Porch Group Q1 2025 Earnings Call Transcript

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Provided by Quartr
May 6, 2025
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Lois Perkins
Lois Perkins
Investor Relations at Porch Group

Good afternoon, everyone, and thank you for participating in Porsche Group's First Quarter twenty twenty five Conference Call. Today, we issued our earnings release and filed our related Form eight ks with the SEC. The press release can be found on our Investor Relations website at ir.porchgroup.com. I would like to take a moment to review the company's Safe Harbor statement within the meaning of the Private Securities Litigation Reform Act of 1995, which provides important cautions regarding forward looking statements. Today's discussion, including responses to your questions, reflects management's views as of today, 05/06/2025.

Lois Perkins
Lois Perkins
Investor Relations at Porch Group

We do not undertake any obligations to update or revise this information. Additionally, we will make forward looking statements about our expected future financial or business performance or conditions, business strategy and plans. These statements are subject to risks and uncertainties, which could cause our actual results to differ materially from these forward looking statements. Please refer to the information on this slide and in our SEC filings for important disclaimers. We will reference both GAAP and non GAAP financial measures on today's call.

Lois Perkins
Lois Perkins
Investor Relations at Porch Group

Please refer to today's press release for reconciliations of non GAAP measures to the most comparable GAAP measures discussed during this earnings call, which are available on our website. As a reminder, this webcast will be available for replay along with a presentation shortly after this call on the company's website at ir.porchgroup.com. Joining me here today are Matt Ehrlichman, Portra Group's CEO, Chairman and Founder Sean Tafag, Portra Group's CFO and Matthew Nagel, Portra Group's COO. Thank you. I'll now turn the call over to Matt for his key updates.

Matt Ehrlichman
Matt Ehrlichman
Founder, Chairman & CEO at Porch Group

Good afternoon, everyone. Thanks for joining us. I've never been more excited to report on quarterly earnings as I am here for Q1 twenty twenty five. After launching the member owned Reciprocal Exchange on January 1 and the corresponding sale of our Homeowners of America insurance carrier into the reciprocal, this is the first quarter in which our business is, in our view, optimally structured. We've fully transformed to a simpler commission and fee based, higher margin model that is more predictable for shareholders.

Matt Ehrlichman
Matt Ehrlichman
Founder, Chairman & CEO at Porch Group

And I'm pleased to report that the results are strong. Because of the standout Q1 results and the trends we're seeing, we are again increasing 2025 guidance. As I look ahead to the next several years, my expectation is very clear that we will grow profitability and cash flow faster than previously anticipated. Sean will take you through the results, the increase in our guidance and the increase in our long term model and margins shortly. So this quarter marks a special time for the company.

Matt Ehrlichman
Matt Ehrlichman
Founder, Chairman & CEO at Porch Group

It's the moment Port shareholders are no longer in the catastrophic weather claims business, while still participating in the attractive growth of the homeowners insurance industry and with durable competitive advantages. This quarter demonstrates how effectively our business is now structured to scale. Overall, we delivered results for Port shareholders that are exciting. Revenue of $85,000,000 generated predominantly from $97,000,000 of premium written at the carrier, which will label reciprocal written premium. Both of these numbers exceeded expectations.

Matt Ehrlichman
Matt Ehrlichman
Founder, Chairman & CEO at Porch Group

Now as the manager of the reciprocal rather than the carrier itself, revenue isn't apples to apples when comparing year over year given our transformation. However, gross profit and adjusted EBITDA certainly are good to look at to assess year over year growth and performance. And so we're happy to report that in Q1, we realized 82% gross margins, which we expect will continue forward, demonstrating what we've been saying about the high margin nature of our go forward business. This produced Q1 gross profit of $69,000,000 which was a $32,000,000 or 86% increase compared to gross profit in Q1 twenty twenty four. Our business is now highly profitable.

Matt Ehrlichman
Matt Ehrlichman
Founder, Chairman & CEO at Porch Group

Net income attributable to Porch was positive at $8,000,000 We produced our highest ever Q1 adjusted EBITDA of $17,000,000 which is a 20% margin and above expectations. This was a $34,000,000 increase over the prior year. Resulting from this, I'm excited to share that we not only generated positive cash for Port shareholders, but significantly so at $27,000,000 of positive cash flow from operations for Port shareholders in the quarter, which includes $7,000,000 collected related to the past best due pursuits. Operationally, we performed strongly. New business premium at our insurance business is performing well.

Matt Ehrlichman
Matt Ehrlichman
Founder, Chairman & CEO at Porch Group

Our software and consumer service operations are progressing nicely and we are investing more aggressively across these businesses to drive faster growth in 2026 and beyond. Finally, the reciprocal remains healthy. The reciprocal's April 1 reinsurance renewals were strong, lowered its catastrophic weather risk and provides Port shareholders certainty and clarity as we move forward. This reciprocal's cost of reinsurance decreased year over year given our strong underwriting results in 2024 and Portia's unique HomeFactors property data. Meanwhile, the reciprocal is healthy with $198,000,000 of surplus combined with non admitted assets at the end of Q1.

Matt Ehrlichman
Matt Ehrlichman
Founder, Chairman & CEO at Porch Group

Similar to a strong comparison we shared about 2023 performance, I'm pleased to share the AM Best Report comparing results across carriers for 2024, the final year in which we owned Homeowners of America. As you can see on the slide, the Carrier was number one in direct combined ratio performance in Texas out of carriers with more than $50,000,000 in homeowners insurance premiums in the state. Across a US wide comparison of carriers with more than $350,000,000 of premium, our carrier was number three. This outperformance versus the market demonstrates the ability for the reciprocal to pay attractive management fees to Porch Group ongoing, while continuing to build surplus. And it reinforces our differentiated capabilities that will sustain advantages for the long term.

Matt Ehrlichman
Matt Ehrlichman
Founder, Chairman & CEO at Porch Group

We believe Porch is an excellent company to own during a turbulent time in the markets. First, we do not believe tariffs will have a significant impact on our business. We expect a mid single digit adjusted EBITDA impact at most, which has been built in and assumed in the increased guidance Sean will share shortly. Second, if there is a recession, we believe our business is well protected and may even benefit. The majority of our business and income is generated from homeowners insurance premiums at the reciprocal.

Matt Ehrlichman
Matt Ehrlichman
Founder, Chairman & CEO at Porch Group

As you can see in the chart on this slide, historically, homeowners insurance premiums just continue to grow in all economic cycles. It's an attractive industry to be playing in, especially in a commission and fee model without absorbing the weather volatility. If interest rates come down amidst the slowing economy, it would it could spark a housing market pickup, which would be attractive for our software, consumer service and insurance businesses. Third, if inflation picks up, we expect homeowners insurance price increases will accelerate, directly increasing our high margin management fees. And finally, if weather worsens, it can now help our business.

Matt Ehrlichman
Matt Ehrlichman
Founder, Chairman & CEO at Porch Group

Porch doesn't absorb nor pay for the catastrophic weather claims under this reciprocal structure. More weather related claims means premiums will increase over time, growing fees produced for Porch and for our shareholders. Nice thing is generally, homeowners need homeowners insurance. So we don't see risk of this industry as a whole doing anything but continuing to grow. And our competitive advantages help us to consistently stand out.

Matt Ehrlichman
Matt Ehrlichman
Founder, Chairman & CEO at Porch Group

I'll now turn it over to Sean to cover our strong financial results and raise guidance.

Shawn Tabak
Shawn Tabak
Chief Financial Officer at Porch Group

Thank you, Matt, and good afternoon, everyone. As previously discussed, we changed our segments as of 01/01/2025 to align with the new business model following the launch of insurance services and the Porch reciprocal exchange. I'll focus my comments today on the Porch shareholders component of our q one twenty five financials. As a reminder and as we discussed last quarter and at our Investor Day, there are three segments that generate cash for Porch shareholders, insurance services, software and data, and consumer services, offset by corporate. We call this Porch shareholder interest.

Shawn Tabak
Shawn Tabak
Chief Financial Officer at Porch Group

And since generating cash for Porch shareholders is our ultimate goal and how we measure our success, this is what we will focus our commentary on in this earnings call and ongoing. As a reminder, under GAAP, for the time being, we are consolidating the Porch reciprocal exchange given the surplus note relationship between the reciprocal and our business. We do provide a reconciliation in our 10 Q and press release between Porch shareholder interest and GAAP consolidated financials, with the difference being the reciprocal segment. Where relevant, we will present the prior year financials on a comparative basis so folks can better understand the trends in our business. For software and data and consumer services, the comparison will be apples to apples.

Shawn Tabak
Shawn Tabak
Chief Financial Officer at Porch Group

But because the reciprocal model didn't exist in 02/2024, the comparison for insurance services and therefore, port shareholder interest will not be apples to apples. Okay. With that background, let's get into our strong q one results, which exceeded expectations. Q one two thousand twenty five port shareholder interest revenue was $84,500,000 with 59% of revenue from insurance services, 26% from software and data, and the remainder from consumer services. Associated gross profit was $69,100,000 with a gross margin of 82.

Shawn Tabak
Shawn Tabak
Chief Financial Officer at Porch Group

Insurance services had an 85% gross margin, software and data was at 75%, and consumer services, 83%. Overall, gross profit grew 86% year over year. Q1 twenty twenty five Port shareholder interest adjusted EBITDA was $16,900,000 a $33,600,000 improvement over the prior year, driven by the shift to the insurance services business model. As Matt mentioned, we see the year over year improvements in gross profit and adjusted EBITDA as the clearest way to understand the increase in our results. We're off to a strong start in delivering what we said we would as the operator of the reciprocal, higher margins and predictable results.

Shawn Tabak
Shawn Tabak
Chief Financial Officer at Porch Group

Now let's dig into the segment results, starting with insurance services. There are a number of ways that Fortune's insurance services business generates economics. Management fees paid by the reciprocal based on a percentage of its written premium, policy fees paid directly by the policyholders, noncatastrophic quota share reinsurance provided by Portra's captive reinsurer to improve capital efficiency for the reciprocal. And as a reminder, this reinsurance only is on attritional losses and does not include catastrophic weather. Also, fees paid by third party agencies when we deliver homebuyer leads and an approximately 15% coupon on a $106,000,000 surplus note Porch Group holds with the reciprocal.

Shawn Tabak
Shawn Tabak
Chief Financial Officer at Porch Group

From the $97,000,000 of the reciprocal's written premium, Porch Insurance Services generated revenue of approximately 50% or $49,800,000 which is high margin and predictable. Associated gross profit was $42,300,000 with a gross margin of 85%. Adjusted EBITDA was $25,800,000 with a margin of 52. Shifting now to software and data. Revenue was $22,000,000 a 4% increase over the prior year, driven by product launches and associated price increases at several of our software businesses and partially offset by a nonrecurring revenue transaction.

Shawn Tabak
Shawn Tabak
Chief Financial Officer at Porch Group

We expect growth in this segment to accelerate in Q2 to high single digits as we normalize for the Q1 nonrecurring item. Gross profit was $16,500,000 with a 75% gross margin. Adjusted EBITDA was $4,600,000 a $2,000,000 increase over the prior year. As a note, in Q1 twenty twenty five, the housing market existing home sales were 2% lower than prior year with continued slow turnover. As interest rates decline in the future, we expect to see tailwinds driven by the pent up demand.

Shawn Tabak
Shawn Tabak
Chief Financial Officer at Porch Group

But for now, we remain cautious and are assuming a flat housing market for the year. Shifting now to consumer services. Revenue was $14,700,000 a 9% decrease over the prior year, driven by the closure of our lower margin moving products such as corporate relocation in the third quarter of twenty twenty four. Gross profit was $12,200,000 with an 83% gross margin. Adjusted EBITDA loss was $700,000 a $2,200,000 decrease over the prior year, driven by investments to drive growth in 2026 and beyond.

Shawn Tabak
Shawn Tabak
Chief Financial Officer at Porch Group

We've reduced corporate expenses significantly over the last couple of years as we move to lower cost location and reduced G and A back office type costs. You can see here the benefit of our cost control actions. Corporate expenses decreased $2,200,000 to $12,800,000 in Q1 twenty twenty five compared to $15,000,000 in the prior year. Moving on to the balance sheet. There are several benefits from the shift toward the commission and fee based insurance services business model.

Shawn Tabak
Shawn Tabak
Chief Financial Officer at Porch Group

It's simpler, higher margin and asset light. As a reminder, our focus is on generating cash for core shareholders, which aligns closely with adjusted EBITDA. In Q1, we have also provided additional information on cash flow from operations of the Port shareholder interest. Port's cash plus investments was $114,000,000 at 03/31/2025. Port shareholder interest cash flow from operations was $27,000,000 driven by adjusted EBITDA in the quarter of $17,000,000 and $7,000,000 of cash from with potential for more over time.

Shawn Tabak
Shawn Tabak
Chief Financial Officer at Porch Group

Additionally, our litigation against other parties remains ongoing, and we will keep you posted as things develop. Now for our updated 2025 guidance for Porch shareholder interest. Now that we are through our first full quarter post the launch of the reciprocal and our transition to a high margin operator, we've seen the results. Good news, the model is performing even better than we had previously expected. And despite the macroeconomic turmoil and tariffs, which have been factored in, we are increasing our 2025 guidance across the board.

Shawn Tabak
Shawn Tabak
Chief Financial Officer at Porch Group

We are increasing our 2025 revenue guidance by $10,000,000 and now ranging from $400,000,000 to $420,000,000 We are increasing our 2025 gross profit guidance by $10,000,000 and now ranging from $320,000,000 to $335,000,000 still within an associated gross margin of approximately 80%. We are increasing our adjusted EBITDA guidance by $5,000,000 now ranging from $60,000,000 to $70,000,000 This increase in adjusted EBITDA guidance reflects three things. First, Q1 twenty twenty five adjusted EBITDA was ahead of our internal expectations by approximately $5,000,000 Second, we are pleased with our Insurance Services segment's performance post reciprocal transition. So we are raising guidance for the rest of the year by $5,000,000 which factors in the mid single digit millions of tariff related impact Matt had mentioned. Finally, those increases are partially offset by an approximately $5,000,000 of additional twenty twenty five investments to accelerate growth in 2026 and beyond.

Shawn Tabak
Shawn Tabak
Chief Financial Officer at Porch Group

Starting April 1, when we renewed our reinsurance contracts, we improved the terms of the noncatastrophic quota share contract for the reciprocal to build even more surplus cushion there and scale insurance premiums. With this change, Q2 adjusted EBITDA for Porch is expected to be approximately 5,000,000 to $7,000,000 lower than Q1 and continue to grow nicely in Q3 and again in Q4. Given this is our first quarter with actual results in our go forward structure, we wanted to provide what we shared at our Investor Day. We wanted to update what we shared at our Investor Day in December. As a quick note, we won't be updating the long term model quarterly.

Shawn Tabak
Shawn Tabak
Chief Financial Officer at Porch Group

But since since it was the first quarter of results, we thought it was relevant. As we saw in the q one results, we now expect the reciprocals written premium to convert to Porch insurance services revenue at approximately 50% versus 40% previously. If we apply that higher conversion to our long term $3,000,000,000 premium target and our long term Porch shareholder our long term target Porch shareholder revenue is $2,300,000,000 Aligned with our Q1 results, we still anticipate 80% gross margins and a 30% adjusted EBITDA margin. This means that at $3,000,000,000 of premium, we now expect adjusted EBITDA of $660,000,000 I'll now hand it over to Matthew to discuss a strategic update and review our KPIs.

Matthew Neagle
Matthew Neagle
Chief Operating Officer at Porch Group

Thank you, Sean. I'd like to start by providing an update on our four strategic focus areas to drive revenue growth for the business. First is to scale insurance premiums. In Q1 twenty twenty five, new business growth accelerated, driven by strong execution across geographies, pricing and distribution. Most ZIP codes across our largest states are reopened at this time.

Matthew Neagle
Matthew Neagle
Chief Operating Officer at Porch Group

Texas, our largest state, implemented a 16% rate increase, reinforcing our commitment to pricing discipline. We remain careful in risk evaluation on both new and renewal policies to ensure profit targets are hit, therefore, keeping the reciprocal healthy and growing surplus. During this time, most premium growth comes from price increases, generating more reciprocal written premium and thus management fees for porch without increasing risk. Key hires have strengthened our insurance leadership team, and we successfully placed its new reinsurance program with over 40 investment grade partners, reducing the reciprocal's risk. Importantly, Port shareholders are no longer in the catastrophic weather claims business.

Matthew Neagle
Matthew Neagle
Chief Operating Officer at Porch Group

The second area of revenue growth is software innovation, where we have made meaningful progress against our roadmap. In q one, Rhino implemented a 20% price increase, in line with our strategic pricing goals. Our inspection business launched an expanded partnership with one of the largest inspection franchises in the country. FlowFi, our mortgage SaaS business, launched a new product, FlowFi Quick Apply, which auto fills up to 80% of a mortgage application, streamlining borrower onboarding and driving adoption. Next is the growth of our data business.

Matthew Neagle
Matthew Neagle
Chief Operating Officer at Porch Group

We continue to expand HomeFactors, our unique property insights product, adding further value for the reciprocal and third party carriers. Lastly, accessing more homebuyers. We made strategic progress in reaching and monetizing high value homebuyers and launched new offerings such as packing services to make their move easier. Before we delve into our key performance indicators for insurance services, I want to provide a few important reminders regarding our segment reporting and prior year comparisons. Early in the first quarter of last year, we divested our EIG business.

Matthew Neagle
Matthew Neagle
Chief Operating Officer at Porch Group

Additionally, our prior insurance segment included our warranty business, which has now been strategically aligned within our new consumer services segment. This realignment allows for greater focus on the distinct growth and profitability drivers of each business. These changes in our business structure make direct year over year comparisons to previously disclosed KPIs less relevant as they are based on a different basis. Furthermore, in support of our profitability objectives, we executed material nonrenewals that extended through the first half of last year. This will naturally impact our year over year comparisons for the current period.

Matthew Neagle
Matthew Neagle
Chief Operating Officer at Porch Group

With these factors in mind, let's now turn to our new key performance indicators. As Sean noted, our insurance services generate economics primarily through reciprocal written premium or RWP, which represents premium written by the reciprocal before any policyholder cancellations. We earn a management fee based on a percentage of this RWP. In the first quarter, reciprocal written premium reached $97,000,000 reflecting an approximate 10% increase compared to the prior year. Looking ahead, we anticipate continued growth in RWP throughout the remainder of the year.

Matthew Neagle
Matthew Neagle
Chief Operating Officer at Porch Group

This expectation is driven by the historic seasonality of renewal policies, where the first quarter typically sees lower volumes compared to the second, third and fourth quarters due to the typical patterns of homebuyer activity in new construction during the spring, summer and fall months. Moreover, our ongoing efforts to expand our distribution channels and implement strategic price increases are expected to further contribute to RWP growth. Reciprocal policies written reflects the total number of new and renewal insurance policies written by the reciprocal during the period. We generate policy fee revenue directly from these policyholders. Reciprocal written policies were 36,000 in q one.

Matthew Neagle
Matthew Neagle
Chief Operating Officer at Porch Group

Given q one has historically the fewest renewal policies written, looking ahead to the second quarter, we expect reciprocal policies written to be north of 50,000 policies in that quarter. This anticipated increase is driven by the historical seasonality and the improving momentum in our new business growth engine. RWP per policy written is calculated by dividing the reciprocal written premium by the total number of reciprocal policies written. In the first quarter, RWP per policy written stood at $2,683. As mentioned before, we are encouraged by the momentum we are building in our new business initiatives.

Matthew Neagle
Matthew Neagle
Chief Operating Officer at Porch Group

In the first quarter of twenty twenty five, we saw Recervical new business premium double on an apples to apples comparison to the prior year, demonstrating the effectiveness of our efforts to expand our reach and attract new policyholders. While we continue to see some residual impact on our renewal rates from our prior profitability initiatives, growing renewal premium represents a significant opportunity for growth. We are actively focused on enhancing our renewal strategies and expect to see improvement in these rates as we progress through the year. Finally, as Matt mentioned, the Porch Recyvocal Exchange maintains a strong financial position with a healthy surplus combined with non minute assets totaling a hundred and 98,000,000. For software and data, we have a number of companies in the annualized revenue per company or ARPA.

Matthew Neagle
Matthew Neagle
Chief Operating Officer at Porch Group

In q one, we served 24,000 companies with an annualized revenue per company of $3,644. Reminder, this only includes companies related to our software and data segment and no longer includes moving companies or insurance agencies. On that basis, the number of companies had been relatively flat, and we expect that to continue until the housing market picks up. As we discussed previously, strategic price increases are driving increases in revenue per company, and we expect that to continue. For consumer services, we have the monetized services and annualized revenue per monetized service.

Matthew Neagle
Matthew Neagle
Chief Operating Officer at Porch Group

In q one, we had 71,000 monetized services with annualized revenue per monetized service of $2.00 $7. Reminder, this only includes monetized services relating to our consumer services segment and does not include insurance policies nor transactions in the software segment. I'll pass it back to Matt now to wrap us up.

Matt Ehrlichman
Matt Ehrlichman
Founder, Chairman & CEO at Porch Group

Thanks, Matthew. I'll quickly wrap just by reinforcing the most important messages from today, and then we'll dive into to q and a. First, delivering quarterly adjusted EBITDA of $17,000,000 in Q1 twenty twenty five, again, a $34,000,000 increase year over year. Number two, this translated to $27,000,000 of positive forward shareholder interest cash flow from operations. Again, think that's a really important stat.

Matt Ehrlichman
Matt Ehrlichman
Founder, Chairman & CEO at Porch Group

Number three, we increased our 2025 adjusted EBITDA guidance by $5,000,000 to $65,000,000 at the midpoint. We demonstrated what we said. We are now a high margin business and produced 82% gross margins. Again, we're proud of our $69,000,000 of Q1 gross profit being an 86% year over year increase. We completed the reinsurance renewals at the reciprocal, as we said, reducing its exposure to catastrophic weather claims and lowering reinsurance costs.

Matt Ehrlichman
Matt Ehrlichman
Founder, Chairman & CEO at Porch Group

Port shareholders not being in the catastrophic weather claims business is great, and I do want to express appreciation to the great partnerships with more than 40 A rated high quality reinsurers. Our premium growth plan is on track, and we're seeing strong signs related to new business growth. Lastly, there are no significant impacts from tariffs. The majority of our business is homeowners insurance, which is stable in a recession. So folks, we're off to a strong start, and we look forward to a fun and exciting year and years ahead.

Matt Ehrlichman
Matt Ehrlichman
Founder, Chairman & CEO at Porch Group

Thank you to our shareholders for your continued support. With that, Lisa, please open the call for questions.

Operator

And we'll take the first question from Daniel Kurnos, Benchmark.

Daniel Kurnos
Equity Research Analyst at The Benchmark Company LLC

Yes. Great. Thanks. Matt, look, not a lot to say here. It's a fantastic quarter, especially from the insurance side.

Daniel Kurnos
Equity Research Analyst at The Benchmark Company LLC

Can I just get some clarity? Because I think I might have missed this from Sean, just why the take rate was so high in the quarter. And, you know, I know you have some built in with the TDI, but just, you know, is that a result of the surplus or what exactly drove that? And then just as we think about your willingness here, Matt, given the strong start of the year to kinda lean in, you know, you guys gave an initial GWP guide. Q one's crushed it.

Daniel Kurnos
Equity Research Analyst at The Benchmark Company LLC

You guys are clearly leaning into agents harder, and so, and getting, new policies written. I just what's your willingness to accelerate from here? Because it sounds like you're there's a little bit of reinvestment willingness, incremental willingness at this point given how strongly you're started.

Matt Ehrlichman
Matt Ehrlichman
Founder, Chairman & CEO at Porch Group

Thanks, Dan. Sean, why don't you take the first one? And Matthew, maybe you can take the the second one, premium growth.

Shawn Tabak
Shawn Tabak
Chief Financial Officer at Porch Group

Yeah. Yeah. Sure. Happy to yeah. The reciprocal written premium converted to revenue at about 50%.

Shawn Tabak
Shawn Tabak
Chief Financial Officer at Porch Group

We do expect that to be close to the ongoing rate there. A couple of things on that. First of all, porch share porch insurance services segment does receive policy fees directly from the policyholder, so that's included there as well. And then second, there are management fees, that are paid by the reciprocal as well as the captive arrangement, their captive reinsurance arrangement that insurance services has with the reciprocal. The thing to remember about the captive is the porch also pays a a commission in sales and marketing and a portion of the attritional losses back to the reciprocal.

Shawn Tabak
Shawn Tabak
Chief Financial Officer at Porch Group

So you can see that all flowing through the porch insurance services p and l that we broke out. The the main thing I think I we think about with respect to the reciprocal is it's in a really healthy spot from a surplus perspective. We ended the quarter with almost $200,000,000 of surplus combined with nonadmitted assets. That's the highest that metric has ever been for the reciprocal. We do expect it, you know, to move around from quarter to quarter, especially as there's, you know, weather claims at the reciprocal, but all, all in all, a very healthy spot for the reciprocal, to be in there.

Shawn Tabak
Shawn Tabak
Chief Financial Officer at Porch Group

We do expect that to be highest at q four.

Matthew Neagle
Matthew Neagle
Chief Operating Officer at Porch Group

And then I I can speak to the plans of how we're thinking about premium growth, Just kind of reiterating some of the prepared comments. We've seen RWP grow 10% on an apples to apples basis year over year. But the area we leaned into, in particular in q four, which is around our agency distribution, appointing and reactivating new agents, has led to q one being more than a % in new business premium growth. There are a variety of levers that we still have to grow RWP over time. And as Sean mentioned in his comments, we have started to make more investments.

Matthew Neagle
Matthew Neagle
Chief Operating Officer at Porch Group

And so I'll I'll share some of those opportunities we have. Some are shorter term and some are are medium term. We will continue to invest in our growth team, to be able to reach out and engage agents in making sure our commissions and incentives are competitive and attractive for our agents. We are now looking at new geographies and looking at additional states where we can offer our products. We are in the infancy of our porch insurance product, which offers a entirely different type of value prop to the consumer and to the agent, and we are going to lean into building that out.

Matthew Neagle
Matthew Neagle
Chief Operating Officer at Porch Group

There are choices we can make around our our product, that can make us even more attractive in the market. We'll do that a little bit in the near term, but we are making bigger investments into how we leverage our data and increase our sophistication of pricing, which will allow us to be more aggressive around growth and pricing in a way that gives us confident that we will be profitable. I would also say, as a as sort of a as a final point, there's still some opportunity for price increases. It's it's probably slower than what we've seen in the past. And this is a massive market, and so there's a lot of opportunity for us.

Matthew Neagle
Matthew Neagle
Chief Operating Officer at Porch Group

And we have started to take midterm investments in terms of bringing on additional talent, senior talent to our team, and starting to put in place some of the systems that will allow us to scale as we go after that 3,000,000,000 in premium in the next seven to ten years. So there's there's a lot ahead for us.

Daniel Kurnos
Equity Research Analyst at The Benchmark Company LLC

Matthew, can I can I just follow-up on one thing super quickly? Like, if if replacement value were to go up as a result of tariffs or or, you know, just in the general market and given that you guys have a lot more of a dynamic model with your data advantage, would, a, you be confident in being able to pass through, premium increases? And, b, do you think it would make you, more advantaged relative to others given that you have, you know, a lot more visibility into the actual products themselves at the house level?

Matthew Neagle
Matthew Neagle
Chief Operating Officer at Porch Group

Yeah. Those are I can I look at those as sort of two vectors? The first is we do look at replacement value on an ongoing basis, and we do update replacement value, on an ongoing basis. And as we do that, it does bring up price, through through just the fact that you're getting more coverage. To your second point, it is certainly our thesis thesis and belief that as we get more and more data into our pricing, which we're every you know, all the time, and there's opportunities for us to invest more into the sophistication of our pricing.

Matthew Neagle
Matthew Neagle
Chief Operating Officer at Porch Group

We do believe that those two things, the privileged data that we have in combination with increasing sophistication, will allow us to target segments that we know to be lower risk, but where we can command attractive pricing in the market. And that is certainly the strategy we're pursuing, and we will keep chipping away at that now and into the, you know, into the future.

Daniel Kurnos
Equity Research Analyst at The Benchmark Company LLC

Awesome. Thanks for, sticking with me, and appreciate all the color. Two for two, mister Ehrlichman. Well done.

Matt Ehrlichman
Matt Ehrlichman
Founder, Chairman & CEO at Porch Group

Thanks thanks, Dan. We appreciate it.

Operator

John Campbell from Stephens Inc. Has the next question.

John Campbell
Managing Director at Stephens Inc.

Hey, guys. Good afternoon. I'll echo the sentiment. It's a great start to the year. Seems like you guys got the momentum building, and I think we're definitely seeing what you guys message as far as life, what life's going to look like under the new reciprocal.

John Campbell
Managing Director at Stephens Inc.

So nice work all around. But I just wanted to get a few insights kind of relative to what you guys are experiencing in the trenches so far with the reciprocal. I don't know, maybe this explains some of the higher take rate, but within Texas, just from a new policy standpoint, just broadly what percent of consumers are selecting HOA versus porch insurance, and and how is that kinda fared versus expectations?

Matt Ehrlichman
Matt Ehrlichman
Founder, Chairman & CEO at Porch Group

Yeah. I I'd say we don't, you know, provide a specific metric on that, although Matthew did obviously provide just kind of overall new business, you know, growth metric, which we're clearly excited about. I will say, John, though, that we we have positioned our products, you know, for certain segments where we really are focused. You know, homebuyers, like Matthew mentioned. We want to be known as being the best, you know, homeowner insurance company for homebuyers.

Matt Ehrlichman
Matt Ehrlichman
Founder, Chairman & CEO at Porch Group

You know, those consumers, which represent, you know, almost almost 40 per actually, 40% of all the homeowners insurance purchases that happen each year are by homebuyers generally. And so we actually convert really well, you know, for those customers. New construction is another segment, you know, we convert really well for. Obviously, you know, because of our data, you know, homes that are better maintained or lower risk, we're naturally gonna play play better. So I will say the answer to your question would vary, you know, depending on the different kind of subsegments, you know, within Texas.

Matt Ehrlichman
Matt Ehrlichman
Founder, Chairman & CEO at Porch Group

But, clearly, overall, we feel like we're in a good spot given how new business, you know, premium is is growing.

John Campbell
Managing Director at Stephens Inc.

Okay. That's helpful. And then on the HOA surplus, you guys had mentioned the $1.98 a hundred 90 8 million, and then I think you had targeted a hundred million for by end of year. I don't know if those are apples to apples. Maybe if you could shed shed some light on that and then just broadly, you know, how much surplus kind of typically draws down throughout the year?

Shawn Tabak
Shawn Tabak
Chief Financial Officer at Porch Group

Yeah. I can cover that. So as of the end of last year, December 31, surplus combined with non admitted assets, which is the key metric that we kind of look at, was a hundred and $57,000,000. It actually went up in q one, to almost $200,000,000, a hundred $98,000,000 to be exact. That's in a very healthy spot.

Shawn Tabak
Shawn Tabak
Chief Financial Officer at Porch Group

Think as I mentioned, it's the highest that that metric has ever been for the reciprocal. And so that's a key thing that we look to to ensure, you know, the continued health of the reciprocal. And as I mentioned, it it does, you know, kind of have a seasonality curve to it, especially typically, the earnings pattern historically for the carrier has been in the in the first half of the year, you typically have, you know, losses driven by catastrophic weather. And then in the second half of the year, that typically flips around and you generate income. Now if you look at the net income even in the financials that we issue today, the reciprocal itself had a had a really strong q one.

Shawn Tabak
Shawn Tabak
Chief Financial Officer at Porch Group

Actually, net income or net loss, excuse me, for the reciprocal improved, like, $10,000,000 year over year. And I think it just speaks to some of the underlying advantages that we've talked about, home factors and some of those other items. So as I mentioned, we do expect, you know, surplus combined with non admitted assets to move around, from quarter to quarter based on, you know, the the carrier's business, but overall, a very healthy position, at the beginning of the year here.

John Campbell
Managing Director at Stephens Inc.

Okay. That's helpful. And then one more to add, just relative to the port shares within HOA for the surplus. You guys have been pretty clear about the flywheel effect, which is super enticing. I'm just trying to get a sense for how that's calculated at the regulator level, if you're able to capture all that appreciation, or or is it is it capped to some extent?

Shawn Tabak
Shawn Tabak
Chief Financial Officer at Porch Group

Yeah. There is there is some cap that's included in the surplus number that that gets filed. One of the things that we look at is surplus combined with the full value of the port shares that in that's in there. You know, effectively, I think of it as effectively the net assets of the business of the of the reciprocal. And so we think that's a a good indication of the overall value there.

Shawn Tabak
Shawn Tabak
Chief Financial Officer at Porch Group

The amount of, you know, technical surplus that gets filed is we are around a 5,000,000, or or thereabout. So, also, a very strong number, with obviously a lot more upside, on top of that if you include the full net assets.

Matt Ehrlichman
Matt Ehrlichman
Founder, Chairman & CEO at Porch Group

And and just a little layer on one thing.

Matt Ehrlichman
Matt Ehrlichman
Founder, Chairman & CEO at Porch Group

Okay.

Matt Ehrlichman
Matt Ehrlichman
Founder, Chairman & CEO at Porch Group

John, the re the reason we think that the surplus plus the non admitted asset number, the hundred and 98 is the is the best number is, obviously, if we wanted it to, the reciprocal could go sell some of those shares. Right? And so no. That's not what we plan to do because we, you know, we anticipate and we hope that the stock will, you know, fairly value the company as we continue to build the company. And so so but we could.

Matt Ehrlichman
Matt Ehrlichman
Founder, Chairman & CEO at Porch Group

You know? And so we think it's the right number to to to focus on. And then quickly to your point on the flywheel, I mean, we are excited about how that flywheel is working. I mean, the the reality is now with this structure, I mean, you can probably see it, you know, as the board stock, you know, price is higher, that net asset number, you know, is higher. It can then support more premium growth.

Matt Ehrlichman
Matt Ehrlichman
Founder, Chairman & CEO at Porch Group

Right? So we would, you know, anticipate growing premium faster. And you see today, I think, you know, investors can see today how, you know, that premium can translate into cash flow for Port shareholders, you know, which we would expect, you know, will will help to just value the company appropriately, you know, as we look ahead. And so, you know, that is it's an exciting time to be able to post the quarter and just demonstrate what we've said there, you know, is is happening, and we expect will continue to happen.

John Campbell
Managing Director at Stephens Inc.

Absolutely. Makes a lot of sense. Thanks, guys.

Matt Ehrlichman
Matt Ehrlichman
Founder, Chairman & CEO at Porch Group

Thanks, Sean. Appreciate it. See you.

Operator

The next question is from Jason Kreyer, Craig Hallum.

Jason Kreyer
Senior Research Analyst at Craig-Hallum Capital Group LLC

Great. Thank you, guys. Impressive work here. So I wanted to just ask about the reinsurance process, if you can give some more details there. If I'm understanding that right, you're you're now gonna carry less risk, also paying less for reinsurance.

Jason Kreyer
Senior Research Analyst at Craig-Hallum Capital Group LLC

And I'm curious as you went through the process, just if you can share some dialogue about, you know, the the reinsurers' appetite to work with Porch and how that's changed.

Matt Ehrlichman
Matt Ehrlichman
Founder, Chairman & CEO at Porch Group

Sure. The, so first things first, which is we are, you know, proud and appreciative of the relationships we have with these great reinsurance, you know, companies. There's been long standing relationships. You know, we we look forward to working with these partners, you know, for years and years and years, you know, to to come. Yes.

Matt Ehrlichman
Matt Ehrlichman
Founder, Chairman & CEO at Porch Group

We are pleased with how, the reinsurance, you know, renewal went because, you know, to your point, you know, we've now set the, the retention limit for the reciprocal, you know, at $25,000,000, which you think is a really healthy spot for it to be. And so if there are large weather events, you know, we have support, you know, from third party partners who would who would then be able to step in and really mitigate the the risk around catastrophic weather for the reciprocal, you know, itself. We shared today the AM Best results in terms of how well the carrier has performed versus others. And so, clearly, we share that data, you know, with third party reinsurers. And so when it came down to pricing, the reality is is that our business does stand out, you know, versus other, you know, carriers.

Matt Ehrlichman
Matt Ehrlichman
Founder, Chairman & CEO at Porch Group

And so through that, we were able to get, you know, get benefit in in just, you know, pricing overall and and just the participation, you know, in that book. So net, yes, we're pleased with how how that that, that process went, you know, overall.

Jason Kreyer
Senior Research Analyst at Craig-Hallum Capital Group LLC

Thank you. Appreciate that. Staying with the the reciprocal written premium topic, I know we've talked about that a little bit. But can you give any transparency on what we should expect on how that breaks out between rate increases versus policy acquisition over the course of the year?

Matthew Neagle
Matthew Neagle
Chief Operating Officer at Porch Group

We don't break that out. We've shared that, you know, Texas has a 16% price increase. I shared we'll continue to look for opportunities for price increases. It's an ongoing thing we look at very closely, but we do expect them to slow down. And then I I shared, we're very focused on rebuilding our growth engine, and we're seeing great momentum with our new business premium.

Matthew Neagle
Matthew Neagle
Chief Operating Officer at Porch Group

And we have opportunity over time to grow renewal premium. And then I I also shared just for clarity, we do expect, reciprocal written premium to increase in q two over $50,000,000, and that's due to the combination of historical seasonality of when we typically acquire policies and the momentum that we're seeing in our new business premium.

John Campbell
Managing Director at Stephens Inc.

Okay. Thank you.

Operator

We'll take the next question from Ryan Tomasello, KBW.

Ryan Tomasello
Managing Director at Keefe, Bruyette & Woods (KBW)

Hi, everyone. Thanks for taking the questions. In terms

Ryan Tomasello
Managing Director at Keefe, Bruyette & Woods (KBW)

of the growth levers for

Ryan Tomasello
Managing Director at Keefe, Bruyette & Woods (KBW)

the reciprocal, can you say what percent of your prior active footprint was essentially turned off when you guys pulled back? And how much of those ZIP codes you've reopened again? And then as a follow-up, on the agent channel, you can just maybe contextualize how large that is today, maybe in terms of, I guess, the number of agents that you're working with and how that compares to where the prior peak was? Just help us understand how much low hanging fruit there is here as you turn that back on.

Matt Ehrlichman
Matt Ehrlichman
Founder, Chairman & CEO at Porch Group

Yeah. Maybe I'll take the first. Then, Matthew, why don't you take this the second around agencies? We we didn't disclose, Ryan, specifically what like, how many geographies or ZIP codes we had we had closed previously. But, I mean, we are very clear that we were, you know, constraining growth and managing premiums to flat as we were taking price increases.

Matt Ehrlichman
Matt Ehrlichman
Founder, Chairman & CEO at Porch Group

And so, you know, you you'll recall, you know, both the nonrenewals, but then closing ZIP codes. So there was, you know, certainly, you know, wide sets of of areas that that we were not taking business in. I would say for the most part at this point, those ZIP codes have been fully reopened. So we've started to to do that in November once we had approval around the the reciprocal, and and we've we've been executing against that. Only last comment on geographies, and I'll turn it over to Matthew, is there is a lot of additional geographic expansion with new states.

Matt Ehrlichman
Matt Ehrlichman
Founder, Chairman & CEO at Porch Group

And so we do expect to continue to open up, you know, new geographies in new states, and that will just be an ongoing process. So more to to announce as we go, you know, there.

Matthew Neagle
Matthew Neagle
Chief Operating Officer at Porch Group

Yeah. So we we don't today disclose the number of active agents or the number of quoting agents. It is growing nicely due to the efforts that we really kicked off just in q four. The additional commentary I'd want you guys to keep in mind is, you know, we just started in q four. So as an example, the growth team, I think just this week reached the initial size that we intended for for this year.

Matthew Neagle
Matthew Neagle
Chief Operating Officer at Porch Group

I would also share that the historical numbers are are kind of interesting, but what's more interesting is just the sheer number of agents that are out there. And I would say we're still very early at engaging, the full prospect list of potential agents. And that prospect list will grow as we expand into new states. And there is energy and excitement around porch insurance. And so as we further, grow and develop our porch insurance, product set, we see opportunity to get more engagement from agencies.

Matthew Neagle
Matthew Neagle
Chief Operating Officer at Porch Group

And then on top of that, once we get agents involved with Porch, there's a whole another lever, which is how do we become a top carrier within their book of business. And I would say that one, we are very early days. A lot of these agents that were reengaging or that were reappointed, we are not yet a a significant part of their business. And so we have this big clear path through the agency channel to go grow materially that is through time, effort, blocking, tackling, and continuing to provide good incentives, good products, and a good claims experience, and make it easy to do business with us. And that's what we're gonna be be focused on.

Matthew Neagle
Matthew Neagle
Chief Operating Officer at Porch Group

But there's a lot of room still, I think, is the the primary message.

Ryan Tomasello
Managing Director at Keefe, Bruyette & Woods (KBW)

And then just wanted to clarify the numbers on the surplus that you talked about earlier, Sean. So you mentioned, I think, 105,000,000 is the statutory amount and then the $198,000,000 is statutory plus non admitted assets. Does the $105 include a haircut amount of the share value? Because by my math, the share value at March 31 was, like, a hundred and 33,000,000. So I'm just trying to get to that plug of, like, what's in the one zero five and then what's in the one ninety eight, if that makes sense.

Shawn Tabak
Shawn Tabak
Chief Financial Officer at Porch Group

Yeah. So one ninety eight is, to make sure it's clear for folks, one ninety eight is, surplus combined with non admitted assets. Some of the port shares isn't included, value isn't included in the filed surplus number. As Matt mentioned, you know, we would have an ability to if if we perhaps liquidated some of those in the future. Don't not expecting.

Shawn Tabak
Shawn Tabak
Chief Financial Officer at Porch Group

And then within the surplus number that I mentioned of approximately a hundred and five, there's also some some of the share value is in there. I suppose if you you took the the highest number of $1.98 and you backed off, you know, the value of 18,300,000.0 shares at the $7.20 stock price at the end of the quarter, that would get you to the surplus, you know, without any of the shares. So those are kind of the different components within it. That helps, hopefully.

Ryan Tomasello
Managing Director at Keefe, Bruyette & Woods (KBW)

Got it. Thanks for the clarification.

Matt Ehrlichman
Matt Ehrlichman
Founder, Chairman & CEO at Porch Group

Thanks, Ryan. Appreciate it.

Operator

We'll take we'll take the next question from Jason Helfstein, Oppenheimer.

Jason Helfstein
Managing Director - Head of Internet Research at Oppenheimer & Co. Inc.

Sean. So I want to start out, in your prepared remarks, you did something about for the time being, you're consolidating the reciprocal. So take us through the steps of what would need to happen for you to have a kind of GAAP reported without reciprocal included? And then secondly, now when we look at software and data and consumer services, software and data revenue is basically flat year over year, consumer services down somewhat. How do you see kind of those businesses kind of potentially improving as housing market gets unlocked presumably at some point in the back half of this year?

Jason Helfstein
Managing Director - Head of Internet Research at Oppenheimer & Co. Inc.

And I guess I'll say we've seen pretty good momentum in the more affluent homes and kind of underperformance in the less affluent homes within housing transactions. So I don't know how that all that ties together. Thank you.

Matt Ehrlichman
Matt Ehrlichman
Founder, Chairman & CEO at Porch Group

Yeah. We would like

Matt Ehrlichman
Matt Ehrlichman
Founder, Chairman & CEO at Porch Group

to Let's do the second one first, and then, Sean, go to the go to the first one just briefly. On I'll start us, and then Matthew layer on. Maybe you can talk about some of the investments and and growth opportunities. But just quickly, it doesn't matter to us really that much, Jason, if if there's, you know, sales more for more affluent homes or less. It's not based on the total dollar amount.

Matt Ehrlichman
Matt Ehrlichman
Founder, Chairman & CEO at Porch Group

It's really around the number of total transactions, you know, that are running through, you know, the the system. You know, our software products charge on a per transaction basis, you know, based on the number of existing home sales and also in some of our software businesses on the number of refinance transactions. And so, obviously, that also is just very, very low right now. And so as the transaction volume picks up, then we benefit. You know?

Matt Ehrlichman
Matt Ehrlichman
Founder, Chairman & CEO at Porch Group

And we we will be able to feel those feel those tailwinds. Maybe, Matthew, just take take one more minute on on that question in terms of some of the investments. Then, Sean, to you on the first one.

Matthew Neagle
Matthew Neagle
Chief Operating Officer at Porch Group

Yeah. So as Matt mentioned, this transaction volume goes up will benefit. In addition, for software and data, there are investments being made into HomeFactors, both the product itself and the go to market. And our core strategy with the software businesses, while the housing market has been flat, has been to invest in innovation to be able to drive price increases so that as transaction volume comes back, we are well positioned. We have been doing that, and we've, pulled the trigger to invest more into that innovation to support price increases, which will benefit us as the market comes back.

Matthew Neagle
Matthew Neagle
Chief Operating Officer at Porch Group

On consumer services, we certainly, have some impact related to housing volumes. Our our moving business in some of our core channels around warranty are tied to, new home buyers. And we have also decided there's opportunity to invest there, in particular, in trying to get access to more consumers through our app, through a website called Moving Place, which will be a a destination site for all types of moving services. We just launched packing there in q one. And also looking at how can we better partner with real estate agents in order to get us access to homebuyers, which is a great segment for us because we can sell them a variety of services, especially insurance.

Matthew Neagle
Matthew Neagle
Chief Operating Officer at Porch Group

Thanks.

Matt Ehrlichman
Matt Ehrlichman
Founder, Chairman & CEO at Porch Group

And then, Sean, do you want consolidation?

Shawn Tabak
Shawn Tabak
Chief Financial Officer at Porch Group

Yeah. So the question around consolidation of the reciprocal and the surplus note. Surplus note is one of the is is the key reason we are consolidating the reciprocal. I guess what I would say is that there is we're really pleased with the structure. I mean, the surplus note is really attractive paper at 15% coupon, and so we're not in a rush to change that.

Shawn Tabak
Shawn Tabak
Chief Financial Officer at Porch Group

We could sell the surplus note at some point off in the future. But, for now, we're really pleased with what we're seeing in the business overall, as well as the the reciprocal transition and the surplus note paper that we currently hold.

Jason Helfstein
Managing Director - Head of Internet Research at Oppenheimer & Co. Inc.

Okay. Thank you.

Matt Ehrlichman
Matt Ehrlichman
Founder, Chairman & CEO at Porch Group

Thank you.

Operator

We'll go next we'll go next to Tim Graves, Loop Capital. Tim, your line is open. Please check your mute button.

Timothy Greaves
Equity Research Associate at Loop Capital Markets LLC

Hello? Can you hear me?

Operator

Yes.

Matt Ehrlichman
Matt Ehrlichman
Founder, Chairman & CEO at Porch Group

Yep. We hear you now.

Timothy Greaves
Equity Research Associate at Loop Capital Markets LLC

Okay. Sorry. Sorry. Thank you for taking the question. I guess my my my question is around home factors.

Timothy Greaves
Equity Research Associate at Loop Capital Markets LLC

I I just wanna know, like, the strength of the pipeline as far as, like, the the strength of the pipeline and home factors and maybe more so, that impact on the revenue going forward and where you see that?

Matthew Neagle
Matthew Neagle
Chief Operating Officer at Porch Group

Sure. I can speak to to those. We actually I think about pipeline in two ways. One is the conversations we're having with carriers. And what makes us really excited is we are engaging with carriers who are actively digging in to go through their own testing process with their own claims data to prove out that the home factors help them to better predict risk, that creates all sorts of opportunities for us.

Matthew Neagle
Matthew Neagle
Chief Operating Officer at Porch Group

The second pipeline I think about is we are still building out new home factors. And the more home factors we build out, there's more opportunities for us to help carriers engage, improve their their pricing and underwriting, which creates opportunity for us. In terms of revenue impact, what we've communicated, in the past is not a lot for 2025, but starting to build in 2026.

Timothy Greaves
Equity Research Associate at Loop Capital Markets LLC

Okay. Thank you.

Matt Ehrlichman
Matt Ehrlichman
Founder, Chairman & CEO at Porch Group

Thank you for the question.

Operator

And everyone at this time, there are no further questions. I'd like to hand the conference back to Mr. Matt Ehrlichman for any additional or closing remarks.

Matt Ehrlichman
Matt Ehrlichman
Founder, Chairman & CEO at Porch Group

I'll just say thank you to all for joining us today. Thanks for those questions. And to our shareholders, thanks for the continued support. As you can tell, we are excited about how this year and years ahead are shaping up. With that, we will end the call.

Matt Ehrlichman
Matt Ehrlichman
Founder, Chairman & CEO at Porch Group

Have a great rest of the day. Take care.

Operator

And once again, everyone, that does conclude today's conference. We would like to thank you all for your participation. You may now disconnect.

Executives
Analysts
    • Daniel Kurnos
      Equity Research Analyst at The Benchmark Company LLC
    • John Campbell
      Managing Director at Stephens Inc.
    • Jason Kreyer
      Senior Research Analyst at Craig-Hallum Capital Group LLC
    • Ryan Tomasello
      Managing Director at Keefe, Bruyette & Woods (KBW)
    • Jason Helfstein
      Managing Director - Head of Internet Research at Oppenheimer & Co. Inc.
    • Timothy Greaves
      Equity Research Associate at Loop Capital Markets LLC
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Key Takeaways

  • In Q1 2025, after launching the member-owned Porch Reciprocal Exchange and exiting catastrophic weather risk, the company delivered an 82% gross margin, $69 million gross profit (up 86% YoY), $17 million adjusted EBITDA (20% margin), and $27 million positive cash flow.
  • Based on those strong starts, Porch raised its 2025 guidance to $400–420 million in revenue, $320–335 million in gross profit and $60–70 million in adjusted EBITDA, and now forecasts long-term run-rate EBITDA of $660 million on $3 billion of reciprocal premium.
  • Strategic reinsurance renewals reduced catastrophe retention to $25 million, lowered reinsurance cost, eliminated shareholder exposure to weather claims and left the reciprocal with a $198 million surplus plus non-admitted assets.
  • The insurance services segment accounted for 59% of Q1 revenue, generating $49.8 million from $97 million of written premium at an 85% gross margin and $25.8 million adjusted EBITDA, while software & data grew 4% to $22 million and consumer services invested for future growth.
  • Management highlighted minimal tariff impact (mid-single-digit EBITDA at most), resilience in a recessionary housing market, upside from potential rate cuts and inflation-driven premium hikes, and a data-driven advantage in property pricing.
AI Generated. May Contain Errors.
Earnings Conference Call
Porch Group Q1 2025
00:00 / 00:00

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