Exzeo Group (XZO) Q3: Net Margin Surges to 33.8%, Testing Overvaluation Concerns

Exzeo Group (XZO) just posted Q3 2025 results with revenue of about $56.3 million, basic EPS of $0.25 and net income of roughly $21.2 million, marking another solid quarterly print. The company has seen revenue climb from $29.3 million in Q3 2024 to $56.3 million in Q3 2025, while basic EPS moved from $0.06 to $0.25 over the same period. This sets up a story of scaling profits and expanding margins that investors will be keen to track.

See our full analysis for Exzeo Group.

With the latest numbers on the table, the next step is to compare this performance with the leading narratives around Exzeo Group to see which views hold up and which may need to be reconsidered.

Curious how numbers become stories that shape markets? Explore Community Narratives

Margins Strengthen With 33.8% Net Profit

• On a trailing 12 month basis, Exzeo turned $210.7 million of revenue into $71.2 million of net income, giving a 33.8% net profit margin compared with 9.5% last year.
• What stands out for a bullish view is how this profitability aligns with the growth story, with earnings up 507.9% year over year and a 5 year earnings CAGR of 53.9%, which heavily supports the idea that Exzeo is not just growing its top line but steadily converting that growth into bottom line gains.
  • Supporters can point to revenue rising from $88.4 million in 2023 to $210.7 million on the latest trailing 12 month cut as evidence that scale is kicking in alongside better margins.
  • At the quarterly level, net income moving from $5.3 million in Q3 2024 to $21.2 million in Q3 2025 suggests that these stronger margins are visible even when you zoom in on a single period.

Over one year, Exzeo’s shift from single digit to mid 30s net margins has turned it into a very different profit story, and that kind of change is exactly what growth focused investors look for when they compare software names. 📊 Read the full Exzeo Group Consensus Narrative.

P/E Looks Modest Versus Peers

• Exzeo trades at about 25.4 times trailing earnings, which is below the US Software industry average of 31.9 times and the peer average of 39.3 times, even though its earnings are forecast to grow around 19.5% per year and revenue about 12.6% per year.
• Consistent with a bullish angle that focuses on relative value, this mix of faster than market growth and a lower than peer P/E multiple suggests the stock is being priced more conservatively than many software names with weaker growth, even though the data points to stronger earnings momentum.
  • Forecast earnings growth of 19.5% per year versus a US market forecast of 16.3% supports the idea that Exzeo is not just growing, but outpacing the broader market while still carrying a discount to typical software valuations.
  • With revenue expected to grow 12.6% per year against a 10.7% market forecast, investors who focus on both top line and bottom line trajectories may see the current multiple as leaving room for the market to re rate if execution continues.

Price Stretches Above DCF Fair Value

• While the shares change hands at $19.94, the cited DCF fair value is $10.27, so the market price stands at roughly double the DCF based estimate even as profitability and growth metrics score well.
• From a more cautious, bearish leaning perspective, this gap between price and DCF fair value, combined with highly illiquid trading over the past three months, raises the possibility that solid fundamentals are already more than reflected in the stock and that execution risk in trading could amplify any pullbacks.
  • Skeptics can argue that even with a 33.8% net margin and a 5 year earnings CAGR of 53.9%, paying almost twice the DCF fair value may leave little margin of safety if growth or margins slow from recent highs.
  • Because shares are described as highly illiquid, any shift in sentiment around the 19.5% earnings growth forecast or the 12.6% revenue growth outlook could lead to sharper price swings than the fundamentals alone would suggest.

Next Steps

Don't just look at this quarter; the real story is in the long-term trend. We've done an in-depth analysis on Exzeo Group's growth and its valuation to see if today's price is a bargain. Add the company to your watchlist or portfolio now so you don't miss the next big move.

Explore Alternatives

Despite robust growth and expanding margins, Exzeo looks richly priced versus its DCF fair value, with illiquidity amplifying the risk of sharp downside moves.

If valuation risk and potential volatility make you uneasy, use our these 907 undervalued stocks based on cash flows to quickly focus on companies where prices still lag fundamentals and offer a wider safety margin.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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