Porch Group, Inc. · NASDAQ:PRCH

Porch — Q4 2023 Earnings Presentation

40 slides from Porch's earnings presentation, Mar 7, 2024

  1. Slide 1: Q4 2023 Earnings Presentation

    Q4 2023 Earnings Presentation March 7, 2024 Copyright 2024 Porch Group, Inc. All rights reserved

  2. Slide 2: Presenters

    Presenters Matt Ehrlichman Shawn Tabak Matthew Neagle Jim Weld CEO, Chairman & Founder Chief Financial Officer Chief Operating Officer GM, Rynoh Copyright 2024 Porch Group, Inc. All rights reserved 2

  3. Slide 3: Disclaimer

    Disclaimer Forward-Looking Statements This presentation contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. These statements are based on the beliefs and assumptions of management. Although we, Porch Group, Inc., believe that our plans, intentions

  4. Slide 4: Agenda

    Agenda • Click to edit Master text styles 1 • SecondQ4’23 level Update 5 Deep Dive: Rynoh • Third level • Fourth level • Fifth & level 2 Results Guidance 6 Strategy & Outlook 3 KPIs 7 Q&A 4 Recap: Warranty Copyright 2024 Porch Group, Inc. All rights reserved 4

  5. Slide 5: Q4'23 Update

    Q4’23 Update Matt Ehrlichman CEO, Chairman & Founder Copyright 2024 Porch Group, Inc. All rights reserved

  6. Slide 6: Q4 2023 Financials: Delivered $12M Adjusted EBITDA

    Q4 2023 Financials: Delivered $12M Adjusted EBITDA Total Revenue ($m) Revenue Less Cost of Adjusted EBITDA (loss)1 Revenue ($m) ($m) $114.6 +79% $64.1 $79.9 $11.7 +$25m $43.9 +82% ($13.3) Q4'22 Q4'23 Q4'22 Q4'23 Q4'22 Q4'23 69% 70% (21)% 10% Revenue less Cost of Revenue Margin Adjusted EBITDA margin

  7. Slide 7: Q4 2023 Key Updates

    Q4 2023 Key Updates ● ~2 years ago set H2’23 Adj EBITDA profitability target: Achieved $21 million ● No material weaknesses ● Important product updates: ○ Launched new title product: RynohVerifi ○ Landed new utilities partnership: now 12, covering 14m households ○ Launched new HVAC micro-warranty ○

  8. Slide 8: Results & Guidance

    Results & Guidance Shawn Tabak Chief Financial Officer Copyright 2024 Porch Group, Inc. All rights reserved

  9. Slide 9: Financial Highlights – Q4 2023

    Financial Highlights – Q4 2023 1 Total Revenue ($m) Revenue less Cost Adj EBITDA (loss) Gross Written of Revenue ($m) ($m) Premium ($m) $114.6 $131 $112 (14)% $79.9 $64.1 +79% $43.9 +82% $11.7 ($13.3) Q4'22 Q4'23 Q4'22 Q4'23 Q4'22 Q4'23 Q4'22 Q4'23 69% 70% (21)% 10% Revenue less Cost of Revenue Marg

  10. Slide 10: Revenue by Segment – Q4 2023

    Revenue by Segment – Q4 2023 Total Revenue ($m) Insurance Segment ($m) Vertical Software Segment ($m) $114.6 $33.0 $86.9 $27.7 $64.1 +79% (16)% $31.2 +179% Q4'22 Q4'23 Q4'22 Q4'23 Q4'22 Q4'23 49% 76% 51% 24% % Total Revenue % Total Revenue ▪ Insurance Segment was ▪ Revenue +179% with premium ▪ Press

  11. Slide 11: Adjusted EBITDA by Segment – Q4 2023

    Adjusted EBITDA by Segment – Q4 2023 1 Total Adjusted Insurance Segment ($m) Vertical Software Corporate EBITDA (loss) ($m) Segment ($m) Expenses ($m) $31.6 $11.7 ($13.3) $0.7 $1.1 ($0.3) ($15.1) ($19.7) Q4'22 Q4'23 Q4'22 Q4'23 Q4'22 Q4'23 Q4'22 Q4'23 (21)% 10% 2% 36% 3% (1)% 24% 17% Adjusted EBITDA

  12. Slide 12: Balance Sheet as of December 31, 2023

    Balance Sheet as of December 31, 2023 Cash, cash equivalents and investments ($m) Total Porch Group $398 Porch $87 +$34m FY’23 Operating Cash Flow Homeowners of America $310 +$43m H2’23 Operating Cash Flow Dec 31, 2023 ▪ $398 million cash, cash equivalents and investments as of December 31, 2023 ▪ O

  13. Slide 13: Q1 2024 Items to Note

    Q1 2024 Items to Note 1. $25 million in Jan ‘24 with signing of strategic agreement with Aon 2. Sold EIG for $12 million; increases profitability 3. $8 million par 2026 unsecured notes repurchased for $3 million cash 4. Filing shelf registration shortly (no imminent plans to raise capital) Copyright

  14. Slide 14: Financial Highlights – FY 2023

    Financial Highlights – FY 2023 1 Total Revenue ($m) Revenue less Cost Adj EBITDA (loss) ($m) Gross Written of Revenue ($m) Premium ($m) $430.3 125.1 $536 $525 (2)% $275.9 +56% $210.1 154.9 $168.4 305.2 +25% ($49.6) ($44.5) 121.0 FY'22 FY'23 FY'22 FY'23 FY'22 FY'23 FY'22 FY'23 61% 49% (18)% (10)% Ins

  15. Slide 15: 2024 Guidance

    2024 Guidance $450m-$490m ● 2024 Revenue growth of 5% to 14% Revenue $225m-$240m Revenue less Cost of ● Assumes 63% GLR in line with 5-year weighted average Revenue $1m-$10m ● Expect to be profitable on a full year basis Adj EBITDA $460m-$480m ● Managing GWP approximately flat1 Gross Written Premium

  16. Slide 16: Seasonal Adjusted EBITDA Trend

    Seasonal Adjusted EBITDA Trend Illustrative Seasonal Adj EBITDA Trend: First quarter Second quarter Third quarter Fourth quarter ● Expect Adj EBITDA to be positive on a full year basis in 2024 and ongoing ● Historic trend sees higher claims in Q1 and Q2, therefore expect Adj EBITDA loss in H1 and pr

  17. Slide 17: KPIs

    KPIs Matthew Neagle Chief Operating Officer Copyright 2024 Porch Group, Inc. All rights reserved

  18. Slide 18: KPIs – Q4 2023

    KPIs – Q4 2023 30k ▪ Broadly similar to Q3’23 and Q4’22 with continued housing market headwinds Avg Number of Companies $1,277 ▪ +84% from Q4’22 as we monetize the insurance opportunity more effectively Avg Revenue per Company per Month 220k ▪ Increase of 3% vs Q4’22 with the industry-wide decline i

  19. Slide 19: Resilient SaaS Revenues

    Resilient SaaS Revenues 2.9 2.4 Software and Service Revenue1 ($m) Industry Home Sales Volumes2 1.9 $20 1.5m $18 $18 $18 $17 $17 $17 1.4m $16 1.4 1.2m 1.2m 1.1m 1.0m 0.9m 0.9m 0.9 0.4 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 ▪ Industry home sale

  20. Slide 20: Insurance Segment KPIs: Q4 2023

    Insurance Segment KPIs: Q4 2023 Insurance Segment KPIs: $112m 310k $1,120 Gross Written Policies in Force Annualized Revenue Premium Per Policy Q4’22: $131m Q4’22: 389k Q4’22: $347 Insurance Carrier (HOA) KPIs: $1,861 96% 36% Annualized Premium Premium Retention1 Gross Loss Ratio Per Policy Q4’22: $

  21. Slide 21: Insurance Profitability Actions Drive GLR Improvement

    Insurance Profitability Actions Drive GLR Improvement Q1’22: Material price increases Q2’22: Started using implemented unique Porch property data Q4’22: Started Q2’23: Gross loss ratio (GLR) trend line non-renewals Increased Q4’23: Further deductibles non-renewals & new restrictions GLR excl. cat tr

  22. Slide 22: Ongoing Rate Increases

    Ongoing Rate Increases Rate Increases1 in HOA’s Largest States: HOA Premium Per Policy: 50% $1,861 +30% CAGR $1,391 35% $1,097 20% 18% 14% 9% 4% 2021 2022 2023 2024 filed Q4'21 Q4'22 Q4'23 Texas South Carolina (1) Rate increases relating to homeowners insurance only, other rate increases have been i

  23. Slide 23: Recap: Warranty

    Recap: Warranty Matthew Neagle Chief Operating Officer Copyright 2024 Porch Group, Inc. All rights reserved

  24. Slide 24: Follow-up to Q2'23 Deep Dive: Warranty Business

    Follow-up to Q2’23 Deep Dive: Warranty Business Revenue Expected to Double in Mid-Term with Increased Volumes Through Multiple Channels Revenue Adjusted EBITDA ~$100 +22% CAGR ~$46 $36.6 ~$40 ‘23 included certain remaining acquisition costs ~$16 $7.3 1 2023 Delivered 2024 Target 2028 Target Adjusted

  25. Slide 25: Deep Dive: Rynoh

    Deep Dive: Rynoh Jim Weld GM, Rynoh Copyright 2024 Porch Group, Inc. All rights reserved

  26. Slide 26: Rynoh: Industry Leading Title & Escrow Software Provider

    Rynoh: Industry Leading Title & Escrow Software Provider Real Estate Transactions Protected By Rynoh1: ~24m ~$8tn Transactions protected Funds protected Agent’s Transaction Rynoh Software Title Agent’s Software Bank (1) Since Rynoh was founded in 2007. Copyright 2024 Porch Group, Inc. All rights res

  27. Slide 27: Transformation to a Valuable SaaS Platform for Title Agents

    Transformation to a Valuable SaaS Platform for Title Agents Streamline In One Easy-To-Use Platform Top Tier SaaS 2023 Metrics RynohLive Financial management and fraud prevention for escrow account management 93% Client Retention1 RynohEscheat State compliance and quick communication of unclaimed fun

  28. Slide 28: Rynoh Focused On Profitability Despite Market Decline

    Rynoh Focused On Profitability Despite Market Decline Industry1 and Rynoh Transaction Volumes Rynoh Price Per Transaction 15.2 ~$13 Industry volumes ~12.2 down 62% 7.6 $6.28 5.8 ~5.8 $4.87 ~4.9 4.3 $3.68 2.9 $2.47 2.2 ~2.2 2 2 2021 2022 2023 2024 Mid-term 2 2021 2022 2023 2024 Mid-term 2 Q1’22: Q3’2

  29. Slide 29: Profitability Driven By Returning Volumes & Price Increases

    Profitability Driven By Returning Volumes & Price Increases Profitability Expected To Expand ~6x By 2028 Revenue Adjusted EBITDA ~$60 +41% CAGR ~$35 ~$14 $10.7 1 ~$8 $5.6 2023 Delivered 2024 Target 2028 Target Adjusted EBITDA Margin 52% ~60% ~60% (1) 2023 net income of $3.0m, adjusted for interest e

  30. Slide 30: Strategy & Outlook

    Strategy & Outlook Matt Ehrlichman CEO, Chairman & Founder Copyright 2024 Porch Group, Inc. All rights reserved

  31. Slide 31: Strong Progress Since Listing: 60% CAGR, profitability

    Strong Progress Since Listing: 60% CAGR, profitability Total Revenue ($m) Revenue less Cost Adj EBITDA (loss) ($m) of Revenue ($m) $470 +60% 4-year CAGR $430 $276 +44% 4-year CAGR $233 $210 $192 $168 $134 $72 $55 H2’23: +$21m $6 FY'20 FY'21 FY'22 FY'23 FY'24 FY'20 FY'21 FY'22 FY'23 FY'24 guidance ($

  32. Slide 32: 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

  33. Slide 33: Q&A

    Q&A Copyright 2024 Porch Group, Inc. All rights reserved

  34. Slide 34: Appendix

    Appendix Copyright 2024 Porch Group, Inc. All rights reserved

  35. Slide 35: Porch Value Proposition

    Porch Value Proposition ● Values driven culture with high employee engagement ● Market leader in home related SaaS, with innovative approach ● Recurring SaaS revenues from ~30k strong relationships with home service companies ● Significant TAM opportunity in homeowners insurance market ● Unique data

  36. Slide 36: Strategic Pillars

    Strategic Pillars Execute Insurance Strategy (including launching Reciprocal Exchange) Grow SaaS Businesses and Aggregate More Unique Data Organizational Efficiency and Cost Control Copyright 2024 Porch Group, Inc. All rights reserved 36

  37. Slide 37: Our Highest Priority ESG Areas

    Our Highest Priority ESG Areas Diversity, Equity, & Inclusion Risk Management & Climate Recruiting diverse talent, providing Mitigating the key risks and uncertainties equitable outcomes and opportunities that can affect the long-term for our employees, and ensuring inclusive sustainability of our b

  38. Slide 38: Operating Cash Flow

    Operating Cash Flow Q1 Q2 Q3 Q4 FY FY Reconciliation to Adj EBITDA 2023 2023 2023 2023 2023 2022 Operating Cash Flow $(22)m $13m $84m $(41)m $34m $(18)m Working capital $(1)m $(57)m $(75)m $43m $(89)m $(38)m Cash interest expense $1m $-m $-m $10m $11m $6m Adjusted EBITDA $(22)m $(43)m $9m $12m $(45)

  39. Slide 39: 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

  40. Slide 40: Email: IR@porch.com Website: IR.porchgroup.com

    Email: IR@porch.com Website: IR.porchgroup.com Copyright 2024 Porch Group, Inc. All rights reserved 40

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