Porch Group, Inc. · NASDAQ:PRCH
Porch — Q2 2024 Earnings Presentation
35 slides from Porch's earnings presentation, Aug 6, 2024
Slide 1: Q2 2024 Earnings Presentation
Q2 2024 Earnings Presentation August 6, 2024 Copyright 2024 Porch Group, Inc. All rights reserved
Slide 2: Presenters
Presenters Matt Ehrlichman Shawn Tabak Matthew Neagle Michelle Taves CEO, Chairman & Founder Chief Financial Officer Chief Operating Officer GM Porch Group Media, Data & Marketing 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 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,
Slide 4: Agenda
Agenda • Click 1 to edit Q2’24 Master text styles Update • Second level • Third level 2 Results & level • Fourth Guidance • Fifth level 3 KPIs 4 Deep Dive: Home Factors 5 Outlook 6 Q&A Copyright 2024 Porch Group, Inc. All rights reserved 4
Slide 5: Q2'24 Update
Q2’24 Update Matt Ehrlichman CEO, Chairman & Founder Copyright 2024 Porch Group, Inc. All rights reserved
Slide 6: Q2 2024 Financials: $8m Adj. EBITDA Improvement YOY
Q2 2024 Financials: $8m Adj. EBITDA Improvement YOY Total Revenue Revenue Less Cost of Adjusted EBITDA (loss)1 Revenue $110.8 $98.8 +12% $17.4 $19.2 ~$23m loss due to May Houston +10% CAT Event Q2'23 Q2'24 Q2'23 Q2'24 +$8m ($34.8) ($43.1) Q2'23 Q2'24 18% 17% (44)% (31)% Revenue less Cost of Revenue
Slide 7: New & Updated Reciprocal Application Filed
New & Updated Reciprocal Application Filed ● Reciprocal application filed with the Texas Potential flywheel ahead1,2: Department of Insurance ● Working closely with TDI towards approval PRCH stock this year price increases ● Porch will handle the day-to-day operations and receive fees as a percentag
Slide 8: Key Updates
Key Updates ● Warranty launched Surge Protection product with early good results ● Launched Home Factors data products to third-party companies ● Filed suit against two parties regarding Vesttoo (reinsurance fraud) ● Porch recertified as a Great Place to Work Copyright 2024 Porch Group, Inc. All rig
Slide 9: Results & Guidance
Results & Guidance Shawn Tabak Chief Financial Officer Copyright 2024 Porch Group, Inc. All rights reserved
Slide 10: Financial Highlights: Q2 2024
Financial Highlights: Q2 2024 1 Total Revenue Revenue less Cost Adj EBITDA (loss) Gross Written of Revenue Premium $143 $110.8 $117 $98.8 18% 17% (44)% (31)% (19)% +12% Revenue less Cost of Revenue Adjusted EBITDA margin as a percentage of Revenue $17.4 +10% $19.2 Q2'23 Q2'24 Q2'23 Q2'24 Q2'23 Q2'24
Slide 11: Revenue by Segment: Q2 2024
Revenue by Segment: Q2 2024 Total Revenue Insurance Segment Vertical Software Segment $110.8 $98.8 $78.3 +12% $64.3 +22% $34.4 $32.6 (5)% Q2'23 Q2'24 Q2'23 Q2'24 Q2'23 Q2'24 65% 71% 35% 29% % Total Revenue % Total Revenue ▪ Insurance Segment was ▪ Revenue increase due to ▪ SaaS1 revenue +4% over pri
Slide 12: Impact Of Catastrophic Weather In Q2 2024
Impact Of Catastrophic Weather In Q2 2024 Insurance Segment Q2 2024 Expected Variance Net attritional claims $11m $28m $17m Net seasonal weather-related claims $52m $64m $12m May Houston CAT Event $23m - $(23)m Cost of Revenue $86m $92m $6m ▪ Attritional claims costs performed $17m better than antic
Slide 13: Adjusted EBITDA by Segment: Q2 2024
Adjusted EBITDA by Segment: Q2 2024 1 Total Adjusted Insurance Vertical Software Corporate EBITDA (loss) Segment Segment Expenses ~$23m loss due $4.8 to May Houston +$3m CAT Event $1.8 Q2'23 Q2'24 +$2m +$4m +$8m ($27.3) ($13.8) ($12.2) ($31.2) Q2'23 Q2'24 Q2'23 Q2'24 ($34.8) ($43.1) Q2'23 Q2'24 (44)
Slide 14: First Half 2024: Adj EBITDA +$13m Over Prior Year
First Half 2024: Adj EBITDA +$13m Over Prior Year Total Revenue Adj EBITDA (loss) $226 $186 $60 +22% Vertical Software $63 $166 Insurance $123 Insurance +$8m H1'23 H1'24 All numbers are $million unless otherwise stated. Copyright 2024 Porch Group, Inc. All rights reserved 14
Slide 15: Balance Sheet as of June 30, 2024
Balance Sheet as of June 30, 2024 Cash, cash equivalents and investments Total Porch Group $410 $(26)m Q2’24 Operating Cash Flow Porch $117 H1’24: $(18)m Homeowners of America1 $293 $(29)m Q2’24 Free Cash Flow H1’24: $(23)m June 30, 2024 ▪ Additional $11m restricted cash and cash equivalents held in
Slide 16: 2024 Adjusted EBITDA Guidance Update
2024 Adjusted EBITDA Guidance Update $30 $8 $(23) $(15) $(30) All numbers are $million unless otherwise stated. Copyright 2024 Porch Group, Inc. All rights reserved 16
Slide 17: 2024 Guidance
2024 Guidance $450m-$470m ● Unchanged: 2024 Revenue growth of 5% to 9% Revenue (Unchanged) $190m-$200m ● Assumes 69% GLR: 5-year weighted average adjusted for H1’24 Revenue less Cost of Revenue and Hurricane Beryl in July (Previously: $230m-$240m) $(20)m-$(10)m Adj EBITDA ● Lower with May Houston Wi
Slide 18: KPIs
KPIs Matthew Neagle Chief Operating Officer Copyright 2024 Porch Group, Inc. All rights reserved
Slide 19: KPIs: Q2 2024
KPIs: Q2 2024 29k ▪ Broadly in line with prior quarters (30k) Avg Number of Companies $1,253 ▪ +17% vs Q2’23, driven by lower ceding and premium per policy increases Avg Revenue ▪ Broadly consistent vs prior quarter (3)% per Company per Month 231k ▪ 5% lower than Q2’23 and 4% lower than prior quarte
Slide 20: Insurance Segment KPIs: Q2 2024
Insurance Segment KPIs: Q2 2024 Insurance Segment KPIs: $117m 232k $1,348 Gross Written Policies in Force Annualized Revenue Premium Per Policy Q2’23: $143m1 Q2’23: 358k 1 Q2’23: $517 1 Insurance Carrier (HOA) KPIs: $2,059 88% 117% Annualized Premium Premium Retention Gross Loss Ratio Per Policy Q2’
Slide 21: Attritional Loss Ratio & Gross Combined Ratio Improved YoY
Attritional Loss Ratio & Gross Combined Ratio Improved YoY Gross Loss Ratio1 Gross Combined Ratio improved 3pp YoY improved 56pp YoY 180% 120% 117% 124% 85% Catastrophic Weather 96% Loss Ratio 35% Attritional Loss Ratio2 21% Q2'23 Q2'24 Q2'23 Q2'24 (1) Current accident year gross loss ratio. (2) Att
Slide 22: Underwriting & Pricing Update
Underwriting & Pricing Update Product: leverage unique data to 1 evaluate risk Earned Premium Per Policy ($) +28% YoY 2,059 1,861 1,948 1,762 Price: implement rate and deductible 2 1,603 1,468 increases to drive profitability Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 H2 2025 2024 Portfolio: non-renew high
Slide 23: Deep Dive: Home Factors
Deep Dive: Home Factors Michelle Taves GM Porch Group Media, Data and Marketing Copyright 2024 Porch Group, Inc. All rights reserved
Slide 24: Porch Group Media – The Data Platform Arm of Porch
Porch Group Media – The Data Platform Arm of Porch ✓ PGM (formerly V12) Acquired by Porch January 2021 ✓ Acquisition combined power of Porch Group Media’s broad consumer database and billions of buyer intent signals with Porch’s unique data assets to create property and homeowner data products PROPE
Slide 25: Actioning Home Factors
Actioning Home Factors Home Factors in production: • Piping Material • Foundation Repair / Replace • Foundation Type • Windows Repair / Replace 30% • Roofing Repair / Replace • Roofing Materials 65% • Presence of Swimming Pool • Water Heater Location • Presence of Water Intrusion • Window Repair / R
Slide 26: Case Studies: Monetizing Our Unique Data Products
Case Studies: Monetizing Our Unique Data Products 1) Insurance Carrier 2) Large Retailer 3) Security Company Risk Use Case Acquisition Use Case Retention Use Case ▪ Home Factors evaluated ▪ Two data products provided, ▪ MoverMatch product identifies against historic claims data homes needing repair
Slide 27: Wrap Up
Wrap Up Matt Ehrlichman CEO, Chairman & Founder Copyright 2024 Porch Group, Inc. All rights reserved
Slide 28: Wrap Up
Wrap Up ● Remain focused on executing the reciprocal exchange ● Anticipate Investor Day later in 2024 ● Look to grow written premium with profitable business ● Focused on full year profitability goal and excited for what is ahead Copyright 2024 Porch Group, Inc. All rights reserved 28
Slide 29: Q&A
Q&A Copyright 2024 Porch Group, Inc. All rights reserved
Slide 30: Appendix
Appendix Copyright 2024 Porch Group, Inc. All rights reserved
Slide 31: 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 32: 2024 Reinsurance Program: Per Occurrence
2024 Reinsurance Program1: Per Occurrence 3rd Party QS XOL Reinsurance $75m-$465m 5.5% 100% $45m-$75m 27.5% Shared $0m-$45m 27.5% 0% • Quota Share (“QS”) strategically reduced to 27.5% • Excess of Loss (“XOL”) secured at a high level of coverage to help protect against significant weather events (1)
Slide 33: Operating Cash Flow
Operating Cash Flow Q2 2023 Q2 2024 Reconciliation to Adj EBITDA Operating Cash Flow $13.3m $(26.0)m Working capital and other $(56.9)m $(12.3)m Cash interest expense $0.5m $3.5m Adjusted EBITDA $(43.1)m $(34.8)m Q2 2023 Q2 2024 Reconciliation to Free Cash Flow Operating Cash Flow $13.3m $(26.0)m Ca
Slide 34: 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 35: Email: IR@porch.com Website: IR.porchgroup.com
Email: IR@porch.com Website: IR.porchgroup.com Copyright 2024 Porch Group, Inc. All rights reserved 35