What Porch Group (PRCH) Said on Its Q3 Earnings Call

Key Points

• Insurance operations drove strong Q3 performance: Reciprocal policies written rose 42% year over year to about 68,000, while Insurance Services revenue increased 39% to $103 million and segment adjusted EBITDA nearly doubled to $50 million.
• Porch raised its 2026 outlook for company-owned segments, forecasting $518 million–$523 million in revenue and $135 million–$140 million in adjusted EBITDA, while reporting improved profitability, $165 million in cash and investments, and lower net leverage.
• The pending Allied Trust acquisition is expected to expand Porch’s insurance presence in Texas, Louisiana and the Carolinas and contribute approximately $25 million of adjusted EBITDA in its first full year; management is targeting more than $180 million in 2027 adjusted EBITDA excluding the Reciprocal.

Porch Group NASDAQ: PRCH reported third-quarter results marked by continued growth in its insurance operations, higher profitability and an increased full-year outlook, while outlining the expected contribution of its pending acquisition of Allied Trust.

Chief Executive Officer Matt Ehrlichman said Reciprocal policies written rose 42% year over year to approximately 68,000, accelerating from 38% growth in the second quarter. Reciprocal written premium reached $161 million, up 17% from a year earlier. New-customer written premium increased 178%, supported by a 114% increase in producing agency branch locations and 79% growth in quote volume.

“The key takeaway is that our organic growth system is working well,” Ehrlichman said, citing capital capacity at the Reciprocal, an expanding distribution funnel, customer growth and underwriting discipline.

Insurance Services Drives Earnings Growth

Consolidated GAAP revenue totaled $144 million, up 13% year over year. Revenue in Porch-owned segments, excluding the Reciprocal, rose 22% to $141 million. Insurance Services revenue increased 39% to $103 million, while segment adjusted EBITDA nearly doubled to $50 million. The segment’s adjusted EBITDA margin was 49%, and its gross margin was 89%.

Chief Financial Officer Shawn Tabak said Insurance Services produced its sixth consecutive “Rule of 80” quarter, combining 39% revenue growth with a 49% adjusted EBITDA margin.

Company-wide adjusted EBITDA excluding the Reciprocal was $44 million, up 116% from the prior-year period. Net income attributable to Porch was $12 million, representing a $23 million year-over-year improvement.

• Software & Data revenue was $22 million, reflecting a previously announced exit from a lower-value product for small home service contractors.
• Consumer Services revenue was $18 million, with adjusted EBITDA of $3 million.
• Software & Data served about 18,000 companies, while annualized average revenue per company increased 17% to $4,840.
• Consumer Services monetized services declined 11% amid housing and moving softness, though average revenue per monetized service increased 6%.

Porch said the Reciprocal’s gross loss ratio was 24% in the quarter, while its attritional loss ratio, excluding catastrophic weather events, was 18%. The attritional ratio remained in the teens for the eighth consecutive quarter.

Capital Position and Higher 2026 Outlook

Statutory surplus at the Reciprocal totaled $174 million at quarter-end, an increase of $22 million from a year earlier and the sixth consecutive quarter of sequential growth. Ehrlichman said the surplus supports premium capacity approaching $1 billion, while including non-admitted assets would support more than $2 billion of premium.

Porch ended the quarter with $165 million in cash and investments, up $38 million from the second quarter. The company said its net leverage declined to 2.4 times trailing 12-month adjusted EBITDA, within its target range of two to three times. The Reciprocal had $333 million in cash and investments.

The company raised its 2026 guidance for Porch-owned segments, excluding the Reciprocal:

• Revenue of $518 million to $523 million, with a midpoint implying 24% year-over-year growth.
• Gross profit of $438 million to $443 million, with an 85% gross margin at the midpoint.
• Adjusted EBITDA of $135 million to $140 million, with the $138 million midpoint representing 79% year-over-year growth.

Porch continues to expect positive net income attributable to the company for the full year.

Allied Trust Acquisition Adds New Markets

Porch recently announced a pending acquisition of Allied Trust, a regional insurance company with operations in Texas and Louisiana and additional presence in the Carolinas. Management said the transaction is expected to add scale, product capabilities, geographic reach, talent and more than a decade of claims data.

The approximately $200 million aggregate consideration, or about $140 million net of Allied’s statutory surplus, is split between Porch and the Reciprocal. The Reciprocal is expected to pay $105 million for the carrier, which management expects will have approximately $60 million in statutory surplus at closing. Porch plans to pay $95 million for Allied’s managing general agency and captive reinsurance entities, including $75 million in cash and $20 million in stock.

Ehrlichman said the transaction is expected to be statutory-surplus neutral for the Reciprocal and to contribute about $25 million of adjusted EBITDA to Porch in the first full year after closing. Porch expects to apply its property data and underwriting capabilities to evaluate risks, adjust pricing and improve Allied’s premium-to-earnings conversion over 12 to 24 months following closing.

Management said its internal 2027 combined-company target, assuming a full year of Allied contributions, includes more than $900 million of reciprocal written premium, more than 360,000 Reciprocal policies written and more than $180 million of adjusted EBITDA excluding the Reciprocal.

During the question-and-answer session, executives said Allied’s Louisiana operations could accelerate Porch’s entry into that market because the acquisition brings existing claims data, agency relationships, customer brand recognition and distribution infrastructure. The company said it has not completed its assessment of what portion of Allied’s policies may be non-renewed or repriced after closing.

Porch also said it expects to establish an at-the-market program that would allow the Reciprocal to sell some of its existing Porch shares over time, converting largely non-admitted assets into statutory surplus to support additional premium capacity.

About Porch Group (NASDAQ:PRCH)

Porch Group, Inc is a technology company that provides software and services for the residential home services industry. Its platform is designed to help businesses manage customer relationships, scheduling, communications, payments, marketing and other operational workflows.

The company serves professionals involved in the home-buying and home-maintenance ecosystem, including home inspection companies and other service providers. Its offerings have included specialized software platforms such as Inspection Support Network and Floify, which support inspection management and mortgage-related workflows, respectively.

Founded in 2012 by Matt Ehrlichman, Porch initially operated as a consumer-focused home improvement marketplace before expanding into vertical software and related services.

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