Porch Group, Inc. · NASDAQ:PRCH

Porch — Q3 2024 Earnings Presentation

32 slides from Porch's earnings presentation, Nov 7, 2024

Slide 2: Presenters
Presenters Matt Ehrlichman Shawn Tabak Matthew Neagle Nicole Pelley CEO, Chairman & Founder Chief Financial Officer Chief Operating Officer EVP and GM, Porch Platform Copyright 2024 Porch Group, Inc. All rights reserved 2
Slide 3: Disclaimer
Disclaimer Forward-Looking Statements Certain statements in this presentation are considered 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 believe that our plans, int
Slide 4: Agenda
Agenda • Click 1 to edit Q3’24 Master text styles Update • Second level • Third level 2 Results & level • Fourth Guidance • Fifth level 3 Deep Dive: Reciprocal Exchange 4 KPIs 5 Wrap Up 6 Q&A Copyright 2024 Porch Group, Inc. All rights reserved 4
Slide 6: Delivered Strong Operational Performance
Delivered Strong Operational Performance ● Q3’24 record profitability! $17m Adjusted EBITDA1. $12m operating cash flow. $14m Net Income. ● Continue implementing insurance profitability actions: premium per policy +25% vs Q3’23 ● Q3 Gross Loss Ratio: 57%. Q3 Attritional Loss Ratio: 21%. Continue to o
Slide 8: Financial Highlights: Q3 2024
Financial Highlights: Q3 2024 1 Total Revenue Revenue less Cost Adj EBITDA Gross Written of Revenue Premium $129.6 (14)% $154 +$30m impact $111.2 +$15m EIG, $139 from Vesttoo2 divested in Jan’24 (10)% $76.6 (16)% +$10m impact $64.1 from Vesttoo2 +$8m $16.9 $8.8 +$2m impact from Vesttoo2 Q3'23 Q3'24
Slide 9: Revenue by Segment: Q3 2024
Revenue by Segment: Q3 2024 Total Revenue Insurance Segment Vertical Software Segment $129.6 (14)% $111.2 +$30m impact from Vesttoo2 $95.2 (16)% $79.9 +$30m impact from Vesttoo2 $34.3 $31.3 (9)% Q3'23 Q3'24 Q3'23 Q3'24 Q3'23 Q3'24 74% 72% 26% 28% % Total Revenue % Total Revenue ▪ Insurance Segment w
Slide 10: Strong Attritional Performance
Strong Attritional Performance Insurance Segment Q3 2024 Expected Variance Attritional claims net of reinsurance1 $16m $29m $(13)m CAT weather related claims net of reinsurance $26m $30m $(4)m 2 Hurricane CAT events ($37m) Other CAT weather losses ($2m) CAT prior period development ($13m offset) Cos
Slide 11: Adjusted EBITDA by Segment: Q3 2024
Adjusted EBITDA by Segment: Q3 2024 1 Total Adjusted Insurance Vertical Software Corporate EBITDA Segment Segment Expenses +$6m $24.8 $16.9 $19.0 +$2m impact +$8m from Vesttoo2 $8.8 +$2m impact from Vesttoo2 +$2m $5.1 $3.2 Q3'23 Q3'24 Q3'23 Q3'24 Q3'23 Q3'24 ($13.4) ($13.0) Q3'23 Q3'24 7% 15% 20% 31
Slide 12: Balance Sheet As Of September 30, 2024
Balance Sheet As Of September 30, 2024 Cash, cash equivalents and investments Total Porch Group $405 +$12m Q3’24 Operating Cash Flow Porch $88 YTD’24: $(5)m Homeowners of America1 $317 +$9m Q3’24 Free Cash Flow2 YTD’24: $(14)m Sept 30, 2024 ▪ Repurchased $43m at an average 47% of par value for $20m
Slide 13: Healthy Insurance Carrier
Healthy Insurance Carrier HOA Surplus ~$100m ~$70m ~$50m Dec 31, 2023 Sept 30, 2024 Dec 31, 2024 Expectation ● HOA surplus expected to grow from ~$70m to ~$100m in Q4 ‘24 due to underwriting improvements and seasonality Copyright 2024 Porch Group, Inc. All rights reserved 13
Slide 14: 2024 Guidance Update
2024 Guidance Update Revenue $440m-$455m ● Growth of 2% to 6% (Previously: $450m-$470m) Revenue Less Cost of Revenue $200m-$210m ● Assumes 68% GLR for FY24 (Previously: $190m-$200m) Adjusted EBITDA $(7.5)m-$2.5m ● Results in $32m of Adjusted EBITDA in Q4’24 at mid-point (Previously: $(20)m-$(10)m) G
Slide 16: Expected Reciprocal Structure At Launch in January 2025
Expected Reciprocal Structure At Launch1 in January 2025 Reciprocal Owned by Porch Group Policyholders / Members Policyholders / Members Insurance & Claims Premiums Payments & Surplus Commission & Fees (~20% take rate4) Software & Data PRMS Operating Services Porch Insurance Reciprocal Insurance Exc
Slide 17: Reciprocal Expected To Launch ~Jan 1, 2025
Reciprocal Expected To Launch ~Jan 1, 2025 Reciprocal Launch Sell HOA to Launch Porch Expand PIRE to Approval Preparation Reciprocal Insurance in TX other states (~Jan 1, 2025) (~Jan 1, 2025) (2025 & ongoing) Submit application Complete TDI customary Sell HOA carrier into PIRE Both Porch Insurance a
Slide 19: 3 New Home Factors Launched In Q3 2024
3 New Home Factors Launched In Q3 2024 Further insights available due to Electric panel in need of repair Porch’s unique property data Indicates 41% higher claims frequency Wiring repair / replace 18% Current 13% Electricity panel capacity discount pricing surcharge 39% of Policyholders 33% of Polic
Slide 21: KPIs: Q3 2024
KPIs: Q3 2024 28k ▪ Broadly in line with prior quarters Avg Number of Companies $1,318 ▪ Lower year over year driven by Vesttoo in Q3’23 ($1,436) and higher quarter over Avg Revenue quarter (Q2’24: $1,253) per Company per Month 245k ▪ Increase compared to prior year (+9%) and prior quarter (+6%) dri
Slide 22: Nearing Time To Grow Premium Again
Nearing Time To Grow Premium Again Insurance Segment KPIs1: $139m 219k $1,460 Gross Written Policies in Force Annualized Revenue Premium Per Policy Q3’23: $154m Q3’23: 334k Q3’23: $1,139 Insurance Carrier (HOA) KPIs: $2,208 100% 57% Annualized Premium Premium Retention Gross Loss Ratio Per Policy Q3
Slide 23: Strong Performance Offsets Hurricane Beryl
Strong Performance Offsets Hurricane Beryl Q1’22: Material Q1’24: Ramped up price increases use of Home implemented Q4’22: Started Factors non-renewals Gross loss ratio trend Q2’22: Started Q2’23: using Porch Q4’23: Further Q2’24: Non- Increased non-renewals & unique data renewals GLR excl. cat tren
Slide 24: Insurance Profitability Actions Continue To Be A Priority
Insurance Profitability Actions Continue To Be A Priority Product Portfolio Price ■ Unique Porch data helps ■ Have finalized non-renewals ■ Continue to take more rate better assess and price risk ■ Exited Georgia where actuarially ■ Increased deductibles appropriate ■ Moved away from coastal zip cod
Slide 25: Texas Price Increases Aid Attritional Loss Improvements
Texas Price Increases Aid Attritional Loss Improvements HOA Texas HOA Texas Premium Per Policy Loss Ratios 12% 12% +42% CAGR $2,508 10% $2,147 8% 7% $1,594 7% Water $1,245 5% 5% Household Fires 2021 2022 2023 Q3 2024 2021 2022 2023 2024 Impact from inflation Loss ratios improve and loss costs throug
Slide 27: A Positive Outlook
A Positive Outlook 1. Reciprocal exchange approved and on track to launch early January 2025 2. Successfully reduced outstanding 2026 Notes to $174 million 3. Demonstrating industry-leading attritional loss ratios 4. Rolling out new Home Factors with a strong positive response from third parties 5.
Slide 30: Operating Cash Flow
Operating Cash Flow Reconciliation to Adj EBITDA Q3 2023 Q3 2024 Operating Cash Flow $83.7m $12.4m Working capital and other $(74.7)m $4.2m Cash interest expense $(0.1)m $0.3m Adjusted EBITDA $8.8m $16.9m Reconciliation to Free Cash Flow Q3 2023 Q3 2024 Operating Cash Flow $83.7m $12.4m Capitalized
Slide 31: 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 Reve

Porch Group — Q3 2024 Earnings Presentation on 6ix

Porch — Q3 2024 Earnings Presentation

Slide 1: Q3 2024 Earnings Presentation

Slide 2: Presenters

Slide 3: Disclaimer

Slide 4: Agenda

Slide 5: Q3'24 Update

Slide 6: Delivered Strong Operational Performance

Slide 7: Results & Guidance

Slide 8: Financial Highlights: Q3 2024

Slide 9: Revenue by Segment: Q3 2024

Slide 10: Strong Attritional Performance

Slide 11: Adjusted EBITDA by Segment: Q3 2024

Slide 12: Balance Sheet As Of September 30, 2024

Slide 13: Healthy Insurance Carrier

Slide 14: 2024 Guidance Update

Slide 15: Deep Dive: Reciprocal Exchange

Slide 16: Expected Reciprocal Structure At Launch in January 2025

Slide 17: Reciprocal Expected To Launch ~Jan 1, 2025

Slide 18: Porch Insurance Will Provide Unique Value To Consumers

Slide 19: 3 New Home Factors Launched In Q3 2024

Slide 20: KPIs

Slide 21: KPIs: Q3 2024

Slide 22: Nearing Time To Grow Premium Again

Slide 23: Strong Performance Offsets Hurricane Beryl

Slide 24: Insurance Profitability Actions Continue To Be A Priority

Slide 25: Texas Price Increases Aid Attritional Loss Improvements

Slide 26: Wrap Up

Slide 27: A Positive Outlook

Slide 28: Q&A

Slide 29: Appendix

Slide 30: Operating Cash Flow

Slide 31: Glossary

Slide 32: Email: IR@porch.com Website: IR.porchgroup.com