Group 1 - The focus is on producing objective, data-driven research primarily about small- to mid-cap companies, which are often overlooked by many investors [1] - Occasionally, large-cap companies are analyzed to provide a broader perspective on the equity markets [1] Group 2 - The article expresses the author's own opinions and does not involve compensation from any company mentioned [2] - There is a beneficial long position in the shares of PRCH, indicating a vested interest in the company's performance [2]

Group 1 - The focus is on producing objective, data-driven research primarily about small- to mid-cap companies, which are often overlooked by many investors [1] - Occasionally, large-cap companies are analyzed to provide a broader perspective on the equity markets [1] Group 2 - There is a beneficial long position in the shares of PRCH, indicating a positive outlook on the company's stock [2]

Porch Group Corporate Presentation September 2025 Copyright 2025 Porch Group, Inc. All rights reserved 241. 174. 0 highlight Disclaimers Financial Targets Porch is providing guidance and targets for future periods in this presentation based on current market conditions, assumptions, and expectations as of the date of this presentation. Actual results may vary due to a number of factors, and there is no guarantee that we will be able to achieve these results. Please refer to the below for important disclaime ...

Financial Performance - Porch Group, Inc. reported break-even quarterly earnings per share, surpassing the Zacks Consensus Estimate of a loss of $0.13, compared to a loss of $0.65 per share a year ago, representing an earnings surprise of +100.00% [1] - The company posted revenues of $107.02 million for the quarter ended June 2025, exceeding the Zacks Consensus Estimate by 10.83%, although this is a decrease from year-ago revenues of $110.84 million [2] - Over the last four quarters, Porch Group has surpassed consensus EPS estimates three times and topped consensus revenue estimates two times [2] Stock Performance - Porch Group shares have increased approximately 161.4% since the beginning of the year, significantly outperforming the S&P 500's gain of 7.6% [3] - The current consensus EPS estimate for the upcoming quarter is -$0.08 on revenues of $110.36 million, and for the current fiscal year, it is -$0.18 on revenues of $405.86 million [7] Industry Outlook - The Internet - Software industry, to which Porch Group belongs, is currently ranked in the top 32% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, suggesting that the stock's performance may be influenced by these revisions [5][6]

Financial Data and Key Metrics Changes - Revenue for Q2 2025 was $107 million, primarily from $12.121 billion of reciprocal written premium, with a gross profit of $89 million, reflecting a 431% increase year-over-year [6][16] - Adjusted EBITDA for Q2 was $16 million, an improvement of $50 million compared to the prior year, resulting in a 15% margin [6][16] - Cash flow from operations for Q2 was $15 million, contributing to a total of $42 million for the first half of 2025 [7][37] Business Line Data and Key Metrics Changes - Insurance services generated $67.4 million in revenue from $121 million of reciprocal written premium, with a gross profit of $57.9 million and a gross margin of 86% [20] - Software and data revenue was $24 million, a 4% increase year-over-year, with a gross profit of $18.2 million and a 76% gross margin [21] - Consumer services revenue decreased by 6% to $17.7 million, with a gross profit of $15.2 million and an 86% gross margin [22] Market Data and Key Metrics Changes - The reciprocal ended Q2 with $299 million in surplus, an increase of $102 million from the previous quarter and $259 million from Q2 2024 [10][11] - The homeowners insurance market is projected to grow at high single digits annually over the next ten years, with Porch Group positioned to benefit from this growth [5] Company Strategy and Development Direction - The company has transitioned to a commission and fee-based model, aiming for predictable and high-margin financial results [5] - The focus is on growing premiums while also increasing surplus at the reciprocal, with a target of $500 million in reciprocal written premium for 2025 [27] - The company is expanding its agency distribution channel and has increased its sales team from 2 to 26 employees [28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the business across macroeconomic cycles, noting that homeowners insurance is a necessary purchase [14] - The company anticipates that a potential recession could benefit its business, as lower interest rates may stimulate the housing market [15] - Management highlighted strong underwriting performance and a favorable loss ratio of 34% for the reciprocal in Q2, compared to 117% the previous year [84] Other Important Information - The company has settled most of its 2026 convertible notes and is on track to reach a leverage goal of 2 to 3 times adjusted EBITDA in the medium term [25] - The company raised its 2025 revenue guidance by $5 million, now ranging from $420 million to $425 million, and increased adjusted EBITDA guidance midpoint to $67.5 million [26] Q&A Session Summary Question: Why did the take rate in insurance increase from 51.5% to almost 56%? - Management noted that the reciprocal written premium is efficiently converting into revenue, exceeding expectations [41][42] Question: How is the company managing growth versus margin expansion? - Management emphasized a balanced approach, aiming for consistent growth while also expanding margins over time [53][54] Question: What was the impact of weather on Q2 results? - Management indicated that weather conditions were normalized, and the company has strong reinsurance protection in place [58][59] Question: Can you provide insights on the HomeFactors data applications beyond underwriting? - Management highlighted various use cases for the data, including marketing campaigns and enhancing consumer experience through the Porch app [66][68] Question: How is the reception of new insurance agency partnerships? - Management reported positive reception and excitement among agents due to competitive commissions and differentiated product offerings [73]

PART I — FINANCIAL INFORMATION [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations and comprehensive income (loss), statements of stockholders' equity (deficit) and noncontrolling interest, and statements of cash flows, along with detailed notes explaining the company's business, accounting policies, segment information, and specific financial items [Condensed Consolidated Balance Sheets (Unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20%28Unaudited%29) This section presents the company's financial position, including assets, liabilities, and equity, at specific points in time **Condensed Consolidated Balance Sheets (Unaudited) (in thousands):** | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Total assets | $770,717 | $813,968 | | Total liabilities | $772,905 | $857,193 | | Porch stockholders' deficit | $(29,292) | $(43,225) | | Noncontrolling interest related to the Reciprocal | $27,104 | — | | Total stockholders' deficit | $(2,188) | $(43,225) | - The Reciprocal, a variable interest entity not owned by Porch Group, Inc., is consolidated for reporting purposes, with its assets and liabilities included in the consolidated balance sheets[12](index=12&type=chunk)[17](index=17&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20%28Loss%29%20%28Unaudited%29) This section details the company's revenues, expenses, and net income or loss over specific reporting periods **Consolidated Statements of Operations (in thousands):** | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $119,295 | $110,844 | $224,040 | $226,287 | | Cost of revenue | $43,422 | $94,046 | $82,719 | $172,412 | | Gross profit | $75,873 | $16,798 | $141,321 | $53,875 | | Operating income (loss) | $5,049 | $(52,479) | $3,783 | $(87,147) | | Net income (loss) | $8,247 | $(64,323) | $11,983 | $(77,685) | | Net income (loss) attributable to Porch | $2,579 | $(64,323) | $10,974 | $(77,685) | | Basic EPS attributable to Porch | $0.03 | $(0.65) | $0.11 | $(0.79) | | Diluted EPS attributable to Porch | $0.00 | $(0.65) | $0.10 | $(0.79) | - Net income attributable to the Reciprocal was **$5,668 thousand** for the three months ended June 30, 2025, and **$1,009 thousand** for the six months ended June 30, 2025[22](index=22&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity (Deficit) and Noncontrolling Interest (Unaudited)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity%20%28Deficit%29%20and%20Noncontrolling%20Interest%20%28Unaudited%29) This section outlines changes in equity, including contributions, net income, and noncontrolling interests, over time **Changes in Stockholders' Equity (Deficit) (in thousands):** | Metric | As of Dec 31, 2024 | As of June 30, 2025 | | :--------------------------------------- | :----------------- | :------------------ | | Porch stockholders' deficit | $(43,225) | $(29,292) | | Noncontrolling interest related to the Reciprocal | — | $27,104 | | Total stockholders' deficit | $(43,225) | $(2,188) | - The formation of the Reciprocal on January 1, 2025, resulted in the recognition of a noncontrolling interest of **$27,104 thousand** as of June 30, 2025"[17](index=17&type=chunk)[30](index=30&type=chunk) - Issuance of convertible debt contributed **$13,400 thousand** to additional paid-in capital during the six months ended June 30, 2025"[25](index=25&type=chunk)[30](index=30&type=chunk) [Condensed Consolidated Statements of Cash Flows (Unaudited)](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20%28Unaudited%29) This section reports cash inflows and outflows from operating, investing, and financing activities over a period **Consolidated Cash Flow Information (in thousands):** | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change ($) | Change (%) | | :--------------------------------------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Net cash provided by (used in) operating activities | $24,391 | $(17,505) | $41,896 | (239)% | | Net cash provided by (used in) investing activities | $(25,269) | $8,764 | $(34,033) | (388)% | | Net cash used in financing activities | $(8,011) | $(3,126) | $(4,885) | 156% | | Net change in cash, cash equivalents, and restricted cash | $(8,889) | $(11,867) | $2,978 | (25)% | | Cash, cash equivalents, and restricted cash at end of period | $187,893 | $285,365 | $(97,472) | (34)% | - Operating cash flows significantly improved, shifting from a net use of **$17.5 million** in 2024 to a net provision of **$24.4 million** in 2025, primarily due to higher reinsurance for weather-related activity in the prior year and increased cash collections from reinsurance recoverables[350](index=350&type=chunk) - Investing activities shifted from providing **$8.8 million** in 2024 to using **$25.3 million** in 2025, mainly due to net purchases of investments and capitalized internal-use software development costs[352](index=352&type=chunk)[353](index=353&type=chunk) [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20%28Unaudited%29) This section provides detailed explanations and additional information supporting the condensed consolidated financial statements [Note 1. Description of Business and Summary of Significant Accounting Policies](index=11&type=section&id=Note%201.%20Description%20of%20Business%20and%20Summary%20of%20Significant%20Accounting%20Policies) This note details the company's operations, business model, and the key accounting principles applied in its financial reporting - Porch Group operates as a homeowners insurance company, leveraging its home services software-as-a-service (SaaS) platform and unique property data to enhance risk assessment and offer comprehensive moving services[36](index=36&type=chunk)[37](index=37&type=chunk)[42](index=42&type=chunk) - Effective January 2025, the company transitioned to four reportable segments: Insurance Services, Software & Data, Consumer Services (collectively 'Porch Shareholder Interest'), and the consolidated Reciprocal Segment (a variable interest entity)[38](index=38&type=chunk)[39](index=39&type=chunk) - Approximately **53%** and **54%** of consolidated revenue for the three and six months ended June 30, 2025, respectively, was derived from customers in Texas[47](index=47&type=chunk) [Note 2. Segment Information](index=15&type=section&id=Note%202.%20Segment%20Information) This note provides financial data and qualitative information about the company's operating segments - Beginning January 2025, Porch Group's reportable segments changed from 'Vertical Software' and 'Insurance' to 'Insurance Services,' 'Software & Data,' 'Consumer Services,' and the 'Reciprocal Segment,' reflecting a shift to a reciprocal exchange model and a new focus on target customers[72](index=72&type=chunk)[73](index=73&type=chunk)[74](index=74&type=chunk) - The Insurance Services segment manages the Reciprocal, earning commissions and fees, holding surplus notes, and including a captive reinsurer for capital efficiency[75](index=75&type=chunk) - Segment performance is evaluated using gross profit and Adjusted EBITDA (Loss) for the Porch Shareholder Interest segments (Insurance Services, Software & Data, Consumer Services) and gross profit and Net Income (Loss) for the Reciprocal Segment[79](index=79&type=chunk)[80](index=80&type=chunk) [Note 3. Variable Interest Entity](index=21&type=section&id=Note%203.%20Variable%20Interest%20Entity) This note explains the company's involvement with and consolidation of the Reciprocal as a variable interest entity - On January 1, 2025, Porch Group formed the Reciprocal and sold its legacy homeowners insurance carrier, Homeowners of America (HOA), to it, with Porch Group holding approximately **$106 million** in surplus notes from the Reciprocal[100](index=100&type=chunk)[231](index=231&type=chunk) - The Reciprocal is consolidated as a variable interest entity (VIE) because Porch Group is the primary beneficiary, providing significant financial support through surplus notes and managing its business operations[103](index=103&type=chunk) - Porch Group receives management fees for services provided to the Reciprocal, which are reported in net income attributable to Porch, while the Reciprocal's assets are solely for its obligations, with no recourse to Porch for underwriting or investment losses[103](index=103&type=chunk)[104](index=104&type=chunk) [Note 4. Revenue](index=22&type=section&id=Note%204.%20Revenue) This note disaggregates revenue by type and provides information on deferred revenue balances **Disaggregation of Revenue (in thousands):** | Revenue Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Transactional | $9,174 | $9,504 | $15,562 | $15,978 | | Recurring | $99,879 | $66,607 | $180,017 | $144,813 | | Insurance carrier | $55,409 | $48,739 | $95,347 | $96,234 | | Intercompany revenue | $(43,132) | $(13,760) | $(62,871) | $(30,229) | | **Total Revenue** | **$119,295** | **$110,844** | **$224,040** | **$226,287** | - Recurring revenue, which includes insurance services management, inspection software, and warranty products, showed significant year-over-year growth for both the three and six months ended June 30, 2025[105](index=105&type=chunk)[106](index=106&type=chunk) - Deferred revenue related to the Reciprocal Segment was **$193.1 million** as of June 30, 2025, a decrease from **$242.6 million** as of December 31, 2024[112](index=112&type=chunk) [Note 5. Investments](index=24&type=section&id=Note%205.%20Investments) This note details the company's investment portfolio, including fair value measurements, income, and realized gains or losses **Investment Income and Realized Gains/Losses (Net of Expenses) (in thousands):** | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Investment income, net of investment expenses | $2,681 | $3,574 | $5,519 | $7,238 | | Realized gains on investments | $181 | $26 | $256 | $40 | | Realized losses on investments | $(197) | $(74) | $(300) | $(108) | | **Total Investment income and realized gains and losses, net of investment expenses** | **$2,665** | **$3,526** | **$5,475** | **$7,170** | **Fair Value of Investment Securities (in thousands):** | Entity | As of June 30, 2025 | As of December 31, 2024 | | :--------------------------------------- | :------------------ | :-------------------- | | Porch Group (captive reinsurance business) | $32,974 | $182,751 | | Reciprocal (consolidated VIE) | $172,144 | — | | **Total** | **$205,118** | **$182,751** | - Unrealized losses on fixed-maturity securities are primarily attributed to interest rate changes rather than credit quality, and the company intends to hold these investments until market price recovery or maturity[134](index=134&type=chunk) [Note 6. Fair Value](index=28&type=section&id=Note%206.%20Fair%20Value) This note provides information on the fair value measurements of the company's financial assets and liabilities **Fair Value Measurement of Assets and Liabilities (in thousands) as of June 30, 2025:** | Category | Level 1 | Level 2 | Level 3 | Total Fair Value | | :------------------------------------------------- | :------ | :------ | :------ | :--------------- | | **Assets:** | | | | | | Money market mutual funds | $15,440 | — | — | $15,440 | | Debt securities (U.S. Treasuries, Muni, Corp, MBS) | $9,318 | $167,541 | — | $176,859 | | **Total Assets** | **$34,789** | **$185,769** | **—** | **$220,558** | | **Liabilities:** | | | | | | Contingent consideration - business combinations | — | — | $55 | $55 | | Private warrant liability | — | — | $4,070 | $4,070 | | Embedded derivatives | — | — | $2,736 | $2,736 | | **Total Liabilities** | **—** | **—** | **$6,861** | **$6,861** | - The fair value of the private warrant liability increased from **$460 thousand** at December 31, 2024, to **$4,070 thousand** at June 30, 2025, influenced by changes in stock price and expected volatility[145](index=145&type=chunk)[146](index=146&type=chunk) - The fair value of embedded derivatives decreased from **$22,262 thousand** at December 31, 2024, to **$2,736 thousand** at June 30, 2025, driven by factors such as the fair value of underlying debt and assumptions regarding possible repurchase events[151](index=151&type=chunk) [Note 7. Property, Equipment, and Software](index=32&type=section&id=Note%207.%20Property%2C%20Equipment%2C%20and%20Software) This note provides details on the company's property, equipment, and software assets, including their gross values, accumulated depreciation, and net book values **Property, Equipment, and Software, Net (in thousands):** | Category | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Software and computer equipment | $8,309 | $8,051 | | Internally developed software | $42,138 | $35,096 | | Total property, equipment, and software, gross | $52,860 | $45,546 | | Less: Accumulated depreciation and amortization | $(26,395) | $(23,004) | | **Property, equipment, and software, net** | **$26,465** | **$22,542** | - Depreciation and amortization expense related to property, equipment, and software was **$1.5 million** for the three months ended June 30, 2025, and **$3.1 million** for the six months ended June 30, 2025[154](index=154&type=chunk) [Note 8. Intangible Assets and Goodwill](index=32&type=section&id=Note%208.%20Intangible%20Assets%20and%20Goodwill) This note provides information on the company's intangible assets and goodwill, including their carrying values and amortization expenses **Intangible Assets, Net (in thousands):** | Category | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Customer relationships | $32,453 | $36,404 | | Acquired technology | $4,847 | $7,511 | | Trademarks and tradenames | $13,730 | $14,735 | | Renewal rights | $4,366 | $5,017 | | Insurance licenses | $4,960 | $4,960 | | **Total intangible assets, net** | **$60,452** | **$68,746** | - Goodwill remained at **$191,907 thousand** for both periods and was reallocated on January 1, 2025, to the Software & Data segment (**$157,364 thousand**) and Consumer Services segment (**$34,543 thousand**) based on a quantitative fair value analysis[158](index=158&type=chunk) - Aggregate amortization expense related to intangibles was **$3.9 million** for the three months ended June 30, 2025, and **$8.3 million** for the six months ended June 30, 2025[156](index=156&type=chunk) [Note 9. Debt](index=33&type=section&id=Note%209.%20Debt) This note details the company's outstanding debt, including convertible notes, their carrying values, and associated interest expenses **Outstanding Debt (Carrying Value, in thousands):** | Debt Type | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :---------------- | | Convertible senior unsecured notes, due 2026 | $20,414 | $172,155 | | Convertible senior secured notes, due 2028 | $241,884 | $231,633 | | Convertible senior unsecured notes, due 2030 | $131,830 | — | | **Total Carrying Value** | **$394,128** | **$403,938** | - In May 2025, the company completed refinancing transactions, exchanging **$96.8 million** of 2026 Notes for **$83.0 million** of newly issued 9.00% Convertible Senior Unsecured Notes due 2030, issuing an additional **$51.0 million** of 2030 Notes for cash, and repurchasing **$47.5 million** of 2026 Notes for cash[161](index=161&type=chunk)[162](index=162&type=chunk) **Interest Expense for Convertible Notes (in thousands):** | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Contractual interest expense (2026, 2028, 2030 Notes) | $6,860 | $6,032 | $12,811 | $12,071 | | Amortization of debt issuance costs and discount (2026, 2028, 2030 Notes) | $5,317 | $4,555 | $10,690 | $9,172 | | **Total Interest Expense** | **$12,177** | **$10,587** | **$23,501** | **$21,243** | [Note 10. Stockholders' Equity and Warrants](index=35&type=section&id=Note%2010.%20Stockholders%27%20Equity%20and%20Warrants) This note provides details on the company's common shares outstanding, shares reserved for issuance, and warrant information **Common Shares Outstanding and Reserved for Future Issuance (in thousands):** | Category | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :---------------- | | Outstanding common shares, total | 122,219 | 119,770 | | Private warrants | 1,796 | 1,796 | | Stock options | 3,020 | 3,181 | | Restricted and performance stock units and awards | 14,301 | 14,119 | | 2020 Equity Plan pool reserved for future issuance | 10,295 | 7,698 | | Convertible senior unsecured notes, due 2026 | 822 | 6,950 | | Convertible senior secured notes, due 2028 | 13,332 | 13,332 | | Convertible senior unsecured notes, due 2030 | 8,527 | — | | **Total shares of common stock outstanding and reserved for future issuance** | **174,312** | **166,846** | - There were **1.8 million** private warrants outstanding as of June 30, 2025, with an exercise price of **$11.50**, expiring on December 23, 2025[178](index=178&type=chunk) [Note 11. Stock-Based Compensation](index=36&type=section&id=Note%2011.%20Stock-Based%20Compensation) This note details the company's stock-based compensation expense and activity related to equity awards **Stock-Based Compensation Expense (in thousands):** | Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Cost of revenue | $62 | — | $96 | — | | Selling and marketing | $496 | $710 | $799 | $1,404 | | Product and technology | $966 | $1,426 | $1,658 | $2,521 | | General and administrative | $6,476 | $4,969 | $10,357 | $8,548 | | **Total stock-based compensation expense** | **$8,000** | **$7,105** | **$12,910** | **$12,473** | **Equity Award Activity (in thousands, for six months ended June 30, 2025):** | Category | Options | Restricted Stock Units | Performance Restricted Stock Units | | :-------------------------- | :------ | :--------------------- | :------------------------------- | | Balances as of Dec 31, 2024 | 3,181 | 7,845 | 6,272 | | Granted | — | 3,300 | 3,544 | | Vested | — | (2,373) | — | | Exercised | (160) | — | — | | Forfeited, canceled or expired | (1) | (1,426) | (2,861) | | **Balances as of June 30, 2025** | **3,020** | **7,346** | **6,955** | - Performance Restricted Stock Units (PRSUs) granted during the six months ended June 30, 2025, have vesting conditions tied to service period, revenue, Adjusted EBITDA, or Total Shareholder Return (TSR) through 2027[182](index=182&type=chunk)[184](index=184&type=chunk) [Note 12. Reinsurance for the Reciprocal](index=38&type=section&id=Note%2012.%20Reinsurance%20for%20the%20Reciprocal) This note describes the reinsurance arrangements for the Reciprocal, including catastrophe coverage and their effects on premiums and losses - As of April 1, 2025, the Reciprocal's excess of loss catastrophe reinsurance provides coverage from **$25.0 million** up to **$410.0 million** per occurrence, with a **7.5%** third-party quota share reducing effective retention to **$23.1 million** per occurrence[186](index=186&type=chunk) **Effects of Reinsurance on Premiums (in thousands):** | Metric | Q2 2025 Written | Q2 2025 Earned | Q2 2024 Written | Q2 2024 Earned | | :---------------- | :-------------- | :------------- | :-------------- | :------------- | | Direct premiums | $95,779 | $100,184 | $109,716 | $102,345 | | Ceded premiums | $20,378 | $(21,229) | $(59,857) | $(40,518) | | **Net premiums** | **$116,157** | **$78,955** | **$49,859** | **$61,827** | **Effects of Reinsurance on Incurred Losses and LAE (in thousands):** | Metric | Q2 2025 | Q2 2024 | YTD Q2 2025 | YTD Q2 2024 | | :---------------- | :------ | :------ | :---------- | :---------- | | Direct losses and LAE | $39,664 | $110,210 | $84,356 | $189,626 | | Ceded losses and LAE | $(7,072) | $(26,060) | $(22,629) | $(36,543) | | **Net losses and LAE** | **$32,592** | **$84,150** | **$61,727** | **$153,083** | [Note 13. Unpaid Losses and Loss Adjustment Reserve](index=41&type=section&id=Note%2013.%20Unpaid%20Losses%20and%20Loss%20Adjustment%20Reserve) This note provides information on the company's reserve for unpaid losses and loss adjustment expenses **Changes in Reserve for Unpaid Losses and LAE (in thousands):** | Metric | December 31, 2024 | June 30, 2025 | | :--------------------------------------- | :---------------- | :------------ | | Reserve for unpaid losses and LAE (gross) | $67,785 | $68,067 | | Net incurred losses and LAE during current year | — | $61,727 | | Net claim and LAE payments during current year | — | $(59,533) | | **Reserve for unpaid losses and LAE (gross) at period end** | **$67,785** | **$68,067** | - Changes in estimates for prior year claims resulted in an increase of **$3.4 million** for the six months ended June 30, 2025[193](index=193&type=chunk) [Note 14. Other Income (Expense), Net](index=41&type=section&id=Note%2014.%20Other%20Income%20%28Expense%29%2C%20Net) This note details the components of other income and expense, net, for various reporting periods **Other Income, Net (in thousands):** | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Interest income | $396 | $360 | $814 | $794 | | Gain on settlement of contingent consideration | — | — | — | $14,930 | | Loss on sale of business | — | $(87) | — | $(5,331) | | Recoveries of losses on reinsurance contracts | $925 | $924 | $8,949 | $13,494 | | Other, net | $172 | $1,203 | $130 | $1,191 | | **Total Other Income, Net** | **$1,493** | **$2,400** | **$9,893** | **$25,078** | - The decrease in total other income, net, for the six months ended June 30, 2025, was primarily due to the absence of a **$14.9 million** gain on settlement of contingent consideration and a **$5.3 million** loss on sale of business, both recognized in the prior year[194](index=194&type=chunk)[284](index=284&type=chunk) [Note 15. Income Taxes](index=41&type=section&id=Note%2015.%20Income%20Taxes) This note provides information on the company's income tax benefit or provision and effective tax rates **Income Tax Benefit (Provision) and Effective Tax Rates:** | Period | 2025 Amount (in thousands) | 2025 Rate | 2024 Amount (in thousands) | 2024 Rate | | :---------------------- | :------------------------- | :-------- | :------------------------- | :-------- | | Three Months Ended June 30 | $1,087 | 15.2% benefit | $(688) | 1.1% provision | | Six Months Ended June 30 | $184 | 1.6% benefit | $(866) | 1.1% provision | - The effective tax rates differ from the U.S. statutory rate of **21%** primarily due to a full valuation allowance related to net deferred tax assets[195](index=195&type=chunk) - The six months ended June 30, 2025, includes **$0.9 million** of deferred federal income tax expense recognized in conjunction with the formation of the Reciprocal and the subsequent sale of HOA[196](index=196&type=chunk) [Note 16. Commitments and Contingencies](index=42&type=section&id=Note%2016.%20Commitments%20and%20Contingencies) This note outlines the company's legal obligations, ongoing litigation, and potential financial exposures - Porch and GoSmith.com are involved in a mass tort action alleging violations of the Telephone Consumer Protection Act (TCPA) and a related Washington state law claim, with **956 plaintiffs** remaining in the consolidated Western District of Washington action[200](index=200&type=chunk)[201](index=201&type=chunk) - The company is currently unable to determine the likelihood of an unfavorable outcome or provide an estimate of the range or amount of potential loss for these disputes[203](index=203&type=chunk)[204](index=204&type=chunk) [Note 17. Net Income (Loss) Attributable To Porch Per Share](index=43&type=section&id=Note%2017.%20Net%20Income%20%28Loss%29%20Attributable%20To%20Porch%20Per%20Share) This note provides the calculation of basic and diluted net income (loss) per share attributable to Porch stockholders **Net Income (Loss) Attributable to Porch Per Share:** | Period | 2025 Basic | 2025 Diluted | 2024 Basic | 2024 Diluted | | :---------------------- | :--------- | :----------- | :--------- | :----------- | | Three Months Ended June 30 | $0.03 | $0.00 | $(0.65) | $(0.65) | | Six Months Ended June 30 | $0.11 | $0.10 | $(0.79) | $(0.79) | - Weighted average shares outstanding used to compute diluted EPS for the three months ended June 30, 2025, increased to **131,679 thousand** from **99,193 thousand** in the prior year[22](index=22&type=chunk)[207](index=207&type=chunk) - Securities not included in the diluted EPS computation for the three months ended June 30, 2025, due to antidilution or unmet performance conditions, included **224 thousand** stock options, **2,621 thousand** performance restricted stock units, **1,796 thousand** private warrants, and **8,527 thousand** 2030 Notes[208](index=208&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=45&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, discussing key factors affecting performance, recent developments, and detailed analysis of consolidated and segment-level financial results for both quarter-to-date and year-to-date periods. It also covers key performance measures, liquidity, capital resources, and non-GAAP financial measures [Business Overview](index=46&type=section&id=Business%20Overview) This section provides an overview of the company's business model, operational structure, and strategic focus - Porch Group operates as a homeowners insurance company, leveraging its SaaS platform and unique property data to enhance risk assessment for its managed Reciprocal Exchange and offering comprehensive home services[215](index=215&type=chunk)[221](index=221&type=chunk) - The company's operations are structured into four segments: Insurance Services, Software & Data, Consumer Services (collectively 'Porch Shareholder Interest'), and the Reciprocal Segment (a consolidated variable interest entity)[216](index=216&type=chunk)[217](index=217&type=chunk)[218](index=218&type=chunk)[219](index=219&type=chunk)[222](index=222&type=chunk) - Porch manages the Reciprocal as its attorney-in-fact, providing services for ongoing commissions and policy fees based on the Reciprocal's gross written premium, with Porch Shareholder Interests largely tied to the Reciprocal's growth and financial condition[223](index=223&type=chunk)[224](index=224&type=chunk) [Recent Developments](index=47&type=section&id=Recent%20Developments) This section highlights significant events and strategic changes that have impacted the company's financial position and operations - On May 27, 2025, Porch completed a debt refinancing, exchanging **$96.8 million** of 2026 Notes for **$83.0 million** of new 2030 Notes, issuing an additional **$51.0 million** of 2030 Notes for cash, and repurchasing **$47.5 million** of 2026 Notes for cash[226](index=226&type=chunk)[229](index=229&type=chunk) - Effective April 1, 2025, the Reciprocal's reinsurance programs were updated, with catastrophe reinsurance starting at **$25.0 million** per occurrence up to **$410.0 million**, and a **7.5%** third-party quota share reducing effective retention to **$23.1 million**[228](index=228&type=chunk) - On January 1, 2025, the Reciprocal was formed, and Porch sold its homeowners insurance carrier, HOA, to it, resulting in Porch holding approximately **$106 million** in surplus notes from the Reciprocal and managing its operations for commissions and fees[231](index=231&type=chunk) [Results of Operations](index=48&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, including revenue, expenses, and profitability, for various periods [Consolidated Quarter-to-Date Results](index=49&type=section&id=Consolidated%20Quarter-to-Date%20Results) This section provides an analysis of the company's consolidated financial performance for the most recent quarter **Consolidated Quarter-to-Date Financial Performance (in thousands):** | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | $ Change | % Change | | :--------------------------------------- | :------------------------------- | :------------------------------- | :--------- | :--------- | | Revenue | $119,295 | $110,844 | $8,451 | 8% | | Cost of revenue | $43,422 | $94,046 | $(50,624) | (54)% | | Gross Profit | $75,873 | $16,798 | $59,075 | 352% | | Operating income (loss) | $5,049 | $(52,479) | $57,528 | (110)% | | Net income (loss) attributable to Porch | $2,579 | $(64,323) | $66,902 | (104)% | | Adjusted EBITDA (Loss) | $15,630 | $(34,773) | $50,403 | (145)% | | Adjusted EBITDA (Loss) Margin | 13% | (31)% | +44 pp | N/A | - The **54% decrease** in cost of revenue was primarily driven by a reduction in weather-related claims compared to the prior year's seasonal trends[238](index=238&type=chunk) - Adjusted EBITDA (Loss) improved by **$50.4 million**, primarily due to the absence of weather-related claims in the current period and the shift in the business model to higher-margin management fees from the Reciprocal[242](index=242&type=chunk) [Porch Shareholder Interest Quarter-to-Date Results (Non-GAAP)](index=53&type=section&id=Porch%20Shareholder%20Interest%20Quarter-to-Date%20Results%20%28Non-GAAP%29) This section analyzes the non-GAAP financial performance of Porch Shareholder Interest segments for the most recent quarter **Porch Shareholder Interest Quarter-to-Date Performance (Non-GAAP, in thousands):** | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | $ Change | | :--------------------------------------- | :------------------------------- | :------------------------------- | :--------- | | Revenue | $107,018 | $75,865 | $31,153 | | Gross Profit | $89,234 | $46,788 | $42,446 | | Adjusted EBITDA (Loss) | $15,630 | $(3,204) | $18,834 | - Porch Shareholder Interest revenue increased by **$31.2 million**, primarily due to increased ceding from the Reciprocal Segment and associated revenue streams from Porch acting as its manager[253](index=253&type=chunk) - Insurance Services Adjusted EBITDA Margin increased to **29%** (from **11%** in prior year) due to higher revenue from increased ceding activity from the Reciprocal Segment and a reduction in weather-related claims[257](index=257&type=chunk)[263](index=263&type=chunk) [Consolidated Year-to-Date Results](index=57&type=section&id=Consolidated%20Year-to-Date%20Results) This section provides an analysis of the company's consolidated financial performance for the year-to-date period **Consolidated Year-to-Date Financial Performance (in thousands):** | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | $ Change | % Change | | :--------------------------------------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Revenue | $224,040 | $226,287 | $(2,247) | (1)% | | Cost of revenue | $82,719 | $172,412 | $(89,693) | (52)% | | Gross Profit | $141,321 | $53,875 | $87,446 | 162% | | Operating income (loss) | $3,783 | $(87,147) | $90,930 | (104)% | | Net income (loss) attributable to Porch | $10,974 | $(77,685) | $88,659 | (114)% | | Adjusted EBITDA (Loss) | $32,491 | $(51,561) | $84,052 | (163)% | | Adjusted EBITDA (Loss) Margin | 15% | (23)% | +38 pp | N/A | - The **52% decrease** in cost of revenue was primarily due to a significant reduction in weather-related claims compared to the prior year[280](index=280&type=chunk) - Adjusted EBITDA (Loss) improved by **$84.1 million**, driven by reduced weather-related claims and the strategic shift to a higher-margin manager model for the Reciprocal[278](index=278&type=chunk) [Porch Shareholder Interest Year-to-Date Results (Non-GAAP)](index=61&type=section&id=Porch%20Shareholder%20Interest%20Year-to-Date%20Results%20%28Non-GAAP%29) This section analyzes the non-GAAP financial performance of Porch Shareholder Interest segments for the year-to-date period **Porch Shareholder Interest Year-to-Date Performance (Non-GAAP, in thousands):** | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | $ Change | | :--------------------------------------- | :----------------------------- | :----------------------------- | :--------- | | Revenue | $191,564 | $160,282 | $31,282 | | Gross Profit | $158,308 | $96,627 | $61,681 | | Adjusted EBITDA (Loss) | $32,491 | $(7,279) | $39,770 | - Porch Shareholder Interest revenue increased by **$31.3 million**, primarily due to the launch of the Reciprocal and increased ceding from new reinsurance programs[295](index=295&type=chunk) - Insurance Services Adjusted EBITDA Margin increased to **39%** (from **13%** in prior year) due to higher revenue from increased ceding activity from the Reciprocal Segment and a reduction in weather-related claims[299](index=299&type=chunk)[304](index=304&type=chunk) [Key Performance Measures and Operating Metrics](index=64&type=section&id=Key%20Performance%20Measures%20and%20Operating%20Metrics) This section outlines the primary metrics used by management to evaluate the performance of each operating segment - For Insurance Services, key metrics include Reciprocal Written Premium, Reciprocal Policies Written, and Reciprocal Written Premium per Policy Written[321](index=321&type=chunk)[322](index=322&type=chunk) - For Software & Data, key metrics are Average Number of Companies and Annualized Average Revenue per Company[323](index=323&type=chunk)[325](index=325&type=chunk) - For Consumer Services, key metrics include Monetized Services and Average Revenue per Monetized Service[326](index=326&type=chunk)[327](index=327&type=chunk) [Liquidity and Capital Resources](index=65&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's ability to generate and manage cash, its capital structure, and its capacity to meet financial obligations - As of June 30, 2025, Porch Group had **$487.9 million** in aggregate principal amount outstanding in convertible notes, which serve as its primary source of capital[328](index=328&type=chunk) - Management believes current cash, cash equivalents, and liquid investments are sufficient to finance operations, capital expenditures, working capital, and debt service obligations for at least the next 12 months[329](index=329&type=chunk) **Liquidity and Capital Resources (in thousands):** | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------------------------------------------------------- | :------------ | :---------------- | | **Porch Shareholder Interest:** | | | | Unrestricted cash, cash equivalents, and investments | $109,065 | $61,648 | | Restricted cash and cash equivalents | $8,407 | $28,244 | | **Reciprocal (Consolidated VIE):** | | | | Unrestricted cash, cash equivalents, and investments | $274,520 | $288,746 | | Restricted cash and cash equivalents | $1,019 | $895 | | **Total Statutory Surplus (Reciprocal)** | **$299,200** | **N/A** | [Non-GAAP Financial Measures](index=69&type=section&id=Non-GAAP%20Financial%20Measures) This section defines and reconciles non-GAAP financial measures used by management to assess performance, providing additional insights beyond GAAP metrics - Management uses non-GAAP financial measures, such as Adjusted EBITDA (Loss) and Porch Shareholder Interest metrics, for internal budgeting, forecasting, strategic planning, and evaluating performance, as well as for investor communication[359](index=359&type=chunk) - Adjusted EBITDA (Loss) is defined as net income (loss) adjusted for net income (loss) attributable to the Reciprocal, interest expense, income taxes, depreciation and amortization, stock-based compensation expense, and mark-to-market gains or losses, among other items[362](index=362&type=chunk) - These non-GAAP measures exclude specified income and expenses required by GAAP and should not be considered in isolation or as a substitute for GAAP financial performance measures[360](index=360&type=chunk)[361](index=361&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=72&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section outlines the company's exposure to various market risks, including interest rate risk from its fixed-rate convertible debt and investment portfolios, inflation risk impacting costs and consumer spending, and foreign currency risk. It also highlights the dependence of Porch's financial results on the Reciprocal's performance - As of June 30, 2025, Porch had **$487.9 million** in interest-bearing debt, primarily fixed-rate convertible notes (2026, 2028, and 2030 Notes), meaning interest expense will not change with market interest rate fluctuations[371](index=371&type=chunk)[372](index=372&type=chunk) - Porch's fixed income portfolio (**$33.0 million**) and the Reciprocal's portfolio (**$172.1 million**) are exposed to interest rate risk, with unrealized losses expected in a rising interest rate environment[373](index=373&type=chunk) - Inflation risk negatively affects operations through higher costs, decreased margins, and potential reductions in consumer spending, while foreign currency risk is immaterial as activities are primarily in the U.S.[376](index=376&type=chunk)[377](index=377&type=chunk) [Item 4. Controls and Procedures](index=73&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms that management, including the Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of the company's disclosure controls and procedures as of June 30, 2025, and concluded they were effective. It also states that there were no material changes in internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2025[379](index=379&type=chunk) - There were no material changes in internal control over financial reporting during the most recent fiscal quarter[380](index=380&type=chunk) PART II — OTHER INFORMATION [Item 1. Legal Proceedings](index=74&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 16 for details on legal proceedings and reiterates that, despite ongoing litigation in the ordinary course of business, management does not believe any current proceedings would individually or in aggregate have a material adverse effect on the company's financial condition or operations - The company is a party to various legal proceedings, including property, personal injury, contract, intellectual property, and class action lawsuits, arising in the ordinary course of business[384](index=384&type=chunk) - Management believes that the outcome of current legal proceedings, if determined adversely, would not individually or in the aggregate have a material adverse effect on the company's business, financial condition, or results of operations[384](index=384&type=chunk) [Item 1A. Risk Factors](index=74&type=section&id=Item%201A.%20Risk%20Factors) This section updates the risk factors, specifically focusing on those related to the newly issued 2030 Notes. It highlights potential adverse impacts such as liquidity issues from conditional conversion, dilution of stockholder ownership, deterrence of beneficial takeover attempts, and negative effects on reported financial condition and earnings due to accounting methods - The conditional conversion feature of the 2030 Notes, if triggered, could adversely affect liquidity by requiring cash settlement or materially reduce net working capital by reclassifying the debt as a current liability[386](index=386&type=chunk) - Conversion of the 2030 Notes may dilute existing stockholders' ownership interests or depress the price of common stock, and certain provisions in the indenture could delay or prevent beneficial takeover attempts[387](index=387&type=chunk)[388](index=388&type=chunk) - The accounting method for the 2030 Notes, including debt discount amortization and the 'if converted' method for diluted EPS, could adversely affect reported earnings and financial condition[389](index=389&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=75&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) This section states that there were no unregistered sales of equity securities, use of proceeds, or issuer purchases of equity securities during the reporting period, beyond what was previously disclosed in the company's Form 8-K filed on May 28, 2025 - No unregistered sales of equity securities, use of proceeds, or issuer purchases of equity securities were reported, other than as disclosed in the company's Form 8-K filed on May 28, 2025[390](index=390&type=chunk) [Item 3. Defaults Upon Senior Securities](index=75&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section confirms that there were no defaults upon senior securities during the reporting period - No defaults upon senior securities were reported[391](index=391&type=chunk) [Item 4. Mine Safety Disclosures](index=75&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that the disclosure requirements for mine safety are not applicable to the company - Mine safety disclosures are not applicable to the company[392](index=392&type=chunk) [Item 5. Other Information](index=75&type=section&id=Item%205.%20Other%20Information) This section discloses that two members of the Board of Directors entered into Rule 10b5-1 trading arrangements in June 2025 to sell common stock to satisfy tax obligations upon the vesting of shares received for Board service. No other directors or officers adopted, terminated, or modified such plans during the quarter - Regi Vengalil, a Board member, entered a Rule 10b5-1 trading arrangement on June 6, 2025, to sell up to **40,000 shares** to satisfy tax obligations upon vesting, with the plan scheduled to terminate on September 15, 2026[393](index=393&type=chunk) - Amanda Reierson, a Board member, entered a Rule 10b5-1 trading arrangement on June 13, 2025, to sell up to **60,000 shares** for similar tax purposes, with the plan scheduled to terminate on June 19, 2026[394](index=394&type=chunk) - No other director or officer adopted, terminated, or modified a Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025[395](index=395&type=chunk) [Item 6. Exhibits](index=76&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of, or incorporated by reference into, the Quarterly Report on Form 10-Q. These include corporate organizational documents, debt indentures, stock award agreements, and various certifications required by the Sarbanes-Oxley Act - Exhibits include corporate governance documents (Certificate of Incorporation, By-Laws), debt instruments (Indenture for 2030 Notes, Form of 9.00% Convertible Senior Notes due 2030), and stock award agreements[397](index=397&type=chunk) - Certifications by the Chief Executive Officer and Chief Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are furnished[397](index=397&type=chunk)[398](index=398&type=chunk) - XBRL Instance Document and Taxonomy Extension documents are included for interactive data filing[397](index=397&type=chunk) SIGNATURES - The report was duly signed on behalf of Porch Group, Inc. by Shawn Tabak, Chief Financial Officer and Duly Authorized Officer, on August 5, 2025[401](index=401&type=chunk)[402](index=402&type=chunk)

Q2 2025 Performance Highlights - Porch Shareholder Interest revenue reached $107 million[20], with a gross profit of $89.2 million[20] and an 83% gross margin[20] - Adjusted EBITDA for Porch Shareholder Interest was $15.6 million[20], representing a 15% margin[20] - Reciprocal Written Premium (RWP) grew to $120.7 million[20], a $72 million increase or 431% increase year-over-year[20, 21] - Porch Shareholder Interest Cash Flow from Operations was $14.9 million[20] Reciprocal Performance - The Reciprocal's surplus combined with non-admitted assets reached $299 million as of June 30, 2025[27], a $102 million increase compared to the prior quarter[27] and a $259 million increase compared to the prior year[27] - The company estimates that a ~$300M surplus could potentially drive ~$1.5B Reciprocal Written Premium and ~$240M Insurance Services Adjusted EBITDA[29] Segment Performance - Insurance Services revenue was $67.4 million with a gross profit of $57.9 million and Adjusted EBITDA of $19.7 million[42], representing an 86% gross margin and 29% Adjusted EBITDA margin[42, 50] - Software & Data revenue was $24.0 million with a gross profit of $18.2 million and Adjusted EBITDA of $5.5 million[42], representing a 76% gross margin and 23% Adjusted EBITDA margin[42, 54] - Consumer Services revenue was $17.7 million with a gross profit of $15.2 million and Adjusted EBITDA of $2.0 million[42], representing an 86% gross margin and 11% Adjusted EBITDA margin[42, 58] Guidance - The company increased its 2025 revenue guidance to $405 million - $425 million[68], gross profit guidance to $328 million - $342 million[68], and Adjusted EBITDA guidance to $65 million - $70 million[68]

[Second Quarter 2025 Results Overview](index=1&type=section&id=Second%20Quarter%202025%20Results%20Overview) [Q2 2025 Financial Highlights](index=1&type=section&id=Q2%202025%20Financial%20Highlights) Porch Group exceeded expectations in Q2 2025 and raised its full-year guidance, achieving $107 million in revenue attributable to Porch shareholders, a net income of $2.6 million, and adjusted EBITDA of $15.6 million, a significant increase of $50.4 million from the prior year period - Porch Group's Q2 2025 performance exceeded expectations, leading to an upward revision of its full-year 2025 guidance, primarily driven by insurance services[1](index=1&type=chunk) Q2 2025 Financial Performance (Millions USD) | Metric | Porch Shareholder Interest (Millions USD) | Consolidated (Millions USD) | | :--- | :--- | :--- | | Revenue | 107.0 | 119.3 | | Gross Profit | 89.2 | 75.9 | | Net Income (Loss) | 2.6 | 8.2 | | Adjusted EBITDA (Loss) | 15.6 | 15.6 | - Gross profit attributable to Porch shareholders increased by over **400% year-over-year**, and adjusted EBITDA grew by **$50.4 million** from the prior year to **$15.6 million**, driving operating cash flow to **$14.9 million**[3](index=3&type=chunk) [CEO Summary](index=1&type=section&id=CEO%20Summary) CEO Matt Ehrlichman stated that Q2 2025, the second quarter since Reciprocal's launch, was highly successful with financial results exceeding expectations and strong organizational performance on key initiatives, leading to an upward revision of the full-year 2025 guidance as the business has become simple, predictable, and profitable - CEO Matt Ehrlichman highlighted Q2 2025 as the second successful quarter under the company's new operating model since Reciprocal's launch, with financial results exceeding expectations[3](index=3&type=chunk) - The company's gross profit increased by over **400% year-over-year**, and adjusted EBITDA improved by **$50.4 million** from Q2 2024 to **$15.6 million**, generating **$14.9 million** in operating cash flow for Porch shareholders[3](index=3&type=chunk) - Given the strong business performance and new outlook, the company raised its 2025 full-year guidance for revenue, gross profit, and adjusted EBITDA attributable to Porch shareholders[3](index=3&type=chunk) [Second Quarter 2025 Operational Highlights](index=1&type=section&id=Second%20Quarter%202025%20Operational%20Highlights) [Operational Highlights Details](index=1&type=section&id=Operational%20Highlights%20Details) Porch Group achieved several operational advancements in Q2, including renewing its partnership with Goosehead Insurance and adding new insurance agent distribution partners, progressing well with the Home Factors product in its Software & Data business, and launching new home warranty and moving services in Consumer Services, while Reciprocal Exchange's surplus grew healthily to $299.2 million - In June, Porch renewed its partnership with Goosehead Insurance and added new insurance agent distribution partners including Roamly, Evertree, and MassDrive[6](index=6&type=chunk) - The Home Factors data product in the Software & Data business is progressing well, with the number of insurers in testing ahead of schedule, maintaining the goal of releasing **100 Home Factors** by year-end[6](index=6&type=chunk) - In Consumer Services, Porch insurance policyholders gained access to full home warranties and 4-hour moving services, with new offerings including packing services launched[6](index=6&type=chunk) - Reciprocal Exchange is operating healthily, with surplus and non-admitted assets totaling **$299.2 million** at the end of Q2 2025, an increase of **$259 million** from the prior year and **$102 million** from Q1 2025[6](index=6&type=chunk) [Key Performance Indicators (KPIs)](index=2&type=section&id=Key%20Performance%20Indicators%20(KPIs)) [Q2 2025 Key Performance Indicators](index=2&type=section&id=Q2%202025%20Key%20Performance%20Indicators) In Q2 2025, insurance services saw Reciprocal Written Premium reach $120.7 million with 42.5 thousand policies, while the Software & Data business reported an average of 24.2 thousand companies and an annualized average revenue per company of $3,974, and Consumer Services had 87.2 thousand monetized services with an average revenue of $202 per monetized service Q2 2025 Key Performance Indicators | Metric | Amount/Quantity | | :--- | :--- | | **Insurance Services KPIs** | | | Reciprocal Written Premium (RWP) | 120.7 Million USD | | Reciprocal Policies Written | 42.5 Thousand | | Reciprocal Written Premium per Policy Written | 2,843 USD | | **Software & Data KPIs** | | | Average Number of Companies | 24.2 Thousand | | Annualized Average Revenue per Company | 3,974 USD | | **Consumer Services KPIs** | | | Number of Monetized Services | 87.2 Thousand | | Average Revenue per Monetized Service | 202 USD | [Balance Sheet Information](index=2&type=section&id=Balance%20Sheet%20Information) [Porch Shareholder Interest Cash and Investments](index=2&type=section&id=Porch%20Shareholder%20Interest%20Cash%20and%20Investments) As of June 30, 2025, total cash, cash equivalents, restricted cash, and investments attributable to Porch shareholders amounted to $117.5 million, an increase from December 31, 2024, primarily due to cash flow from operations and Vesttoo bankruptcy proceeds, despite some cash used for repurchasing 2026 convertible senior unsecured notes Porch Shareholder Interest Cash, Cash Equivalents, and Investments (Millions USD) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | 76.1 | 46.5 | | Short-term investments | 3.7 | 1.6 | | Long-term investments | 29.2 | 13.5 | | Unrestricted cash, cash equivalents, and investments | 109.1 | 61.6 | | Restricted cash and cash equivalents | 8.4 | 28.2 | | **Total cash, cash equivalents, investments, and restricted cash** | **117.5** | **89.9** | - Total cash, cash equivalents, restricted cash, and investments attributable to Porch shareholders increased from **$89.9 million** as of December 31, 2024, to **$117.5 million** as of June 30, 2025[10](index=10&type=chunk) - The increase was primarily driven by **$42.1 million** in cash flow from operating activities attributable to Porch shareholders (of which **$32.5 million** was contributed by Adjusted EBITDA) and **$7.1 million** received from the Vesttoo bankruptcy proceedings[10](index=10&type=chunk) - Porch used **$55.7 million** in cash during the six months ended June 30, 2025, to repurchase a portion of its 2026 convertible senior unsecured notes, including **$51.0 million** in cash proceeds from the issuance of 9.00% convertible senior unsecured notes due 2030[10](index=10&type=chunk) [Outstanding Convertible Debt](index=2&type=section&id=Outstanding%20Convertible%20Debt) As of June 30, 2025, Porch Group's total outstanding convertible debt amounted to $487.9 million, comprising 2030 notes, 2028 notes, and 2026 notes Outstanding Convertible Debt as of June 30, 2025 (Millions USD) | Note Type | Principal Outstanding | | :--- | :--- | | 9.00% Convertible Senior Unsecured Notes due 2030 | 134.0 | | 6.75% Convertible Senior Secured Notes due 2028 | 333.3 | | 0.75% Convertible Senior Unsecured Notes due 2026 | 20.5 | | **Total** | **487.9** | [Condensed Consolidated Balance Sheets](index=12&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, Porch Group reported total assets of $770.7 million, total liabilities of $772.9 million, and a total shareholder deficit of ($2.188 million), showing a decrease in both total assets and liabilities, and an improvement in shareholder deficit compared to December 31, 2024 Condensed Consolidated Balance Sheet Highlights (Thousands USD) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | 76,091 | 167,643 | | Short-term investments | 3,746 | 24,099 | | Total current assets | 113,753 | 365,127 | | Total assets | 770,717 | 813,968 | | **Liabilities and Shareholder Deficit** | | | | Total current liabilities | 66,227 | 414,156 | | Long-term debt | 394,128 | 403,788 | | Total liabilities | 772,905 | 857,193 | | Porch shareholder deficit | (29,292) | (43,225) | | Total shareholder deficit | (2,188) | (43,225) | - Total assets as of June 30, 2025, were **$770.7 million**, a decrease from **$813.9 million** as of December 31, 2024[53](index=53&type=chunk) - Total liabilities were **$772.9 million**, a decrease from **$857.1 million** as of December 31, 2024[56](index=56&type=chunk) - Porch shareholder deficit improved from **($43.225 million)** as of December 31, 2024, to **($29.292 million)** as of June 30, 2025[56](index=56&type=chunk) [Post Balance Sheet Events](index=3&type=section&id=Post%20Balance%20Sheet%20Events) [Debt Repurchase in July 2025](index=3&type=section&id=Debt%20Repurchase%20in%20July%202025) In July 2025, Porch Group repurchased 2026 notes with a total principal of $11.8 million for $11.3 million, expecting to recognize a debt extinguishment gain of approximately $0.3 million in Q3 2025, reducing the outstanding principal of 2026 notes to $8.8 million, with the board authorizing management to repurchase the remaining portion - In July 2025, the company repurchased 2026 notes with a total principal of **$11.8 million** for **$11.3 million**, representing **96.5%** of the face value[13](index=13&type=chunk) - A debt extinguishment gain of approximately **$0.3 million** is expected to be recognized in Q3 2025[13](index=13&type=chunk) - Following this transaction, the outstanding principal of the 2026 notes decreased to **$8.8 million**[13](index=13&type=chunk) - The Board of Directors has authorized management to repurchase the remaining 2026 notes in the open market or through privately negotiated transactions[13](index=13&type=chunk) [Full Year 2025 Financial Outlook](index=3&type=section&id=Full%20Year%202025%20Financial%20Outlook) [Porch Group Shareholder Interest Full Year 2025 Guidance](index=3&type=section&id=Porch%20Group%20Shareholder%20Interest%20Full%20Year%202025%20Guidance) Porch Group raised its full-year 2025 financial guidance for Porch shareholder interest, increasing the revenue midpoint by $5 million to $415 million, gross profit midpoint by $7.5 million to $335 million, and adjusted EBITDA midpoint by $2.5 million to $67.5 million, with this guidance excluding future performance of Reciprocal Porch Shareholder Interest Full Year 2025 Guidance (Millions USD) | Metric | New Guidance Range | Midpoint Increase (Millions USD) | Original Guidance Range | | :--- | :--- | :--- | :--- | | Revenue | 405 - 425 | 5.0 | 400 - 420 | | Gross Profit | 328 - 342 | 7.5 | 320 - 335 | | Adjusted EBITDA | 65 - 70 | 2.5 | 60 - 70 | - The company raised its 2025 full-year guidance for revenue, gross profit, and adjusted EBITDA attributable to Porch shareholders[15](index=15&type=chunk) - This guidance represents only the business owned by Porch shareholders and excludes the future performance of Reciprocal[15](index=15&type=chunk) [Company Information](index=4&type=section&id=Company%20Information) [Conference Call](index=4&type=section&id=Conference%20Call) Porch Group management held a conference call on August 5, 2025, to discuss results and conduct a Q&A session, with presentation slides and a replay available on the company's investor relations website - Porch Group management held a conference call on August 5, 2025, to discuss financial results[18](index=18&type=chunk) - Presentation slides from the conference call are available on the company's investor relations website, ir.porchgroup.com, with a webcast replay also provided[18](index=18&type=chunk)[19](index=19&type=chunk) [About Porch Group](index=4&type=section&id=About%20Porch%20Group) Porch Group, Inc. is a new kind of homeowner's insurance company strategically positioned to succeed in the homeowner's insurance market by deploying leading vertical software solutions, providing best-in-class homebuyer services including moving services, leveraging unique data for advantageous underwriting, and offering more protection to policyholders - Porch Group, Inc. is a new kind of homeowner's insurance company[20](index=20&type=chunk) - The company's strategy includes deploying vertical software solutions, providing homebuyer services (such as moving services), leveraging unique data for underwriting, and offering more protection to policyholders[20](index=20&type=chunk) [Investor Relations Contact](index=4&type=section&id=Investor%20Relations%20Contact) Investors can contact Porch Group's investor relations department via IR@porch.com - Investor relations contact email is IR@porch.com[22](index=22&type=chunk) [Legal and Financial Disclosures](index=5&type=section&id=Legal%20and%20Financial%20Disclosures) [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) This press release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995, based on management's beliefs and assumptions, but subject to inherent risks, uncertainties, and assumptions, with the company cautioning investors not to place undue reliance on these statements and listing important factors that could cause future results to differ materially, including expansion plans, weather events, economic conditions, laws and regulations, reinsurance programs, capital requirements, and cybersecurity risks - Certain statements in this press release are considered forward-looking statements, based on management's beliefs and assumptions, but subject to inherent risks, uncertainties, and assumptions[23](index=23&type=chunk) - Important factors could cause future results to differ materially from forward-looking statements, including expansion plans, weather events, economic conditions, laws and regulations, reinsurance programs, capital requirements, cybersecurity risks, and other risks discussed in the company's annual report on Form 10-K[24](index=24&type=chunk)[31](index=31&type=chunk) - The company undertakes no obligation to publicly update any forward-looking statements, except as required by applicable law[26](index=26&type=chunk) [Non-GAAP Financial Measures](index=6&type=section&id=Non-GAAP%20Financial%20Measures) This press release includes non-GAAP financial measures such as Adjusted EBITDA (Loss), Adjusted EBITDA (Loss) Margin, and non-GAAP metrics related to Porch shareholder interest, which management uses to evaluate performance, for budgeting and strategic planning, and to set incentive targets, while acknowledging their limitations in excluding certain significant revenues and expenses required by GAAP and advising investors not to view them in isolation - This press release includes non-GAAP financial measures such as Adjusted EBITDA (Loss), Adjusted EBITDA (Loss) Margin, and non-GAAP metrics related to Porch shareholder interest[27](index=27&type=chunk) - Management uses these non-GAAP measures as supplemental metrics for evaluating operating and financial performance, internal budgeting and forecasting, strategic planning, and setting incentive targets[28](index=28&type=chunk) - A primary limitation of non-GAAP financial measures is that they exclude certain significant revenues and expenses required to be recorded under GAAP, and investors should not view these measures in isolation[29](index=29&type=chunk) Reconciliation of Adjusted EBITDA (Loss) to Net Income (Loss) (Thousands USD) | Metric | June 30, 2025 (Amount) | June 30, 2025 (Margin) | June 30, 2024 (Amount) | June 30, 2024 (Margin) | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) | 8,247 | 7% | (64,323) | (58)% | | Less: Net loss (income) attributable to Reciprocal | (5,668) | (5)% | — | —% | | Interest expense | 12,026 | 10% | 10,326 | 9% | | Provision for (benefit from) income taxes | (1,186) | (1)% | 688 | 1% | | Depreciation and amortization | 4,461 | 4% | 6,202 | 6% | | Gain on extinguishment of debt | (34) | —% | — | —% | | Other income, net | (95) | —% | (704) | (1)% | | (Gain) loss on reinsurance contracts | — | —% | (1,095) | (1)% | | Stock-based compensation expense | 8,000 | 7% | 7,105 | 6% | | Mark-to-market (gain) loss | (9,975) | (8)% | 5,405 | 5% | | Restructuring costs | (187) | —% | 1,635 | 1% | | Acquisition and other transaction costs | 41 | —% | (12) | —% | | **Adjusted EBITDA (Loss)** | **15,630** | **13%** | **(34,773)** | **(31)%** | [Porch Shareholder Interest Definition](index=10&type=section&id=Porch%20Shareholder%20Interest%20Definition) Porch shareholder interest is defined as the Insurance Services, Software & Data, and Consumer Services segments, plus corporate expenses, with the operating results of these segments constituting the 'Net income (loss) attributable to Porch' in the company's unaudited condensed consolidated statements of operations and comprehensive income (loss) - Porch shareholder interest is defined as the Insurance Services, Software & Data, and Consumer Services segments, plus corporate expenses[41](index=41&type=chunk) - The operating results of these segments constitute the 'Net income (loss) attributable to Porch' in the company's unaudited condensed consolidated statements of operations and comprehensive income (loss)[42](index=42&type=chunk) [Key Performance Indicators Definitions](index=11&type=section&id=Key%20Performance%20Indicators%20Definitions) This section provides definitions for the company's key performance indicators (KPIs) used to manage the business, including Reciprocal Written Premium, Reciprocal Policies Written, and Reciprocal Written Premium per Policy Written for Insurance Services; Average Number of Companies and Annualized Average Revenue per Company for Software & Data; and Monetized Services and Average Revenue per Monetized Service for Consumer Services - Reciprocal Written Premium is defined as the total face value of one-year premiums underwritten by Reciprocal during the period, net of cancellations and before reinsurance and commissions[45](index=45&type=chunk) - Average Number of Companies is defined as the straight-line average of the number of companies at the end and beginning of the period for the Software & Data segment[47](index=47&type=chunk) - Monetized Services is defined as the total number of services for which the company generates revenue, including but not limited to new and renewed warranty policies, completed moving jobs, and sales of security, TV/internet, or other home projects[49](index=49&type=chunk) [Detailed Financial Statements](index=7&type=section&id=Detailed%20Financial%20Statements) [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) In Q2 2025, Porch Group reported consolidated revenue of $119.3 million, gross profit of $75.9 million, operating income of $5 million, and net income of $8.2 million, with net income attributable to Porch being $2.6 million, showing significant year-over-year growth in revenue and gross profit, and a shift from net loss to net income Condensed Consolidated Statements of Operations Highlights (Thousands USD) | Metric | June 30, 2025 (Three Months) | June 30, 2024 (Three Months) | | :--- | :--- | :--- | | Revenue | 119,295 | 110,844 | | Cost of revenue | 43,422 | 94,046 | | Gross profit | 75,873 | 16,798 | | Operating expenses | 70,824 | 69,277 | | Operating income (loss) | 5,049 | (52,479) | | Net income (loss) | 8,247 | (64,323) | | Less: Net income attributable to Reciprocal | 5,668 | — | | **Net income (loss) attributable to Porch** | **2,579** | **(64,323)** | | Earnings per share - Basic | 0.03 | (0.65) | | Earnings per share - Diluted | — | (0.65) | Porch Shareholder Interest Performance Summary (Thousands USD) | Metric | June 30, 2025 (Three Months) | June 30, 2024 (Three Months) | Change | | :--- | :--- | :--- | :--- | | Revenue | 107,018 | 75,865 | 31,153 | | Gross profit | 89,234 | 46,788 | 42,446 | | Adjusted EBITDA (Loss) | 15,630 | (3,204) | 18,834 | - In Q2 2025, Porch shareholder interest revenue was **$107 million**, gross profit was **$89.2 million**, and adjusted EBITDA was **$15.6 million**, all showing significant improvement from the prior year period[60](index=60&type=chunk) [Supplemental Cash Flow Information](index=15&type=section&id=Supplemental%20Cash%20Flow%20Information) In Q2 2025, Porch Group's consolidated operating cash flow was $35.6 million, investing activities used $5.9 million, and financing activities used $7.8 million, with Porch shareholder interest operating cash flow at $14.9 million, and consolidated cash, cash equivalents, and restricted cash totaling $187.9 million as of June 30, 2025 Q2 2025 Cash Flow Highlights (Thousands USD) | Metric | Consolidated | Reciprocal Segment | Porch Shareholder Interest | | :--- | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | 35,569 | 20,679 | 14,890 | | Net cash provided by (used in) investing activities | (5,901) | (179) | (5,722) | | Net cash provided by (used in) financing activities | (7,782) | — | (7,782) | | Cash, cash equivalents, and restricted cash, end of period | 187,893 | 103,395 | 84,498 | H1 2025 Cash Flow Highlights (Thousands USD) | Metric | Consolidated | Reciprocal Segment | Porch Shareholder Interest | | :--- | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | 24,391 | (17,678) | 42,069 | | Net cash provided by (used in) investing activities | (25,269) | (47,752) | (24,330) | | Net cash provided by (used in) financing activities | (8,011) | 46,813 | (8,011) | | Cash, cash equivalents, and restricted cash, end of period | 187,893 | 103,395 | 84,498 | - Porch shareholder interest generated **$42.069 million** in cash flow from operating activities during the first half of 2025[64](index=64&type=chunk)

Core Viewpoint - Porch Group, Inc. (PRCH) is expected to report a year-over-year increase in earnings despite lower revenues for the quarter ended June 2025, with the consensus outlook being crucial for assessing the company's earnings picture [1][2]. Earnings Expectations - The consensus EPS estimate for Porch Group is a loss of $0.13 per share, reflecting an 80% year-over-year improvement [3]. - Revenues are projected to be $96.56 million, which is a decrease of 12.9% compared to the same quarter last year [3]. Estimate Revisions - Over the last 30 days, the consensus EPS estimate has been revised 42.86% higher, indicating a reassessment by analysts [4]. - The Most Accurate Estimate for Porch Group aligns with the Zacks Consensus Estimate, resulting in an Earnings ESP of 0% [12]. Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that a positive or negative reading indicates the likely deviation of actual earnings from the consensus estimate, with a positive ESP being a strong predictor of an earnings beat [9][10]. - Porch Group currently holds a Zacks Rank of 2, which complicates the prediction of an earnings beat despite the positive revision trend [12]. Historical Performance - In the last reported quarter, Porch Group was expected to post a loss of $0.07 per share but instead reported earnings of $0.02, resulting in a surprise of +128.57% [13]. - Over the past four quarters, the company has exceeded consensus EPS estimates two times [14]. Market Reaction - The stock price may increase if the upcoming earnings report exceeds expectations, while a miss could lead to a decline [2]. - An earnings beat or miss is not the sole factor influencing stock movement, as other variables can also impact investor sentiment [15].

Group 1: Momentum Investing Overview - Momentum investing involves following a stock's recent trend, with the aim of buying high and selling higher, capitalizing on established price movements [1] - The Zacks Momentum Style Score helps define momentum characteristics, with Porch Group, Inc. (PRCH) currently holding a Momentum Style Score of B [2][3] Group 2: Performance Metrics - PRCH shares have increased by 4.24% over the past week, outperforming the Zacks Internet - Software industry, which rose by 2.59% [5] - Over the last quarter, PRCH shares have surged by 138.35%, and over the past year, they have gained 600.55%, while the S&P 500 has only increased by 23.56% and 13.28%, respectively [6] Group 3: Trading Volume and Earnings Outlook - The average 20-day trading volume for PRCH is 1,991,823 shares, indicating a bullish sign with rising stock prices [7] - In the past two months, one earnings estimate for PRCH has moved higher, raising the consensus estimate from -$0.22 to -$0.18, with no downward revisions [9] Group 4: Conclusion - Considering the performance metrics and earnings outlook, PRCH is rated as a 2 (Buy) stock with a Momentum Score of B, making it a promising near-term investment [11]