Porch Group Q2 2025 Earnings Report

Porch Group EPS Results

• Actual EPS: $0.03
• Consensus EPS: -$0.13
• Beat/Miss: Beat by +$0.16
• One Year Ago EPS: N/A

Porch Group Revenue Results

• Actual Revenue: $119.30 million
• Expected Revenue: $98.06 million
• Beat/Miss: Beat by +$21.23 million
• YoY Revenue Growth: N/A

Porch Group Announcement Details

• Quarter: Q2 2025
• Date: 8/5/2025
• Time: After Market Closes
• Conference Call Date: Tuesday, August 5, 2025
• Conference Call Time: 5:00PM ET

Porch Group (NASDAQ:PRCH), together with its subsidiaries, operates a vertical software and insurance platform in the United States. The company operates in two segments, Vertical Software and Insurance. The Vertical Software segment provides software and services to inspection, mortgage, and title companies on a subscription and transactional basis, as well as move and post-move services. This segment offers inspection software and services, title insurance software, mortgage software, moving services, mover and homeowner marketing, and measurement software for roofers. The Insurance segment offers consumers with insurance and warranty products to protect their homes. This segment provides property-related insurance and captive reinsurance products; and warranty products under the Porch Warranty, American Home Protect, and Residential Warranty Services brands. The company was founded in 2011 and is headquartered in Seattle, Washington.

Porch Group Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Q2 Adjusted EBITDA of $16 million represented a $50 million year-over-year improvement and translated to $15 million in operating cash flow for Porch shareholders.
• Positive Sentiment: Porch Group raised its full-year 2025 guidance, with revenue now targeted at $405 million–$425 million, gross profit at $328 million–$342 million, and adjusted EBITDA at $65 million–$70 million.
• Positive Sentiment: The Porch reciprocal exchange ended Q2 with $299 million in surplus (up $102 million sequentially and $259 million year-over-year), providing capacity to support $1.5 billion in premiums and generate additional high-margin EBITDA.
• Positive Sentiment: Underwriting performance was exceptionally strong, with the reciprocal’s gross loss ratio falling to 34% in Q2 from 117% a year earlier, underscoring effective pricing and risk selection.
• Neutral Sentiment: HomeFactors data business is ahead of schedule, with multiple carrier tests underway and early ROI metrics pointing to future potential in both insurance and adjacent industries.

Presentation

[John Campbell, Head - IR at Porch Group]

Good afternoon, everyone, and thank you for participating in Porch Group's second quarter twenty twenty five conference call. Today, we issued our earnings release and filed our related Form eight k with SEC. The press release can be found on our investor relations website at ir.torchgroup.com. I'd 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, reflect management's views as of today, 08/05/2025.

[John Campbell, Head - IR 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, our 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.

[John Campbell, Head - IR at Porch Group]

Please refer to today's press release for reconciliations of non GAAP measures, to the most comparable GAAP measures discussed during the earnings call, which are also available on our website. As a reminder, this webcast will be available for replay for replay along with the presentation shortly after this call on the company's website at, again, ir.porchgroup.com. So joining me here today are Matt Berlikman, Porch Group's CEO, chairman, and founder Sean Tabak, Porch Group CFO, and Matthew Nagel, Porch Group COO. With that, I'm gonna turn the call over to Matt for his key updates.

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

John has made it that he's listened to almost a thousand of those statements in his career. John, we're happy to have you reading it on on the other side. Good afternoon, everyone. Thanks for joining us. It continues to be an exceptionally exciting time here at Porch, and I'm thrilled to provide an update on strong results, which exceeded expectations across the board, increased guidance, and what's ahead.

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

At the start of twenty twenty twenty twenty five, we launched the member owned Porch reciprocal exchange, which is a key milestone for both our company and our shareholders. This transformed Porch into a simpler commission and fee based model. It's designed to deliver predictable and high margin financial results for Porch Group shareholders. Our go forward structure is playing out better than expected and positions Porch to benefit from the massive now over a 170,000,000,000 US homeowners insurance market, which is attractive customer retention and is expected to grow high single digits annually over the next ten years. So similar to last quarter, our q two financial results were ahead of expectations, straightforward, and reflective of a business that we believe is in the early innings of long term sustainable and high margin growth.

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

To highlight a few key metrics for port shareholder interest, revenue was a $107,000,000 generated predominantly from a $12,121,000,000 dollars of reciprocal written premium. Q two gross profit came in at a healthy $89,000,000, a 431% increase and $72,000,000 improvement over the prior year. We're happy to report that our gross margins remain north of 80%. Q two adjusted EBITDA of $16,000,000 was led again by the strength in insurance services and was an improvement of $50,000,000 versus the prior year and resulted in a 15% margin. As we've said, adjusted EBITDA is largely expected to translate to cash flow.

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

And in q two, we realized $15,000,000 of cash flow from operations for Port shareholders. This caps off a strong 2025 where we generated $42,000,000 of operating cash flow for Port shareholders, of $32,000,000 in adjusted EBITDA. Operationally, we continue to be pleased with the progress made to date and are even more excited about how we're set up for the years ahead. Our agency distribution channel is growing nicely. We've scaled our sales team, our head of plan and insurance agencies added, and have made good progress with new and existing nationwide partners.

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

Our HomeFactors data business continues to progress. We're ahead of schedule here with the number of third party carrier tests underway and are pleased with the ROI metrics that are emerging. While US housing conditions remain difficult, we're pleased with the rate of product innovations in our software and consumer services segments and our ability to align price with value. Bringing us quickly back to our December Investor Day, we talked about the flywheel we designed we designed at Porch. As the reciprocal expands surplus, we're able to grow its premiums faster.

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

As we do so, Porch Group's fees, profits, and cash flow grows, and we'd expect the Porch stock price would as well. By structuring the reciprocal such that it holds 18,300,000.0 Porch shares, as the Porch share price increases, so does surplus and capital at the reciprocal, and the flywheel continues. This strategy is working. We aren't gonna go deep into the reciprocal every quarter, but periodically, we do think it's important to highlight the progress we're seeing and its health. After continued positive underwriting results and strong q two net income, the reciprocal ended the second quarter with $299,000,000 of surplus combined with non admitted assets.

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

The growth here is exceptional. This is an increase of a $102,000,000 versus just last quarter and an increase of $259,000,000 better versus q two twenty twenty four. The second quarter is historically the seasonally toughest from an insurance claims and loss standpoint. So to have this level of growth with the more attractive q three, and in particular, q four still ahead is exciting. Let's look deeper at the progress at the reciprocal between the close of q one to to q q two and see the amount of potential future value created just in this single quarter by growing surplus to the extent we did.

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

So we ended q one with roughly $200,000,000 in surplus combined with nonmeted assets. As a reminder, during our December investor day, we outlined the five to one premium to surplus ratio as a general rule of thumb. This ratio has, in fact, improved further in our new operating model, but we'll stick with the five to one for now. Thus, at the end of q one, the reciprocal had capital, which could support approximately a billion dollars, $1,000,000,000 in premium. Sean will present q two financials shortly, but you'll see in the second quarter, reciprocal written premium translated to insurance services, adjusted EBITDA at a 16% conversion.

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

Assuming that framework at a billion in premium, the reciprocal had the capital to produce a 160,000,000 in insurance services adjusted EBITDA. Now look at q two. The reciprocal closed this quarter at approximately now $300,000,000 in surplus combined with non admitted assets. This lift in capital translates to being able to support another $500,000,000 in reciprocal written premium, so $1,500,000,000 potential overall at this point. This means that the performance by the reciprocal in this quarter alone is exceptionally value creating, providing the capital to support reciprocal written premium that could generate an additional $80,000,000 of adjusted EBITDA or 240,000,000 overall.

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

We'll continue to be measured in how fast we scale the reciprocal's premiums to ensure a significant buffer, and we'll manage how fast we expand Porch Group's margins to optimize for long term shareholder value creation. Finally, before turning it over to the team, I want to reemphasize a point I made last quarter when we outlined why we believe that Porch is set up to be a resilient investments across all macro cycles. Homeowners need homeowners insurance. Broadly speaking, it's not an optional purchase, and historically, homeowners insurance premiums have grown throughout economic cycles. We continue to expect that tariffs will not impact our business in any meaningful way.

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

We believe our business is well protected and may even benefit should a recession take hold. And if interest rates come down against the slowing economy, it could spark a housing market pickup, which would be attractive for nearly all our businesses, including insurance given our focus on homebuyers. The other end, if inflation picks up, homeowners insurance prices should increase, translating to higher premiums and porch revenue. Okay. I'll now turn it over to Sean to cover our strong financial results and raised guidance.

[Shawn Tabak, CFO at Porch Group]

Thank you, Matt, and good afternoon, everyone. Similar to Matt's overview, my comments will address performance of the port shareholder interest since generating cash for port shareholders is our ultimate goal and how we measure our success. As a reminder, under GAAP, we are consolidating the reciprocal exchange financials, which you can find throughout the press release and our 10 q. With that background, let's get into our q two performance. Q two two thousand twenty five port shareholder interest revenue was $107,000,000 with an 83% gross margin, producing 89,200,000 in gross profit.

[Shawn Tabak, CFO at Porch Group]

Adjusted EBITDA of $15,600,000 was ahead of expectations. The GAAP consolidated results are on the right hand side of this slide. Overall, we saw another quarter of strong performance in our insurance services segment, driving total company results above expectations. And while software and data and consumer services segments continue to provide strategic advantages that help our insurance business succeed, the financial results of these segments continue to be impacted by a soft housing market. Given the outperformance in insurance services, we are increasing our outlook for the year, which I'll cover shortly.

[Shawn Tabak, CFO at Porch Group]

The poor shareholder interest revenue of $107,000,000 was comprised of insurance services at 63%, followed by software and data at 22% and the remainder from consumer services. We continue to see the year over year improvements in gross profit and adjusted EBITDA as the clearest way to understand the increases in our results, and we're pleased with the progress. Q2 Porch shareholder interest gross profit was $89,200,000 with an 83% gross margin. This was a $72,400,000 increase over the prior year driven by insurance services. Q two adjusted EBITDA was $15,600,000 a $50,400,000 increase over the prior year driven by the transition to the high margin insurance services reciprocal operator business model.

[Shawn Tabak, CFO at Porch Group]

Now let's move a little deeper into the segment results and starting with insurance services. First, as a reminder, there are a number of ways that Portia's insurance services business generates economics. Management fees paid by the reciprocal based on a percentage of reciprocal written premium, policy fees paid by the policyholders, noncatastrophic weather quota share reinsurance provided by Port's captive reinsurer, which is used to improve capital efficiency for the reciprocal, fees paid by third party agencies when we deliver leads of homebuyers interested in purchasing insurance, and finally, an approximately 15% coupon on a $106,000,000 surplus note Porch Group holds from the reciprocal. From the $121,000,000 of reciprocal written premium, Porch Insurance Services generated revenue of $67,400,000 a 56% premium to revenue conversion rate. Associated gross profit was $57,900,000 a gross margin of 86%.

[Shawn Tabak, CFO at Porch Group]

Segment adjusted EBITDA was $19,700,000 a margin of 29% and a 16% premium to adjusted EBITDA conversion rate. We continue to be pleased with the transition to the reciprocal and the insurance services business model and how we are performing here. Shifting now to software and data. Revenue was $24,000,000, a 4% increase over the prior year driven by product innovation and corresponding price increases. We continue to see a sluggish underlying housing market, and small businesses in our related markets are also seeing softness.

[Shawn Tabak, CFO at Porch Group]

Gross profit was $18,200,000 a 76% gross margin. Adjusted EBITDA was $5,500,000 a $1,500,000 increase over the prior year driven by the revenue increase and effective cost control. Shifting now to consumer services. Revenue was $17,700,000 a 6% decrease over the prior driven by the closure of our lower margin corporate relocation moving products in the 2024. Gross profit was $15,200,000 an 86% gross margin.

[Shawn Tabak, CFO at Porch Group]

This was a 640 basis point margin improvement over the prior year driven by the shift toward higher margin services. Adjusted EBITDA was $2,000,000, an $800,000 increase over the prior year driven by cost discipline. Over the last few years, we have reduced corporate expenses as we move to lower cost locations and reduced G and A back office costs. In the second quarter, corporate expenses of $11,500,000 decreased $700,000 from the prior year. Moving on to the balance sheet.

[Shawn Tabak, CFO at Porch Group]

There are several benefits from the shift toward the commission and fee based insurance services business model. It's simpler, higher margin, and asset light. And as a reminder, our focus is on generating cash for Port shareholders, which aligns closely with Port shareholder interest adjusted EBITDA. Port cash plus investments was $117,000,000 at 06/30/2025. Port shareholder interest cash flow from operations was $14,900,000 in the quarter, driven by the $15,600,000 in adjusted EBITDA.

[Shawn Tabak, CFO at Porch Group]

In Q2, we made notable progress on our capital structure, settling all but 20,500,000 of our twenty twenty six convertible notes. We refinanced $153,000,000 of our twenty twenty six unsecured convertible notes with $134,000,000 in 2,030 unsecured convertible notes and cash. Additionally, after the end of the quarter, we repurchased an additional $11,800,000 of the remaining twenty twenty six notes at approximately 96% of par, bringing the remaining balance to $8,800,000 All in, we believe that our balance sheet is well positioned for our next stage of growth, and we are on track to reach our leverage goal of two to three times adjusted EBITDA in the medium term. Now for our updated 2025 guidance for core shareholder interest. We are pleased with our results in the first half of the year and are raising our guidance across the board.

[Shawn Tabak, CFO at Porch Group]

We are increasing our 2025 revenue guidance by $5,000,000 now ranging from $4.00 $5,000,000 to $425,000,000 We are increasing our 2025 gross profit guidance by $7,500,000 given the higher margins we are seeing, now ranging from $328,000,000 to $342,000,000 For adjusted EBITDA, we are raising the midpoint by $2,500,000, now at a tightened range of $65,000,000 to $70,000,000. And now I'll hand over to Matthew to discuss a strategic update and review our KPIs.

[Matthew Neagle, COO at Porch Group]

Thank you, Sean. I'll start by giving a brief business update and an overview of the KPIs across for shareholder interests, three operating segments. We are back on offense and insurance and focused on growing premiums while also growing surplus at the reciprocal. Q two reciprocal written premium grew 25% over q one with tremendous capacity for ongoing growth. We believe you're on track to seed 2025 target of 500,000,000.

[Matthew Neagle, COO at Porch Group]

Agencies serve as our main distribution channel, so extending and deepening our partner base is a key focus for us. Since the launch of the reciprocal, we've grown our sales and account management headcount from just two to 26 employees. The investment has led in ahead of schedule pace for the number of independent insurance agencies we're working with. In the quarter, we announced a handful of notable wins, including a renewed partnership with Goosehead, as well as a as well as new relationships with Romely, Ever Tree, and Mass Drive, among other confidential nationwide partners. In addition, we are expanding geographies again, nearing the launch of a new state in Michigan.

[Matthew Neagle, COO at Porch Group]

And as I touched on last call, most of the ZIP codes across our existing states have been reopened at this stage. Additionally, we'll grow with differentiated product. The new porch insurance product has been designed to be truly differentiated. Like our HOA product, it will leverage our unique property data to provide pricing advantages. But in addition, we are including other important benefits for home buyers, in particular, such as a full home warranty and four hours of moving service.

[Matthew Neagle, COO at Porch Group]

Moving to the insurance KPIs, reciprocal written premium in queue was a $181,000,000. Recivocal 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. In the quarter, we wrote nearly 43,000 policies. RWP per policy written is calculated by dividing the reciprocal written premium by the total number of reciprocal policies written.

[Matthew Neagle, COO at Porch Group]

For the second quarter, we posted RWP per policy written of $2,843 which was a 6% increase versus the prior quarter. We'll periodically update on the reciprocal's health, which is clearly strong, given its all time high of $299,000,000 of surplus combined with non admitted assets. We ensure the reciprocal is healthy in several ways and that there is adequate surplus in capital to support the scaling of premium for many years ahead. To put a finer point on this, the reciprocal has the statutory surplus to support our premium goals through 2026, even if the share price was approximately $2 and no shares were sold. This is as of the end of Q2, and as a reminder on the historic seasonality of the reciprocals business, Q3, and in particular Q4, are the most profitable quarters.

[Matthew Neagle, COO at Porch Group]

Second, continued exceptional underwriting. In Q2, the reciprocal's underwriting strength was driven by the combination of our data advantage, effective pricing efforts, strong underwriting and more normal weather. Third, downside protection with reinsurance. As we discussed last earnings call, we finalized our reinsurance renewal on April 1 with a great outcome, continuing partnerships with a panel of more than 40 A rated reinsurance partners. This renewal improved the retention per weather event to $23,000,000 which reduces the reciprocal's exposure.

[Matthew Neagle, COO at Porch Group]

As a reminder, if Q2 had included major weather events, Porch Group's adjusted EBITDA still would have been the same $15,600,000 as the weather claims are paid by the reciprocal. The reciprocal surplus would absorb the associated weather claims losses up to the retention level. Therefore, if a major weather event had occurred in Q2, the reciprocal still would have had approximately $275,000,000 of surplus combined with non admitted assets and the ability to support approximately $1,375,000,000 in premium. So you can see how the reciprocal's capacity to write premium remains strong and is protected from large weather events. Moving to software and data, our strategic focus areas for this segment are price increases tied to software innovation, continued market expansion, and growth of our data business.

[Matthew Neagle, COO at Porch Group]

On the software front, we continue to innovate with urgency, and I'm pleased with the team's efforts in positioning us well for when the market normalizes. One highlight I wanted to share, in particular, was Rhino securing two impactful wins, including the nation's largest title insurance company with Fidelity National Financial's EscrowTrax, as well as another top five title insurance company. This continues to demonstrate the scalability of Rhino's enterprise grade fraud detection and reconciliation tools. Relative to our data business, we have been highly encouraged, but not at all surprised, by early stage metrics and proof points we were seeing out of a broad group of insurance carriers testing home factors. As it stands today, we are ahead of plan related to the number of carriers testing home factors and are pleased with the results to date.

[Matthew Neagle, COO at Porch Group]

Companies and other industries are testing as well. And in mid July, we announced that a regional home improvement brand utilized HomeFactors for a marketing campaign and the results were impressive. In terms of the software and data KPIs, in Q2, we served approximately 24,000 companies with an annualized revenue per company of $3,974 which rose 9% versus Q1. We continue to believe that the number of companies served likely remains flattish until better housing conditions bring more companies back into the market. The biggest update in consumer services is a recent TDI approval to include warranty and four hours of moving services as a member benefit for Porsche Insurance customers.

[Matthew Neagle, COO at Porch Group]

Our moving business continues to make progress in a variety of ways, including providing additional products and services that can be utilized by customers. Hacking services is one of these new offerings which has been received well. As for the consumer services KPIs in q two, we had 87,000 monetized services with annualized revenue per monetized service of $202. I'll now pass it back to Matt to wrap us up.

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

Thank you, Matthew. I'll wrap up by reinforcing the most important messages from today. So first, certainly, we delivered quarterly adjusted EBITDA of $16,000,000 in q two twenty twenty five, a $50,000,000 increase year over year. Again, this translates to $15,000,000 in Port shareholder interest cash flow from operations in the quarter and $42,000,000 in the first half of the year. Second, we increased our 2025 adjusted EBITDA guidance midpoint to $67,500,000 for the year.

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

Third, gross margins, which remain north of 80% with $89,000,000 gross profit, up $72,000,000 year over year. Next, we are very pleased with the continued increasing health of the reciprocal as we discussed. From a capacity standpoint, we are at a record level of surplus and have tremendous room to grow premium and porch profits. Our flywheel is working and is just getting started. And lastly, we've shifted back to offense as we add agencies, and we're excited about what the future holds for our differentiated porch insurance offering.

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

Alright. Thanks for your time today. We're in the early stages of building a truly great company, and we're glad to have you along for the ride. With that, JR, please go ahead and open up the call for questions.

[Operator]

Thank you. Ladies and gentlemen, we will now begin the question and answer session. The first question comes from the line of Daniel Kurnos with The Benchmark Company. Please go ahead.

[Daniel Kurnos, MD - Internet & Media Equity Research at The Benchmark Company LLC]

Great. Thanks. Obviously, another fantastic quarter for you guys. Apologies if I missed this one because my phone cut out for a second. But Sean, did you address why the take rate and insurance went to almost 56% from 51 and a half percent in the quarter and how we should be thinking about that because it's a pretty big step function?

[Shawn Tabak, CFO at Porch Group]

Yeah. Happy to take that one. I guess, and, Dan, great to, thanks for the question. Overall, we're we're continuing to be quite pleased with the model and how it's working out. The reciprocal written premium to your the basis of your question is very efficiently transferring into poor shareholder interest revenue and better than we expected there in the quarter.

[Shawn Tabak, CFO at Porch Group]

So just pleased with how it's it's working and, you know, continue to not only see the revenue flow through, but importantly, the EBITDA and cash flow also flow through, from how that, that's all working out.

[Daniel Kurnos, MD - Internet & Media Equity Research at The Benchmark Company LLC]

Well, it's it's a good place to follow-up, Sean. I appreciate the color because, you know, Matt, I know you're managing to margins here. Like sales and margin is pretty high in insurance. I'm just kind of curious the areas of investment you're making there. You clearly have plenty of cushion to do whatever you want. But just maybe how to think about that because that also ticked up because you're clearly flexing some internal muscle at the moment.

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

Yeah. We talked a bit last quarter about, you know, making additional investments across, you know, our insurance business as well as software and consumer services. You know, we are we are making investments. I mean, we are set up to your point, and we have room to be able to position ourselves, you know, well for growth as we look ahead. We also had mentioned that, starting April 1, you know, we shifted the, the quota share program that that our captive reinsurer provides to the reciprocal to also pay a bit higher commission back to the reciprocal, and that shows up in the sales and marketing line as well.

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

And that's another way that we can drive more surplus, you know, back into the reciprocal. And, Dan, to your question, it's why we're, you know, really excited about the results because we were able to generate really strong economics at Porch Group for our shareholders and really strong growth in surplus, you know, at the reciprocal, which allows for more growth as we as we look ahead. But but that's the other driver there.

[Daniel Kurnos, MD - Internet & Media Equity Research at The Benchmark Company LLC]

Got it. Just last for me. I know it's super early since you just got TDI approval. We kinda talked about this last time. But just thinking about attach rates to warranty and moving, I don't think we had contemplated

[Daniel Kurnos, MD - Internet & Media Equity Research at The Benchmark Company LLC]

Obviously, it's super smart on the flywheel side. But is there any kind of directional color we should be thinking about, in terms of additional growth coming now that you have approval there from those vectors?

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

So we'll we'll share more metrics as we go, obviously. But just strategically, it is a it's it's a big deal, you know, for us because we want to not only have fundamental advantages with the the data, the differentiated data that lets us price the insurance products more accurately than the than the market. We not only wanna have advantages with the structure and the margins that we're able to create, and we're demonstrating that to your earlier question that we're able to simply generate a lot of value, you know, out of our insurance business for our shareholders. But we also wanna differentiate with the the fundamental product that's in the market. And so now, you know, having having product, just look ahead where you can have products in the market that that it's not only about just providing insurance, but we can provide full protection for your home that includes warranty coverage for all of the porch insurance customers, but we can also provide, you know, moving, you know, service, you know, for home buyers.

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

You know? And we really do want porch insurance to end up being known as the best insurance product for home buyers. And so this that's a big deal for us just strategically to be able to help just extend that that the the long term advantages that we're gonna have there.

[Daniel Kurnos, MD - Internet & Media Equity Research at The Benchmark Company LLC]

Got it. Alright. So many more questions, but I'll shut up so people don't get mad at me. Thank you, Matt, and, well done again on the print.

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

Thanks, Sam. Appreciate it.

[Shawn Tabak, CFO at Porch Group]

Sam.

[Operator]

Your next question comes from the line of Jason Helfstein with Oppenheimer. Please go ahead.

[Jason Helfstein, MD & Head - Internet at Oppenheimer & Co. Inc.]

Thanks for taking the questions. So maybe talk a little bit more just about how you're thinking about growth versus margin expansion. Obviously, you've seen very strong financial performance this year. And just what's the philosophy, I guess, as we're kind of thinking, I'm not asking for 2026 guidance, but kind of growth versus margin? Number two, again, revenue is not the best proxy, but you beat TechnoTra revenue, at least beat us by $11,000,000 you're only raising the full year by $5,000,000 So just is there anything you're seeing in third quarter that's giving you pause or again revenue is not the best way to typically look at insurance?

[Jason Helfstein, MD & Head - Internet at Oppenheimer & Co. Inc.]

And then lastly, just any commentary on the weather impacts on 2Q? Thanks. From a if it was actually favorable? Thanks.

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

Perhaps I'll take the first one. Sean, why don't you take the second? And Matthew, perhaps take the third. So real quick, in terms of philosophy. With with with the model that we have, the business we have now, Jason, we are, set up, and very optimistic about our ability to be able to consistently grow, know, at a at a really nice clip.

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

We talked back in the investor day, you know, grow, you know, north of 20%, you know, annually for an extended period of time. You know, we expect to be able to go and and do that as we look ahead while also showing margin expansion, you know, each year. You can see, you know you know, our gross margins are more than than 80, but but, you know, look at the adjusted EBITDA margins. You know, in our view, there's a lot of room to be able to continue to grow our adjusted EBITDA, you know, margins over time. But we do want to manage it.

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

We don't want need to max out growth this year or max out adjusted EBITDA margin this year. We wanna show nice, consistent sequential improvement, you know, for both of those two metrics for a long, long, long period of time. And that's how we believe we'll be able to create the most value over time, you know, for shareholders. Lashan, to you to take the second question?

[Shawn Tabak, CFO at Porch Group]

Yeah. The second question was about, q two revenue and, and and revenue for the second half of the year, implied in our guidance. And I think both are strong is the key takeaway there. Q two was above our expectations. I know it was more above the maybe consensus from the street's expectations.

[Shawn Tabak, CFO at Porch Group]

But from our, you know, internal, it was above our expectations. And, you know, we also increased guidance for the rest of the year. So, actually, we feel really good going into the second half of the year. The a lot of the things that Matthew talked about on the growth side and continuing to scale premiums at the reciprocal. That's a key driver.

[Shawn Tabak, CFO at Porch Group]

Actually, Dan's question was another one. We're seeing, you know, the premium convert to revenue and adjusted EBITDA very strongly in in porch insurance services. And then I guess the third thing I would just quickly highlight I know the question's more on revenue, but, you know, we're increasing our adjusted EBITDA midpoint by two and a half. That's while we're continuing to invest in growth, within operating expenses for 2026 and beyond. So, as a team, we're quite pleased with the performance and, you know, happy to be able to raise guidance, across the board today.

[Matthew Neagle, COO at Porch Group]

Sure. I'll take the third one. I think I heard comments on q two weather. You know, the first thing I'll say is overall, the weather felt normalized as we compare to twenty twenty four q two. What's also important to emphasize so that everybody who's on the call is clear is Port Group shareholders would not have been directly impacted by the weather in Q2 had it been not more normal weather.

[Matthew Neagle, COO at Porch Group]

And then I'd also reiterate comments from the prepared remarks, which is we've done a lot of work with our reinsurance partners to lower our retention, which is the max amount we would pay if there were a large event, and we've lowered that to $23,000,000 So even if there would have been a significant event in q two, it would have impacted Porch Group directly. And to the extent it would have impacted the reciprocal, we would have had that really strong reinsurance protection. The last thing I would say is we have done a lot of work to get the right risks into our portfolio, leveraging our data. And so that has also contributed to the overall performance in q two, where we we felt like we had a really strong underwriting performance quarter.

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

Let me just tag on one more thing real quick because, Jason, you might have also been thinking about q three, you know, weather just so far. Around the fourth of July weekend, you know, there were flash floods in in Texas and and just, you know, so so sad, and and our hearts go out to the families that were impacted, you know, by that. It's just terrible. Related to the business into the reciprocal, the the volume of claims was not not material at all. It was nominal.

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

And just as a reminder, flood is typically not a covered event in homeowners insurance, and it isn't for us. So there there's not exposure, you know, to to events like that. But, anyway, if you were if you were thinking about the q three, you know, weather earlier in in July, it was not that's not a material event. Obviously, it's not an event for Porch Group, but it's not an event for the reciprocal either.

[Jason Helfstein, MD & Head - Internet at Oppenheimer & Co. Inc.]

Appreciate the color. Thank you.

[Operator]

Next question comes from the line of Jason Kreyer with Craig Hallum. Please go ahead.

[Cal Bartyzal, Equity Research Analyst at Craig-Hallum Capital Group LLC]

Great. Thank you. This is Cal on for Jason. So maybe to start, good to hear the updates on HomeFactors, but I'm just kind of curious if you can speak to applications of this data outside of just licensing for underwriting. Just curious the opportunity you're seeing in other industries like media campaigns and if there's any difference in the sales cycle with these other industries relative to the more elongated sales cycles when you're working with carriers.

[Matthew Neagle, COO at Porch Group]

Sure. I can speak to it. We see a lot of interesting use cases for the data. We obviously are using it for our own underwriting. We've talked about factors within, the insurance space to help drive underwriting and pricing.

[Matthew Neagle, COO at Porch Group]

When we look beyond that, it is certainly there's certainly potential when it comes to reaching homeowners who are going through a real estate transaction. And if there are homes that have certain conditions that may indicate certain types of work is likely to be needed, such as as roofing. And so we are, working with potential partners and partners around those use cases. I would say the sales cycle is shorter than in insurance because generally there's the shorter testing period. There's still some sales cycle there, but it's something we are excited about.

[Matthew Neagle, COO at Porch Group]

The last thing that I would say is over time, there's also opportunities for us to use that data to power the consumer experience tied to our, porch app and the porch insurance, value prop because we can bring in that data and help to educate and engage and empower homeowners with more information about their home.

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

I'm just gonna tack on because I think it's I think it's an interesting one. I think, Matthew, you had all the key points. And there's lots of use cases outside of insurance. But with carriers, we are finding more and more opportunities for ways to be able to to use the data and create value, obviously, for underwriting. You know, obviously, for pricing, you know, upstream to be able to have more accurate pricing.

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

We mentioned during our reinsurance renewal how we're bringing in the data into our reinsurance submission, you know, was able to lower cost materially. So there's opportunities with reinsurance. Carriers that are out there that are marketing to consumers. If we know which consumers are buying homes and which consumers have low risk homes, clearly, that's valuable. And then lastly, you know, insurance carriers out there spend a lot of money doing their own, you know, kind of reviews of homes post underwriting.

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

And if we have that data, you know, and they can be able to speed up that process and be able to be be more accurate, you know, obviously, that that creates a lot of value. So it's it's been fun as we have more and more tests going on because it's opening up lots of use cases. And, again, like we mentioned in the prepared remarks, the results in the ROI so far have been, been been very, very strong.

[Cal Bartyzal, Equity Research Analyst at Craig-Hallum Capital Group LLC]

Great. Appreciate all the color there. And then maybe lastly for me, you announced some new insurance agency partnerships. Just curious if you can update us on the go to market agent reception, any additional distribution strategies you might be pursuing?

[Matthew Neagle, COO at Porch Group]

Sure. You know, we are focused on the agency channel. There's massive untapped opportunity for us in terms of how much we've penetrated and how much is out there. We are investing in growth through the agency channel. We've built out a team.

[Matthew Neagle, COO at Porch Group]

I made a I mentioned we grew from two to just as of now, we're up to 26. We're ahead of pace in the number of agencies, and we're excited about the differentiated value product or value that we can bring with our porch insurance product. Matt mentioned, you know, we now have a member a set of member benefits that include a full warranty, moving services that's on top of our moving concierge. We're in a position, given our economics, to pay competitive, commissions. And so agents are excited to work with us and to grow with us.

[Matthew Neagle, COO at Porch Group]

And I would say we're very early stages, both in our outreach to grow the number of agents and to build those relationships with them so that we're a bigger and bigger part of their business. So excited, early, lots of growth ahead for us.

[Cal Bartyzal, Equity Research Analyst at Craig-Hallum Capital Group LLC]

Great to hear. Thank you.

[Operator]

Your next question comes from the line of Randy Binner with B. Riley. Please go ahead.

[Randy Binner, Managing Director at B.Riley Securities]

Hey, thanks. Yes, I'm kind of picking up actually on the insurance side on last question there, if that's okay. The guess I should be interested to hear you've talked about the go to market adding agents in sales and distribution and that's important. But I'd be interested just to hear if there's certain states or kind of broader geographies where you're seeing more success? I think homeowners rates are up a lot across the country.

[Randy Binner, Managing Director at B.Riley Securities]

And so is our agents viewing the reciprocal as like a new market that has better pricing? Or is there certain areas where you're coming in and large carriers are going out? Just be interested kind of how the reciprocal is being received and where it's finding success so far.

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

Sure. Yeah. There there's a couple of things to to hit on. I think it was a great great question. Thanks thanks for the thanks for it.

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

So first, just to make sure it's clear, in market, you know, we continue to offer our homeowners insurance, you know, product, You know? And then porch insurance, you know, will be a a second product, you know, that that's in market that'll have and will have, you know, differentiated value propositions. We will continue to expand states. So right now, we're in, you know, 20 just just 22 states, but there's a bunch of states that we are not in that we think are really attractive insurance markets. And so we'll expand both the homeowners of America product and then eventually over time, the porch insurance product as we roll that out, you know, across the country.

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

But, know, again, very attractive markets that are out there. Within our existing states, some of them, Texas being one, we have seen other carriers, you know, exiting that state or slowing down new business. You know, obviously, that's great for us. You know, our underwriting results are very, very strong. And and, obviously, the fact that we know more about properties when we're pricing policies helps us to be able to have very strong underwriting results.

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

And so, you know, for us, you know, it creates a really attractive, I'd say, market dynamic, you know, because not only do consumers need our product, but agents, you know, need our product as well as they're as they're going out, you know, to market. So net, you know, I I mentioned this a bit earlier on. We do think the homeowners insurance category as a whole, is a beautiful place to be playing. You know, it is to your point, it is growing, and we it's expected to continue to grow really fast. And given that we can play in that market without having to take on the weather volatility, you know, on a month to month or quarter to quarter basis, you allow our business to grow with high margins and just participate, you know, in what's ahead for for the category.

[Randy Binner, Managing Director at B.Riley Securities]

Thanks for that. And then just related and apologize if I missed this, but did you talk at all about the loss ratio for the reciprocal in the quarter? I know it doesn't accrue to Port shareholders. But just curious in a kind of a normal or even better cat quarter for Texas, if there if you can disclose kind of like how good the losses were in the quarter?

[Shawn Tabak, CFO at Porch Group]

They were exceptional, is the the short answer. The gross loss ratio was 34% in the quarter. That compares to a 117% last year. In q two, remember, q two is usually when the majority of the losses come in because of that Got Yeah. The weather.

[Shawn Tabak, CFO at Porch Group]

And so tremendous result there. You also saw net income in the quarter for the reciprocal of, you know, just under $6,000,000 compared to a loss of around $30,000,000 last year. So just a a really great part. And then that I think that's as Matt talked about on the call today, that's that's what's underpinning that, increase in surplus combined with non admitted assets, is is a really strong underwriting performance there.

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

Yeah. I'll I'll just layer on.

[Randy Binner, Managing Director at B.Riley Securities]

Alright.

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

Attrition attritional loss ratio as well, something we look at, know, was, again, just exceptional. And it just goes to show that we really have fundamental advantages, you know, with our ability to price and underwrite.

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

But attritional loss ratio was in the second quarter down to 8%, you know, which is a 1,300 basis point improvement, you know, versus the same quarter prior year. So, again, just, you know, very, very strong results for the reciprocal.

[Randy Binner, Managing Director at B.Riley Securities]

Alright. Very good. Thank you.

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

Thanks for the questions.

[Operator]

Your next question comes from the line of Timothy Greaves with Loop Capital. Please go ahead.

[Timothy Greaves, Equity Research Associate at Loop Capital Markets LLC]

Hi, thank you for taking my question. I guess I want to ask more about the HomeFactor than the conversion there. I know you said that there's a lot more people testing the product, but what is the timeline on, I guess, adoption? And, and what is the, conversion rates you're you're seeing in, like, people testing to to adopting a product?

[Matthew Neagle, COO at Porch Group]

Sure. I can hit on that. What we're excited about is the interest and engagement across the broad set of carriers that are, of all shapes and sizes. I'll just say that kind of the the vibe we get from the carriers is very strong. In terms of the selling cycle, we, would say, are seeing what we expect.

[Matthew Neagle, COO at Porch Group]

These carriers wanna test it. They have certain steps they have to take before they can formally introduce it into their pricing, in their underwriting. All of them remain very engaged. From a financial standpoint, we haven't we don't need any revenue from HomeFactors to hit our twenty twenty five targets. And I would say the progress is is going well.

[Matthew Neagle, COO at Porch Group]

We don't report on a on a conversion rate. We have shared kind of what we did with Bamboo. We don't expect to release every single, new customer that we get. But I'll just reiterate, there's real interest and real excitement. The team's fired up.

[Matthew Neagle, COO at Porch Group]

The vibes are good, and we're pushing really, really hard.

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

Yeah. I would just layer on. I do think that that carriers, as ever they've gone through the test, really do feel like we're hitting the bull's eye with, with the product that we have, you know, for them. So, I I I concur. I think that it's, it's set up well as we look ahead.

[Timothy Greaves, Equity Research Associate at Loop Capital Markets LLC]

Okay. Thanks for the color.

[Operator]

Your next question comes from the line of Graham Bundy with KBW. Please go ahead.

[Graham Bundy Jr, Equity Research Associate at KBW]

Hello, everyone. I am on for Ryan Thomas asello today, and I appreciate you taking my questions. First, you've had success taking price across many of your software brands over the last year or so. Going forward, will the approach be more consistent with annual price taking on renewals? Or should we expect your price taking to continue to be lumpy with a more multiyear approach?

[Matthew Neagle, COO at Porch Group]

Well, I'll take that. Our strategy is to continue to price the value. Our strategy is to continue to invest in innovation, continue to bring new features and products to market. I don't want to say exactly when we'll do price increases, but it's certainly our expectation that we'll be able to have ongoing price increases across our businesses. And the upside to that is a lot of those businesses are driven by transaction volume in the real estate market, and transaction volume is low both for new home sales and for refinancings.

[Matthew Neagle, COO at Porch Group]

And as the interest rates come down, our expectation is that that market will get healthier, will get closer to normal. And then all the good work we've done around innovating on products and raising price will be a nice upside that will essentially drop to the bottom line on those businesses. So that's the strategy we're focused on.

[Graham Bundy Jr, Equity Research Associate at KBW]

Okay. Awesome. I appreciate the color there. And then my follow-up, which you all have already touched on slightly, but just in terms of EBITDA margins, you've obviously already told us how you're thinking about the longer term potential. But over the near term, should we expect the pace of the margin expansion to be relatively consistent?

[Graham Bundy Jr, Equity Research Associate at KBW]

Or do we also need to consider the potential for some opportunistic reinvestment that makes annual margin expansion a bit lumpier?

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

Obviously, we haven't provided, you know, 2026, you know, guidance as we look ahead, but I'll just give you, you know, generally what we've talked about, which is we we do expect to be able to show nice margin expansion while also investing, you know, in the business to be able to sure ensure that we're growing at the clips we wanna grow. So we don't expect it's going to need to be the improvement's gonna need to be lumpy. You know, we think that we're gonna be able to manage the business to be able to create a lot of value for shareholders. And we think, again, like I said before, the combination of really nice growth with margin expansion, you know, each year for an extended period of time, you know, we'll we'll produce that.

[Graham Bundy Jr, Equity Research Associate at KBW]

Awesome. Thank you for the color.

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

Thanks for the questions.

[Operator]

And it seems that we have no further questions for today. I would now like to turn the call back over to Matt Ehrlichman for closing remarks.

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

I I just appreciate folks, you know, tuning in and being being with us on this this journey. I I think you can probably, you know, hear it come through, hopefully, but the team is fired up. We are we're in a good spot. The vibes across the company are are, I would say, excellent. And, we're, you know, in the early days of building a really big, you know, exciting business.

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

So we'll we'll keep you up to speed as we continue to progress, but I appreciate everybody's time. Have a great rest of the day.

[Operator]

This concludes today's conference call. You may now disconnect.

Participants

Executives

• John Campbell, Head - IR
• Matt Ehrlichman, CEO, Chairman & Founder
• Shawn Tabak, CFO
• Matthew Neagle, COO

Analysts

• Daniel Kurnos, MD - Internet & Media Equity Research at The Benchmark Company LLC
• Jason Helfstein, MD & Head - Internet at Oppenheimer & Co. Inc.
• Cal Bartyzal, Equity Research Analyst at Craig-Hallum Capital Group LLC
• Randy Binner, Managing Director at B.Riley Securities
• Timothy Greaves, Equity Research Associate at Loop Capital Markets LLC
• Graham Bundy Jr, Equity Research Associate at KBW