Porch Group, Inc. Q3 FY2024 Earnings Call

Good afternoon, everyone, and thank you for participating in Porch Group's Third Quarter 2024 Conference Call. Today, we issued our earnings release and filed our related Form 8-K with the SEC. The press release can be found on our Investor Relations website at ir.porchgroup.com. Joining me here today are Matt Ehrlichman, Porch Group's CEO, Chairman and Founder; Shawn Tabak, Porch Group's CFO; Matthew Neagle, Porch Group's COO; and Nicole Pelley, EVP and GM of the Porch platform. Before we go further, I would like to take a moment to review the company's Safe Harbor statement within the meaning of the Private Securities Litigation Reform Act of 1995, which provides important cautions regarding forward-looking statements. Today's discussion, including responses to your questions, reflects management's views as of today, November 7, 2024. We do not undertake any obligation to update or revise this information. Additionally, we will make forward-looking statements about our expected future financial or business performance or conditions, business strategy and plans, including the expected benefits and timing of the launch of the reciprocal exchange based on current expectations and assumptions. These statements are subject to risks and uncertainties that could cause our actual results to differ materially from these forward-looking statements. We disclaim any obligation to update publicly any forward-looking statements, whether in response to new information, future events or otherwise, except as required by applicable law. We encourage you to consider the risk factors and other risks and uncertainties described in our SEC filings, as well as the risk factor information in these slides for additional information, including factors that could cause our results to differ materially from current expectations. We will reference both GAAP and non-GAAP financial measures on today's call. Please refer to today's press release and reconciliations of non-GAAP measures to the most comparable GAAP measures discussed during this earnings call, which are available on our website. The financial information provided today is preliminary, unaudited and subject to revision upon completion of the closing and audit processes. As a reminder, this webcast will be available for replay, along with the presentation shortly after this call on the company's website at ir.porchgroup.com. Thank you. I'll now turn the call over to you, Matt.

Thanks, Lois, and good afternoon, everybody. Thanks for joining us. We are excited about today's update, so let's get started. In October, we announced that the Texas Department of Insurance approved our application to form and license Porch Insurance Reciprocal Exchange or PIRE, with the core structural and economic terms aligned with what was proposed in our application. In the coming weeks, we expect to complete customary administrative procedures to form and fund the reciprocal, file appropriate rates for PIRE, and complete the acquisition of HOA at the start of January 2025 when Porch Insurance will officially be available to policyholders. We then expect our insurance business to be conducted under this new model, with Porch Group acting as the operator of the reciprocal, mitigating direct exposure to insurance claims and weather events for Porch Group shareholders. This announcement is a long time coming, a key milestone for Porch and the result of tremendous work by our team. I extend my thanks to our partners at the TDI as well. We believe a reciprocal is the optimal structure, expected to result in higher margins and more predictable financial results for Porch, and believe it will allow us to scale our insurance operations more profitably over time. While we've constrained premium growth to approximately flat until we receive this approval, just this past week, we announced Porch Insurance in Texas reactivated many channel partners and launched our premium growth plan with an eye toward a strong 2025. Shawn and Nicole will share next steps for PIRE and the value creation opportunities ahead shortly. Here, I'll highlight some Q3 accomplishments. First, we are profitable. We delivered record quarterly results with adjusted EBITDA at positive $17 million and achieved positive operating cash flow of $12 million, both exceeding expectations. Net income in Q3 was positive at $14 million. This is all despite Hurricane Beryl, a severe weather event occurring in early Q3 which we had mentioned last quarter. Importantly, we expect to be adjusted EBITDA profitable ongoing, marking today as a significant milestone for the business. Our insurance profitability actions are compounding and making a substantial impact; pricing, deductibles, the use of Home Factors, our unique property data, all contributing. We implemented further insurance premium per policy increases, and total premium per policy increased 25% year-over-year. Our gross loss ratio in Q3 was 57%. And without catastrophic weather, our attritional loss ratio was 21%, again, outperforming expectations. The insurance carrier is healthy and expected to approach $100 million of surplus at the end of the year, which would be by far its highest in its history and is expected to post strong positive net income for the full year of 2024. Next, we have fully implemented AI models into our data platform and Home Factors data products. We launched three new Home Factors in the quarter and are seeing incredible results in better predicting losses and risk of a home. Multiple third-party carriers are currently testing our Home Factors data products against their historical claims, and the results are resounding. We can help unlock meaningful underwriting and pricing advantages given our unique insights into approximately 90% of homes in the U.S. In the Vertical Software segment, we continue to roll out new products and features as we increase pricing. I'm very pleased with how high our customer retention rates remain. Finally, during the third quarter, we used $20 million of cash to repurchase $43 million of our September 2026 unsecured debt, bringing us to a total of $51 million par value repurchased this year. Now over to you, Shawn, to cover the financials.

Thanks, Matt, and good afternoon, everyone. Let's turn to our third quarter financial results. First, a quick reminder that Q3 is a difficult comparison against the prior year. Last year in Q3, we discovered that one of our legacy reinsurance partners, Vesttoo, had committed a global fraud, and therefore, we terminated that reinsurance contract and looked for replacement reinsurance. During that period, we had lower reinsurance ceding, which resulted in additional revenue of $30 million in the third quarter of 2023, additional revenue less cost of revenue of $10 million, and adjusted EBITDA of $2 million. With that as a backdrop, third quarter 2024 revenue was $111.2 million, in line with our expectations. This was a 14% decrease from the prior year, driven by the Vesttoo matter, offset by a 25% increase in premium per policy in our insurance segment. Revenue less cost of revenue was $64.1 million, a margin of 58% and ahead of our expectations. Adjusted EBITDA was $16.9 million, an $8.1 million improvement from the prior year and ahead of our expectations, driven by the insurance segment and strong cost control. Gross written premium decreased 10% from the prior year, driven by the divestiture of our legacy insurance agency, EIG, in the first quarter of this year. We have managed HOA gross written premiums to be roughly flat year-over-year. With the recent approval of the reciprocal, we will now begin to execute our premium growth plan. Taking a closer look at revenue, the insurance segment was 72% of total revenue in the third quarter, relatively consistent with the prior year. Revenue from our Insurance segment was $79.9 million, a 16% decrease from the prior year, driven by the Vesttoo matter. Vertical Software segment revenue was $31.3 million, a decrease of 9% from the prior year. Within this segment, software and services subscriptions revenue increased 7% from the prior year, a 300 basis point acceleration over the growth rate in the second quarter of 2024, driven by price increases in Rynoh and Inspection software, offset by a revenue decline in the moving business which exited the unprofitable corporate relocations offering, redirecting focus to higher-margin services. Now, let's dig into the Insurance segment cost of revenue. Cost of revenue related to attritional claims was $16 million, better than our expectations by $13 million. Cost of revenue related to catastrophic weather claims was $26 million. In the quarter, there were two hurricanes that drove approximately $37 million in cost of revenue net of reinsurance. Hurricane Beryl was a one-in-10-year event that occurred in early July; Hurricane Helene was a smaller event that developed later in the quarter and impacted the Carolinas. This was partially offset by $13 million of favorable prior period development. With our underwriting changes, previous weather events were smaller than we had previously estimated. Recently, Hurricane Milton occurred in early October. As a reminder, we do not have exposure in Florida and therefore, no exposure to this event. Moving to adjusted EBITDA, overall, adjusted EBITDA was $16.9 million in the third quarter of 2024, a positive improvement from the prior year. The Insurance segment adjusted EBITDA was $24.8 million, a $5.7 million increase from the prior year, driven by the insurance profitability actions that Matt mentioned. The vertical software adjusted EBITDA was $5.1 million, a $1.9 million improvement from the prior year, driven by price increases in our software and services subscription businesses and strong cost control. The Vertical Software adjusted EBITDA margin increased to 16% in the quarter. Corporate expenses were $13 million or 12% of total revenue, broadly flat from the prior year. Operating cash flow was positive at $12 million in the third quarter of 2024. As of September 30, 2024, we had $405 million in cash, cash equivalents and investments, excluding the $317 million at HOA; Porch held $88 million. This was $29 million lower than the prior quarter, predominantly due to the repurchase of $43 million in par value of the 2026 unsecured notes for $20 million of cash. The repurchases were done at an average of 47% of par value. Taking a step back, I wanted to provide some context on capital allocation. First, we have maintained an appropriate minimum level of operating cash to run the business; second, we allocate capital toward investment opportunities that we expect to generate the highest risk-adjusted return and in excess of our internal hurdle rate, which is well above our weighted average cost of capital. Given the performance in our Insurance business in Q3, we had excess cash available and were presented with an opportunity to deploy it against the unsecured notes at appropriate rates despite the low coupon. In Q4, we expect to have two primary uses of cash: $10 million for an interest payment on the secured notes and $10 million for the seed funding of the reciprocal exchange entity, which we will cover in more detail shortly. As we shift to the reciprocal model and launch PIRE, we will continue to focus on the health of the insurance carrier and its surplus and on satisfying related regulatory capital and other requirements. After the $10 million injection to start PIRE, we do not anticipate the insurance entities will need additional cash or equity from Porch Group. Case in point, we expect HOA will end this year at record high surplus at approximately $100 million compared to $50 million at the end of the prior year. HOA surplus on September 30 was approximately $70 million. Shifting now to guidance; we are updating our full year guidance today, reflecting our strong Q3 performance. We expect 2024 revenue of $440 million to $455 million with 2% to 6% growth. One thing I'll note is the prior year revenue was higher due to the Vesttoo fallout in Q3 2023 and the divestiture of EIG in January of this year. Revenue less cost of revenue guidance is updated with a $10 million improvement, now $200 million to $210 million. Overall, we expect adjusted EBITDA loss of $7.5 million to a profit of $2.5 million, a $12.5 million improvement compared to previous guidance. The midpoint of this range results in $32 million of adjusted EBITDA in the fourth quarter, which is a $20 million improvement over the fourth quarter of 2023. For the full year, the midpoint would be a $40 million improvement over full year 2023, highlighting the profitability improvements of the business. We expect gross written premiums of $460 million to $470 million. We'll now focus on our reciprocal exchange deep dive for this quarter. I'm pleased to have Nicole here to discuss this section with me.

Hi, everyone. I'm excited to be here again, updating you on our progress and next steps. We've been working on this for a while and we appreciate your support. First, Shawn will review the new structure of our Insurance business once the reciprocal is launched, and then I will talk you through the next steps as well as the value proposition for our insurance customers.

Now that we have TDI approval, we will form a new entity called Porch Insurance Reciprocal Exchange or PIRE. We will provide an initial $10 million of funding in exchange for a surplus note. On or around January 1, 2025, we expect to complete the sale of HOA, our existing insurance carrier to PIRE and receive an additional surplus note in exchange. The amount of this surplus note will be equal to the difference between HOA's statutory surplus on the date of the sale minus our existing $49 million surplus note, which will continue forward. Given HOA's performance, its surplus has been growing, and at this time, we expect HOA surplus at the end of the year to be approximately $100 million. This means that in total, our expectation is for Porch Group to hold approximately $110 million of surplus notes, all expected to bear a coupon of 9.75% plus SOFR. After the acquisition of HOA, PIRE will hold all policies, premiums, and pay certain expenses, including claims, agent commissions and reinsurance expenses. As with all reciprocal exchanges, the entity will be owned by its policyholders, who will make surplus contributions in addition to their premiums, which is expected to result in faster surplus growth over the long term. At Porch Group, within our new Insurance Services segment, we will operate two business units: first, Porch Risk Management Services, or PRMS, which will be the operator and attorney-in-fact of PIRE and HOA. PRMS will operate with mostly fixed costs and will receive high-margin commissions and fees that build up to a take rate of approximately 20% of gross written premium. The second business unit will be Porch Insurance Capital Solutions, or PICS, which will hold the surplus note. Stepping back and looking at the new Insurance Services segment holistically, we expect revenue to decrease under this new model but with higher adjusted EBITDA dollars and margins. Incremental margins are expected to be particularly strong given most of PRMS expenses are fixed. Cash flow dynamics are attractive as well, as fees are paid to PRMS upfront. We expect for our Insurance Services segment to move away from weather-related volatility, making it more predictable. We are excited to walk through the go-forward financial model in detail at an upcoming Investor Day in December. Nicole will now take us through the launch plan.

Thanks, Shawn. As mentioned, we have received prior approval from both the TDI and the Porch Board, which is a significant milestone that gives us certainty and clarity moving forward. We are now preparing for the launch, including system programming, operational readiness, finalizing the Porch Insurance value proposition, and training independent agents. The launch is targeted for January 2025. At that time, the HOA sale will be completed, and the existing carrier and its entire book of policies will transfer to PIRE as a subsidiary. We will also introduce Porch Insurance, a new homeowners insurance product offering an enhanced value proposition. Consumers will make a surplus contribution in addition to their premium, helping to build surplus more quickly. We will offer both Porch Insurance and HOA products to new and renewing Texas policyholders, starting the Porch Insurance product launch in Texas, our largest state. In 2025 and beyond, we will expand Porch Insurance into other states where HOA writes policies. However, it's important to note that PIRE's expansion into more states will not affect Porch Group's financial results. When the HOA is sold to PIRE in January 2025, all premium will be managed at the reciprocal, with Porch Group's Insurance Services segment generating revenue from approximately a 20% commission and fee rate on total gross written premium. State expansion is primarily about providing additional products to consumers and facilitating the surplus contributions that accelerate surplus growth. I mentioned the extra value we will provide through the Porch Insurance product. Porch Insurance customers are considered owners and members of the reciprocal. We offer more protection for homes against everyday and catastrophic risks. While our warranty product protects inside the house, Porch Insurance members receive a 90-day warranty, along with new coverages for service lines and refrigerated property protection, and features like appliance recall check monitoring. Porch Insurance is tailored for homebuyers and homeowners who actively maintain their homes, with homebuyers saving about 16% on homeowners insurance. They can use our app or moving concierge to arrange moving services, coordinate home technology setup, and manage their moving tasks. We also reward our members and aim to simplify home maintenance while promoting community engagement. Homeowners can utilize our Porch app to manage tasks, find professionals for projects, and access discounts on well-maintained homes, thanks to insights from Home Factors. We're pleased with the progress of our property data product Home Factors and the use of AI and machine learning to extract and structure data accurately. This quarter, we released three new insights related to the electrical system in homes, covering the condition of wiring, electrical panel capacity, and the state of the electrical panel. Each of these insights is unique to Porch and provides valuable data for underwriting and pricing policies. For instance, if a panel needs repair, it can lead to higher claims frequency. Based on our analysis, homes with panels that do not require repair could receive an 18% discount, while those that do may incur a 13% surcharge. We plan to submit multiple new filings by the end of 2024 that will incorporate Home Factors data. Additionally, we announced our entry into the market selling Home Factors to third parties, with promising initial results. Thank you for your time, and I will now hand it over to Matthew to cover our KPIs.

Thanks, Nicole. Hello, everyone. As Shawn mentioned, once we enter into 2025, we will make small adjustments to our reporting segments in light of the reciprocal formation and at that time, update our KPIs for our go-forward operating model. We'll share more at the upcoming Investor Day. Until then, I'll quickly cover the current KPIs we have been using. First, the average number of companies was 28,000 in Q3. Average revenue per company per month decreased 8% to $1,318 from the prior year, driven by the Vesttoo impact Shawn mentioned. We had 245,000 monetized services in the quarter, a 9% increase over the prior year. The average revenue per monetized service was $377, 26% lower than the prior year, similarly driven by the Vesttoo matter. Looking now at our insurance segment KPIs. As a reminder, 2023 included the EIG Insurance Agency that was divested in January of 2024 and thus year-over-year comparisons are not apples-to-apples. In the third quarter of 2024, gross written premium was $139 million from 219,000 policies in force. As we've discussed, we have constrained premium growth focus on profitability and are nearing the time when we begin to grow premium once again. Annualized revenue per policy was $1,460, an increase of 28% from the prior year driven by premium per policy increases. Focusing on HOA; the annualized premium per policy increased 25% to $2,208. Premium retention was 100%. The non-renewals are now complete, and we expect to see the benefit of continued price increases as we look ahead. Our gross loss ratio was 57% in the third quarter, a strong result given the two hurricane events. Slide 23 presents the gross loss ratio and splits out attritional losses. Our non-cat loss performance was exceptional, delivering a gross attritional loss ratio of 21%, an 11% improvement from the prior year. I'd like to now provide some insight and data into how our attritional losses have significantly outperformed in the last two quarters. First, product. Our risk selection benefits from Home Factors, with our unique data helping us better assess and price risk and apply discounts and surcharges where appropriate. We are also revising deductibles and policy terms, therefore, reducing our risk exposure. Second, portfolio. We've completed our risk selection review during which we non-renewed higher-risk policies that our data and modeling showed were unlikely to be profitable. We have exited Georgia and pulled back from coast on Texas and South Carolina. Third, price. We continue to increase pricing across states where appropriate. We are not alone here in our price increase actions. With historic losses, inflation, and increased reinsurance costs and expenses, premiums have had to increase significantly across the homeowners' insurance industry. Let's focus on Texas, our largest state, to highlight how premium per policy increases have improved our attritional loss ratios. In response to market shifts, we've implemented rate hikes, deductible changes, and water coverage surcharges. Since 2021, our premium per policy in Texas has grown at a 42% CAGR, now reaching $2,508. The chart shows how these actions, particularly around water and fire perils, have improved loss ratios over the past four years. While inflation and rising reinsurance costs drove ratios higher in '21 to '22, they've since improved in '23 to '24, reflecting the success of our strategic measures. Thanks, everyone. I will hand it to Matt to wrap this up.

Thanks, Matthew. Thank you, team. We couldn't be more excited about what's ahead. To recap, one, the Porch Insurance Reciprocal Exchange is approved and the acquisition of HOA by PIRE is expected to be completed at the start of January; second, we lowered the amount of outstanding unsecured debt; three, our insurance business is demonstrating industry-leading attritional loss ratios. We continue to roll out new Home Factors and are getting a strong positive response in the market; and five, for the full year, we are still focused on our target of achieving full year profitability in 2024, delivering positive adjusted EBITDA each quarter ongoing and delivering predictable cash flow results for Porch Group shareholders in 2025 and beyond. We look forward to our Investor Day next month, where we'll share more detail about the economic model for Porch Group post reciprocal, the financial health of the insurance carrier, financial targets with long-term growth and margins, and details into a variety of our business units. We'll share updated segments and reporting KPIs that will begin Q1 2025. With what we expect in terms of 2025 and 2026 results, it's going to be a fun run here coming up. With that, we will wrap the prepared remarks and pass the call to the operator. Christina, please go ahead and open up the call for Q&A.

Your first question comes from the line of John Campbell from Stephens.

Great job on achieving profitability despite facing challenging conditions this past quarter. Regarding the reciprocal exchange and new value proposition for consumers, I noticed you mentioned the moving concierge service. My main question is how this differs from your previous offerings. Additionally, could you elaborate on how effectively you have integrated the moving services with past insurance policies and why you believe this could enhance synergies between the two areas?

Sure, I can take that. Nicole, feel free to add your insights. Over the past few years, we have developed significant capabilities to assist people with their moves as we've focused on this business. We're also keen on targeting homebuyers, particularly those who are purchasing a home and moving, and we aim to offer them additional services. For example, we're providing a 90-day warranty and a moving concierge to help set us apart as the top choice for homebuyers. We operate the concierge service nationwide, including in Texas. So far, HOA has not engaged with the Porch services, and this has been a deliberate choice, as we are looking to integrate it into the Porch value proposition for insurance.

And sir, does that complete your question?

Yes, I'm sorry, my line cut out there. I had one more. And I apologize, guys. I hopped on the call a little bit late here, so apologies if I missed this explanation. But could you maybe talk to the decision to exit the corporate relocation business and kind of help size up the impact within Vertical Software?

Yes. I can speak to that, too. There were a couple of trends working against us. There's more remote work that's happening. There's less corporate relocation happening. We provided a certain type of service to meet that segment that, as the scale went down, it really didn't make sense for us to focus on it. You will see the impact in the move-related revenue in the quarter. One thing that I will say is there's still opportunity for us in moving. We are a leader in labor-only services and we still do that for certain partners in the corporate relocation space as well as other leading brands. But it was a key driver for why the move-related revenue is down this quarter.

Your next question comes from the line of Jason Helfstein of Oppenheimer.

Just want to ask, when you're done with the reciprocal or the transaction is done. How do you think about that impacting overall corporate revenue or corporate expenses? And then secondly, what reciprocal is done and you think about bringing in outside capital to fund it, what's the process with which then you're able to extract your capital back out of the reciprocal?

Yes, I could cover the expense profile. I think if I just take a step back for a second, the reciprocal, one of the reasons we are excited about the shift to that model is that our expenses for our insurance segment, the entities I talked about today, PRMS, will be relatively fixed, mostly employee-type expenses. We'll provide a lot more detail on that as well as other expenses around the business at the Investor Day. But for now, as I think we have announced today, the take rate at 20% gross written premium combined with that, expense profile and a relatively fixed expense profile that scales quite nicely. We're excited about the opportunity ahead and what that presents for us. And I think your second question was on surplus now. Was that?

Yes, that's right. I can take that. So we've mentioned before, Jason, that once the reciprocal is launched, it could make sense at some point to go out and raise third-party capital, third-party surplus note investors for the insurance entities. We'll see when the right time is to do that. Yes, when we go and look to pursue that, we have two choices. One is to keep additional capital inside the insurance entities to build surplus and grow premium faster or to be able to pay down some of Porch Group's existing and expanded now surplus note. Obviously, in the interim, that surplus note is paying a coupon, that 9.75% plus SOFR coupon. But we will, like Shawn had mentioned, you have, give or take, we expect approximately $110 million of surplus notes here once the transaction goes through.

And does that complete your question?

This is Steve on for Jason. Yes.

Your next question comes from the line of Jason Kreyer from Craig-Hallum.

So now that you've got kind of a deadline set for triggering the reciprocal as we get into next year, I think the focus probably starts on growing policies in force. Just curious what that looks like from a go-to-market perspective as far as finding new policies, whether that be geographically and then how you tap into some of that Home Factors type of data to find those homeowners that have the most attractive risk profiles.

We are excited that the reciprocal has been approved to begin growing premium. Our main focus for the next year is premium growth. There are still many opportunities in Texas and in the 21 other states where we operate, and we intend to take advantage of that potential. Our primary strategy for market entry is through agents, and there is considerable room to increase the number of appointed agents. We are beginning to invest in growth teams that will assist us in recruiting, activating, and supporting more agents. Additionally, we have started making adjustments to the commission structure for agents to encourage both growth and profitability. These changes make us very competitive in the market. If we succeed in driving profitable growth, there are chances for agents to earn above-market commissions. We are looking forward to collaborating with our agents to achieve this. Home Factors is crucial to our profitable growth strategy, helping us identify lower-risk homeowners and price risk more accurately. This is especially beneficial in targeting homebuyers because the data we have is up-to-date following recent inspections. We are enthusiastic about starting to grow premium next year.

And then I just want to ask about that, the commission fee of 20%, how sticky is that? Like does that move around over time? Does that move around kind of annually or over several years? Or should we expect that 20% to be a pretty stable figure as we look forward?

Okay. Go ahead, Shawn, do you want to?

I believe that starting with a 20% take rate is advantageous for us, and there may be opportunities to increase it in the future as part of Porch Group's growth strategy. We will provide more detailed information during the Analyst Day. As I mentioned earlier, I think 20% is a solid take rate that will contribute significantly to our profitability.

Your next question comes from the line of Ryan Tomasello from KBW.

Maybe just zooming in on another part of the business, Floify, just was hoping you can provide an update on how that business is performing in terms of the sales environment and whether or not attrition, I know, has been a headwind for a lot of players like Floify if you feel like that's bottomed out. And then also related to Floify, the embedded insurance marketplace opportunity is something that was a big part of that story. Just was wondering if there's any update there on how that fits into the whole insurance strategy overall.

Yes. I can speak to Floify. Across all of our vertical software businesses, we are focused on continuing to innovate, continuing to take price for the value that we can create. It has certainly been a headwind market. Floify, in addition to the transaction volume falling down, you also see a lot of loan officers exiting the market. A lot of the way we monetize their business is through those loan officers. We are excited about some of the things we are working on. We see opportunities for us to provide services and monetize going forward on a more transactional basis, which will give us an opportunity as transaction volumes return to participate in that growth in addition to the growth of loan officers which we would expect to come back but probably more slowly in transactions. There have also been some interesting market movements with competitive players that have opened up some avenues for us to grow share and focus on certain parts of the market. If you look at our Vertical Software segment, we've seen margin expansion. The team has done an excellent job in these headwinds of staying focused on driving new innovation while really keeping a close eye on profitability, which positions us really well as the growth comes back over the next one, two, three years in the real estate market.

Regarding the embedded insurance question, I want to clarify my response. Overall, as Matthew mentioned, the team has performed exceptionally well. Each of our software business leaders and their teams have done a commendable job in this market. Floify deserves significant recognition; for instance, the metrics you inquired about indicate that attrition has stabilized and improved. Concerning the embedded insurance opportunity, we've concentrated more on some of our other software products, particularly in the inspection industry, due to the current instability in the mortgage industry. We've prioritized developing features for those businesses that they critically need to stabilize and operate effectively, which is why embedded insurance hasn't been a major focus for us lately.

And there are currently no further questions on this end. Lois, do you have any preceded questions?

Yes, I've got one here. I think this is for you, Nicole. Can you talk about the Home Factors opportunity? And would it be material for Porch in the future?

Yes. So I would say, first and foremost, I'm just hugely excited about the opportunity here with Home Factors. There is a tremendous amount of money that is spent on data industry-wide. We'll spend more time on that as we go through Investor Day, but the opportunity here is very large. I truly believe that this can be one of the largest pillars of our business given the uniqueness of the data and the results that we've seen within our own insurance company. Not only that, we're just getting started, but the feedback we've heard from third parties that are testing is just really positive. The last thing I'd sort of highlight is we continue to find new use cases for how we can use the data. Clearly, there's an opportunity within underwriting to be more effective, same with pricing, but there's also opportunities to accelerate underwriting just to move with more speed to close more business, reducing on-site inspections and optimizing reinsurance. As I think about it, the opportunity is really big. The results are really strong. There are many ways the data adds value. While we're early here, I believe over the next several years, there's a really large opportunity here for us to be a major pillar of value for the company.

Perfect. Thank you, everybody. I really do appreciate the time and just the continued support. We are at a, like I said, a really fun moment in our company's history, where we can see what's ahead, and we're excited. We look forward to speaking to you more shortly here at the Investor Day in early December, providing more details about that future. Details for the event will follow and be available on our Investor Relations website here soon. And with that, enjoy the rest of your day. Take care, everybody.