Porch(PRCH) - 2024 Q2 - Quarterly Results

Executive Summary Porch Group achieved 12% YoY revenue growth to $110.8 million, narrowing GAAP Net Loss and improving Adjusted EBITDA despite significant weather events Q2 2024 Financial & Operational Highlights Q2 2024 saw 12% YoY revenue growth to $110.8 million, reduced GAAP Net Loss, and improved operational ratios despite a major weather event Q2 2024 Key Financial Metrics | Metric | Q2 2024 | Q2 2023 | Change (YoY) | | :--- | :--- | :--- | :--- | | Total Revenue | $110.8M | $98.8M | +12% | | GAAP Net Loss | ($64.3M) | ($87.0M) | +$22.6M | | Adjusted EBITDA Loss | ($34.8M) | ($43.1M) | +$8.4M | | Cash, Cash Equivalents, and Investments | $409.8M | - | - | Q2 2024 Key Operational Metrics | Metric | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Attritional Loss Ratio | 21% | 35% | | Gross Combined Ratio | 124% | 180% | | Gross Written Premium | $117M | - | | Policies in Force | ~232k | - | CEO Commentary CEO highlighted solid performance despite catastrophic weather, crediting insurance actions for improved profitability and focusing on data platform expansion and reciprocal exchange - The company's results were broadly in line with its plan, showing solid YoY improvement despite catastrophic weather claims in Houston worse than historical expectations[2] - Strategic priorities include expanding the data platform, monetizing data products, and executing the reciprocal exchange for the insurance business, targeting 2024 application approval[2] Financial Performance Q2 2024 financial performance showed revenue growth in Insurance, offset by a slight decline in Vertical Software, with improved profitability metrics despite weather impacts Consolidated & Segment Financial Results Consolidated revenue grew 12% YoY to $110.8 million, driven by a 22% increase in the Insurance segment, while Vertical Software revenue declined 5% Q2 2024 Financial Performance by Segment (in millions) | Metric | Insurance | Vertical Software | Consolidated | | :--- | :--- | :--- | :--- | | Revenue | $78.3 (+22% YoY) | $32.6 (-5% YoY) | $110.8 (+12% YoY) | | Revenue less cost of revenue | ($8.0) | $27.2 | $19.2 | | Adjusted EBITDA (loss) | ($27.3) | $4.8 | ($34.8) | Key Performance Indicators (KPIs) KPIs reflect a focus on higher-value policies, with Annualized Premium per Policy up 28% and Annualized Revenue per Policy up 161%, despite decreases in Gross Written Premium and Policies in Force Insurance Segment KPIs (Q2 2024 vs Q2 2023) | KPI | Q2 2024 | Q2 2023 | % Change | | :--- | :--- | :--- | :--- | | Gross Written Premium | $117M | $143M | (19)% | | Policies in Force | 232k | 358k | (35)% | | Annualized Premium per Policy | $2,059 | $1,603 | +28% | | Annualized Revenue per Policy | $1,348 | $517 | +161% | Vertical Software & Services KPIs (Q2 2024 vs Q2 2023) | KPI | Q2 2024 | Q2 2023 | % Change | | :--- | :--- | :--- | :--- | | Average Companies in Quarter | 29,494 | 30,691 | (4)% | | Avg. Monthly Revenue per Account | $1,253 | $1,073 | +17% | | Avg. Quarterly Revenue per Monetized Service | $395 | $331 | +19% | Balance Sheet and Liquidity As of June 30, 2024, Porch Group held $409.8 million in cash and investments, with $550.3 million in outstanding convertible debt principal Cash and Investments (in millions) | Category | June 30, 2024 | Dec 31, 2023 | Change | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $274.2 | $258.4 | +6% | | Investments | $135.6 | $139.2 | (3%) | | Total | $409.8 | $397.6 | +3% | - Total outstanding principal for convertible debt was $550.3 million as of June 30, 2024, comprising $333.3 million of 6.75% notes due 2028 and $217.0 million of 0.75% notes due 2026[9] Strategic Developments & Outlook Porch Group filed an updated reciprocal exchange application and lowered full-year 2024 profit guidance due to catastrophic weather events, while maintaining revenue and gross written premium outlook Post Balance Sheet Events: Reciprocal Exchange Application The company filed an updated application for a Texas reciprocal exchange to restructure its insurance underwriting business, contributing 18.3 million common shares to HOA to bolster its balance sheet - An updated application was filed to form a Texas reciprocal exchange, which, if approved, will restructure the insurance underwriting business, with a Porch subsidiary managing the Reciprocal for a fee[10] - To bolster its insurance carrier's (HOA) balance sheet following Q2 weather impacts and support the reciprocal transition, Porch contributed approximately 18.3 million of its common shares to HOA[10] Full Year 2024 Financial Outlook Full-year 2024 profit guidance was lowered due to two major catastrophic weather events, a $23 million Houston storm and an expected $30 million from Hurricane Beryl, while revenue and gross written premium outlook remain unchanged - Profit guidance was lowered primarily due to two 1-in-10-year catastrophic weather events: a $23 million May Houston event (Q2) and an expected $30 million from Hurricane Beryl (Q3)[12] Full Year 2024 Guidance | Metric | Updated Guidance | Previous Guidance | Status | | :--- | :--- | :--- | :--- | | Revenue | $450M - $470M | - | Unchanged | | Revenue Less Cost of Revenue | $190M - $200M | $230M - $240M | Lowered | | Adjusted EBITDA | ($20M) - ($10M) | $2.5M - $12.5M | Lowered | | Gross Written Premium | $460M - $480M | - | Unchanged | Appendix This section provides supplementary information, including forward-looking statements, definitions and reconciliations of non-GAAP financial measures, KPI definitions, and unaudited condensed consolidated financial statements Non-GAAP Financial Measures & Reconciliations This section defines non-GAAP measures like Adjusted EBITDA and provides detailed reconciliations from GAAP Net Loss, showing a Q2 2024 Net Loss of $64.3 million reconciling to an Adjusted EBITDA Loss of $34.8 million Reconciliation of Net Loss to Adjusted EBITDA (Loss) (in thousands) | Line Item | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net loss | $(64,323) | $(86,963) | | Interest expense | 10,326 | 8,775 | | Depreciation and amortization | 6,202 | 6,214 | | Stock-based compensation expense | 7,105 | 6,404 | | Other Adjustments | 5,917 | 22,436 | | Adjusted EBITDA (Loss) | $(34,773) | $(43,134) | Condensed Consolidated Financial Statements This section presents unaudited condensed consolidated financial statements, including Balance Sheets, Statements of Operations, and Statements of Cash Flows, with total assets of $876.1 million and total liabilities of $978.0 million as of June 30, 2024 - The Condensed Consolidated Balance Sheet shows Total Assets of $876.1 million and Total Liabilities of $978.0 million, resulting in a Total Stockholders' Deficit of $101.9 million as of June 30, 2024[31] - The Condensed Consolidated Statement of Operations for the six months ended June 30, 2024, shows a Net Loss of $77.7 million on revenues of $226.3 million[32] - For the six months ended June 30, 2024, net cash used in operating activities was $17.5 million, while net cash provided by investing activities was $8.8 million[35] Key Performance Indicator Definitions This section provides detailed definitions for key performance indicators (KPIs) used by management, including Gross Written Premium, Policies in Force, Annualized Revenue per Policy, and Gross Loss Ratio - Defines Gross Written Premium as total premium written by the licensed carrier (before reinsurance), plus home warranty premiums and premiums from policies placed with third parties[29] - Defines Policies in Force as the number of active policies at period end for the Insurance segment, including those written by Porch and third parties[29] - Defines Gross Loss Ratio as the insurance carrier's gross losses divided by gross earned premium for the period on an accident year basis[29]