Good afternoon, everyone, and thank you for participating in Porch Group's first quarter 2025 conference call. Today, we issued our earnings release and filed our related Form 8K with the SEC. The press release can be found on our investor relations website at ir.porchgroup.com. I'd 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, May 6th, 2025. We do not undertake any obligations 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. These statements are subject to risks and uncertainties, which could cause our actual results to differ materially from these forward-looking statements. Please refer to the information on this slide and in our SEC findings for important disclaimers. We will reference both GAAP and non-GAAP financial measures on today's call. Please refer to today's press release for reconciliations of non-GAAP measures to the most comparable GAAP measures discussed during this earnings call, which are available on our website. As a reminder, this webcast will be available for replay, along with a presentation shortly after this call, on the company's website at ir.portgroup.com. Joining me here today are Matt Ehrlichman, Porch Group CEO, Chairman and Founder, Sean Tevac, Porch Group CFO, and Matthew Nagel, Porch Group COO. Thank you. I'll now turn the call over to Matt for his key updates.

Good afternoon, everyone. Thanks for joining us. I've never been more excited to report on quarterly earnings as I am here for Q1 2025. After launching the member-owned Port Reciprocal Exchange on January 1st and the corresponding sale of our Homeowners of America insurance carrier into the Reciprocal, this is the first quarter in which our business is, in our view, optimally structured. We've fully transformed to a simpler, commission-and-fee-based, higher-margin model that is more predictable for shareholders. And I'm pleased to report that the results are strong. Because of the standout Q1 results and the trends we're seeing, we are again increasing 2025 guidance. As I look ahead to the next several years, my expectation is very clear that we will grow profitability and cash flow faster than previously anticipated. Sean will take you through the results, the increase in our guidance and the increase in our long-term model and margins shortly. So this quarter marks a special time for the company. It's the moment port shareholders are no longer in the catastrophic weather claims business, while still participating in the attractive growth of the homeowners insurance industry and with durable competitive advantages. This quarter demonstrates how effectively our business is now structured to scale. Overall, we delivered results for port shareholders that are exciting. Revenue of $85 million generated predominantly from $97 million of premium written at the carrier, which we'll label reciprocal written premium. Both of these numbers exceeded expectations. Now, as the manager of the reciprocal rather than the carrier itself, revenue isn't apples to apples when comparing year over year given our transformation. However, gross profit and adjusted EBITDA certainly are good to look at to assess year-over-year growth and performance. And so we're happy to report that in Q1, we realized 82% gross margins, which we expect will continue forward, demonstrating what we've been saying about the high margin nature of our go-forward business. This produced Q1 gross profit of $69 million, which was a $32 million, or 86%, increase compared to gross profit in Q1 2024. Our business is now highly profitable. Net income attributable to Porch was positive at $8 million. We produced our highest ever Q1 adjusted EBITDA of $17 million, which is a 20% margin and above expectations. This was a $34 million increase over the prior year. Resulting from this, I'm excited to share that we not only generated positive cash for port shareholders, but significantly so at $27 million of positive cash flow from operations for port shareholders in the quarter, which includes $7 million collected related to the past Vestu pursuits. Operationally, we perform strongly. New business premium at our insurance business is performing well. Our software and consumer service operations are progressing nicely, and we are investing more aggressively across these businesses to drive faster growth in 2026 and beyond. Finally, the reciprocal remains healthy. The reciprocal's April 1st reinsurance renewals were strong, lowered its catastrophic weather risk, and provides port shareholders certainty and clarity as we move forward. This reciprocal's cost of reinsurance decreased year over year, given our strong underwriting results in 2024, and Porch's unique home factors property data. Meanwhile, the reciprocal is healthy, with $198 million of surplus combined with non-admitted assets at the end of Q1. Similar to a strong comparison we shared about 2023 performance, I'm pleased to share the AM Best Report comparing results across carriers for 2024, the final year in which we owned Homeowners of America. As you can see on the slide, the carrier was number one in direct combined ratio performance in Texas out of carriers with more than $50 million in homeowners insurance premiums in the state. Across a U.S. wide comparison of carriers with more than $350 million of premium, our carrier was number three. This outperformance versus the market demonstrates the ability for the reciprocal to pay attractive management fees to Porch Group ongoing while continuing to build surplus. And it reinforces our differentiated capabilities that will sustain advantages for the long term. We believe Porch is an excellent company to own during a turbulent time in the markets. First, we do not believe tariffs will have a significant impact on our business. We expect a mid-single-digit adjusted EBITDA impact at most, which has been built in and assumed in the increased guidance Sean will share shortly. Second, if there is a recession, we believe our business is well protected and may even benefit. The majority of our business and income is generated from homeowners insurance premiums at the reciprocal. As you can see in the chart on this slide, historically, homeowners insurance premiums just continue to grow in all economic cycles it's an attractive industry to be playing in especially in a commission and fee model without absorbing the weather volatility if interest rates come down amidst the slowing economy it would it could spark a housing market pickup which would be attractive for our software consumer service and insurance businesses third if inflation picks up we expect homeowners insurance price increases will accelerate directly increasing our high margin management fees. And finally, if weather worsens, it can now help our business. Porch doesn't absorb nor pay for the catastrophic weather claims under this reciprocal structure. More weather related claims means premiums will increase over time, growing fees produced for Porch and for our shareholders. The nice thing is generally homeowners need homeowners insurance, so we don't see risk of this industry as a whole doing anything but continuing to grow. And our competitive advantages help us to consistently stand out. I'll now turn it over to Sean to cover our strong financial results and raise guidance.

Thank you, Matt, and good afternoon, everyone. As previously discussed, we changed our segments as of January 1st, 2025, to align with the new business model following the launch of insurance services and the porch reciprocal exchange. I'll focus my comments today on the porch shareholders component of our Q125 financials. As a reminder, and as we discussed last quarter and at our investor day, there are three segments that generate cash for porch shareholders, insurance services, software and data, and consumer services, offset by corporate. We call this porch shareholder interest. And since generating cash for porch shareholders is our ultimate goal and how we measure our success, this is what we will focus our commentary on in this earnings call and ongoing. As a reminder, under GAAP, for the time being, we are consolidating the porch reciprocal exchange, given the surplus note relationship between the reciprocal and our business. We do provide a reconciliation in our 10Q and press release between porch shareholder interest and gap consolidated financials, with the difference being the reciprocal segment. Where relevant, we will present the prior year financials on a comparative basis so folks can better understand the trends in our business. For software and data and consumer services, the comparison will be apples to apples. But because the reciprocal model didn't exist in 2024, the comparison for insurance services, and therefore port shareholder interest, will not be apples to apples. Okay, with that background, let's get into our strong Q1 results, which exceeded expectations. Q1 2025 port shareholder interest revenue was $84.5 million, with 59% of revenue from insurance services, 26% from software and data, and the remainder from consumer services. Associated gross profit was $69.1 million, with a gross margin of 82%. 2%. Insurance services had an 85% gross margin, software and data was at 75%, and consumer services, 83%. Overall gross profit grew 86% year over year. Q1 2025 port shareholder interest adjusted EBITDA was $16.9 million, a $33.6 million improvement over the prior year driven by the shift to the insurance services business model. As Matt mentioned, we see the year-over-year improvements in gross profit and adjusted EBITDA as the clearest way to understand the increase in our results. We're off to a strong start in delivering what we said we would as the operator of the reciprocal, higher margins and predictable results. Now let's dig into the segment results, starting with insurance services. There are a number of ways that Porch's insurance services business generates economics. Management fees paid by the reciprocal based on a percentage of its written premium. Policy fees paid directly by the policyholders. Non-catastrophic quota share reinsurance provided by Porch's captive reinsurer to improve capital efficiency for the reciprocal. And as a reminder, this reinsurance only is on attritional losses and does not include catastrophic weather. Also, fees paid by third-party agencies when we deliver homebuyer leads and an approximately 15% coupon on a $106 million surplus note Porch Group holds with the reciprocal. From the $97 million of the reciprocal's written premium, Porch Insurance Services generated revenue of approximately 50%, or $49.8 million. which is high margin and predictable. Associated gross profit was $42.3 million with a gross margin of 85%. Adjusted EBITDA was $25.8 million with a margin of 52%. Shifting now to software and data. Revenue was $22 million, a 4% increase over the prior year driven by product launches and associated price increases at several of our software businesses and partially offset by a non-recurring revenue transaction. We expect growth in this segment to accelerate in Q2 to high single digits as we normalize for the Q1 non-recurring item. Gross profit was $16.5 million with a 75% gross margin. Adjusted EBITDA was $4.6 million, a $2 million increase over the prior year. As a note, in Q1 2025, the housing market existing home sales were 2% lower than prior year, with continued slow turnover. As interest rates decline in the future, we expect to see tailwinds driven by the pent-up demand. But for now, we remain cautious and are assuming a flat housing market for the year. Shifting now to consumer services. Revenue was $14.7 million, a 9% decrease over the prior year, driven by the closure of our lower margin moving products such as corporate relocation in the third quarter of 2024. Gross profit was $12.2 million, with an 83% gross margin. Adjusted EBITDA loss was $700,000, a $2.2 million decrease over the prior year, driven by investments to drive growth in 2026 and beyond. We've reduced corporate expenses significantly over the last couple of years as we moved to lower cost location and reduced G&A back office type costs. You can see here the benefit of our cost control actions. Corporate expenses decreased $2.2 million to $12.8 million in Q1 2025 compared to $15 million in the prior year. Moving on to the balance sheet. There are several benefits from the shift toward the commission and fee-based insurance services business model. It's simpler, higher margin, and asset length. As a reminder, our focus is on generating cash for port shareholders, which aligns closely with adjusted EBITDA. In Q1, we have also provided additional information on cash flow from operations of the port shareholder interest. Porch Cash Plus Investments was $114 million at March 31st, 2025. Porch Shareholder Interest Cash Flow from Operations was $27 million, driven by adjusted EBITDA in the quarter of $17 million and $7 million of cash from the Vestu bankruptcy process, with potential for more over time. Additionally, our litigation against other parties remains ongoing, and we will keep you posted as things develop. Now for our updated 2025 guidance for porch shareholder interest. Now that we are through our first full quarter post the launch of the reciprocal and our transition to a high margin operator, we've seen the results. Good news, the model is performing even better than we had previously expected. And despite the macroeconomic turmoil in tariffs, which have been factored in, we are increasing our 2025 guidance across the board. We are increasing our 2025 revenue guidance by $10 million and now ranging from $400 million to $420 million. We are increasing our 2025 gross profit guidance by $10 million, and now ranging from $320 million to $335 million, still within an associated gross margin of approximately 80%. We are increasing our adjusted EBITDA guidance by $5 million, now ranging from $60 million to $70 million. This increase in adjusted EBITDA guidance reflects three things. First, Q1 2025 adjusted EBITDA was ahead of our internal expectations by approximately $5 million. Second, we are pleased with our insurance services segment's performance post-reciprocal transition, so we are raising guidance for the rest of the year by $5 million, which factors in the mid-single-digit millions of tariff-related impact Matt had mentioned. Finally, those increases are partially offset by an approximately $5 million of additional 2025 investments to accelerate growth in 2026 and beyond. Starting April 1, when we renewed our reinsurance contracts, we improved the terms of the non-catastrophic quota share contract for the reciprocal to build even more surplus cushion there and scale insurance premiums. With this change, Q2 adjusted EBITDA for Porch is expected to be approximately $5 to $7 million lower than Q1 and continue to grow nicely in Q3 and again in Q4. Given this is our first quarter with actual results in our go-forward structure, we wanted to provide what we shared at our investor day. We wanted to update what we shared at our investor day in December. As a quick note, we won't be updating the long-term model quarterly, but since it was the first quarter of results, we thought it was relevant. As we saw in the Q1 results, we now expect the Reciprocal's written premium to convert to porch insurance services revenue at approximately 50% versus 40% previously. If we apply that higher conversion to our long-term $3 billion premium target and our long-term target port shareholder revenue is $2.3 billion. Aligned with our Q1 results, we still anticipate 80% gross margins and a 30% adjusted EBITDA margin. This means that at $3 billion of premium, we now expect adjusted EBITDA of $660 million. I'll now hand it over to Matthew to discuss a strategic update and review our KPIs.

Thank you, Sean. I'd like to start by providing an update on our four strategic focus areas to drive revenue growth for the business. First is to scale insurance premiums. In Q1 2025, new business growth accelerated, driven by strong execution across geographies, pricing, and distribution. Most zip codes across our largest states are reopened at this time. Texas, our largest state, implemented a 16% rate increase, reinforcing our commitment to pricing discipline. We remain careful in risk evaluation on both new and renewal policies to ensure profit targets are hit, therefore keeping the reciprocal healthy and growing surplus. During this time, most premium growth comes from price increases, generating more reciprocal written premium and thus management fees for porch, without increasing risk. Key hires have strengthened our insurance leadership team, and we successfully placed its new reinsurance program with over 40 investment grade partners, reducing the reciprocal's risk. Importantly, port shareholders are no longer in the catastrophic weather claims business. The second area of revenue growth is software innovation, where we have made meaningful progress against our roadmap. In Q1, Rhino implemented a 20% price increase in line with our strategic pricing goals. Our inspection business launched an expanded partnership with one of the largest inspection franchises in the country. FlowFi, our mortgage SaaS business, launched a new product, FlowFi Quick Apply, which autofills up to 80% of a mortgage application, streamlining borrower onboarding and driving adoption. Next is the growth of our data business. We continue to expand Home Factors, our unique Property Insights product, adding further value for the reciprocal and third-party carriers. Lastly, accessing more homebuyers. We made strategic progress in reaching and monetizing high-value homebuyers and launched new offerings such as packing services to make their move easier. Before we delve into our key performance indicators for insurance services, I want to provide a few important reminders regarding our segment reporting and prior year comparisons. Early in the first quarter of last year, we divested our EIG business. Additionally, our prior insurance segment included our warranty business, which has now been strategically aligned within our new consumer services segment. This realignment allows for greater focus on the distinct growth and profitability drivers of each business. These changes in our business structure make direct year-over-year comparisons to previously disclosed KPIs less relevant as they are based on a different basis. Furthermore, in support of our profitability objectives, we executed material non-renewals that extended through the first half of last year. This will naturally impact our year-over-year comparisons for the current period. With these factors in mind, let's now turn to our new key performance indicators. As Sean noted, our insurance services generate economics primarily through Reciprocal Written Premium, or RWP, which represents premium written by the reciprocal before any policyholder cancellations. We earn a management fee based on a percentage of this RWP. In the first quarter, Reciprocal Written Premium reached $97 million, reflecting an approximate 10% increase compared to the prior year. Looking ahead, we anticipate continued growth in RWP throughout the remainder of the year. This expectation is driven by the historic seasonality of renewal policies, where the first quarter typically sees lower volumes compared to the second, third, and fourth quarters due to the typical patterns of homebuyer activity in new construction during the spring, summer, and fall months. Moreover, our ongoing efforts to expand or distribution channels and implement strategic price increases are expected to further contribute to RWP growth. Reciprocal policies written reflects the total number of new and renewal insurance policies written by the reciprocal during the period. We generate policy fee revenue directly from these policyholders. Reciprocal-written policies were 36,000 in Q1. Given Q1 has historically the fewest renewal policies written, looking ahead to the second quarter, we expect reciprocal policies written to be north of 50,000 policies in that quarter. This anticipated increase is driven by the historical seasonality and the improving momentum in our new business growth engine. RWP per policy written is calculated by dividing the reciprocal written premium by the total number of reciprocal policies written. In the first quarter, RWP per policy written stood at $2,683. As mentioned before, we are encouraged by the momentum we are building in our new business initiatives. In the first quarter of 2025, we saw reciprocal new business premium double on an apples-to-apples comparison to the prior year, demonstrating the effectiveness of our efforts to expand our reach and attract new policyholders. While we continue to see some residual impact on our renewal rates from our prior profitability initiatives, growing renewal premium represents a significant opportunity for growth. We are actively focused on enhancing our renewal strategies and expect to see improvement in these rates as we progress through the year. Finally, as Matt mentioned, the Porch Reciprocal Exchange maintains a strong financial position with a healthy surplus combined with non-minuted assets totaling $198 million. For software and data, we have the number of companies in the annualized revenue per company, or ARPA. In Q1, we serve 24,000 companies with an annualized revenue per company of $3,644. Reminder, this only includes companies related to our software and data segment and no longer includes moving companies or insurance agencies. On that basis, the number of companies has been relatively flat, and we expect that to continue until the housing market picks up. As we discussed previously, strategic price increases are driving increases in revenue per company, and we expect that to continue. For consumer services, we have the monetized services and annualized revenue per monetized service. In Q1, we had 71,000 monetized services with annualized revenue per monetized service of $207. Reminder, this only includes monetized services relating to our consumer services segment and does not include insurance policies nor transactions in the software segment. I'll pass it back to Matt now to wrap us up.

Thanks, Matthew. I'll quickly wrap just by reinforcing the most important messages from today, and then we'll dive into the Q&A. First, delivering quarterly adjusted EBITDA of $17 million in Q1 2025. Again, a $34 million increase year over year. Number two, this translated to $27 million of positive for its shareholder interest cash flow from operations. Again, we think that's a really important stat. Number three, we increased our 2025 adjusted EBITDA guidance by $5 million to $65 million at the midpoint. We demonstrated what we said. we are now a high margin business and produced 82% gross margins. Again, we're proud of our $69 million of Q1 gross profit being an 86% year-over-year increase. We completed the reinsurance renewals at the reciprocal, as we said, reducing its exposure to catastrophic weather claims and lowering reinsurance costs. Court shareholders not being in the catastrophic weather claims business is great, and I do want to express appreciation to the great partnerships with more than 40 A-rated, high-quality reinsurers. Our premium growth plan is on track, and we're seeing strong signs related to new business growth. Lastly, there are no significant impacts from tariffs. The majority of our business is homeowners insurance, which is stable in a recession. So folks, we're off to a strong start, and we look forward to a fun and exciting year and years ahead. Thank you to our shareholders for your continued support. With that, Lisa, please open the call for questions.

Thank you, sir. And everyone, if you would like to ask a question today, please press star one on your telephone keypad. Once again, that is star one if you have a question today. And we'll take the first question from Daniel Kurnos, Benchmark.

Yeah, great. Thanks, Matt. Look, not a lot to say here. It's a fantastic quarter, especially from the insurance side. Can I just get some clarity? Because I think I'm going to miss this from Sean, just why the take rate was so high in the quarter and you know i know you have some built in with the tdi um but just you know is that a result of the surplus or what exactly drove that and then just as we think about your willingness here matt given the strong start of the year to kind of lean in you know you guys gave an initial gwp guide q1 crushed it um you guys are clearly leaning into agents harder and so uh and getting you know new policies written i just what's your willingness to accelerate from here because it sounds like there's a little bit of reinvestment willingness, incremental willingness at this point, given how strong the year started. Thanks.

Thanks, Dan. Sean, why don't you take the first one? And Matthew, maybe you can take the second one, premium growth.

Yeah, sure. Happy to, yeah, the reciprocal written premium converted to revenue at about 50%. We do expect that to be close to the ongoing rate there. A couple of things on that. First of all, So porch insurance services segment does receive policy fees directly from the policy holder. So that's included there as well. And then second, there are management fees that are paid by the reciprocal as well as the captive arrangement, the captive reinsurance arrangement that insurance services has with the reciprocal. The thing to remember about the captive is the porch also pays a commission in sales and marketing and a portion of the nutritional losses back to the reciprocal. So you can see that all flowing through the porch insurance services P&L that we broke out. The main thing I think we think about with respect to the reciprocal is it's in a really healthy spot from a surplus perspective. We ended the quarter with almost $200 million of surplus combined with non-admitted assets. That's the highest that metric has ever been for the reciprocal. We do expect it to move around from quarter to quarter, especially as there's weather claims at the reciprocal. But all in all, a very healthy spot for the reciprocal to be in there. We do expect that to be highest at Q4.

And then I can speak to the plans of how we're thinking about premium growth, just kind of reiterating some of the prepared comments. We've seen RWP grow 10% on an apples-to-apples basis year-over-year, but the area we leaned into, in particular in Q4, which is around our agency distribution, appointing and reactivating new agents, has led to Q1 being more than 100% in new business premium growth. There are a variety of levers that we still have to grow RWP over time. And as Sean mentioned in his comments, we have started to make more investments. And so I'll share some of those opportunities we have. Some are shorter term and some are medium term. We will continue to invest in our growth team to be able to reach out and engage agents in making sure our commissions and incentives are competitive and attractive for our agents. We are now looking at new geographies and looking at additional states where we can offer our products. We are in the infancy of our porch insurance product, which offers a entirely different type of value prop to the consumer and to the agent. And we are going to lean into building that out. There are choices we can make around our product that can make us even more attractive in the market. We'll do that a little bit in the near term, but we are making bigger investments into how we leverage our data and increase our sophistication of pricing, which will allow us to be more aggressive around growth and pricing in a way that gives us confident that we will be profitable. I would also say, as a final point, there's still some opportunity for price increases. It's probably slower than what we've seen in the past. And this is a massive market. And so there's a lot of opportunity for us. And we have started to take midterm investments in terms of bringing on additional talent, senior talent to our team and starting to put in place some of the systems that will allow us to scale as we go after that $3 billion in premium in the next seven to 10 years. So there's a lot ahead for us.

Matthew, can I just follow up on one thing super quickly? If replacement value were to go up as a result of tariffs or, you know, just in the general market? And given that you guys have a lot more of a dynamic model with your data advantage, would A, you be confident in being able to pass through premium increases? And B, do you think it would make you more advantaged relative to others, given that you have, you know, a lot more visibility into the actual products themselves at the house level?

Yeah, those are. I look at those as sort of two vectors. The first is we do look at replacement value on an ongoing basis and we do update replacement value um on an ongoing basis and as we do that it does bring up price uh through through just the fact that you're getting more coverage to your second point it is certainly our thesis and belief that as we get more and more data into our pricing, which we're every, you know, all the time. And there's opportunities for us to invest more into the sophistication of our pricing. We do believe that those two things, the privileged data that we have in combination with increasing sophistication will allow us to target segments that we know to be lower risk, but where we can command attractive pricing in the market. And that is certainly the strategy we're pursuing. And we will keep chipping away at that now and into the future.

Awesome. Thanks for sticking with me and appreciate all the color. Two for two, Mr. Ehrlichman. Well done.

Thanks, Dan. We appreciate it.

John Campbell from Stevens Inc. has the next question.

Hey, guys. Good afternoon. I'll echo the sentiment. It's a great start to the year since you guys got the momentum building. And I think we're definitely seeing what you guys message as far as life, what life's going to look like under the new reciprocal. So nice work all around. But I just wanted to get a few insights to kind of relative what you guys are experiencing in the trenches so far with the reciprocal. I don't know, maybe this explains some of the higher take rate, but within Texas, just from a new policy standpoint, just broadly, what percent of consumers are selecting HOA versus porch insurance and how is that kind of fared versus expectations?

Yeah, I'd say we don't, you know, provide a specific metric on that, although Matthew did obviously provide just kind of an overall new business, you know, growth metric, which we're clearly excited about. I will say, John, though, that we we have positioned our products, you know, for certain segments where we really are focused. You know, homebuyers, like Matthew mentioned, we want to be known as being the best homeowner insurance company for homebuyers. You know, those consumers, which represent, you know, almost almost 40, actually 40 percent of all the homeowners insurance purchases that happen each year are by homebuyers generally. And so we actually convert really well, you know, for those customers. New construction is another segment, you know, we convert really well for. Obviously, you know, because of our data, you know, homes that are better maintained, you know, or lower risk, we're naturally going to play better. So I will say the answer to your question would vary, you know, depending on the different kind of sub segments, you know, within Texas. But clearly, overall, we feel like we're in a good spot given how a new business, you know, premium is growing.

Okay, that's helpful. And then on the HOA surplus, you guys had mentioned the $198 million, and then I think you had targeted $100 million by end of year. I don't know if those are apples to apples. Maybe if you could shed some light on that, and then just broadly, how much surplus typically draws down throughout the year?

Yeah, I can cover that. So as of the end of last year, December 31st, surplus combined with non-admitted assets, which is the key metric that we kind of look at, was $157 million. It actually went up in Q1 to almost $200 million, $198 million to be exact. That's in a very healthy spot. I think, as I mentioned, it's the highest that that metric has ever been for the reciprocal. And so it's a key thing that we look to to ensure, you know, the continued health of the reciprocal. And as I mentioned, it does, you know, kind of have a seasonality curve to it, especially Typically, the earnings pattern historically for the carrier has been in the first half of the year, you typically have losses driven by catastrophic weather. And then in the second half of the year, that typically flips around and you generate income. Now, if you look at the net income, even in the financials that we issue today, the reciprocal itself had a really strong Q1. Actually, net loss for the reciprocal improved like $10 million year over year. And I think it just speaks to some of the underlying advantages that we've talked about, home factors and some of those other items. So as I mentioned, we do expect surplus combined with non-admitted assets to move around from quarter to quarter based on the carrier's business, but overall a very healthy position at the beginning of the year.

Okay, that's helpful. And then one more to add, just relative to the port shares within HOA for the surplus, You know, you guys have been pretty clear about the flywheel effect, which is super enticing. I'm just trying to get a sense for how that's calculated at the regulatory level, if you're able to capture all of that appreciation, or is it capped to some extent?

Yeah, there is some cap that's included in the surplus number that gets filed. One of the things that we look at is surplus combined with the full value of the port shares that's in there. You know, effectively, I think of it as effectively the net assets of the business, of the reciprocal. And so we think that's a good indication of the overall value there. The amount of, you know, technical surplus that gets filed is around $105 million or thereabouts. So also a very strong number with obviously a lot more upside on top of that, if you include the full net assets.

And just let me layer on one thing. OK, John, the reason we think that the surplus plus the non-emitted asset number, the 198 is the best number is obviously if we wanted it to, the reciprocal could go sell some of those shares. right um and so now that's not what we plan to do because we you know we anticipate and we hope that the stock will you know fairly value the company as we continue to build the company and so um so but we could you know and so we think it's the right number to um to focus on and then quickly to your point on the flywheel i mean we are excited about how that flywheel is working i mean that the reality is now with this structure i think you can probably see it you know as the port stock you know price is higher that net asset number you know is higher it can then support more premium growth right so we would you know anticipate growing premium faster and you see today i think you know investors can see today how you know that premium can translate into cash flow for port shareholders you know which we would expect you know will will help to just value the company appropriately, you know, as we look ahead. And so, you know, that is, it's an exciting time to be able to post a quarter and just demonstrate what we've said there, you know, is, is happening. And we expect will continue to happen. Absolutely. Makes a lot of sense. Thanks guys.

Thanks, Sean.

Appreciate it. See you.

The next question is from Jason Cryer, Craig Hallam.

Great. Thank you guys. Impressive work here. So I want to just ask about the reinsurance process if you can give some more details there if i'm understanding that right you're now going to carry less risk but also paying less for reinsurance and i'm curious as you went through the process just if you can share some dialogue about you know the the reinsurers appetite to work with porch and how that's changed sure the uh so first things first which is we are proud and appreciative of the relationships we have with these great reinsurance companies.

There's been longstanding relationships. We look forward to working with these partners for years and years and years to come. Yes, we are pleased with how the reinsurance renewal went because, to your point, we've now set the retention limit for the reciprocal at $25 million, which you think is a really healthy spot for it to be. And so if there are large weather events, we have support from third-party partners who would then be able to step in and really mitigate the risk around catastrophic weather for the reciprocal itself. We shared today the AMVEST results in terms of how well the carrier has performed versus others. And so clearly we share that data with third-party reinsures. And so when it came down to pricing, the reality is, is that our business does stand out, you know, versus other, you know, carriers. And so through that, we were able to get, you know, get benefit in just, you know, pricing overall and just the participation, you know, in that book. So, Nat, yes, we're pleased with how that process went, you know, overall.

Thank you. Appreciate that. Staying with the reciprocal written premium topic, We've talked about that a little bit, but can you give any transparency on what we should expect on how that breaks out between rate increases versus policy acquisition over the course of the year?

We don't break that out. We've shared that, you know, Texas has a 16% price increase. I shared we'll continue to look for opportunities for price increases. It's an ongoing thing we look at very closely, but we do expect them to slow down. And then I shared we're very focused on rebuilding our growth engine, and we're seeing great momentum with our new business premium. And we have opportunity over time to grow renewal premium. And then I also share, just for clarity, we do expect reciprocal rent premium to increase in Q2 over $50 million, and that's due to the combination of historical seasonality of when we typically acquire policies and the momentum that we're seeing in our new business premium. Okay, thank you.

We'll take the next question from Ryan Tomasello, KBW.

Hi, everyone. Thanks for taking the questions. In terms of the growth levers for the reciprocal, can you say what percent of your prior active footprint, you know, was essentially turned off when you guys pulled back and how much of those zip codes you've reopened again? And then as a follow-up on the agent channel, if you can just maybe contextualize how large that is today, maybe in terms of, I guess, the number of agents that you're working with and how that compares to where the prior peak was, just to help us understand, you know, how much low-hanging fruit there is here as you turn that back on.

Yeah, maybe I'll take the first, and Matthew, why don't you take the second round agencies? We didn't disclose, Ryan, specifically, like, how many geographies or zip codes we had closed previously, but we were very clear that we were, you know, constraining growth and managing premiums to flat as we were taking price increases, And so, you know, you'll recall, you know, both the non-renewals, but then closing zip codes. So there was, you know, certainly, you know, wide sets of areas that we were not taking business in. I would say for the most part at this point, those zip codes have been fully reopened. So we've started to do that in November once we had approval around the reciprocal and we've been executing against that. only last comment on geographies and i'll turn over to matthew is there is a lot of additional geographic expansion um with new states and so we do expect to continue to open up you know new geographies in new states um and that will just be an ongoing process so more to announce as we go you know there yeah uh so we we don't today disclose the number of active agents or the number of coding agents.

It is growing nicely due to the efforts that we really kicked off just in Q4. The additional commentary I'd want you guys to keep in mind is, you know, we just started in Q4. So as an example, the growth team, I think just this week reached the initial size that we intended for for this year i would also share that um the historical numbers are are kind of interesting but what's more interesting is just the sheer number of agents that are out there and i would say we're still very early at engaging uh the full prospect list of potential agents and that prospect list will grow as we expand into new states and there is energy and excitement around porch insurance and so as we further grow and develop our porch insurance product set we see opportunity to get more engagement from agencies and then on top of that once we get agents involved with porch there's a whole nother lever which is how do we become a top carrier within their book of business and i would say that one we are very early days a lot of these agents that we're reengaging or that we've appointed, we are not yet a significant part of their business. And so we have this big, clear path through the agency channel to go grow materially. That is through time, effort, blocking and tackling and continuing to provide good incentives, good products and a good claims experience and make it easy to do business with us. And that's what we're going to be focused on. But there's a lot of room still, I think, is the primary message.

And then just wanted to clarify the numbers on the surplus that you talked about earlier, Sean. So you mentioned, I think, $105 million is the statutory amount, and then the $198 is statutory plus non-admitted assets. Does the $105 include a haircut amount of the share value? Because by my math, the share value at March 31st was like $133 million.

So I'm just trying to get to that plug of like what's in the 105 and then what's in the 198 if that makes sense yeah so 198 is uh to make sure it's clear for folks 198 is um surplus combined with non-admitted assets some of the port shares isn't included uh value isn't included in the filed surplus number um as matt mentioned you know we would have an ability to uh if we perhaps liquidated some of those in the future, not expecting. And then within the surplus number that I mentioned of approximately 105, there's also some of the share value is in there. I suppose if you took the highest number of 198 and you backed off, you know, the value of 18.3 million shares at the $7.20 stock price at the end of the quarter, that would get you to the surplus, you know, without any of the shares. So, those are kind of the different components within it that helps, hopefully.

Got it. Thanks for the clarification. Thanks, Ryan. Appreciate it.

We'll take the next question from Jason John Helfstein Oppenheimer.

Hey, Sean, so I want to start out. In your prepared remarks, you said something about for the time being, you're consolidating the reciprocal. So take us through the steps of what would need to happen for you to have a kind of gap report. And then secondly, now when we look at software and data and consumer services, software and data revenue is basically flat year-over-year. consumer services down somewhat um how do you see kind of those businesses you know kind of potentially improving as housing market gets unlocked presumably at some point in the back half this year and i guess i'll say we've seen pretty good momentum in the you know more affluent homes um and kind of underperformance in the less affluent homes within housing trends together there. Thank you.

Let's do the second one first, and then, Sean, go to the first one just briefly. I'll start us and then, Matthew, later on, maybe you can talk about some of the investments and growth opportunities. But just quickly, it doesn't matter to us really that much, Jason, if there's sales for more flowing homes or less. It's not based on the total dollar amount. It's really around the number of total transactions that are running through the system. Our software products charge on a per transaction basis, you know, based on the number of existing home sales and also in some of our software businesses on the number of refinance transactions. And so obviously that also is just very, very low right now. And so as the transaction volume picks up, then we benefit, you know, and we will be able to feel those tailwinds.

Maybe Matthew, just take one more minute on that question in terms of some of the investments, then Sean, do you on the first one yeah so as matt mentioned as transaction volume goes up will benefit in addition for software and data there are investments being made into home factors both the product itself and the go-to-market and our core strategy with the software businesses while the housing market has been flat has been to invest in innovation to be able to drive price increases so that as transaction volume comes back, we are well positioned. We have been doing that and we've pulled the trigger to invest more into that innovation to support price increases, which will benefit us as the market comes back. On consumer services, we certainly have some impact related to housing volumes. Our moving business and some of our core channels around warranty are tied to new homebuyers. And we have also decided there's opportunity to invest there, in particular in trying to get access to more consumers through our app, through a website called Moving Place, which will be a destination site for all types of moving services. We just launched packing there in Q1. And also looking at how can we better partner with real estate agents in order to get us access to homebuyers, which is a great segment for us because we can sell them a variety of services, especially insurance. Thanks. And then, Sean, do you own consolidation?

Yeah. So, the question around consolidation of the reciprocal and the surplus note. Surplus note is the key reason we are consolidating the reciprocal. I guess what I would say is that we're really pleased with the structure. I mean, the surplus note is really attractive paper at 15% coupon, and so we're not in a rush to change that. We could sell the surplus note at some point off in the future, but for now, we're really pleased with what we're seeing in the business overall, as well as the reciprocal transition and the surplus note paper that we currently hold. Thank you.

We'll go next to Tim Graves, Loop Capital.

Tim, your line is open. please check your mute button hello can you hear me yes yep we hear you now okay sorry thank you for uh yeah thank you for taking the question i guess my my my question is around uh home factors um i i just want to know like the strength of the pipeline uh as far as like uh the strength of the pipeline and all home factors and maybe more so uh that impact on the revenue going forward and what you see that?

Sure, I can speak to those. We actually, I think about pipeline in two ways. One is the conversations we're having with carriers, and what makes us really excited is we are engaging with carriers who are actively digging in to go through their own testing process with their own claims data to prove out that the home factors help them to better predict risk. that creates all sorts of opportunities for us the second pipeline i think about is we are still building out new home factors and the more home factors we build out there's more opportunities for us to help carriers engage uh improve their their pricing and underwriting which creates opportunity for us in terms of revenue impact what we've communicated um in the past is not a lot for 2025, but starting to build in 2026.

Okay, thank you. Thank you for the question.

And everyone at this time, there are no further questions. I'd like to hand the conference back to Mr. Matt Ehrlichman for any additional or closing remarks.

I'll just say thank you to all for joining us today. Thanks for those questions. And to our shareholders, thanks for the continued support. As you can tell, we are excited about how this year and years ahead are shaping up. With that, we will end the call. Have a great rest of the day.