Financial Performance - Total consolidated revenue increased by $6.9 million, or 6%, from $111.2 million in Q3 2024 to $118.1 million in Q3 2025[239]. - Gross profit increased by $25.2 million, or 41%, from $61.7 million in Q3 2024 to $86.9 million in Q3 2025[239]. - Operating income improved by $18.8 million, from a loss of $2.5 million in Q3 2024 to a profit of $16.3 million in Q3 2025[239]. - Adjusted EBITDA increased by $3.7 million, or 22%, from $16.9 million in Q3 2024 to $20.6 million in Q3 2025[246]. - Net income attributable to Porch decreased by $25.2 million, from $14.4 million in Q3 2024 to a loss of $10.9 million in Q3 2025[239]. - Porch's total revenue for the three months ended September 30, 2025, was $115.074 million, an increase of $37.382 million compared to $77.692 million in the prior year period[257]. - Gross profit for Porch increased to $94.242 million in Q3 2025, up by $54.127 million from $40.115 million in Q3 2024[257]. - Adjusted EBITDA for Porch improved significantly to $20.626 million in Q3 2025, a positive change of $26.155 million from a loss of $5.529 million in the same quarter last year[257]. - The company reported a significant loss of $15.4 million in net income, compared to a profit of $14.4 million in the same quarter last year[239]. - The company reported a net loss of $64.7 million for the nine months ended September 30, 2025, compared to a loss of $63.3 million in the previous year[306]. Revenue Segments - Insurance Services segment revenue increased by 99% to $73.8 million for the three months ended September 30, 2025, driven by increased ceding from the Reciprocal Segment[264]. - Software & Data segment revenue increased by 7% to $24.6 million for the three months ended September 30, 2025[270]. - Consumer Services segment revenue grew by $1.6 million to $19.4 million for the three months ended September 30, 2025, primarily due to higher fees for third-party services[274]. - Total revenue for the nine months ended September 30, 2025, was $342.122 million, with a breakdown of $191.041 million from Insurance Services, $70.647 million from Software & Data, and $51.738 million from Consumer Services[295]. - Insurance Services segment revenue increased by 61% to $191.0 million for the nine months ended September 30, 2025, up from $118.6 million in the previous year, driven by increased ceding from the Reciprocal Segment[310]. Expenses and Costs - Cost of revenue decreased by $18.3 million, or 37%, from $49.5 million in Q3 2024 to $31.1 million in Q3 2025, representing 26% of revenue compared to 44% in the prior year[240]. - Selling and marketing expenses rose by $2.9 million, or 11%, from $27.2 million in Q3 2024 to $30.2 million in Q3 2025[241]. - General and administrative expenses increased by $2.8 million, or 11%, from $24.3 million in Q3 2024 to $27.1 million in Q3 2025[242]. - Interest expense increased by $3.3 million, or 31%, from $10.6 million in Q3 2024 to $14.0 million in Q3 2025, primarily due to the exchange of notes[243]. - Selling and marketing expenses totaled $54.906 million, representing a significant investment in growth initiatives[1]. - General and administrative expenses increased by $9.0 million, or 12%, to $81.9 million, primarily due to a one-time agency partnership payment[285]. Adjusted EBITDA and Margins - Adjusted EBITDA improved by $87.7 million to $53.1 million in 2025, compared to a loss of $34.6 million in 2024, attributed to a shift in business model[292]. - Adjusted EBITDA (Loss) for the Insurance Services segment improved by $26.2 million to $25.3 million for the three months ended September 30, 2025[260]. - Adjusted EBITDA for the Software & Data segment rose to $15.2 million in 2025, compared to $11.6 million in 2024, driven by strong cost control measures[318]. - Adjusted EBITDA (Loss) for Porch Shareholder Interest improved by $65.6 million, resulting in a loss of $12.4 million for the nine months ended September 30, 2025, compared to a loss of $78 million in the prior year[306]. Surplus and Debt Management - The Reciprocal segment has a surplus of $412.0 million as of September 30, 2025, an increase of $254.0 million from December 31, 2024[236]. - Porch holds $106 million of surplus notes due from the Reciprocal, which pay interest of 9.75% plus SOFR[236]. - The company had $412.0 million in total statutory surplus as of September 30, 2025, which is crucial for meeting regulatory capital requirements[359]. - As of September 30, 2025, the company had $475.1 million in aggregate principal amount outstanding in convertible notes[339]. - The company exchanged $96.8 million of 2026 Notes for $83.0 million of newly issued 2030 Convertible Senior Unsecured Notes, and issued an additional $51.0 million of 2030 Notes for cash[349]. Cash Flow and Investments - Net cash provided by operating activities for the nine months ended September 30, 2025, was $65.2 million, a significant increase from a net cash used of $5.1 million in the same period of 2024[360][361]. - Net cash used in investing activities was $49.4 million for the nine months ended September 30, 2025, primarily due to $104.0 million in investment purchases[363]. - Net cash used in financing activities was $19.8 million for the nine months ended September 30, 2025, mainly related to $68.2 million in repurchases of 2026 Notes[366]. Strategic Initiatives - The company is focusing on market expansion and new product development as part of its strategic initiatives moving forward[296]. - New services, including online packing services for movers, were launched in the Consumer Services segment[236]. - Rynoh implemented a 20% price increase in the first quarter for the Software and Data segment, aligning with strategic pricing goals[236].

Q3 2025 Earnings Presentation November 5, 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 disclaimers ...

Financial Performance - Porch Group reported Q3 2025 revenue of $115.1 million, with a net loss of $(10.9) million and Adjusted EBITDA of $20.6 million, an increase of $3.7 million from Q3 2024 [2]. - Revenue for Q3 2025 increased to $118,082,000, up from $111,200,000 in Q3 2024, representing a growth of 6.7% [59]. - Gross profit for Q3 2025 was $86,947,000, compared to $61,717,000 in Q3 2024, marking a significant increase of 40.8% [59]. - Operating income for Q3 2025 was $16,335,000, a turnaround from an operating loss of $2,504,000 in Q3 2024 [59]. - The net loss attributable to Porch for Q3 2025 was $10,857,000, compared to a net income of $14,382,000 in Q3 2024 [59]. - Adjusted EBITDA for Porch Shareholder Interest improved to $20,626,000 in Q3 2025, compared to a loss of $5,529,000 in Q3 2024, a positive change of $26,155,000 [61]. Revenue Breakdown - Total revenue for the Insurance Services segment was $73,845,000, with a gross profit of $62,250,000, resulting in a gross margin of 84% [32]. - The Software & Data segment generated revenue of $11,595,000, with a gross profit of $18,155,000, leading to a gross margin of 74% [32]. - The Consumer Services segment reported revenue of $24,635,000 and a gross profit of $16,609,000, achieving a gross margin of 86% [32]. - Reciprocal Written Premium (RWP) for Q3 2025 was $137.5 million, with 47.7 thousand policies written, resulting in RWP per policy of $2,884 [9]. - Average Revenue per Company in Software & Data segment was $4,140, with 23.8 thousand companies [9]. Cash Flow and Assets - Porch Shareholder Interest Cash Flow from Operations was $28.8 million for Q3 2025, contributing to a total cash and investments of $132.1 million as of September 30, 2025 [11]. - Cash Flow from Operations for Porch Shareholder Interest was primarily driven by Adjusted EBITDA of $53.1 million and a $7.1 million receipt from the Vesttoo bankruptcy process [11]. - Total current assets decreased to $116,302,000 as of September 30, 2025, from $365,127,000 as of December 31, 2024 [54]. - Cash and cash equivalents at the end of Q3 2025 were $192,796,000, compared to $187,893,000 at the beginning of the period, indicating a net increase of $4,903,000 [63]. Expenses and Liabilities - Operating expenses totaled $54,906,000, with selling and marketing expenses accounting for $35,719,000 [32]. - Total liabilities decreased to $777,259,000 as of September 30, 2025, from $857,193,000 as of December 31, 2024, reflecting a reduction of 9.3% [57]. - Long-term debt as of September 30, 2025, was $379,368,000, a slight decrease from $403,788,000 as of December 31, 2024 [57]. Future Outlook - Full year 2025 guidance for Porch Shareholder Interest revenue is projected between $410 million and $420 million, with Adjusted EBITDA expected at $70 million [15]. - The company plans to prioritize Reciprocal surplus generation to scale premiums and profits rapidly in 2026 and beyond [3]. - The company emphasized the importance of developing new products and enhancing existing services to drive future growth [26]. - Future profitability is contingent on managing growth and navigating regulatory challenges in the insurance sector [26]. - The company plans to launch the Porch Insurance product, which will include a 10% surplus contribution from policyholders, aligning RWP with the full economic payment expected [52].

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]

Financial Performance & Targets - Porch Group's 2025 full-year Porch Shareholder Interest Revenue guidance midpoint is $415 million[14] - The company targets $100 million in Adjusted EBITDA for 2026[14] - The company is aiming for medium-term revenue of $2.3 billion and Adjusted EBITDA of $660 million[72] - Q2 2025 saw Porch Shareholder Interest Revenue of $1207 million, Gross Profit of $892 million, and Adjusted EBITDA of $156 million[55] Insurance Services - The company's gross margins are approximately 80%[14, 16] - Insurance Services represented 61% of the company's YTD revenue mix in 2025[49] - The company's strategy involves managing a 3rd party-owned Reciprocal, participating in the U S Homeowners Insurance market[16] - The company aims to achieve a Reciprocal Written Premium of approximately $500 million in 2025 and approximately $600 million in 2026, with a medium-term target of approximately $3 billion[72, 113] Data & Technology - The company possesses unique property data for approximately 90% of US homes[14, 29] - The company's software supports over 40% of all US home inspections[25, 129]

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]