Porch Group, Inc. · NASDAQ:PRCH
Porch — Q1 2024 Earnings Presentation
34 slides from Porch's earnings presentation, May 8, 2024
Slide 1: Q1 2024 Earnings Presentation
Q1 2024 Earnings Presentation May 8, 2024 Copyright 2024 Porch Group, Inc. All rights reserved
Slide 2: Presenters
Presenters Matt Ehrlichman Shawn Tabak Matthew Neagle Efram Ware CEO, Chairman & Founder Chief Financial Officer Chief Operating Officer President & GM, HOA Copyright 2024 Porch Group, Inc. All rights reserved 2
Slide 3: Disclaimer
Disclaimer Forward-Looking Statements Certain statements in this presentation may be considered “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. These statements are based on the beliefs and assumpt
Slide 4: Agenda
Agenda • Click 1 to edit Q1’24 Master text styles Update • Second level • Third level 2 Results & level • Fourth Guidance • Fifth level 3 KPIs 4 Deep Dive: HOA 5 Outlook 6 Q&A Copyright 2024 Porch Group, Inc. All rights reserved 4
Slide 5: Q1'24 Update
Q1’24 Update Matt Ehrlichman CEO, Chairman & Founder Copyright 2024 Porch Group, Inc. All rights reserved
Slide 6: Porch: A New Kind of Homeowners Insurance Company
Porch: A New Kind of Homeowners Insurance Company How We’ll Win Vertical Software Homeowners insurance differentiators Home Services Leading SaaS products Insurance, warranty and for inspection, mortgage moving services and title companies Advantaged underwriting Best for homebuyers Whole home prote
Slide 7: Q1 2024 Financials: Improvement Year-Over-Year
Q1 2024 Financials: Improvement Year-Over-Year Total Revenue ($m) Revenue Less Cost of Adjusted EBITDA (loss)1 $115.4 Revenue ($m) ($m) $87.4 +32% $36.1 $39.6 +10% Q1'23 Q1'24 Q1'23 Q1'24 ($21.9) +$5m ($16.8) Q1'23 Q1'24 41% 34% (25)% (15)% Revenue less Cost of Revenue Margin Adjusted EBITDA margin
Slide 8: Top Decile 2023 Direct Combined Ratio
Top Decile 2023 Direct Combined Ratio U.S. Top 50 Homeowners’ Insurance Carriers: 2023 Direct Combined Ratio1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 Texas Top 50 Homeowners’ Insurance Carriers: 2023
Slide 9: Q1 2024 Key Updates
Q1 2024 Key Updates ● Successful reinsurance renewal on April 1st: ○ Secured more excess of loss (XOL) coverage at better terms ○ 3rd party quota share terms improved, resulting in slightly higher ceding than anticipated ● Rynoh: >20% price increase implemented in the quarter ● ISN: price increase i
Slide 10: Results & Guidance
Results & Guidance Shawn Tabak Chief Financial Officer Copyright 2024 Porch Group, Inc. All rights reserved
Slide 11: Financial Highlights – Q1 2024
Financial Highlights – Q1 2024 1 Total Revenue ($m) Revenue less Cost Adj EBITDA (loss) Gross Written of Revenue ($m) ($m) Premium ($m) $115.4 $115 $87.4 (28)% $83 +32% $36.1 $39.6 +10% Q1'23 Q1'24 Q1'23 Q1'24 Q1'23 Q1'24 ($16.8) ($21.9) +$5m Q1'23 Q1'24 41% 34% (25)% (15)% Revenue less Cost of Reve
Slide 12: Revenue by Segment – Q1 2024
Revenue by Segment – Q1 2024 Total Revenue ($m) Insurance Segment ($m) Vertical Software Segment ($m) $115.4 $87.4 $87.9 +32% $58.7 +50% $28.6 $27.5 (4)% Q1'23 Q1'24 Q1'23 Q1'24 Q1'23 Q1'24 67% 76% 33% 24% % Total Revenue % Total Revenue ▪ Insurance Segment was ▪ Revenue increase due to +33% ▪ Movin
Slide 13: Claim Type Breakdown
Claim Type Breakdown 1. Attritional1 claims typically represent ~half of annual losses 2. Catastrophic2 (CAT) losses generally consistent on a year-to-year basis with occasional outliers Attritional Gross Loss Ratio: CAT Weather Gross Loss Ratio: 2021 experienced 71% Winter Storm Uri, we were well p
Slide 14: Impact Of Catastrophic Weather In Q1 2024
Impact Of Catastrophic Weather In Q1 2024 Insurance Segment Q1 2024 Expected Q1 Variance Net attritional losses and other COR $(35)m Net CAT losses $(36)m $(28)m $(8)m Cost of Revenue $(71)m ▪ $36m CAT weather ~$8m worse than historic experiences and management expectations Copyright 2024 Porch Grou
Slide 15: Adjusted EBITDA by Segment – Q1 2024
Adjusted EBITDA by Segment – Q1 2024 1 Total Adjusted Insurance Segment ($m) Vertical Software Corporate EBITDA (loss) ($m) Segment ($m) Expenses ($m) ~$8m loss above expectations with early Texas Spring $1.1 Storm Season2 ($2.9) ($0.4) +$1m ($7.2) +$4m Q1'23 Q1'24 ($14.3) ($15.0) +$5m ($16.8) ($21.
Slide 16: Balance Sheet as of March 31, 2024
Balance Sheet as of March 31, 2024 Cash, cash equivalents and investments ($m) Total Porch Group $413 Porch $112 +$8m Q1’24 Operating Cash Flow Homeowners of America $301 +$6m Q1’24 Free Cash Flow March 31, 2024 ▪ Additional $37m restricted cash and cash equivalents held incremental to unrestricted
Slide 17: 2024 Guidance: Increasing Adjusted EBITDA Guidance
2024 Guidance: Increasing Adjusted EBITDA Guidance $450m-$470m ● 2024 Revenue growth of 5% to 9%. Quota share ceding at a Revenue higher level than anticipated (Previously: $450-$490m) $230m-$240m ● Assumes 63% GLR in line with 5-year weighted average Revenue less Cost of Revenue (Previously: $225m-
Slide 18: KPIs
KPIs Matthew Neagle Chief Operating Officer Copyright 2024 Porch Group, Inc. All rights reserved
Slide 19: KPIs – Q1 2024
KPIs – Q1 2024 30k ▪ Broadly consistent with prior quarters with continued housing market headwinds Avg Number of Companies $1,294 ▪ +36% from Q1’23, driven by lower ceding and premium per policy increases Avg Revenue per Company per Month 241k ▪ +12% from Q1’23, despite the industry-wide 3% decline
Slide 20: Insurance Segment KPIs: Q1 2024
Insurance Segment KPIs: Q1 2024 Insurance Segment KPIs: $83m 256k $1,375 Gross Written Policies in Force Annualized Revenue Premium Per Policy Q1’23: $115m1 Q1’23: 376k1 Q1’23: $6121 Insurance Carrier (HOA) KPIs: $1,948 90% 71% Annualized Premium Premium Retention Gross Loss Ratio Per Policy Q1’23:
Slide 21: Profitability Actions Demonstrated In Loss Ratios
Profitability Actions Demonstrated In Loss Ratios Gross Loss Ratio1 improved 8% Gross Combined Ratio improved 10% 107% 97% 79% 71% 39% CAT GLR 38% 40% GLR excl. CAT/ Attritional 33% Q1'23 Q1'24 Q1'23 Q1'24 ● Profitability actions continue to drive year-on-year loss ratio improvements ● Q1’24 $360 av
Slide 22: Three Ps Drive Leading Underwriting Performance
Three Ps Drive Leading Underwriting Performance 1 Product: leverage unique data to evaluate risk 2 Price: implement rate and deductible increases to drive profitability 3 Portfolio: non-renew higher risk policies in line with risk appetite Copyright 2024 Porch Group, Inc. All rights reserved 22
Slide 23: Deep Dive: Homeowners of America ("HOA")
Deep Dive: Homeowners of America (“HOA”) Efram Ware President & GM, HOA Copyright 2024 Porch Group, Inc. All rights reserved
Slide 24: Four Key Pillars Of Predicting & Pricing Risk
Four Key Pillars Of Predicting & Pricing Risk Personal Geographic Home Interior Home Exterior Past claims Weather Water heater Roof type and history location defects Distance to coast Porch’s Insurance score Type of piping Window quality Home Wildfire risk Factors No. household Presence of wood Foun
Slide 25: Unique Data ("Home Factors") In Risk Modeling
Unique Data (“Home Factors”) In Risk Modeling Derived Factors Property Insights Derived Factors Factor Type Confidence Factor Type Confidence Factor Type Confidence Roof Shingle 89% Roof Shingle 98% Roof Shingle 86% Piping Copper 90% Piping Copper 97% Piping Copper 82% ● Properties of same age with
Slide 26: Functions Of Reinsurance
Functions Of Reinsurance Related to Excess of Loss (“XOL”): Reduce Exposure: ceding helps protect against significant catastrophic weather events Stabilize Results: ceding can minimize or reduce volatility Related to Quota Share: Commissions: receive ceding commissions helps offset underwriting expe
Slide 27: 2024 Reinsurance Successfully Placed
2024 Reinsurance Successfully Placed ● Profitability actions and strong underwriting results facilitate attractive reinsurance renewals ● ~50 reinsurers who are A-rated, with whom we have long-term relationships ● Probable maximum loss (PML) reduced 50% in 2024 compared to 2022 ● Successful renewal
Slide 28: Wrap Up
Wrap Up Matt Ehrlichman CEO, Chairman & Founder Copyright 2024 Porch Group, Inc. All rights reserved
Slide 29: Outlook
Outlook ● Insurance profitability actions continue to drive a strong underwriting performance ● Reciprocal approval expected in 2024 ● Early days of monetizing ‘Home Factors’ and further leveraging at HOA ● Excited for 2024 and expect to achieve full-year Adj EBITDA profitability Copyright 2024 Porc
Slide 30: Q&A
Q&A Copyright 2024 Porch Group, Inc. All rights reserved
Slide 31: Appendix
Appendix Copyright 2024 Porch Group, Inc. All rights reserved
Slide 32: Operating Cash Flow
Operating Cash Flow Q1 Q1 Reconciliation to Adj EBITDA 2023 2024 Operating Cash Flow $(22)m $8m Working capital and other $(1)m $(26)m Cash interest expense $1m $0m Adjusted EBITDA $(22)m $(17)m Q1 Q1 Reconciliation to Free Cash Flow 2023 2024 Operating Cash Flow $(22)m $8m Capitalized software cost
Slide 33: Glossary
Glossary Term Definition We define Annualized Premium Per Policy as the total direct earned premium for Homeowners of America (“HOA”) , our insurance carrier, divided by the number of active insurance Annualized Premium Per Policy policies at the end of the period, multiplied by four. Annualized Rev
Slide 34: Email: IR@porch.com Website: IR.porchgroup.com
Email: IR@porch.com Website: IR.porchgroup.com Copyright 2024 Porch Group, Inc. All rights reserved 34