Hippo (HIPO) - 2023 Q3 - Quarterly Report

Filing Information Form 10-Q Details This is Hippo Holdings Inc.'s Quarterly Report on Form 10-Q for the period ended September 30, 2023 - The report is a Quarterly Report on Form 10-Q for the period ended September 30, 2023[2] - The registrant is Hippo Holdings Inc., a Delaware corporation[2] Registrant Information and Securities Hippo Holdings Inc. is a non-accelerated, smaller reporting, and emerging growth company, with common stock and warrants on NYSE Registrant Filer Status | Filer Status | Designation | | :------------- | :---------- | | Large accelerated filer | ☐ | | Accelerated filer | ☐ | | Non-accelerated filer | ☒ | | Smaller reporting company | ☒ | | Emerging growth company | ☒ | Securities Registered Pursuant to Section 12(b) of the Act | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | :------------------ | :---------------- | :-------------------------------------- | | Common stock, $0.0001 par value per share | HIPO | New York Stock Exchange | | Warrants to purchase common stock | HIPO.WS | New York Stock Exchange | - The registrant had 23,887,240 shares of common stock outstanding as of October 24, 2023[3] Table of Contents Cautionary Note regarding Forward-Looking Statements Forward-Looking Statements Disclaimer This section contains forward-looking statements about the Company's future, subject to risks and uncertainties that may cause actual results to differ - The report contains forward-looking statements about financial position, business strategy, and future operations, identifiable by words like 'anticipate,' 'believe,' 'expect,' and 'plan'[6] - These statements are based on current information, expectations, forecasts, and assumptions, and involve risks and uncertainties that could lead to materially different actual results[7] - The Company does not commit to updating forward-looking statements to reflect new information or future events, except as required by applicable securities laws[7] Part I. Financial Information Item 1. Consolidated Financial Statements This section presents Hippo Holdings Inc.'s unaudited consolidated financial statements and related notes for Q3 2023 and FY2022 Consolidated Balance Sheets Consolidated balance sheets show increased total assets and liabilities, with decreased stockholders' equity, as of September 30, 2023 Consolidated Balance Sheet Highlights (in millions) | Item | September 30, 2023 | December 31, 2022 | Change | | :----------------------------------- | :------------------- | :------------------ | :------- | | Total assets | $1,647.0 | $1,568.9 | +$78.1 | | Total liabilities | $1,235.7 | $975.4 | +$260.3 | | Total stockholders' equity | $411.3 | $593.5 | -$182.2 | | Cash and cash equivalents | $228.4 | $194.5 | +$33.9 | | Loss and loss adjustment expense reserve | $359.9 | $293.8 | +$66.1 | | Unearned premiums | $441.8 | $341.3 | +$100.5 | Consolidated Statements of Operations and Comprehensive Loss Total revenue increased and net loss decreased for Q3 2023, driven by higher earned premium and absence of prior year impairment charges Consolidated Statements of Operations Highlights (in millions) | Item | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Change (YoY) | | :----------------------------------- | :------------------------------ | :------------------------------ | :----------- | | Total revenue | $57.7 | $30.7 | +$27.0 | | Net earned premium | $32.9 | $10.7 | +$22.2 | | Net investment income | $5.7 | $2.5 | +$3.2 | | Total expenses | $108.3 | $157.9 | -$49.6 | | Impairment and restructuring charges | — | $55.3 | -$55.3 | | Net loss attributable to Hippo | $(53.1) | $(129.2) | +$76.1 | | Net loss per share (basic and diluted) | $(2.24) | $(5.66) | +$3.42 | Consolidated Statements of Operations Highlights (Nine Months Ended Sep 30) | Item | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | Change (YoY) | | :----------------------------------- | :----------------------------- | :----------------------------- | :----------- | | Total revenue | $145.2 | $83.9 | +$61.3 | | Net earned premium | $69.0 | $30.9 | +$38.1 | | Net investment income | $16.5 | $4.0 | +$12.5 | | Total expenses | $368.7 | $349.1 | +$19.6 | | Impairment and restructuring charges | — | $55.3 | -$55.3 | | Net loss attributable to Hippo | $(230.8) | $(270.3) | +$39.5 | | Net loss per share (basic and diluted) | $(9.85) | $(11.93) | +$2.08 | Consolidated Statements of Stockholders' Equity Stockholders' equity decreased for the nine months ended September 30, 2023, primarily due to net losses, partially offset by stock-based compensation Stockholders' Equity Changes (January 1 to September 30, 2023, in millions) | Item | Amount | | :----------------------------------- | :----- | | Balance at January 1, 2023 | $589.9 | | Net loss | $(230.8) | | Other comprehensive loss | $(0.7) | | Issuance of common stock | $2.8 | | Repurchase of common stock | $(1.8) | | Shares withheld related to net share settlement | $(4.0) | | Stock-based compensation expense | $46.7 | | Other | $(6.0) | | Balance at September 30, 2023 | $407.0 | Stockholders' Equity Changes (January 1 to September 30, 2022, in millions) | Item | Amount | | :----------------------------------- | :----- | | Balance at January 1, 2022 | $859.6 | | Net loss | $(270.3) | | Other comprehensive loss | $(7.1) | | Issuance of common stock | $4.1 | | Repurchase of common stock | — | | Shares withheld related to net share settlement | $(3.5) | | Stock-based compensation expense | $46.3 | | Other | $(2.1) | | Balance at September 30, 2022 | $635.0 | Consolidated Statements of Cash Flows Cash used in operating activities decreased, investing activities generated cash, and financing activities used more cash for the nine months ended September 30, 2023 Consolidated Cash Flow Summary (Nine Months Ended Sep 30, in millions) | Cash Flow Activity | 2023 | 2022 | Change | | :----------------------------------- | :----- | :----- | :----- | | Net cash used in operating activities | $(43.9) | $(131.4) | +$87.5 | | Net cash provided by (used in) investing activities | $79.6 | $(290.7) | +$370.3 | | Net cash used in financing activities | $(10.8) | $(3.7) | $(7.1) | | Net increase (decrease) in cash, cash equivalents, and restricted cash | $24.9 | $(425.8) | +$450.7 | | Cash, cash equivalents, and restricted cash at end of period | $269.4 | $392.9 | $(123.5) | Notes to Consolidated Financial Statements These notes provide detailed disclosures on accounting policies, financial instruments, equity, and segment information, offering context to the financial statements Note 1. Description of Business and Summary of Significant Accounting Policies Hippo Holdings Inc. underwrites and markets insurance through subsidiaries, with financial statements adjusted for a 2022 reverse stock split - Hippo Holdings Inc. underwrites, administers, and markets personal property and commercial insurance policies through its licensed agency, insurance company subsidiaries (Spinnaker, SSIC, MIC), and captive reinsurer (RHS)[22] - The Company completed a one-for-25 reverse stock split on September 29, 2022, retroactively adjusting all share and per share information[27][29] - The Company reports three operating segments: Services, Insurance-as-a-Service, and Hippo Home Insurance Program[26] [Note 2. Investments](index=13&type=section&id=Note