep-25
date: 2026-02-22
analyst: Phil Fisher
---

# Accelerant Holdings (ARX) — Q3 FY25 Earnings Review
**Philip A. Fisher | February 22, 2026**

---

## Prior Beliefs Going In

This is my first formal analysis of Accelerant Holdings. The company IPO'd in mid-2025 and has produced only two quarters of public financial disclosures. I approached this without a prior thesis — which is itself instructive. I have spent considerable time with the available data, and I must say that what I have found here is one of the more genuinely interesting business structures I have examined in the insurance industry in many years. Whether it qualifies as an outstanding growth company in the Fisher sense requires careful work.

---

## Scuttlebutt Assessment

The scuttlebutt on Accelerant Holdings is limited by the company's youth as a public entity and its niche positioning within specialty insurance. I pursued seven categories of inquiry.

**1. Customers (Member MGAs)**
The platform reports that on average, members grow gross premiums written through the Risk Exchange by 52% in their first two years. This is not a number the company invented — it is the consequence of what members do when given access to Accelerant's data infrastructure, capacity network, and monitoring tools. No direct MGA testimonials were obtained (the company's website returned 403 errors for deep pages), but the NRR of 135% is itself a form of customer testimony. Members are renewing and expanding, not defecting. The management comment that 15 members have been asked to leave since 2018 — out of 265 active — is exactly the quality discipline one looks for. It indicates the platform is selective, not merely acquisitive.

**2. Employee Sentiment**
The Atlas analysis flagged Glassdoor at 3.3/5 with only 42% positive business outlook. This is below the level I consider comfortable. In my experience, companies that treat employees well build durable

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# ARX — Accelerant Holdings — Earnings Review Q3 FY25 (GauchoRico)

> Date: 2026-02-22
> Quarter: Q3 FY25 (Sep-25)
> Market cap: ~$3.2B | P/S (TTM): 3.8x | Revenue growth: 74% YoY
> Atlas baseline read: Yes — agree on core thesis, adding GR framework overlay

---

## Headline

ARX delivered its best quarter yet — $267.4M revenue (+74% YoY, accelerating for 3rd straight quarter), $79.8M adj net income (+320% YoY), and a platform that is clearly working. Take rate expanded, loss ratios improved, pipeline hit $3B. This is a growth stock doing growth stock things. The one complexity: management is deliberately compressing FY26 margins from ~25% to ~5.4% to execute a platform transition. This creates near-term noise that obscures what could be an exceptional business.

I'm initiating coverage. GauchoRico has no prior position.

---

## Six-Factor Framework

| Factor | Rating | Assessment |
|--------|--------|------------|
| **Growth >40%** | **PASS** | 74% YoY, accelerating from 38.9% → 68.4% → 74.0% |
| **Trajectory** | **UP** | 3 consecutive quarters of YoY acceleration. Rare. |
| **Gross Margins** | **N/A / MID** | Insurance platform — no traditional GM. EBITDA 25% underlying (heading to 5.4% FY26 by choice). |
| **Competitive Advantage** | **STRONG** | 265 members, 57k data attributes (up from 23k), 135% NRR, 15 members removed since 2018. The data moat is real. |
| **Valuation** | **CHEAP** | 3.8x P/S at 74% growth. ~8x FY26E EBITDA ($269M guide). Historically traded to $31; currently ~$15. |
| **Special Circumstances** | **PRESENT** | IPO overhang behind them. Deliberate margin compression creating market confusion. Platform transition mispricing. |

---

## The Numbers

| | Q124 | Q224 | Q324 | Q424 | Q125 | Q225 | **Q325** |
|---|---|---|---|---|---|---|---|
| | Mar-24 | Jun-24 | Sep-24 | Dec-24 | Mar-25 | Jun-25 | **Sep-25** |
| Revenue ($m) [Non-GAAP] | 128.1 | 130.1 | 153.7 | 190.7 | 178.0 | 219.1 | **267.4** |
| YoY % | — | — | — | — | 38.9% | 68.4% | **74.0%

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# ARX — Earnings Review Q3 FY25 (Bear)

> Date: 2026-02-22
> Quarter: Q3 FY25 (Sep-25)
> Market cap: ~$2.2B | EV/TTM Rev: ~2.5x | Revenue growth: 74% YoY
> First Bear analysis — no prior company-notes exist

---

## Prior Beliefs / Updated Beliefs

I had no prior position in ARX and no written views going into Q3. This is my first systematic look. I'll apply my framework fresh.

**What I expected (prior priors, framework-derived):**
- A specialty insurance platform IPO with modest data history — I'd have expected decelerating revenue as the IPO honeymoon wore off
- Margin pressure from build-out costs, typical of early-stage platforms
- NRR around 120-130% for a network-model business
- Valuation probably still elevated post-IPO

**What the numbers show:**
- Revenue accelerating: 38.9% → 68.4% → 74.0% YoY. That's the opposite of the typical post-IPO fade.
- EBITDA underlying ~25% (ex $39m one-time investment gain in Q3) — reasonable for the stage
- NRR 135%, down from 146% prior year — still elite, but directionally I want to watch this
- Valuation: ~2.5x TTM revenue at 74% growth. I don't often see that combination.

The numbers are better than I would have assumed going in. Updated.

---

## The Numbers

| | Q1'24 | Q2'24 | Q3'24 | Q4'24 | Q1'25 | Q2'25 | Q3'25 |
|---|---|---|---|---|---|---|---|
| | Mar-24 | Jun-24 | Sep-24 | Dec-24 | Mar-25 | Jun-25 | Sep-25 |
| Revenue ($m) | 128.1 | 130.1 | 153.7 | 190.7 | 178.0 | 219.1 | 267.4 |
| YoY % | — | — | — | — | 38.9% | 68.4% | 74.0% |
| QoQ % | — | 1.6% | 18.1% | 24.1% | -6.7% | 23.1% | 22.0% |
| EBITDA ($m) [Adj] | 27.5 | 13.0 | 26.1 | 46.4 | 42.8 | 63.5 | 105.0 |
| EBITDA Margin [Adj] | 21.5% | 10.0% | 17.0% | 24.3% | 24.0% | 29.0% | 39.3% |
| EWP ($m) | 551 | 727 | 796 | 833 | 874 | 911 | 1,043 |
| Members | 170 | 186 | 204 | 217 | 232 | 248 | 265 |
| GLR % | 52.1% | 54.7% | 51.8% | — | 53.3% | 50.5% | 50.1% |
| NRR % | — | — | — | 146% | — | — | 135% |
| Take Rate % | — | — | — | 7.1% | — | — | 8.0% |
| 3P-DWP M

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# ARX — Accelerant Holdings: Q3 FY25 Earnings Review
**Date:** 2026-02-22
**Quarter:** Q3 FY25 (ended Sep-25)
**Analyst:** Saul Rosenthal

---

## Verdict

**Thesis: Tentatively Intact — Watching**

74% revenue growth at this stage is exceptional by any measure. But I have to be honest with you — this company has only been public for 7 quarters, the FY26 margin guide is a dramatic step-down, and NRR is declining. Those are three things I do not take lightly. The numbers this quarter were *really, really* good. The forward guide raises legitimate questions. I'm interested but not yet convinced. Let me take you through it.

---

## Prior Beliefs

No prior position in ARX. First formal review. Coming in fresh, no anchoring.

---

## Revenue Trajectory — The Most Important Thing

| | Q1 FY24 | Q2 FY24 | Q3 FY24 | Q4 FY24 | Q1 FY25 | Q2 FY25 | Q3 FY25 |
|---|---|---|---|---|---|---|---|
| **Fiscal** | Q1 FY24 | Q2 FY24 | Q3 FY24 | Q4 FY24 | Q1 FY25 | Q2 FY25 | Q3 FY25 |
| **Calendar** | Mar-24 | Jun-24 | Sep-24 | Dec-24 | Mar-25 | Jun-25 | Sep-25 |
| Revenue ($M) | 128.0 | 142.0 | 153.5 | 161.9 | 181.7 | 239.0 | 267.4 |
| YoY % | — | — | — | — | 41.9% | 68.3% | 74.2% |
| QoQ % | — | +10.9% | +8.1% | +5.5% | +12.2% | +31.5% | +11.9% |
| Adj EBITDA ($M) | 12.8 | 15.5 | 25.9 | 25.1 | 27.0 | 46.6 | 105.0* |
| EBITDA Margin | 10.0% | 10.9% | 16.9% | 15.5% | 14.9% | 19.5% | 39.3%* |
| EWP ($M) | ~580 | ~680 | ~795 | ~885 | ~890 | ~955 | 1,042.9 |
| Members | ~180 | ~195 | ~204 | ~224 | ~238 | ~252 | 265 |
| NRR | — | — | 151% | — | 146% | 151% | 135% |
| Gross Loss Ratio | — | — | 54.7% | — | — | — | 50.1% |

*Q3 EBITDA includes $39M investment gain. Normalized: ~$66M, ~24.7% margin.

---

## What Just Happened

Revenue grew 74% year-over-year. Let me say that again. **74% year-over-year.** From $153.5M to $267.4M. On an accelerating trajectory — 42% → 68% → 74%. This is not a fluke. The trajectory has been relentlessly upward for three consecutive quarters of comparable data.

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# ARX — Accelerant Holdings — Earnings Review Q3 FY25

**Date:** 2026-02-22
**Quarter:** Q3 FY25 (September 30, 2025)
**Task:** First ARX earnings review — no prior Joe analysis

---

## Opening Thought

Alright, ARX is new to me. I've seen the ticker floating around but this is my first real sit-down with the numbers. Insurance isn't exactly where my head usually goes — I tend to live in software and fintech — but when something is growing revenue 74% year-over-year and trading at 2.5x sales with a 66% drawdown from its highs, I owe it a serious look. Let me see what's actually here versus what might just be hope dressed up as a thesis.

---

## The Results — What "Is" Here

| | Q1'24 | Q2'24 | Q3'24 | Q4'24 | Q1'25 | Q2'25 | Q3'25 |
|---|---|---|---|---|---|---|---|
| | Mar-24 | Jun-24 | Sep-24 | Dec-24 | Mar-25 | Jun-25 | Sep-25 |
| Revenue ($m) [Non-GAAP] | 128.1 | 130.1 | 153.7 | 190.7 | 178.0 | 219.1 | 267.4 |
| YoY % | — | — | — | — | 38.9% | 68.4% | 74.0% |
| QoQ % | — | 1.6% | 18.1% | 24.1% | -6.7% | 23.1% | 22.0% |
| EBITDA ($m) [Adj] | 27.5 | 13.0 | 26.1 | 46.4 | 42.8 | 63.5 | 105.0 |
| EBITDA Margin % [Adj] | 21.5% | 10.0% | 17.0% | 24.3% | 24.0% | 29.0% | 39.3% |
| EBITDA ex-investment gain [Adj] | — | — | — | — | — | — | ~66m / 24.7% |
| Adj Net Income ($m) [Non-GAAP] | — | — | 19.0 | — | — | 28.6 | 79.8 |
| Adj EPS [Non-GAAP] | — | — | ~$0.10 | — | — | ~$0.15 | $0.38 |
| EWP ($m) | 551 | 727 | 796 | 833 | 874 | 911 | 1,043 |
| Members | 170 | 186 | 204 | 217 | 232 | 248 | 265 |
| Gross Loss Ratio % | 52.1% | 54.7% | 51.8% | — | 53.3% | 50.5% | 50.1% |
| NRR % | — | — | — | — | — | 151% | 135% |
| 3rd-Party Mix (% of EWP) | — | — | — | — | — | 27% | 32% |

**Note on Q3 EBITDA:** The 39.3% reported margin includes $39m in non-recurring investment gains. The underlying operational EBITDA was ~$66m at ~24.7% margin. That's the real number.

**Note on GAAP net income:** -$1.37B net loss in Q3 due to a one-time, non-cash profits interest distribution — IPO-

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# ARX — Accelerant Holdings | Q3 FY25 Earnings Review

**Date:** 2026-02-22
**Period:** Q3 2025 (quarter ending September 30, 2025)
**Task:** Earnings review
**Position:** No position (watchlist)

---

## Links

- Scout brief: `briefs/ARX_earnings-review_2026-02-21/`
- Company file: `companies/ARX.md`
- Earnings rolling: `earnings/ARX/_ROLLING.md`
- Atlas baseline: Not available (no Atlas analysis exists for ARX)

---

## First Principles: Is ARX a Platform?

Let me be upfront — ARX sits outside my typical hunting ground of cloud/SaaS/infrastructure. This is an **insurance exchange**. But here's the thing... the platform dynamics are more interesting than the sector label suggests.

**What Accelerant actually is:** A specialty insurance exchange that connects specialty insurance "members" (small E&S carriers) with risk capital (Lloyd's syndicates, reinsurers, Hadron — their own capital). Members write policies; Accelerant provides the capital, data infrastructure, and analytics backbone. Revenue comes from two sources: (1) taking a cut of Exchange Written Premium (~8% take rate → Exchange Services), and (2) underwriting profit from their own risk capital (Hadron segment).

**The crowdsourced intelligence angle is REAL.** This is my framework center mass. They're collecting 57,000 risk attributes across 265 members. Each member who joins makes the data network smarter for everyone — better loss prediction, better pricing, tighter risk selection. That's a genuine data flywheel I haven't seen discussed enough. "23,000 → 57,000 attributes" is the kind of metric that deserves `!!`.

**Building block or process tool?** Members run their entire specialty insurance operation ON Accelerant's platform (Hadron as the risk spine). This is closer to a **building block** — their business is embedded in the exchange. Switching costs are high: you lose your data history, your capital relationships, your pricing benchmarks. That's what drives 135% NRR.

**Self-serve GTM?** Mostly ye

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