Porch(PRCH) - 2024 Q3 - Quarterly Report

Revenue and Premiums - Gross Written Premium for Q3 2024 was $139 million, a decrease of 10% from$ 154 million in Q3 2023[113] - Total revenue decreased by $18.4 million, or 14%, from$ 129.6 million in Q3 2023 to $111.2 million in Q3 2024, primarily due to higher reinsurance ceding and a reduction in policies in force[126] - Insurance segment revenue was$ 79.9 million, representing 72% of total revenue, down from $95.2 million or 74% of total revenue in the same quarter of 2023, primarily due to a reduction in policies in force[131] - Vertical Software segment revenue decreased to$ 31.3 million, down 9% from $34.3 million in the prior year, driven by a 33% decline in move-related transactions[130] - Year-to-date revenue for the nine months ended September 30, 2024, was$ 337.5 million, a 7% increase from $315.7 million in the same period of 2023[136] - Total revenue for the nine months ended September 30, 2024, was$ 337.5 million, reflecting a 7% increase from $315.7 million in the same period of 2023[141] - Insurance segment revenue increased to$ 246.1 million for the nine months ended September 30, 2024, up 13% from $218.3 million in the same period of 2023, accounting for 73% of total revenue[141] Policies and Loss Ratios - Policies in Force decreased by 34% to 219,000 from 334,000 year-over-year[113] - Gross Loss Ratio increased to 57% from 39%[115] - Non-catastrophe gross loss ratio improved by 11 percentage points from the prior year, driven by premium per policy increases and non-renewal of higher risk policies[123] Expenses and Cash Flow - Selling and marketing expenses decreased by$ 12.9 million, or 32%, from $40.1 million in Q3 2023 to$ 27.2 million in Q3 2024, primarily due to a decrease in variable policy acquisition costs[126] - Interest expense increased by 50% to $31.8 million for the nine months ended September 30, 2024, compared to$ 21.2 million in the same period of 2023[137] - Net cash used in operating activities was $(5.1) million for the nine months ended September 30, 2024, a decrease of$ 79.978 million or 107% compared to $74.9 million in the same period of 2023[3] - Net cash used in investing activities increased by 53% to$ (52.2) million for the nine months ended September 30, 2024, from $(34.2) million in 2023[4] - The company reported a net cash change of$ (80.6) million for the nine months ended September 30, 2024, compared to a positive change of $133.1 million in 2023, reflecting a 161% decrease[8] Debt and Equity - The company repurchased$ 51.2 million of its 2026 senior convertible notes at an average par value of 45.3%, for $23.2 million during the nine months ended September 30, 2024[123] - A gain of$ 22.5 million on extinguishment of debt was recognized during Q3 2024 due to the repurchase of a portion of the 2026 Notes[127] - The company repurchased $43.2 million of its 2026 Notes in September 2024, paying an average of 47% of par value, resulting in a$ 22.5 million gain on extinguishment of debt[5] - The company issued a total of 18.3 million newly issued shares to HOA to support the transition of Porch's insurance underwriting business, enhancing HOA's balance sheet strength[121] - The company contributed a total of 18.3 million newly issued shares to HOA to support its insurance underwriting business transition, which is expected to bolster HOA's balance sheet and support premium growth in 2025[7] Net Loss and Adjusted EBITDA - The company recorded a loss of $5.3 million from the sale of its insurance agency, Elite Insurance Group, for a sale price of$ 12.2 million[119] - Net loss for the nine months ended September 30, 2024, was $63.3 million, a 52% improvement from a net loss of$ 131.4 million in the same period of 2023[136] - Adjusted EBITDA loss for the nine months ended September 30, 2024, was $(34.6) million, a$ 21.6 million improvement from $(56.2) million in the same period of 2023[148] - Segment Adjusted EBITDA for the Insurance segment improved to a loss of$ 24.8 million, a 30% increase compared to a loss of $19.0 million in the same period last year[133] - Vertical Software segment Adjusted EBITDA increased to a loss of$ 5.1 million, improving by 62% from a loss of $3.2 million in the prior year[134] - Vertical Software segment Adjusted EBITDA improved to$ 11.0 million for the nine months ended September 30, 2024, compared to $4.6 million in the same period of 2023, a 140% increase[143] - Insurance segment Adjusted EBITDA loss narrowed to$ (5.4) million for the nine months ended September 30, 2024, from $(19.3) million in the same period of 2023, an improvement of 72%[143] Cash and Investments - Cash recoveries on terminated reinsurance contracts amounted to approximately$ 28 million during the nine months ended September 30, 2024[123] - Cash and cash equivalents as of September 30, 2024, totaled $206.7 million, with an additional$ 10.0 million in restricted cash[149] - The insurance carrier, HOA, held cash and cash equivalents of $150.5 million and investments of$ 166.0 million as of September 30, 2024[6] - The company has a $197.8 million portfolio of fixed income securities with an unrealized loss of$ (0.9) million as of September 30, 2024[10] - Investment income and realized gains increased to $3.8 million in Q3 2024 from$ 2.5 million in Q3 2023, attributed to a higher investment balance and reinvested securities at higher interest rates[127] - Investment income and realized gains increased to $11.0 million for the nine months ended September 30, 2024, compared to$ 4.5 million in the same period of 2023[138] Regulatory and Contractual Developments - The Texas Department of Insurance approved the application to form a reciprocal exchange on October 25, 2024[116] - The terminated reinsurance contract with Vesttoo would have required approximately $20 million in additional premium payments if not terminated[116]