Porch(PRCH) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Results Overview Q2 2025 Financial Highlights 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] 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] CEO Summary 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] - 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] - 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] Second Quarter 2025 Operational Highlights Operational Highlights Details 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] - 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] - 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] - 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] Key Performance Indicators (KPIs) Q2 2025 Key Performance Indicators 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 Porch Shareholder Interest Cash and Investments 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] - 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] - 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] Outstanding Convertible Debt 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 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] - Total liabilities were $772.9 million, a decrease from $857.1 million as of December 31, 2024[56] - Porch shareholder deficit improved from ($43.225 million) as of December 31, 2024, to ($29.292 million) as of June 30, 2025[56] Post Balance Sheet Events Debt Repurchase in July 2025 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] - A debt extinguishment gain of approximately $0.3 million is expected to be recognized in Q3 2025[13] - Following this transaction, the outstanding principal of the 2026 notes decreased to $8.8 million[13] - The Board of Directors has authorized management to repurchase the remaining 2026 notes in the open market or through privately negotiated transactions[13] Full Year 2025 Financial Outlook Porch Group Shareholder Interest Full Year 2025 Guidance 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] - This guidance represents only the business owned by Porch shareholders and excludes the future performance of Reciprocal[15] Company Information Conference Call 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] - 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][19] About Porch Group 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] - 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] Investor Relations Contact Investors can contact Porch Group's investor relations department via IR@porch.com - Investor relations contact email is IR@porch.com[22] Legal and Financial Disclosures Forward-Looking Statements 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] - 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][31] - The company undertakes no obligation to publicly update any forward-looking statements, except as required by applicable law[26] Non-GAAP Financial Measures 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] - 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] - 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] 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 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] - 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] Key Performance Indicators Definitions 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] - 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] - 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] Detailed Financial Statements Condensed Consolidated Statements of Operations 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] Supplemental Cash Flow Information 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]