Porch Group, Inc 10-Q for FY2025 Q1
Porch Group, Inc. (PRCH)
10-Q
2025-05-08
For: 2025-03-31
View Original
Added on
April 06, 2026
About this 10-Q
Porch Group, Inc filed this 10-Q on May 8, 2025, covering the quarter ended March 31, 2025 (FY2025 Q1).
Headline figures
Quarter ended March 31, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $104.75M
- down 9.3% from $115.44M a year earlier
- Net income
- $8.4M
- compared with a net loss of $13.36M a year earlier
- Diluted EPS
- $0.07
- compared with -$0.14 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________________________________
FORM 10-Q
___________________________________________________________
(Mark One)
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2025
or
EXCHANGE ACT OF 1934
For the transition period from ___________ to
Commission File Number: 001-39142
___________________________________________________________
(Exact name of registrant as specified in its charter)
___________________________________________________________
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | ||||
(Address of Principal Executive Offices) (Zip Code)
(855 ) 767-2400
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
___________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading symbol | Name of Exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | o | x | |||||||||||||||
| Non-accelerated filer | o | Smaller reporting company | Emerging growth company | ||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
The number of outstanding shares of the registrant’s common stock as of May 1, 2025, was 121,537,469 . This includes 18,312,208 shares of common stock held by Porch Reciprocal Exchange, the registrant’s affiliate. These shares held by our affiliate are considered treasury shares for GAAP accounting purposes and under Delaware law are not considered outstanding for quorum and are not entitled to vote or receive dividends.
Table of Contents
Page | |||||
Introductory Note
On January 1, 2025, Porch Group, Inc., sold its legacy homeowners insurance carrier, Homeowners of America, to the newly formed Porch Reciprocal Exchange (the “Reciprocal”), a separate entity which is owned by its policyholder-members and is accounted for as a variable interest entity. The accompanying unaudited condensed consolidated financial statements include the accounts of Porch Group, Inc., and its subsidiaries as well as the Reciprocal. The Reciprocal is managed, but not owned, by Porch Group, Inc., and is consolidated for reporting purposes. References to “Porch Shareholder Interest” include businesses the Company owns and exclude the Reciprocal.
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PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
PORCH GROUP, INC.
Condensed Consolidated Balance Sheets (Unaudited)
(all numbers in thousands unless otherwise stated, except per share data)
| March 31, 2025 | December 31, 2024 | |||||||||||||
| Assets | ||||||||||||||
| Current assets | ||||||||||||||
| Cash and cash equivalents | $ | $ | ||||||||||||
| Accounts receivable, net | ||||||||||||||
| Short-term investments | ||||||||||||||
| Reinsurance balance due | ||||||||||||||
| Prepaid expenses and other current assets | ||||||||||||||
| Restricted cash and cash equivalents | ||||||||||||||
| Total current assets | ||||||||||||||
| Property, equipment, and software, net | ||||||||||||||
| Goodwill | ||||||||||||||
| Long-term investments | ||||||||||||||
| Intangible assets, net | ||||||||||||||
| Other assets | ||||||||||||||
| Assets of Reciprocal: | (1) | |||||||||||||
| Cash and cash equivalents, including restricted | ||||||||||||||
| Accounts receivable, net | ||||||||||||||
| Short-term investments | ||||||||||||||
| Reinsurance balance due | ||||||||||||||
| Prepaid expenses and other current assets | ||||||||||||||
| Intangible assets, net | ||||||||||||||
| Long-term investments | ||||||||||||||
| Total assets | $ | $ | ||||||||||||
______________________________________
(1)Porch Reciprocal Exchange (the “Reciprocal”) is a consolidated variable interest entity not owned by Porch Group, Inc. (see Note 3).
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
PORCH GROUP, INC.
Condensed Consolidated Balance Sheets (Unaudited) - Continued
(all numbers in thousands unless otherwise stated, except per share data)
| March 31, 2025 | December 31, 2024 | |||||||||||||
| Liabilities and Stockholders' Deficit | ||||||||||||||
| Current liabilities | ||||||||||||||
| Accounts payable | $ | $ | ||||||||||||
| Accrued expenses and other current liabilities | ||||||||||||||
| Deferred revenue | ||||||||||||||
| Refundable customer deposits | ||||||||||||||
| Current debt | ||||||||||||||
| Losses and loss adjustment expense reserves | ||||||||||||||
| Other insurance liabilities, current | ||||||||||||||
| Total current liabilities | ||||||||||||||
| Long-term debt | ||||||||||||||
| Other liabilities | ||||||||||||||
| Liabilities of Reciprocal: | (1) | |||||||||||||
| Accounts payable and other current liabilities | ||||||||||||||
| Deferred revenue | ||||||||||||||
| Losses and loss adjustment expense reserves | ||||||||||||||
| Other insurance liabilities, current | ||||||||||||||
| Other liabilities | ||||||||||||||
| Total liabilities | ||||||||||||||
| Commitments and contingencies (Note 16) | ||||||||||||||
| Stockholders' deficit | ||||||||||||||
Common stock, $ | ||||||||||||||
| Additional paid-in capital | ||||||||||||||
| Accumulated other comprehensive income (loss) | ( | |||||||||||||
| Accumulated deficit | ( | ( | ||||||||||||
| Porch stockholders' deficit | ( | ( | ||||||||||||
| Noncontrolling interest related to the Reciprocal | ||||||||||||||
| Total stockholders' deficit | ( | ( | ||||||||||||
| Total liabilities and stockholders' deficit | $ | $ | ||||||||||||
______________________________________
(1)Porch Reciprocal Exchange (the “Reciprocal”) is a consolidated variable interest entity not owned by Porch Group, Inc. (see Note 3) .
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
PORCH GROUP, INC.
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)
(all numbers in thousands unless otherwise state, except per share data)
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Revenue | $ | $ | |||||||||||||||||||||
| Cost of revenue | |||||||||||||||||||||||
| Gross Profit | |||||||||||||||||||||||
| Selling and marketing | |||||||||||||||||||||||
| Product and technology | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Operating loss | ( | ( | |||||||||||||||||||||
| Other income (expense): | |||||||||||||||||||||||
| Interest expense | ( | ( | |||||||||||||||||||||
| Change in fair value of private warrant liability | ( | ( | |||||||||||||||||||||
| Change in fair value of derivatives | |||||||||||||||||||||||
| Gain on extinguishment of debt | |||||||||||||||||||||||
| Investment income and realized gains and losses, net of investment expenses | |||||||||||||||||||||||
| Other income, net | |||||||||||||||||||||||
| Total other income (expense) | |||||||||||||||||||||||
| Income (loss) before income taxes | ( | ||||||||||||||||||||||
| Income tax provision | ( | ( | |||||||||||||||||||||
| Net income (loss) | ( | ||||||||||||||||||||||
| Less: Net loss attributable to the Reciprocal | ( | ||||||||||||||||||||||
| Net income (loss) attributable to Porch | $ | $ | ( | ||||||||||||||||||||
| Net income (loss) attributable to Porch per share - basic | $ | $ | ( | ||||||||||||||||||||
| Net income (loss) attributable to Porch per share - diluted | $ | $ | ( | ||||||||||||||||||||
| Comprehensive Income | |||||||||||||||||||||||
| Net income (loss) | $ | $ | ( | ||||||||||||||||||||
| Other comprehensive income (loss): | |||||||||||||||||||||||
| Change in net unrealized loss, net of tax | ( | ||||||||||||||||||||||
| Comprehensive income (loss) | ( | ||||||||||||||||||||||
| Less: Comprehensive loss attributable to the Reciprocal | ( | ||||||||||||||||||||||
| Comprehensive income (loss) attributable to Porch | $ | $ | ( | ||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
PORCH GROUP, INC.
Condensed Consolidated Statements of Stockholders’ Equity (Deficit) and Noncontrolling Interest (Unaudited)
(all numbers in thousands unless otherwise stated, except per share data)
| Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Porch Stockholders' Equity (Deficit) | Noncontrolling Interest Related to the Reciprocal | Total Stockholders' Equity (Deficit) | |||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||
| Balances as of December 31, 2024 | (1) | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Formation of Reciprocal | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Exercise of stock options | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Income tax withholdings | ( | — | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Balances as of March 31, 2025 | (2) | $ | $ | $ | $ | ( | $ | ( | ( | ||||||||||||||||||||||||||||||||||||||
| Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Porch Stockholders' Equity (Deficit) | Noncontrolling Interest Related to the Reciprocal | Total Stockholders' Equity (Deficit) | |||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||
| Balances as of December 31, 2023 | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss, net of tax | — | — | — | ( | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Exercise of stock options | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Income tax withholdings | ( | — | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Balances as of March 31, 2024 | $ | $ | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||||||||||||
______________________________________
(1)Excludes 18.3 million shares of common stock held by Homeowners of America (“HOA”) as of December 31, 2024.
(2)Excludes 18.3 million shares of common stock held by the Reciprocal as of March 31, 2025 (following the distribution of such shares to the Reciprocal in connection with the sale of HOA to the Reciproca l.
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6
PORCH GROUP, INC.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(all numbers in thousands)
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income (loss) | $ | $ | ( | ||||||||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities | |||||||||||
| Depreciation and amortization | |||||||||||
| Provision for doubtful accounts | |||||||||||
| Gain on extinguishment of debt | ( | ||||||||||
| Loss on divestiture of business | |||||||||||
| Change in fair value of private warrant liability | |||||||||||
| Change in fair value of contingent consideration | ( | ||||||||||
| Change in fair value of derivatives | ( | ( | |||||||||
| Stock-based compensation | |||||||||||
| Non-cash interest expense | |||||||||||
| Gain on settlement of contingent consideration | ( | ||||||||||
| Other operating activities | ( | ( | |||||||||
| Change in operating assets and liabilities, net of acquisitions and divestitures | |||||||||||
| Accounts receivable | ( | ( | |||||||||
| Reinsurance balance due | ( | ||||||||||
| Deferred policy acquisition costs | |||||||||||
| Accounts payable | ( | ||||||||||
| Accrued expenses and other current liabilities | |||||||||||
| Losses and loss adjustment expense reserves | |||||||||||
| Other insurance liabilities, current | ( | ||||||||||
| Deferred revenue | ( | ( | |||||||||
| Refundable customer deposits | ( | ||||||||||
| Other assets and liabilities, net | ( | ||||||||||
| Net cash provided by (used in) operating activities | ( | ||||||||||
| Cash flows from investing activities: | |||||||||||
| Purchases of property and equipment | ( | ( | |||||||||
| Capitalized internal use software development costs | ( | ( | |||||||||
| Purchases of short-term and long-term investments | ( | ||||||||||
| Maturities, sales of short-term and long-term investments | |||||||||||
| Net cash provided by (used in) investing activities | ( | ||||||||||
| Cash flows from financing activities: | |||||||||||
| Repayments of principal | ( | ( | |||||||||
| Other financing activities | ( | ||||||||||
| Net cash used in financing activities | ( | ( | |||||||||
| Net change in cash, cash equivalents, and restricted cash and cash equivalents | $ | ( | $ | ||||||||
| Cash, cash equivalents, and restricted cash and cash equivalents at beginning of period | |||||||||||
| Cash, cash equivalents, and restricted cash and cash equivalents at end of period | $ | $ | |||||||||
| Supplemental schedule of non-cash investing and financing activities | |||||||||||
| Non-cash reduction of convertible notes | $ | $ | |||||||||
| Non-cash reduction in advance funding arrangement obligations | $ | $ | |||||||||
| Supplemental disclosures | |||||||||||
| Cash paid for interest | $ | $ | |||||||||
| Income taxes paid | $ | $ | |||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7
PORCH GROUP, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(all numbers in thousands, except share amounts and unless otherwise stated)
Note 1. Description of Business and Summary of Significant Accounting Policies
Description of Business
Porch Group, Inc., (“Porch Group,” “Porch,” the “Company,” “we,” “our,” “us”) is a new kind of homeowners insurance company. We differentiate and look to win in the massive and growing homeowners insurance opportunity by:
•Utilizing our unique property data to enhance our property risk assessment creates advantages in pricing and underwriting decisions for the policyholder-owned Porch Reciprocal Exchange (the “Reciprocal”) we manage. This enables the Reciprocal to attract lower-risk properties and appropriately price higher-risks, in turn supporting growth of profitable premium and thus more management fees for our insurance services business.
•Aiming to be the best homeowners insurance partner for homebuyers by helping with more than just insurance. We provide moving services and offer both a full moving concierge and the Porch app. We help make moving easier and assist with important services such as insurance, moving, warranty, security, TV/Internet, and more.
•Providing more protection for the home by including home warranty alongside homeowners insurance. We are able to fill the gaps of protection for consumers, minimize surprises, and deepen our relationships and value proposition.
As a leader in the home services software-as-a-service (“SaaS”) space, we’ve built deep relationships with approximately 24 thousand companies who utilize our software. These companies are from industries key to the home-buying transaction, such as home inspectors, title companies, and mortgage companies. These relationships provide us with early insights to United States (“U.S.”) homebuyers and properties.
Beginning in January 2025, we operate under four two reportable segments. See Note 2, Segment Information, for additional information on our reportable segments.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements include the accounts of Porch Group, Inc. and its subsidiaries as well as the Reciprocal, a variable interest entity (“VIE”) in which the Company is considered the primary beneficiary. The Reciprocal is managed, but not owned by Porch Group, and is consolidated at this time as a VIE for reporting purposes. All significant intercompany balances and transactions have been eliminated in consolidation. Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, these unaudited condensed consolidated financial statements and notes should be read in conjunction with the Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on February 25, 2025. The information as of December 31, 2024, included in the unaudited condensed consolidated balance sheets was derived from our audited consolidated financial statements. Certain prior period amounts have been reclassified to conform to the current year’s presentation.
In 2025, we elected to begin presenting a subtotal for gross profit on the unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). Accordingly, we reclassified into cost of revenue certain amortization expense related to software and acquired intangible assets that are directly related to revenue generation. The related amortization expense was presented in “product and technology” and “general and administrative” in our historical financial statements. Prior period amounts have been reclassified to conform to the current year’s presentation.
The unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q (this “Quarterly Report”) were prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments (all of which are of a normal recurring nature) considered necessary to present fairly our financial position, results of operations, comprehensive loss, stockholders’ equity (deficit), and cash flows for the periods and dates presented. The results of operations for the three months ended March 31, 2025, are not necessarily indicative of the results that may be expected for the year ending December 31, 2025, or any other interim period or future
8
year due to various factors such as management estimates and the seasonal nature of some portions of our insurance business.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported of certain assets and liabilities, disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses. Actual results may differ from those estimates and assumptions.
Concentrations
Financial instruments which potentially subject us to credit risk consist principally of cash, money market accounts on deposit with financial institutions, money market funds, certificates of deposit and fixed-maturity securities, as well as receivable balances in the course of collection.
The Reciprocal has exposure and remains liable in the event of insolvency of its reinsurers. The Reciprocal and its reinsurance intermediary regularly assess the credit quality and ratings of its reinsurer counterparties. For our third-party quota share program which covers all business in all states and is placed at 27.5 % of P&C losses, as of March 31, 2025, two reinsurers represented more than 10 57 % in the aggregate, of the total reinsurance balance due line item on the unaudited Condensed Consolidated Balance Sheets. There are currently no material receivables on the unaudited Condensed Consolidated Balance Sheets related to the Reciprocal’s excess of loss catastrophe program. See Note 12, Reinsurance for the Reciprocal, for more information.
Approximately 57 % of consolidated revenue in the three months ended March 31, 2025, was derived from customers in Texas and could be adversely affected by economic conditions, an increase in competition, local weather events, or environmental impacts and changes.
Substantially all revenues in the Insurance Services segment are related to the Reciprocal Segment.
No individual customer represented more than 10% of total consolidated revenue for the three months ended March 31, 2025 or 2024. As of March 31, 2025, and December 31, 2024, no individual customer accounted for 10% or more of total accounts receivable, net, on the unaudited Condensed Consolidated Balance Sheets.
As of March 31, 2025, we held approximately $151.2 million of cash with four U.S. commercial banks.
Cash, Cash Equivalents and Restricted Cash and Cash Equivalents
| March 31, 2025 | December 31, 2024 | |||||||||||||
| Held as collateral by captive reinsurer for benefit of the Reciprocal | (1) | $ | $ | |||||||||||
| Pledged to state departments of insurance | (2) | |||||||||||||
| Held for payment of possible warranty claims | (3) | |||||||||||||
| Other | ||||||||||||||
| Restricted cash and cash equivalents | $ | $ | ||||||||||||
| Restricted cash and cash equivalents of the Reciprocal: | ||||||||||||||
| Pledged to state departments of insurance | (2) | $ | $ | |||||||||||
| Restricted cash and cash equivalents | $ | $ | ||||||||||||
______________________________________
(1)Held by our captive reinsurance business as collateral for the benefit of the Reciprocal.
(2)Pledged to the Department of Insurance in certain states as a condition of our Certificate of Authority for the purpose of meeting obligations to policyholders and creditors.
(3)Required under regulatory guidelines in 23 states and 23 states as of March 31, 2025 and December 31, 2024, respectively.
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The reconciliation of cash, cash equivalents, and restricted cash and cash equivalents to amounts presented in the unaudited Condensed Consolidated Statements of Cash Flows are as follows:
| March 31, 2025 | December 31, 2024 | |||||||||||||
| Cash and cash equivalents of Porch | (1) | $ | $ | |||||||||||
| Restricted cash and cash equivalents of Porch | ||||||||||||||
| Cash and cash equivalents of the Reciprocal | ||||||||||||||
| Restricted cash and cash equivalents of the Reciprocal | ||||||||||||||
| Total cash, cash equivalents, and restricted cash and cash equivalents | $ | $ | ||||||||||||
______________________________________
(1)Balance as of December 31, 2024, includes $111.1 million cash and cash equivalents at HOA.
Accounts Receivable
Goodwill
We test goodwill for impairment for each reporting unit on an annual basis or more frequently when events or changes in circumstances indicate the fair value of a reporting unit is below its carrying value. We have the option to perform a qualitative assessment to determine if an impairment is more likely than not to have occurred. If we can support the conclusion that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, we would not need to perform a quantitative impairment test. If we cannot support such a conclusion or we do not elect to perform the qualitative assessment, then we perform a quantitative assessment. If a quantitative goodwill impairment assessment is performed, we utilize a combination of market and income valuation approaches. If the fair value of a reporting unit is less than its carrying value, an impairment loss is recorded to the extent that the fair value of the reporting unit is less than its carrying value. We have selected October 1 as the date to perform annual impairment testing.
Determining the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions to evaluate the impact of operating and macroeconomic changes on each reporting unit. The fair value of each reporting unit was estimated using a combination of income and market valuation approaches using publicly traded company multiples in similar businesses. Such fair value measurements are based predominately on Level 3 inputs (as defined below). This analysis requires significant judgments including an estimate of future cash flows which is dependent on internally developed forecasts, estimation of the long-term rate of growth for our business, estimation of the useful life over which cash flows will occur, and determination of our weighted average cost of capital, which is risk-adjusted to reflect the specific risk profile of the reporting unit being tested.
Impairment of Long-Lived Assets
We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable. Events that trigger a test for recoverability include a significant decrease in the market price for a long-lived asset, significant negative industry or economic trends, an accumulation of costs significantly in excess of the amount originally expected for the acquisition, a current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset, or a sustained decrease in share price. When a triggering event occurs, a test for recoverability is performed, comparing projected undiscounted future cash flows to the carrying value of the asset group. If the test for recoverability identifies a possible impairment, the asset group’s fair value is measured relying primarily on an income approach. An impairment charge is recognized for the amount by which the carrying value of the asset group exceeds its estimated fair value. Management identifies the asset group that includes the potentially impaired long-lived asset, at the lowest level at which there are separate, identifiable cash flows.
We estimate the fair value of an asset group using the income approach. Such fair value measurements are based predominately on Level 3 inputs. Inherent in our development of cash flow projections are assumptions and estimates derived from a review of our operating results, business plan forecasts, expected growth rates, and cost of capital, similar to
10
those a market participant would use to assess fair value. We also make certain assumptions about future economic conditions and other data. Many of these factors used in assessing fair value are outside the control of management and these assumptions and estimates may change in future periods.
Deferred Policy Acquisition Costs
Expected Credit Losses
We regularly review our individual investment securities for factors that may indicate that a decline in fair value of an investment has resulted from an expected credit loss, including:
•the financial condition and near-term prospects of the issuer, including any specific events that may affect its operations or earnings;
•the extent to which the market value of the security is below its cost or amortized cost;
•general market conditions and industry or sector specific factors;
•nonpayment by the issuer of its contractually obligated interest and principal payments; and
•our intent and ability to hold the investment for a period of time sufficient to allow for the recovery of costs.
Fair Value of Financial Instruments
Fair value principles require disclosures regarding the manner in which fair value is determined for assets and liabilities and establishes a three-tiered fair value hierarchy into which these assets and liabilities must be grouped, based upon significant levels of inputs as follows:
Level 1 Observable inputs, such as quoted prices (unadjusted) in active markets for identical assets or liabilities at the measurement date;
Level 2 Observable inputs, other than Level 1 prices, such as quoted prices in active markets for similar assets and liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and
Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The lowest level of significant input determines the placement of the entire fair value measurement in the hierarchy. Management’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability.
Other Insurance Liabilities, Current
The following table details the components of other insurance liabilities, current, on the unaudited Condensed Consolidated Balance Sheets. Other insurance liabilities were held by the Reciprocal as of March 31, 2025.
| March 31, 2025 | December 31, 2024 | ||||||||||
| Ceded reinsurance premiums payable | $ | $ | |||||||||
| Commissions payable, reinsurers and agents | |||||||||||
| Advance premiums | |||||||||||
| Funds held under reinsurance treaty | |||||||||||
| General and accrued expenses payable | |||||||||||
| Other insurance liabilities, current | $ | $ | |||||||||
11
Accounting Standards Not Yet Adopted
In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Updated (“ASU”) 2023-09, Improvements to Income Tax Disclosures, which requires disaggregated information about our effective tax rate reconciliation as well as information on income taxes paid. The new guidance will first be effective in our annual disclosures for the year ending December 31, 2025, and should be applied on a prospective basis with the option to apply retrospectively. Early adoption is permitted. We are in the process of assessing the impact of ASU 2023-09 on our disclosures.
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures, which requires that public entities disclose, on an annual and interim basis, disaggregated information about specific expense categories (including employee compensation, depreciation, and amortization) presented on the face of the income statement. The guidance will first be effective in our annual disclosures for the year ending December 31, 2027. Early adoption is permitted. We are in the process of assessing the impact of ASU 2024-03 on our disclosures.
In November 2024, the FASB issued ASU 2024-04, Debt - Debt with Conversion and Other Options, which clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. The new guidance will first be effective in our annual disclosures for the year ending December 31, 2026, and can be applied either prospectively or retrospectively. Early adoption is permitted. We are in the process of assessing the impact of ASU 2024-04 on our consolidated financial statements and related disclosures.
Note 2. Segment Information
Reportable segments were identified based on how the chief operating decision-maker (“CODM”) manages the business, makes operating decisions, and evaluates operating and financial performance. Our chief executive officer acts as the CODM and reviews financial and operational information for our reportable segments. Operating segments are components of an enterprise for which separate discrete financial information is available and operational results are regularly evaluated by the CODM for the purposes of making decisions regarding resource allocation and assessing performance.
Beginning in January 2025, there was a change in internal reporting provided to the CODM and a change in the lens through which the CODM makes decisions and allocates resources. As a result, our reportable segments, that are also our operating segments, changed from Vertical Software and Insurance prior to 2025 to Insurance Services, Software & Data, Consumer Services, and the Reciprocal Segment. Management references the Insurance Services, Software & Data, and Consumer Services segments, together with corporate expenses, as “Porch Shareholder Interest.” Our fourth segment, the Reciprocal Segment, is managed, but not owned, by Porch Group and is consolidated for reporting purposes.
The changes in reporting were driven by how the CODM views our target customer (e.g. primarily total premium in Insurance Services, primarily businesses in Software & Data, and primarily direct consumers in Consumer Services) and by the shift to a reciprocal exchange model where we are the manager rather than the owner. In connection with the formation of the Reciprocal on January 1, 2025, we sold our legacy homeowners insurance carrier, Homeowners of America (“HOA”), to the Reciprocal, shifting all premium and policyholders to the member-owned entity. As of January 1, 2025 the Reciprocal pays all claim costs, all reinsurance costs, and all agency commissions in addition to management fees to Porch. The Reciprocal is a VIE and represents a noncontrolling interest as discussed in Note 3.
Our Insurance Services segment manages and operates the Reciprocal, providing services related, but not limited, to underwriting, policy renewal, risk management, insurance portfolio management, financial management, and setting investment guidelines in exchange for commissions and fees. The Insurance Services segment also holds the surplus notes issued by the Reciprocal and includes our captive reinsurer which provides non-catastrophic weather reinsurance support to improve capital efficiency for the Reciprocal.
Our Software & Data segment provides, on a subscription and predominantly transactional basis, software to inspection, mortgage, title, and roofing companies and data products to insurance and other types of companies. This segment includes several strategically important businesses, including home inspection software, title and mortgage software, Home Factors (our unique property insights product), and mover marketing products.
Our Consumer Services segment provides warranty products through Porch Warranty and other warranty brands to protect the whole home. Our Consumer Services segment also provides moving related services such as movers, TV/Internet, and security.
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The Reciprocal Segment includes HOA and its parent, Porch Reciprocal Exchange, which is a member-owned reciprocal exchange, owned by policyholder members rather than Porch Group, Inc. The Reciprocal Segment provides consumers with insurance to protect their homes, earning revenue primarily through premiums collected on policies.
Our segment operating and financial performance measures are gross profit and Adjusted EBITDA (Loss) for the Insurance Services, Software & Data, and Consumer Services segments. Adjusted EBITDA (Loss) is defined as gross profit less the following expenses associated with each segment: selling and marketing, product and technology, and general and administrative. Adjusted EBITDA (Loss) also excludes non-cash items or items that management does not consider reflective of ongoing core operations, such as depreciation, amortization, and stock-based compensation expense. The CODM uses gross profit and Adjusted EBITDA (Loss) to allocate resources for these segments (including employees, property, and financial or capital resources) predominately in the annual budget and forecasting process. Both of these measures are also used to provide guidance to investors.
Our segment operating financial performance measures for the Reciprocal Segment are gross profit and Net Income (Loss). The CODM uses Net Income (Loss) instead of Adjusted EBITDA (Loss) for this segment because he reviews interest expense on the surplus note created as part of the formation of the Reciprocal. Adjusted EBITDA (Loss), by definition, excludes interest expense.
As a result of the formation of the Reciprocal, beginning in 2025, we will allocate certain expenses to the Insurance Services segment that were historically considered Corporate costs. This allocation is meant to account for fees paid through Corporate shared services on behalf of the Insurance Services segment and related to its management of the Reciprocal. Because this change occurred as a direct result of the formation of the Reciprocal, the allocation is not recast to prior periods.
The following tables present revenue and significant expenses by segment that are regularly provided to the CODM. Other segment items that the CODM does not consider in assessing segment performance are presented to reconcile to each segment’s measure of profit or loss.
The “Corporate” column includes shared expenses that are not allocated to the reportable segments. These consist primarily of selling and marketing, certain product and technology, accounting, human resources, legal, general and administrative, and other income, expenses, gain and losses.
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| Three Months Ended March 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||
| Insurance Services | Software & Data | Consumer Services | Corporate | Reciprocal Segment | Eliminations | Total | ||||||||||||||||||||||||||||||||||||||
| Revenue | (1) | ( | ||||||||||||||||||||||||||||||||||||||||||
| Cost of revenue | ( | |||||||||||||||||||||||||||||||||||||||||||
| Gross Profit | ( | |||||||||||||||||||||||||||||||||||||||||||
| Significant expenses: | ||||||||||||||||||||||||||||||||||||||||||||
| Selling and marketing | ( | |||||||||||||||||||||||||||||||||||||||||||
| Product and technology | ||||||||||||||||||||||||||||||||||||||||||||
| General and administrative | ( | |||||||||||||||||||||||||||||||||||||||||||
| Other segment items: | ||||||||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | (2) | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | (2) | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||
| Interest income on intercompany surplus notes | ( | |||||||||||||||||||||||||||||||||||||||||||
| Change in fair value of contingent consideration | ||||||||||||||||||||||||||||||||||||||||||||
| Restructuring costs | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||
| Other gains and losses | (3) | ( | ||||||||||||||||||||||||||||||||||||||||||
| Acquisition and other transaction costs | ( | |||||||||||||||||||||||||||||||||||||||||||
| Adjusted EBITDA (Loss) | $ | $ | $ | ( | ||||||||||||||||||||||||||||||||||||||||
| Other income (expense): | ||||||||||||||||||||||||||||||||||||||||||||
| Interest expense | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Change in fair value of private warrant liability | ( | |||||||||||||||||||||||||||||||||||||||||||
| Change in fair value of derivatives | ||||||||||||||||||||||||||||||||||||||||||||
| Investment income and realized gains and losses, net of investment expenses | ||||||||||||||||||||||||||||||||||||||||||||
| Other income | ||||||||||||||||||||||||||||||||||||||||||||
| Interest income (expense) on intercompany surplus notes | ( | |||||||||||||||||||||||||||||||||||||||||||
| Income tax expense (provision) | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | $ | ( | ||||||||||||||||||||||||||||||||||||||||||
| Net loss attributable to the Reciprocal | ( | |||||||||||||||||||||||||||||||||||||||||||
| Net income attributable to Porch | $ | |||||||||||||||||||||||||||||||||||||||||||
______________________________________
(1)Revenue includes intersegment revenues of $45.4 million in Insurance Services (which includes fees and commissions paid by the Reciprocal to Insurance Services), $2.0 million in Software & Data, and $(25.6 ) million in revenue offsets in the Reciprocal Segment.
(2)Depreciation, amortization, and stock-based compensation are included in Cost of revenue, Selling and marketing, Product and technology, and General and administrative lines above and are excluded from Adjusted EBITDA (Loss).
(3)Other gains and losses primarily includes investment income and some recoveries of reinsurance losses.
14
| Three Months Ended March 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||
| Insurance Services | Software & Data | Consumer Services | Corporate | Reciprocal Segment | Eliminations | Total | ||||||||||||||||||||||||||||||||||||||
| Revenue | (1) | ( | ||||||||||||||||||||||||||||||||||||||||||
| Cost of revenue | ( | |||||||||||||||||||||||||||||||||||||||||||
| Gross Profit | ( | |||||||||||||||||||||||||||||||||||||||||||
| Significant expenses: | ||||||||||||||||||||||||||||||||||||||||||||
| Selling and marketing | ( | |||||||||||||||||||||||||||||||||||||||||||
| Product and technology | ||||||||||||||||||||||||||||||||||||||||||||
| General and administrative | ||||||||||||||||||||||||||||||||||||||||||||
| Other segment items: | ||||||||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | (2) | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | (2) | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||
| Change in fair value of contingent consideration | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Restructuring costs | ( | ( | — | |||||||||||||||||||||||||||||||||||||||||
| Other gains and losses | (3) | ( | — | |||||||||||||||||||||||||||||||||||||||||
| Adjusted EBITDA (Loss) | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||
| Other income (expense): | ||||||||||||||||||||||||||||||||||||||||||||
| Interest expense | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Change in fair value of private warrant liability | ( | |||||||||||||||||||||||||||||||||||||||||||
| Change in fair value of derivatives | ||||||||||||||||||||||||||||||||||||||||||||
| Gain on extinguishment of debt | ||||||||||||||||||||||||||||||||||||||||||||
| Investment income and realized gains and losses, net of investment expenses | ||||||||||||||||||||||||||||||||||||||||||||
| Other income (expense) | ||||||||||||||||||||||||||||||||||||||||||||
| Income tax benefit (expense) | ( | |||||||||||||||||||||||||||||||||||||||||||
| Net loss | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||||||||
______________________________________
(1)Revenue includes intersegment revenues of $44.1 million in Insurance Services, $0.3 million in Software & Data, and $(27.6 ) million revenue offsets in the Reciprocal Segment.
(2)Depreciation, amortization, and stock-based compensation are included in Cost of revenue, Selling and marketing, Product and technology, and General and administrative lines above and are excluded from Adjusted EBITDA (Loss).
(3)Other gains and losses primarily includes investment income and some recoveries of reinsurance losses.
15
The following table presents a reconciliation of segment profitability measures to consolidated net income (loss).
| Three Months Ended March 31, | ||||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||
| Segment Profitability Measures: | ||||||||||||||||||||||||||
| Insurance Services Adjusted EBITDA (Loss) | $ | $ | ||||||||||||||||||||||||
| Software & Data Adjusted EBITDA (Loss) | ||||||||||||||||||||||||||
| Consumer Services Adjusted EBITDA (Loss) | ( | |||||||||||||||||||||||||
| Reciprocal Segment Net Income (loss) | ( | ( | ||||||||||||||||||||||||
| Subtotal | ( | |||||||||||||||||||||||||
| Reconciling items: | ||||||||||||||||||||||||||
| Corporate expenses | ( | ( | ||||||||||||||||||||||||
| Interest expense | ( | ( | ||||||||||||||||||||||||
| Income tax provision | ( | ( | ||||||||||||||||||||||||
| Depreciation and amortization | ( | ( | ||||||||||||||||||||||||
| Gain (loss) on extinguishment of debt | ||||||||||||||||||||||||||
| Other income, net | ||||||||||||||||||||||||||
| Stock-based compensation expense | ( | ( | ||||||||||||||||||||||||
| Mark-to-market gains | ||||||||||||||||||||||||||
| Restructuring costs | (1) | ( | ( | |||||||||||||||||||||||
| Acquisition and other transaction costs | ( | ( | ||||||||||||||||||||||||
| Net income (loss) | $ | $ | ( | |||||||||||||||||||||||
(1) Primarily consists of cost related to forming a reciprocal exchange.
The CODM does not review assets on a segment basis other than the assets of the Reciprocal Segment that are presented on the unaudited Condensed Consolidated Balance Sheets as required for VIE disclosure.
All of our revenue is generated in the United States except for an immaterial amount. As of March 31, 2025, and December 31, 2024, we did not have material assets located outside of the United States.
Note 3. Variable Interest Entity
A VIE is a legal entity that is structured such that equity investors lack the ability to make significant decisions relating to the entity's operations through voting rights, do not substantively participate in the gains and losses of the entity, or the entity does not have sufficient equity at risk to finance its activities without additional subordinated financial support. We consolidate VIEs in which we are deemed the primary beneficiary. The primary beneficiary is the entity that has both (1) the power to direct the activities of the VIE that most significantly affect that entity's economic performance and (2) the obligation to absorb losses or the right to receive benefits that could be potentially significant to the VIE.
On January 1, 2025, we completed the formation of the Reciprocal, a Texas-domiciled reciprocal insurance exchange. In connection with the formation, we completed the sale of our legacy homeowners insurance carrier, HOA, to the Reciprocal. The purchase price was equal to HOA’s estimated surplus at December 31, 2024, of approximately $105 million, less $58 million, which is the $49 million principal plus $9 million of unpaid interest under a surplus note issued by HOA to Porch Group, Inc. in 2023. The completion of the sale brought the total surplus notes held by Porch to approximately $106 million. Following the sale, HOA became a wholly owned subsidiary of the Reciprocal.
We formed a management company that acts as attorney-in-fact (“AIF”) for the Reciprocal. The Reciprocal owns HOA and writes homeowners insurance policies that are sold to its subscribers. The establishment of the AIF was completed in connection with the formation of the Reciprocal on January 1, 2025.
We consolidate the Reciprocal since (1) we have provided surplus notes to the Reciprocal and would absorb any expected losses that could potentially be significant to the Reciprocal, including through the interest associated with $106 million of
16
surplus notes due to Porch from the Reciprocal and (2) the AIF manages the business operations of the Reciprocal and therefore has the power to direct the activities that most significantly impact the economic performance of the Reciprocal. The Reciprocal’s anticipated economic performance is driven by its underwriting and investment results. The AIF receives a management fee for the services provided to the Reciprocal. The management fee revenues are based upon all premiums written or assumed by the Reciprocal (including HOA). The AIF determines the management fee rate to be paid by the Reciprocal.
The assets of the Reciprocal can be used only to settle the obligations of the Reciprocal for which creditors and other beneficial owners have no recourse to Porch. We have no obligation related to any underwriting and/or investment losses experienced by the Reciprocal. As of March 31, 2025, there were $106 million of surplus notes outstanding. The effects of the transactions between Porch and the Reciprocal are eliminated in consolidation to derive consolidated net income (loss). However, the management fee income earned by the AIF is reported in net income (loss) attributable to Porch and is included in basic and diluted earnings per share.
Note 4. Revenue
Disaggregation of Revenue
The following table provides detail of total revenue. Transactional revenue consists of revenue recognized from non-recurring sales or services that do not generate ongoing revenue and primarily includes revenue generated from moving services. Recurring revenue refers to revenue streams that are more predictable and generate revenue from customers on an ongoing basis, including revenue from insurance services management, inspection software, title insurance software, mortgage software, warranty products, and marketing services. Insurance carrier revenue consists of revenue earned through premiums collected on policies, policy fees, and commissions by the Reciprocal.
| Three Months Ended March 31, | ||||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||
| Transactional | $ | $ | ||||||||||||||||||||||||
| Recurring | (1) (2) | |||||||||||||||||||||||||
| Intercompany revenue | ( | ( | ||||||||||||||||||||||||
| Insurance carrier | (2) | |||||||||||||||||||||||||
| Intercompany revenue | ( | ( | ||||||||||||||||||||||||
Total revenue | $ | $ | ||||||||||||||||||||||||
______________________________________
(1)Revenue recognized during the three months ended March 31, 2025 and 2024, includes revenue of $8.2 million and $9.5 million, respectively, which is accounted for in accordance with ASC Topic 460, Guarantees, separately from revenue from contracts with customers.
(2)Revenue recognized during the three months ended March 31, 2025 and 2024, includes revenue of $65.6 million and $73.9 million, respectively, which is accounted for in accordance with ASC Topic 944, Financial Services-Insurance, separately from the revenue from contracts with customers.
Disclosures Related to Contracts with Customers
Timing may differ between the satisfaction of performance obligations and the invoicing and collection of amounts related to contracts with customers. Liabilities are recorded for amounts that are collected in advance of the satisfaction of performance obligations. To the extent a contract exists, as defined by ASC Topic 606, Revenue from Contracts with Customers, (“ASC 606”) these liabilities are classified as deferred revenue. To the extent that a contract does not exist, as defined by ASC 606, these liabilities are classified as refundable customer deposits.
17
Insurance Commissions Receivable
A summary of the activity impacting the contract assets during the three months ended March 31, 2025, is presented below:
| Balance at December 31, 2024 | $ | ||||
| Estimated lifetime value of commissions on insurance policies sold by carriers | |||||
| Cash receipts | ( | ||||
| Balance at March 31, 2025 | $ | ||||
As of March 31, 2025, and December 31, 2024, $0.4 million and $0.2 million, respectively, of contract assets were expected to be collected within the immediately following 12 months and therefore were included in accounts receivable, net, on the unaudited Condensed Consolidated Balance Sheets. The remaining $1.5 million and $1.2 million of contract assets as of March 31, 2025, and December 31, 2024, respectively, are expected to be collected after the immediately following 12 months and were included in other assets on the unaudited Condensed Consolidated Balance Sheets.
Deferred Revenue
A summary of the activity impacting Software & Data segment deferred revenue balances during the three months ended March 31, 2025, is presented below:
| Balance at December 31, 2024 | $ | ||||
| Revenue recognized | ( | ||||
| Additional amounts deferred | |||||
| Balance at March 31, 2025 | $ | ||||
Revenue recognized for performance obligations satisfied during the three month ended March 31, 2025, includes $3.4 million that was included in the deferred revenue balances as of December 31, 2024.
Deferred revenue on the unaudited condensed consolidated balance sheet as of March 31, 2025, and December 31, 2024, includes $216.8 million and $242.6 million, respectively, of deferred revenue related to the Reciprocal Segment. The portion of insurance premiums related to the unexpired term of policies in force as of the end of the reporting period and to be earned over the remaining term of these policies is deferred and reported as deferred revenue.
Remaining Performance Obligations
The amount of the transaction price allocated to performance obligations to be satisfied at a later date, which is not recorded in the unaudited condensed consolidated balance sheets, is immaterial as of March 31, 2025, and December 31, 2024.
We have applied the practical expedients not to present unsatisfied performance obligations for (i) contracts with an original expected length of one year or less, (ii) contracts with variable consideration that is allocated entirely to unsatisfied performance obligations or to a wholly unsatisfied promise accounted for under the series guidance, and (iii) contracts for which we recognize revenue at the amount which it has the right to invoice for services performed.
Warranty Revenue and Related Balance Sheet Disclosures
We recognize an asset for the incremental costs of obtaining a contract with a customer if we expect the benefit of those costs to be longer than one year. As of March 31, 2025 and December 31, 2024, we had $0.2 million and $0.3 million, respectively, of capitalized costs in prepaid expenses and other current assets. As of March 31, 2025 and December 31, 2024, we had $0.8 million and $1.0 million, respectively, in other assets on the Condensed Consolidated Balance Sheets.
Payments received in advance of warranty services provided are included in refundable customer deposits or deferred revenue based upon the cancellation and refund provisions within the respective agreement. The following table provides balances as of the dates shown.
| March 31, 2025 | December 31, 2024 | |||||||||||||
| Refundable customer deposits | $ | $ | ||||||||||||
| Deferred revenue | $ | $ | ||||||||||||
| Non-current deferred revenue | (1) | $ | $ | |||||||||||
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____________________________________
(1)Non-current deferred revenue is included in other liabilities in the unaudited Condensed Consolidated Balance Sheets.
Note 5. Investments
The following table summarizes investment income and realized gains and losses on investments during the periods presented.
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Investment income, net of investment expenses | $ | $ | |||||||||||||||||||||
| Realized gains on investments | |||||||||||||||||||||||
| Realized losses on investments | ( | ( | |||||||||||||||||||||
| Investment income and realized gains and losses, net of investment expenses | $ | $ | |||||||||||||||||||||
Investments Held by Porch Group
The following tables summarize the amortized cost, fair value, and unrealized gains and losses of investment securities.
| March 31, 2025 | ||||||||||||||||||||||||||
| Amortized Cost | Gross Unrealized | Fair Value | ||||||||||||||||||||||||
| Gains | Losses | |||||||||||||||||||||||||
| U.S. Treasuries | $ | $ | $ | $ | ||||||||||||||||||||||
| Obligations of states, municipalities and political subdivisions | ||||||||||||||||||||||||||
| Corporate bonds | ||||||||||||||||||||||||||
| Residential and commercial mortgage-backed securities | ||||||||||||||||||||||||||
| Other loan-backed and structured securities | ||||||||||||||||||||||||||
| Total investment securities | (1) | $ | $ | $ | $ | |||||||||||||||||||||
____________________________________
(1)Represents total investment securities held by our captive reinsurance business as collateral for the benefit of HOA.
| December 31, 2024 | |||||||||||||||||||||||
| Amortized Cost | Gross Unrealized | Fair Value | |||||||||||||||||||||
| Gains | Losses | ||||||||||||||||||||||
| U.S. Treasuries | $ | $ | $ | ( | $ | ||||||||||||||||||
| Obligations of states, municipalities and political subdivisions | ( | ||||||||||||||||||||||
| Corporate bonds | ( | ||||||||||||||||||||||
| Residential and commercial mortgage-backed securities | ( | ||||||||||||||||||||||
| Other loan-backed and structured securities | ( | ||||||||||||||||||||||
| Total investment securities | $ | $ | $ | ( | $ | ||||||||||||||||||
19
The amortized cost and fair value of securities held by our captive reinsurance business at March 31, 2025, by contractual maturity, are shown in the following table. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
| March 31, 2025 | ||||||||||||||
| Remaining Time to Maturity | Amortized Cost | Fair Value | ||||||||||||
| Due in one year or less | $ | $ | ||||||||||||
| Due after one year through five years | ||||||||||||||
| Due after five years through ten years | ||||||||||||||
| Due after ten years | ||||||||||||||
| Residential and commercial mortgage-backed securities | ||||||||||||||
| Other loan-backed and structured securities | ||||||||||||||
| Total | (1) | $ | $ | |||||||||||
____________________________________
(1)Represents total investment securities held by our captive reinsurance business as collateral for the benefit of HOA.
Securities held by our captive reinsurance business with gross unrealized loss position, aggregated by investment category and length of time the individual securities have been in a continuous loss position, are as follows:
| Less Than Twelve Months | Twelve Months or Greater | Total | ||||||||||||||||||||||||||||||||||||
| As of March 31, 2025 | Gross Unrealized Loss | Fair Value | Gross Unrealized Loss | Fair Value | Gross Unrealized Loss | Fair Value | ||||||||||||||||||||||||||||||||
| U.S. Treasuries | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Obligations of states, municipalities and political subdivisions | ||||||||||||||||||||||||||||||||||||||
| Corporate bonds | ||||||||||||||||||||||||||||||||||||||
| Residential and commercial mortgage-backed securities | ||||||||||||||||||||||||||||||||||||||
| Other loan-backed and structured securities | ||||||||||||||||||||||||||||||||||||||
| Total securities | (1) | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
____________________________________
At March 31, 2025, there were four securities, held by our captive reinsurance business as collateral for the benefit of HOA, in an unrealized loss position. Of these securities, none had been in an unrealized loss position for 12 months or longer.
20
| Less Than Twelve Months | Twelve Months or Greater | Total | ||||||||||||||||||||||||||||||||||||
| As of December 31, 2024 | Gross Unrealized Loss | Fair Value | Gross Unrealized Loss | Fair Value | Gross Unrealized Loss | Fair Value | ||||||||||||||||||||||||||||||||
| U.S. Treasuries | $ | ( | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| Obligations of states, municipalities and political subdivisions | ( | ( | ( | |||||||||||||||||||||||||||||||||||
| Corporate bonds | ( | ( | ( | |||||||||||||||||||||||||||||||||||
| Residential and commercial mortgage-backed securities | ( | ( | ( | |||||||||||||||||||||||||||||||||||
| Other loan-backed and structured securities | ( | ( | ( | |||||||||||||||||||||||||||||||||||
| Total securities | $ | ( | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||
At December 31, 2024, there were 452 securities in an unrealized loss position.
Investments Held by the Reciprocal (Consolidated VIE)
The following table summarizes the amortized cost, fair value, and unrealized gains and losses of investment securities held by the Reciprocal.
| March 31, 2025 | |||||||||||||||||||||||
| Amortized Cost | Gross Unrealized | Fair Value | |||||||||||||||||||||
| Gains | Losses | ||||||||||||||||||||||
| U.S. Treasuries | $ | $ | $ | ( | $ | ||||||||||||||||||
| Obligations of states, municipalities and political subdivisions | ( | ||||||||||||||||||||||
| Corporate bonds | ( | ||||||||||||||||||||||
| Residential and commercial mortgage-backed securities | ( | ||||||||||||||||||||||
| Other loan-backed and structured securities | ( | ||||||||||||||||||||||
| Total investment securities held by the consolidated VIE | $ | $ | $ | ( | $ | ||||||||||||||||||
The amortized cost and fair value of securities held by the Reciprocal at March 31, 2025, by contractual maturity, are shown in the following table. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
| March 31, 2025 | ||||||||||||||
| Remaining Time to Maturity | Amortized Cost | Fair Value | ||||||||||||
| Due in one year or less | $ | $ | ||||||||||||
| Due after one year through five years | ||||||||||||||
| Due after five years through ten years | ||||||||||||||
| Due after ten years | ||||||||||||||
| Residential and commercial mortgage-backed securities | ||||||||||||||
| Other loan-backed and structured securities | ||||||||||||||
| Total | $ | $ | ||||||||||||
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Securities held by the Reciprocal with gross unrealized loss position, aggregated by investment category and length of time the individual securities have been in a continuous loss position, are as follows:
| Less Than Twelve Months | Twelve Months or Greater | Total | ||||||||||||||||||||||||||||||||||||
| As of March 31, 2025 | Gross Unrealized Loss | Fair Value | Gross Unrealized Loss | Fair Value | Gross Unrealized Loss | Fair Value | ||||||||||||||||||||||||||||||||
| U.S. Treasuries | $ | ( | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| Obligations of states, municipalities and political subdivisions | ( | ( | ( | |||||||||||||||||||||||||||||||||||
| Corporate bonds | ( | ( | ( | |||||||||||||||||||||||||||||||||||
| Residential and commercial mortgage-backed securities | ( | ( | ( | |||||||||||||||||||||||||||||||||||
| Other loan-backed and structured securities | ( | ( | ( | |||||||||||||||||||||||||||||||||||
| Total securities held by the consolidated VIE | $ | ( | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||
At March 31, 2025, there were 395 securities in an unrealized loss position held by the Reciprocal. Of these securities, 60 had been in an unrealized loss position for 12 months or longer as of March 31, 2025.
We believe there were no fundamental issues, such as credit losses or other factors, with respect to any of our available-for-sale securities. The unrealized losses on investments in fixed-maturity securities were caused primarily by interest rate changes. We expect that the securities will not be settled at a price less than par value of the investments. Because the declines in fair value are attributable to changes in interest rates or market conditions and not credit quality, and because we have the ability and intent to hold our available-for-sale investments until a market price recovery or maturity, we do not consider any of our investments to have any decline in fair value due to expected credit losses at March 31, 2025.
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Note 6. Fair Value
The following tables summarize the fair value measurements of assets and liabilities that are measured at fair value on a recurring basis.
| Fair Value Measurement as of March 31, 2025 | ||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total Fair Value | |||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||
| Money market mutual funds | $ | $ | $ | $ | ||||||||||||||||||||||
| Debt securities: | ||||||||||||||||||||||||||
| U.S. Treasuries | ||||||||||||||||||||||||||
| Obligations of states, municipalities and political subdivisions | ||||||||||||||||||||||||||
| Corporate bonds | ||||||||||||||||||||||||||
| Residential and commercial mortgage-backed securities | ||||||||||||||||||||||||||
| Other loan-backed and structured securities | ||||||||||||||||||||||||||
| Asset of Reciprocal (a consolidated variable interest entity): | ||||||||||||||||||||||||||
| Money market mutual funds | ||||||||||||||||||||||||||
| Debt securities: | ||||||||||||||||||||||||||
| U.S. Treasuries | ||||||||||||||||||||||||||
| Obligations of states, municipalities and political subdivisions | ||||||||||||||||||||||||||
| Corporate bonds | ||||||||||||||||||||||||||
| Residential and commercial mortgage-backed securities | ||||||||||||||||||||||||||
| Other loan-backed and structured securities | ||||||||||||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||
| Contingent consideration - business combinations | (1) | $ | $ | $ | $ | |||||||||||||||||||||
| Private warrant liability | (2) | |||||||||||||||||||||||||
| Embedded derivatives | (3) | |||||||||||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||||||||
______________________________________
(1)The liability for contingent considerations related to business combinations is included in other liabilities in the unaudited Condensed Consolidated Balance Sheets as of March 31, 2025.
(2)The private warranty liability is included in accrued expenses and other current liabilities in the unaudited Condensed Consolidated Balance Sheets as of March 31, 2025.
(3)The embedded derivatives liability is included in other liabilities in the unaudited Condensed Consolidated Balance Sheets as of March 31, 2025.
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| Fair Value Measurement as of December 31, 2024 | ||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total Fair Value | |||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||
| Money market mutual funds | $ | $ | $ | $ | ||||||||||||||||||||||
| Debt securities: | ||||||||||||||||||||||||||
| U.S. Treasuries | ||||||||||||||||||||||||||
| Obligations of states, municipalities and political subdivisions | ||||||||||||||||||||||||||
| Corporate bonds | ||||||||||||||||||||||||||
| Residential and commercial mortgage-backed securities | ||||||||||||||||||||||||||
| Other loan-backed and structured securities | ||||||||||||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||
| Contingent consideration - business combinations | (1) | $ | $ | $ | $ | |||||||||||||||||||||
| Private warrant liability | (2) | |||||||||||||||||||||||||
| Embedded derivatives | (3) | |||||||||||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||||||||
______________________________________
(1)The unaudited Condensed Consolidated Balance Sheets included less than $0.1 million in accrued expenses and other current liabilities and less than $0.1 million in other liabilities as of December 31, 2024, for contingent consideration related to business combinations.
(2)The private warranty liability is included in accrued expenses and other current liabilities in the unaudited Condensed Consolidated Balance Sheets as of December 31, 2024.
(3)The embedded derivatives liability is included in other liabilities in the unaudited Condensed Consolidated Balance Sheets as of December 31, 2024.
Financial Assets
Money market mutual funds are valued at the closing price reported by the fund sponsor from an actively traded exchange. As the funds are generally maintained at a net asset value which does not fluctuate, cost approximates fair value. These are included as a Level 1 measurement in the table above. The fair values for available-for-sale fixed-maturity securities are based upon prices provided by an independent pricing service. We have reviewed these prices for reasonableness and have not adjusted any prices received from the independent provider. Level 2 securities represent assets whose fair value is determined using observable market information such as previous day trade prices, quotes from less active markets or quoted prices of securities with similar characteristics. There were no transfers between Level 1 and Level 2.
Contingent Consideration – Business Combinations
As part of the acquisition of Floify, LLC (“Floify”) in October 2021, we issued shares as partial closing consideration to the sellers of Floify and guaranteed that the value of those shares would equal or exceed 200 % of such price on or prior to December 31, 2024 (the “True-Up Obligation”). The True-Up Obligation could be settled at our option in cash, Porch common stock, or a combination thereof. On March 27, 2024, we entered into a settlement agreement and mutual release of claims with the sellers of Floify to settle a post-closing dispute. As part of the of this agreement, the sellers of Floify agreed to terminate the True-Up Obligation in full and released from restriction approximately $0.9 million of escrowed cash to us. We estimated the fair value of the True-Up Obligation as of the settlement date using the Monte Carlo simulation method. The fair value is based on the simulated market price of our common stock over the maturity date of the True-Up Obligation. As of March 27, 2024, the key inputs used to determine the fair value of $14.9 million included the stock price of $4.13 , strike price of $36.00 , discount rate of 23.6 % and volatility of 95 %. Subsequent to the valuation, we recognized a gain on settlement in other income, net, in the unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss equal to the fair value of $14.9 million.
We estimated the fair value of the business combination contingent consideration based on specific metrics related to the acquisition of Residential Warranty Services (“RWS”) in April 2022, using the discounted cash flow method. The fair value is based on a percentage of revenue of the contingent consideration through the maturity date of August 2026. As of March 31, 2025, the key inputs used to determine the fair value of $0.1 million were management’s cash flow estimates
24
and the discount rate of 14 %. As of December 31, 2024, the key inputs used to determine the fair value of $0.1 million were management’s cash flow estimates and the discount rate of 14 %.
Private Warrants
We estimated the fair value of the private warrants that expire on December 23, 2025, using the Black-Scholes-Merton option pricing model. As of March 31, 2025, the key inputs used to determine the fair value included exercise price of $11.50 , expected volatility of 67 %, remaining contractual term of 0.73 years, and stock price of $7.29 . As of December 31, 2024, the key inputs used to determine the fair value included exercise price of $11.50 , expected volatility of 67 %, remaining contractual term of 0.98 years, and stock price of $4.92 .
Embedded Derivatives
In connection with the issuance of senior secured convertible notes in April 2023 and in accordance with Accounting Standards Codification 815-15, Derivatives and Hedging – Embedded Derivatives, certain features of the senior secured convertible notes were bifurcated and accounted for separately from the notes. The following features are recorded as derivatives.
•Repurchase option. If more than $30 million aggregate principal amount of the 2026 Notes remains outstanding on June 14, 2026, the 2028 Note holders have the right to require us to repurchase for cash on June 15, 2026, all or any portion of their 2028 Notes, in principal amounts of one thousand dollars or an integral number thereof, at a repurchase price equal to 106.5 % of the principal amount of the 2028 Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the repurchase date.
•Fundamental change option. If we undergo a fundamental change, as defined in the indenture governing the 2028 Notes and subject to certain conditions, holders of the 2028 Notes have the right to require us to repurchase for cash all or any portion of their 2028 Notes, in principal amounts of one thousand dollars or an integral multiple thereof, at a repurchase price equal to 105.25 % of the principal amount of the 2028 Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the repurchase date. A fundamental change includes events such as a change in control, recapitalization, liquidation, dissolution, or delisting.
•Asset sale repurchase option. If we sell assets and receive net cash proceeds of $2.5 million in excess of the Asset Sale Threshold (as defined below) (such excess net cash proceeds, the “Excess Proceeds”), we must offer to all holders of 2028 Notes to repurchase their 2028 Notes for an aggregate amount of cash equal to 50 % of such Excess Proceeds at a repurchase price per 2028 Note equal to 100 % of the principal amount thereof, plus accrued and unpaid interest to, but excluding, the relevant purchase date, if any. “Asset Sale Threshold” means $20.0 million in the aggregate, provided that on and after the date on which the cumulative net cash proceeds received by the Company and its restricted subsidiaries from the sale of assets after April 20, 2023, exceeds $20.0 million in the aggregate, the “Asset Sale Threshold” means $0 . As of March 31, 2025, our remaining Asset Sale Threshold was $9.1 million (See Note 17).
The inputs for determining fair value of the embedded derivatives are classified as Level 3 inputs. Level 3 fair value is based on unobservable inputs based on the best information available. These inputs include the probabilities of a repurchase, a fundamental change, and qualifying asset sales, ranging from 2 57
Level 3 Rollforward
Fair value measurements categorized within Level 3 are sensitive to changes in the assumptions or methodology used to determine fair value, and such changes could result in a significant increase or decrease in the fair value.
The changes for Level 3 items measured at fair value on a recurring basis using significant unobservable inputs are as follows:
| Contingent Consideration - Business Combinations | Embedded Derivatives | Private Warrant Liability | ||||||||||||||||||
| Fair value as of December 31, 2024 | $ | $ | $ | |||||||||||||||||
| Change in fair value, loss (gain) included in net loss | (1) | ( | ( | |||||||||||||||||
| Fair value as of March 31, 2025 | $ | $ | $ | |||||||||||||||||
25
| Contingent Consideration - Business Combinations | Embedded Derivatives | Private Warrant Liability | ||||||||||||||||||
| Fair value as of December 31, 2023 | $ | $ | $ | |||||||||||||||||
| Settlements | ( | |||||||||||||||||||
| Change in fair value, loss (gain) included in net loss | (1) | ( | ||||||||||||||||||
| Fair value as of March 31, 2024 | $ | $ | $ | |||||||||||||||||
______________________________________
(1)Changes in fair value of contingent consideration related to business combinations are included in general and administrative expenses in the unaudited condensed consolidated statements of operations. Changes in fair value of the private warrant liability and embedded derivatives are disclosed separately in the unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).
Fair Value of Fixed Rate Debt
As of March 31, 2025, and December 31, 2024, the fair value of the 2026 Notes (see Note 9) was $152.5 million and $137.7 million, respectively. As of March 31, 2025, and December 31, 2024, the fair value of the 2028 Notes (see Note 9) was $295.4 million and $278.3 million, respectively. The fair value of the other notes approximate the unpaid principal balance. All debt, other than the convertible notes which are Level 2, is considered a Level 3 measurement.
Note 7. Property, Equipment, and Software
Property, equipment, and software, net, consists of the following:
| March 31, 2025 | December 31, 2024 | ||||||||||
| Software and computer equipment | $ | $ | |||||||||
| Furniture, office equipment, and other | |||||||||||
| Internally developed software | |||||||||||
| Leasehold improvements | |||||||||||
| Less: Accumulated depreciation and amortization | ( | ( | |||||||||
| Property, equipment, and software, net | $ | $ | |||||||||
Note 8. Intangible Assets and Goodwill
Intangible Assets
Intangible assets are stated at cost or acquisition-date fair value less accumulated amortization and impairment. The following tables summarize intangible asset balances.
26
| As of March 31, 2025 | Weighted Average Useful Life (in years) | Intangible Assets, Gross | Accumulated Amortization and Impairment | Intangible Assets, Net | |||||||||||||||||||
| Customer relationships | $ | $ | ( | $ | |||||||||||||||||||
| Acquired technology | ( | ||||||||||||||||||||||
| Trademarks and tradenames | ( | ||||||||||||||||||||||
| Non-compete agreements | ( | ||||||||||||||||||||||
| Renewal rights | ( | ||||||||||||||||||||||
| Insurance licenses | Indefinite | — | |||||||||||||||||||||
| Total intangible assets | $ | $ | ( | $ | |||||||||||||||||||
| As of December 31, 2024 | Weighted Average Useful Life (in years) | Intangible Assets, Gross | Accumulated Amortization and Impairment | Intangible Assets, Net | |||||||||||||||||||
| Customer relationships | $ | $ | ( | $ | |||||||||||||||||||
| Acquired technology | ( | ||||||||||||||||||||||
| Trademarks and tradenames | ( | ||||||||||||||||||||||
| Non-compete agreements | ( | ||||||||||||||||||||||
| Renewal rights | ( | ||||||||||||||||||||||
| Insurance licenses | Indefinite | — | |||||||||||||||||||||
| Total intangible assets | $ | $ | ( | $ | |||||||||||||||||||
The aggregate amortization expense related to intangibles was $4.4 million and $4.7 million for the three months ended March 31, 2025 and 2024, respectively.
Goodwill
The following table summarizes goodwill balances by segment as of March 31, 2025.
| March 31, 2025 | |||||
| Software & Data | $ | ||||
| Consumer Services | |||||
| Total | $ | ||||
As of December 31, 2024, the entire $191.9 191.9 11 % to 14 %. Management considers historical experience and all available information at the time the fair values are estimated. Assumptions are subject to a high degree of judgment and complexity. Other than this reallocation to new segments, there were no changes in the carrying amount of goodwill for the three months ended March 31, 2025.
27
Note 9. Debt
The following tables summarize outstanding debt as of March 31, 2025, and December 31, 2024.
| Principal | Unamortized Debt Issuance Costs & Discount | Carrying Value | |||||||||||||||
| Convertible senior notes, due 2026 | $ | $ | ( | $ | |||||||||||||
| Convertible senior notes, due 2028 | ( | ||||||||||||||||
| Balance as of March 31, 2025 | $ | $ | ( | $ | |||||||||||||
| Principal | Unamortized Debt Issuance Costs & Discount | Carrying Value | |||||||||||||||
| Convertible senior notes, due 2026 | $ | $ | ( | $ | |||||||||||||
| Convertible senior notes, due 2028 | ( | ||||||||||||||||
| Other notes | |||||||||||||||||
| Balance as of December 31, 2024 | $ | $ | ( | $ | |||||||||||||
Convertible Senior Notes
Interest expense for our convertible senior notes includes both contractual interest expense and amortization of debt issuance costs and discount. The following table details interest expense recognized for the 0.75 % convertible senior notes due in September 2026 (the “2026 Notes”) and the 6.75 % convertible senior notes due in October 2028 (the “2028 Notes”).
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Contractual interest expense for 2026 Notes | $ | $ | |||||||||||||||||||||
| Contractual interest expense for 2028 Notes | |||||||||||||||||||||||
| Amortization of debt issuance costs and discount for 2026 Notes | |||||||||||||||||||||||
| Amortization of debt issuance costs and discount for 2028 Notes | |||||||||||||||||||||||
| $ | $ | ||||||||||||||||||||||
The effective interest rates for the 2026 Notes and 2028 Notes are 1.3 % and 17.9 %, respectively.
For the three months ended March 31, 2025 and 2024, we capitalized $0.1 million and $0.1 million, respectively, of interest expense on the 2028 Notes related to internally developed software projects.
During 2024, we repurchased a total of $51.2 million aggregate principal amount of our 2026 Notes, including $8.0 million in the first quarter for $3.0 million, and $43.2 million through the rest of the year for $20.2 million, representing 45.3 % of par value, in total. We recognized a total gain on extinguishment of debt in 2024 of $27.4 million, of which $4.9 million was recognized in the first quarter of 2024.
28
Note 10. Stockholders' Equity and Warrants
Common Shares Outstanding and Common Stock Equivalents
The following table shows the number of our common shares that could be issued for each component of our capital structure.
| March 31, 2025 | December 31, 2024 | |||||||||||||
| Outstanding common shares | (1) | |||||||||||||
| Common shares reserved for future issuance: | ||||||||||||||
| Private warrants | ||||||||||||||
| Stock options | ||||||||||||||
| Restricted and performance stock units and awards (Note 11) | ||||||||||||||
| 2020 Equity Plan pool reserved for future issuance (Note 11) | ||||||||||||||
| Convertible senior notes, due 2026 | (2) | |||||||||||||
| Convertible senior notes, due 2028 | ||||||||||||||
| Total shares of common stock outstanding and reserved for future issuance | ||||||||||||||
______________________________________
(1)Includes 18.3 million shares of common stock held by the Reciprocal as of March 31, 2025.
(2)In connection with the September 16, 2021, issuance of the 2026 Notes, we used a portion of the proceeds to pay for the capped call transactions, which are expected to generally reduce the potential dilution to our common stock. The capped call transactions impact the number of shares that may be issued by effectively increasing our conversion price from $25 per share to approximately $37.74 , which would result in approximately 5 million potentially dilutive shares instead of the shares reported in this table as of March 31, 2025.
Warrants
There was no activity related to private warrants during the three months ended March 31, 2025 and 2024. As of March 31, 2025, and December 31, 2024, there were 1.8 11.50 , and they expire on December 23, 2025. The private warrants are liability classified financial instruments measured at fair value, with periodic changes in fair value recognized through earnings and are included in “change in fair value of private warrant liability” in the unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). See Note 6 for more information.
Note 11. Stock-Based Compensation
The following table summarizes the classification of stock-based compensation expense in the unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Cost of revenue | $ | $ | |||||||||||||||||||||
| Selling and marketing | $ | $ | |||||||||||||||||||||
| Product and technology | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Total stock-based compensation expense | $ | $ | |||||||||||||||||||||
Under our 2020 Stock Incentive Plan, employees, directors and consultants are eligible for grants of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards (“RSAs”), restricted stock units (“RSUs”), performance restricted stock units (“PRSUs”), and other stock awards, collectively referred to as “Equity Awards.” All Equity Awards granted in 2025 were to employees and directors.
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The following table summarizes Equity Award activity for the three months ended March 31, 2025:
| Number of Options | Number of Restricted Stock Units | Number of Performance Restricted Stock Units | |||||||||||||||
| Balances as of December 31, 2024 | |||||||||||||||||
| Granted | |||||||||||||||||
| Vested | ( | ||||||||||||||||
| Exercised | ( | ||||||||||||||||
| Forfeited, canceled or expired | ( | ( | |||||||||||||||
| Balances as of March 31, 2025 | |||||||||||||||||
The weighted-average grant date fair value of RSUs granted during the three months ended March 31, 2025, was $5.08 .
Note 12. Reinsurance for the Reciprocal
2024 Program
As of April 1, 2024, our third-party quota share program consists of one combined program covering all business in all states and is placed at 27.5 % of P&C losses. All programs are effective for the period April 1, 2024, through March 31, 2025, and are subject to certain limits and exclusions, which vary by participating reinsurer.
Coverage for catastrophe events starts immediately within the quota share contracts and at $45.0 million per occurrence within the property catastrophe excess of loss treaties placed on April 1, 2024. Losses are shared at various levels up to $75.0 million. Over $75.0 million losses are covered up to a loss of $465.0 million. We also place reinstatement premium protection to cover any reinstatement premiums due on the first five layers.
We placed a parametric reinsurance contract to cover aggregate severe convective storm losses from January 1, 2024, to January 1, 2025. This contract would provide up to $30.0 million in recovery over $85.0 million in modeled losses.
2025 Program
As of April 1, 2025, coverage for excess of loss catastrophe reinsurance starts at $25.0 million per occurrence up to a loss of $410.0 million. Additionally, the third party quota share reinsurance contracts start immediately at 7.5 % of P&C losses, which includes catastrophe events. We also place reinstatement premium protection to cover any reinstatement premiums due on the second through fourth layers.
The Reciprocal’s third-party quota share program consists of one combined program covering all business in all states and is placed at 7.5 % of P&C losses.
Reinsurance Impact
The effects of reinsurance on premiums written by the Reciprocal and earned for the three months ended March 31, 2025 and 2024, were as follows:
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Written | Earned | Written | Earned | ||||||||||||||||||||
| Direct premiums | $ | $ | $ | $ | |||||||||||||||||||
| Ceded premiums | ( | ( | ( | ( | |||||||||||||||||||
| Net premiums | $ | $ | $ | $ | |||||||||||||||||||
30
The effects of reinsurance on incurred losses and loss adjustment expense (“LAE”) for the three months ended March 31, 2025 and 2024, were as follows:
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Direct losses and LAE | $ | $ | |||||||||||||||||||||
| Ceded losses and LAE | ( | ( | |||||||||||||||||||||
| Net losses and LAE | $ | $ | |||||||||||||||||||||
The detail of reinsurance balances due is as follows:
| March 31, 2025 | December 31, 2024 | ||||||||||
| Ceded unearned premium | $ | $ | |||||||||
| Losses and LAE reserve | |||||||||||
| Reinsurance recoverable | |||||||||||
| Other | |||||||||||
| Reinsurance balance due | $ | $ | |||||||||
On January 19, 2024, we entered into a -year business collaboration agreement with Aon Corp. and Aon Re, Inc. ("Aon"), resulting in payments to us of approximately $25 million in January 2024 and additional cash payments through the end of the contract term. Of the cash payments that we have or will receive through the end of the contract term, $8.7 million is non-refundable and was immediately recognized in other income, net, in the unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). A portion of the remaining amount is potentially refundable to Aon if we breach the agreement, including if we directly or indirectly place reinsurance with brokers unaffiliated with Aon, subject to customary cure rights. The remaining amount is being recognized in other income, net, over the term of the agreement.
Note 13. Unpaid Losses and Loss Adjustment Reserve
The following table summarizes the changes in the reserve balances for unpaid losses and LAE, gross of reinsurance, for the three months ended March 31, 2025:
| Reserve for unpaid losses and LAE at December 31, 2024 | $ | ||||
| Reinsurance recoverables on losses and LAE at December 31, 2024 | ( | ||||
| Reserve for unpaid losses and LAE reserve, net of reinsurance recoverables at December 31, 2024 | |||||
| Add provisions (reductions) for losses and LAE occurring in: | |||||
| Current year | |||||
| Prior years | |||||
| Net incurred losses and LAE during the current year | |||||
| Deduct payments for losses and LAE occurring in: | |||||
| Current year | ( | ||||
| Prior years | ( | ||||
| Net claim and LAE payments during the current year | ( | ||||
| Reserve for losses and LAE, net of reinsurance recoverables at March 31, 2025 | |||||
| Reinsurance recoverables on losses and LAE at March 31, 2025 | ( | ||||
| Reserve for unpaid losses and LAE at March 31, 2025 | $ | ||||
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As a result of additional information on claims occurring in prior years becoming available to management, changes in estimates of provisions of losses and loss adjustment expenses were made resulting in an increase of $4.2 million for the three months ended March 31, 2025.
Note 14. Other Income (Expense), Net
The following table details the components of other income, net, on the unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss):
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Interest income | $ | $ | |||||||||||||||||||||
| Gain on settlement of contingent consideration | |||||||||||||||||||||||
| Loss on sale of business | ( | ||||||||||||||||||||||
| Recoveries of losses on reinsurance contracts | |||||||||||||||||||||||
| Other, net | ( | ( | |||||||||||||||||||||
| Other income, net | $ | $ | |||||||||||||||||||||
Note 15. Income Taxes
Provision for income taxes for the three months ended March 31, 2025, and 2024, were $0.9 million and $0.2 million, respectively, and the effective tax rates for these periods were 19.5 % and (1.4 )%, respectively. The difference between our effective tax rates for the 2025 and 2024 periods and the U.S. statutory rate of 21% was primarily due to a full valuation allowance related to our net deferred tax assets.
Our income tax provision for the three months ended March 31, 2025 includes the recognition of deferred federal income tax expense of $0.9 million which was recognized in conjunction with the formation of the Reciprocal and subsequent sale of HOA to the Reciprocal. The deferred tax expense associated with this event is driven by changes to our scheduled reversal of deferred tax liabilities and assets, which is a function of the underlying impact the event has on our Federal consolidated income tax filing group.
Note 16. Commitments and Contingencies
From time to time we are or may become subject to various legal proceedings arising in the ordinary course of business, including proceedings initiated by users, other entities, or regulatory bodies. Estimated liabilities are recorded when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. In many instances, we are unable to determine whether a loss is probable or to reasonably estimate the amount of such a loss and, therefore, the potential future losses arising from a matter may differ from the amount of estimated liabilities we have recorded in the financial statements covering these matters. We review our estimates periodically and make adjustments to reflect negotiations, estimated settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular matter
Cases under Telephone Consumer Protection Act
Porch and/or an acquired entity, GoSmith.com, are party to a legal proceeding alleging violations of the automated calling and/or internal and National Do Not Call restrictions of the Telephone Consumer Protection Act of 1991 and a related Washington state law claim. The proceedings were commenced as thirteen separate mass tort actions brought by a single plaintiffs’ law firm in December 2019 and April/May 2020 in federal district courts throughout the United States. One of the actions was dismissed with prejudice and appealed to the Ninth Circuit Court of Appeals. While the appeal was pending, the remaining cases were consolidated in the United States District Court for the Western District of Washington, where Porch resides. On October 12, 2022, in a split decision, the Ninth Circuit Court of Appeals reversed. Following remand, that case was also consolidated with the Western District of Washington action. Plaintiffs then filed a motion for leave to file a second amended complaint, which was granted in part and denied in part. The Second Amended Complaint
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was filed in July 2023. In September 2023, Defendants filed a Motion to Strike the Second Amended Complaint; this motion was denied. Defendants then filed a Motion to Dismiss the Second Amended Complaint on February 15, 2024; that motion was granted in part on November 13, 2024. In its Order, the Court dismissed Plaintiff’s automated calling claims and transferred claims against two individual defendants (former officers of GoSmith.com) to Northern District of California to proceed separately. Plaintiffs were granted leave to amend their remaining claims.
In the Western District of Washington action, Plaintiffs filed a Third Amended Complaint on December 2, 2024, and subsequently a Fourth Amended Complaint, to correct errors in the prior amendment, on December 23, 2024. As a result of the dismissal and amendments, the total number of Plaintiffs remaining in the Western District of Washington action is 956. Defendants filed their Answer and Affirmative Defendants to the Fourth Amended Complaint on January 24, 2025. The parties’ filed a required Joint Status Report and Discovery Plan on December 18, 2024. Based thereon, the Court issued a Scheduling Order on February 3, 2025. Such Order opened discovery for the parties, authorized Defendants to issue a questionnaire to all Plaintiffs to gather information regarding whether Plaintiffs meet statutory criteria required to have standing under the relevant law at issue in the lawsuit, and set various procedural and other timelines for the case.
The Northern District of California action is proceeding against two individual Defendants. Upon transfer, all but six of the Plaintiffs dismissed their claims in the Northern District of California action. Defendants moved to stay the California litigation pending conclusion of the Washington matter; that motion is currently pending. An initial case management conference will be held on May 8, 2025.
Plaintiffs in both cases seek actual, statutory, and/or treble damages, injunctive relief, and reasonable attorneys’ fees and costs from the respective Defendants. We are unable to state whether the likelihood of an unfavorable outcome of these disputes is probable or remote. We are also unable to provide an estimate of the range or amount of potential loss (if the outcome should be unfavorable). Management intends to contest these cases vigorously.
Putative Wage and Hours Class Action Proceeding
Former employees of Welcome Wagon filed a complaint in United States District Court for the Eastern District of New York asserting putative class action claims for failure to pay minimum wages, overtime compensation, and other damages in violation of federal and New York Law. The case was filed on November 4, 2024. Welcome Wagon filed a motion to dismiss on January 6, 2025. The plaintiff seeks to represent all current and former similarly situated community marketing employees. This action is at an early stage in the litigation process and Porch is unable to determine the likelihood of an unfavorable outcome, although it is reasonably possible that the outcome may be unfavorable. Porch is unable to provide an estimate of the range or amount of potential loss (if the outcome should be unfavorable).
Other
In addition, in the ordinary course of business, we and our subsidiaries are (or may become) parties to litigation involving property, personal injury, contract, intellectual property and other claims, stockholder derivative actions, class action lawsuits and other matters. The amounts that may be recovered in such matters may be subject to insurance coverage. Although the results of legal proceedings and claims cannot be predicted with certainty, neither we nor any of our subsidiaries are currently a party to any legal proceedings the outcome of which, we believe, if determined adversely to us, would individually or in the aggregate have a material adverse effect on our business, financial condition or results of operations.
Note 17. Net Income (Loss) Attributable To Porch Per Share
Earnings per share (“EPS”) is calculated using the two-class method unless the treasury stock method results in lower EPS. Basic EPS is calculated by dividing net income or loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. To calculate diluted EPS, basic EPS is further adjusted to include the effect of potentially dilutive stock options, RSUs, PRSUs, RSAs, convertible notes, earnout shares, and warrants using the more dilutive result of the treasury stock method or the if-converted method. All potentially dilutive securities are antidilutive to periods with net losses, and basic EPS equals diluted EPS in those periods.
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The following table summarizes the computation of basic and diluted net income (loss) attributable to Porch per share for the three months ended March 31, 2025 and 2024:
| Three Months Ended March 31, | |||||||||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||||||||
| Net income (loss) attributable to Porch used to compute net income (loss) attributable to Porch per share - basic | $ | $ | ( | ||||||||||||||||||||||||||
| Effect of dilutive securities | |||||||||||||||||||||||||||||
| Net income (loss) attributable to Porch used to compute net income (loss) attributable to Porch per share - diluted | $ | $ | ( | ||||||||||||||||||||||||||
| Denominator: | |||||||||||||||||||||||||||||
| Weighted average shares outstanding used to compute net income (loss) attributable to Porch per share - basic | |||||||||||||||||||||||||||||
| Effect of dilutive securities: | |||||||||||||||||||||||||||||
| Stock Options | |||||||||||||||||||||||||||||
| RSUs | |||||||||||||||||||||||||||||
| PRSUs | |||||||||||||||||||||||||||||
| Weighted average shares outstanding used to compute net income (loss) attributable to Porch per share - diluted | |||||||||||||||||||||||||||||
| Net income (loss) attributable to Porch per share - basic | $ | $ | ( | ||||||||||||||||||||||||||
| Net income (loss) attributable to Porch per share - diluted | $ | $ | ( | ||||||||||||||||||||||||||
The following table discloses securities that were not included in the computation of diluted net loss per share because to do so would have been antidilutive for the periods presented:
| Three Months Ended March 31, | ||||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||
| Stock options | ||||||||||||||||||||||||||
| Restricted stock units and awards | ||||||||||||||||||||||||||
| Performance restricted stock units | ||||||||||||||||||||||||||
| Private warrants | ||||||||||||||||||||||||||
| Convertible debt | (1) | |||||||||||||||||||||||||
______________________________________
(1)In connection with the September 16, 2021, issuance of the 2026 Notes, we used a portion of the proceeds to pay for the capped call transactions, which are expected to generally reduce the potential dilution to our common stock. The capped call transactions impact the number of shares that may be issued by effectively increasing our conversion price from $25 per share to approximately $37.74 , which would result in approximately 5 million potentially dilutive shares instead of the shares reported in this table as of March 31, 2025.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This quarterly report on Form 10-Q (this “Quarterly Report”) and the documents incorporated herein by reference contain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. These statements are based on the beliefs and assumptions of management. Although we believe that our plans, intentions, and expectations reflected in or suggested by these forward-looking statements are reasonable, we cannot assure you that we will achieve or realize these plans, intentions, or expectations. Forward-looking statements are inherently subject to risks, uncertainties, and assumptions. Generally, statements that are not historical facts, including statements concerning our possible or assumed future actions, business strategies, events, or results of operations, are forward-looking statements. These statements may be preceded by, followed by, or include the words “believe,” “estimate,” “expect,” “project,” “forecast,” “may,” “will,” “should,” “seek,” “plan,” “scheduled,” “anticipate,” “intend,” or similar expressions.
Forward-looking statements are not guarantees of performance. You should not put undue reliance on these statements which speak only as of the date hereof. You should understand that the following important factors, among others, could affect our future results and could cause those results or other outcomes to differ materially from those expressed or implied in our forward-looking statements:
•expansion plans and opportunities, and managing growth, to build a consumer brand;
•the incidence, frequency, and severity of weather events, extensive wildfires, and other catastrophes;
•economic conditions, especially those affecting the housing, insurance, and financial markets;
•expectations regarding revenue, cost of revenue, operating expenses, and the ability to achieve and maintain future profitability;
•existing and developing federal and state laws and regulations, including with respect to insurance, warranty, privacy, information security, data protection, and taxation, and management’s interpretation of and compliance with such laws and regulations;
•the structure, availability, and performance of Porch Reciprocal Exchange (the “Reciprocal”)’s and Homeowners of America (“HOA”)’s reinsurance programs to protect against loss and maintain their financial stability ratings and a healthy surplus, the success of which are dependent on a number of factors outside management’s control;
•the possibility that a decline in our share price would result in a negative impact to the Reciprocal’s, surplus position and may require further financial support to enable the Reciprocal to meet applicable regulatory requirements and maintain financial stability rating;
•uncertainties related to regulatory approval of insurance rates, policy forms, insurance products, license applications, acquisitions of businesses, or strategic initiative, and other matters within the purview of insurance regulators (including the discount associated with the shares contributed to HOA that were subsequently transferred to the Reciprocal in connection with the closing of the sale of HOA to the Reciprocal);
•the ability of the Company and its affiliates to successfully operate and manage the Reciprocal and our ability to successfully operate our businesses alongside a reciprocal exchange;
•our ability to implement our plans, forecasts and other expectations with respect to the Reciprocal and to realize expected synergies and/or convert policyholders from our existing insurance carrier business into policyholders of the Reciprocal;
•reliance on strategic, proprietary relationships to provide us with access to personal data and product information, and the ability to use such data and information to increase transaction volume and attract and retain customers;
•the ability to develop new, or enhance existing, products, services, and features and bring them to market in a timely manner;
•changes in capital requirements, and the ability to access capital when needed to provide statutory surplus;
•our ability to timely repay our outstanding indebtedness;
•the increased costs and initiatives required to address new legal and regulatory requirements arising from developments related to cybersecurity, privacy, and data governance and the increased costs and initiatives to protect against data breaches, cyber-attacks, virus or malware attacks, or other infiltrations or incidents affecting system integrity, availability, and performance;
•retaining and attracting skilled and experienced employees;
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•costs related to being a public company; and
•other risks and uncertainties discussed in Part II, Item 1A, “Risk Factors,” in our Annual Report on Form 10-K (“Annual Report”) for the year ended December 31, 2024, as well as those discussed elsewhere in this report and in subsequent reports filed with the Securities and Exchange Commission (“SEC”), all of which are available on the SEC’s website at www.sec.gov.
We caution you that the foregoing list may not contain all the risks to forward-looking statements made in this Quarterly Report on Form 10-Q.
You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends we believe may affect our business, financial condition, results of operations and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors, including those described above and elsewhere in this Quarterly Report on Form 10-Q. 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.
Business Overview
Porch Group, Inc., (“Porch Group,” “Porch,” the “Company,” “we,” “our,” “us”) is a new kind of homeowners insurance company. We differentiate and look to win in the massive and growing homeowners insurance opportunity by:
•Utilizing our unique property data, with insights into more than 90% of United States (“U.S.”) homebuyers and properties, to enhance our property risk assessment creates advantages in pricing and underwriting decisions for the policyholder-owned Porch Reciprocal Exchange (the “Reciprocal”) we manage. This enables the Reciprocal to attract lower-risk properties and appropriately price higher-risks, in turn supporting growth of profitable premium and thus more management fees for our insurance services business.
•Aiming to be the best homeowners insurance partner for homebuyers by helping with more than just insurance. We provide moving services and offer both a full moving concierge and the Porch app. We help make moving easier and assist with important services such as insurance, moving, warranty, security, TV/Internet, and more.
•Providing more protection for the home by including home warranty alongside homeowners insurance. We are able to fill the gaps of protection for consumers, minimize surprises, and deepen our relationships and value proposition.
As a leader in the home services software-as-a-service (“SaaS”) space, we’ve built deep relationships with approximately 24 thousand companies who utilize our software. These companies are from industries key to the home-buying transaction, such as home inspectors, title companies, and mortgage companies.
Beginning in January 2025, we operate under four reportable segments that are also our operating segments. Three of these segments are owned by Porch Group — Insurance Services, Software & Data, and Consumer Services. We collectively call these three segments, along with corporate functions, the “Porch Shareholder Interest.” Our fourth segment, the Reciprocal Segment, is managed, but not owned, by Porch Group and, at this time, is consolidated for reporting purposes as described in the basis of presentation section in Note 1 of the unaudited Notes to Condensed Consolidated Financial Statements.
Insurance Services — Our Insurance Services segment manages and operates the Reciprocal, providing services related, but not limited, to underwriting, policy renewal, risk management, insurance portfolio management, financial management, and setting investment guidelines in exchange for commissions and fees. The Insurance Services segment also holds the surplus notes issued by the Reciprocal and includes our captive reinsurer which provides non-catastrophic weather reinsurance support to improve capital efficiency for the Reciprocal.
Software & Data — Our Software & Data segment provides, on a subscription and predominantly transactional basis, software to inspection, mortgage, title, and roofing companies and data products to insurance and other types of companies. This segment includes several strategically important businesses, including home inspection software, title and mortgage software, Home Factors (our unique property insights product), and mover marketing products.
Consumer Services — Our Consumer Services segment provides warranty products through Porch Warranty and other warranty brands to protect the whole home. Our Consumer Services segment also provides moving related services such as movers, TV/Internet, and security.
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Reciprocal Segment — The Reciprocal Segment includes HOA and its parent, Porch Reciprocal Exchange, which is a member-owned reciprocal exchange, owned by policyholder members rather than Porch Group, Inc. The Reciprocal Segment provides consumers with insurance to protect their homes, earning revenue primarily through premiums collected on policies.
The financial information herein should be read in conjunction with the consolidated financial statements for the year ended December 31, 2024, contained in our Annual Report on Form 10-K for the year ended December 31, 2024, and the unaudited Condensed Consolidated Financial Statements included in Item 1 of this Quarterly Report. Unless otherwise noted herein, all numbers are in thousands, except per share amounts.
Recent Developments
Reciprocal
On January 1, 2025, we completed the formation of the Reciprocal. In connection with the formation, we completed the sale of our homeowners insurance carrier, HOA, to the Reciprocal for a purchase price equal to HOA’s estimated surplus at December 31, 2024, of approximately $105 million, less $58 million of principal and unpaid interest under a surplus note issued by HOA to Porch in 2023. The purchase price was financed by a surplus note issued by the Reciprocal to Porch, bringing the total surplus notes held by Porch to approximately $106 million. Following the sale, HOA became a wholly owned subsidiary of the Reciprocal and, as part of the transaction, subsequently transferred certain economics to the Reciprocal following TDI approval, including the 18.3 million Porch shares held by HOA. Porch will manage and operate the Reciprocal, providing services related, but not limited, to underwriting, policy renewal, risk management, insurance portfolio management, financial management, and setting investment guidelines. In addition, Porch will maintain the Reciprocal’s books and records and be responsible for its accounting and financial reporting. In exchange for these services, Porch will receive commissions and fees. The Reciprocal will pay all claims and claims adjustment expenses, reinsurance costs, agency commissions, and taxes and license fees.
New Segments
Beginning in January 2025, there was a change in internal reporting provided to the Chief Operating Decision Maker (“CODM”) and a change in the lens through which the CODM makes decisions and allocates resources. As a result, our reportable segments, that are also our operating segments, changed from Vertical Software and Insurance prior to 2025 to Insurance Services, Software & Data, Consumer Services, and the Reciprocal Segment. Management references the Insurance Services, Software & Data, and Consumer Services segments, together with corporate expenses, as “Porch Shareholder Interest.” Our fourth segment, the Reciprocal Segment, is managed, but not owned, by Porch Group and is consolidated for reporting purposes.
The changes in reporting were driven by how the CODM views our target customer (e.g. primarily total premium in Insurance Services, primarily businesses in Software & Data, and primarily direct consumers in Consumer Services) and by the shift to a reciprocal exchange model where we are the manager rather than the owner.
Results of Operations
Key Factors Affecting Operating Results
The following key factors affected our operating results in the three months ended March 31, 2025:
•On January 1, 2025, we completed the formation of the Reciprocal and sold HOA into the Reciprocal; Porch Group now holds $106 million of surplus notes due from the Reciprocal which pay interest of 9.75% plus SOFR.
•In Insurance Services, new business premiums are performing well.
•In Software and Data, Rynoh implemented a 20% price increase, in line with the strategic pricing goals.
•In Consumer Services, new services were launched including packing services for movers and new warranties for homeowners.
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Three Months Ended March 31, 2025, compared to the Three Months Ended March 31, 2024
Consolidated Results
| Three Months Ended March 31, | ||||||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | |||||||||||||||||||||||
| (dollar amounts in thousands) | ||||||||||||||||||||||||||
| Revenue | $ | 104,745 | $ | 115,443 | $ | (10,698) | (9) | % | ||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||
| Cost of revenue | 39,297 | 78,366 | (39,069) | (50) | % | |||||||||||||||||||||
| Selling and marketing | 29,516 | 33,948 | (4,432) | (13) | % | |||||||||||||||||||||
| Product and technology | 13,201 | 12,292 | 909 | 7 | % | |||||||||||||||||||||
| General and administrative | 23,997 | 25,505 | (1,508) | (6) | % | |||||||||||||||||||||
| Total operating expenses | 106,011 | 150,111 | (44,100) | (29) | % | |||||||||||||||||||||
| Operating loss | (1,266) | (34,668) | 33,402 | (96) | % | |||||||||||||||||||||
| Other income (expense): | ||||||||||||||||||||||||||
| Interest expense | (11,246) | (10,787) | (459) | 4 | % | |||||||||||||||||||||
| Change in fair value of private warrant liability | (732) | (425) | (307) | 72 | % | |||||||||||||||||||||
| Change in fair value of derivatives | 6,673 | 1,483 | 5,190 | 350 | % | |||||||||||||||||||||
| Gain on extinguishment of debt | — | 4,891 | (4,891) | (100) | % | |||||||||||||||||||||
| Investment income and realized gains and losses, net of investment expenses | 2,810 | 3,644 | (834) | (23) | % | |||||||||||||||||||||
| Other income, net | 8,400 | 22,678 | (14,278) | (63) | % | |||||||||||||||||||||
| Total other income | 5,905 | 21,484 | (15,579) | (73) | % | |||||||||||||||||||||
| Income (loss) before income taxes | 4,639 | (13,184) | 17,823 | (135) | % | |||||||||||||||||||||
| Income tax provision | (903) | (178) | (725) | 407 | % | |||||||||||||||||||||
| Net income (loss) | 3,736 | (13,362) | 17,098 | (128) | % | |||||||||||||||||||||
| Less: Net loss attributable to the Reciprocal | (4,659) | — | (4,659) | N/A | ||||||||||||||||||||||
| Net income (loss) attributable to Porch | $ | 8,395 | $ | (13,362) | $ | 21,757 | (163) | % | ||||||||||||||||||
| Net income (loss) | $ | 3,736 | $ | (13,362) | $ | 17,098 | (128) | % | ||||||||||||||||||
| Net loss (income) attributable to the Reciprocal | 4,659 | — | 4,659 | N/A | ||||||||||||||||||||||
| Interest expense | 11,195 | 10,787 | 408 | 4 | % | |||||||||||||||||||||
| Income tax provision | 14 | 178 | (164) | (92) | % | |||||||||||||||||||||
| Depreciation and amortization | 5,024 | 6,317 | (1,293) | (20) | % | |||||||||||||||||||||
| Gain on extinguishment of debt | — | (4,891) | 4,891 | (100) | % | |||||||||||||||||||||
| Other income, net | (7,162) | (21,502) | 14,340 | (67) | % | |||||||||||||||||||||
| Stock-based compensation expense | 4,910 | 5,368 | (458) | (9) | % | |||||||||||||||||||||
| Mark-to-market gains | (5,969) | (7) | (5,962) | 85,171 | % | |||||||||||||||||||||
| Restructuring costs | 319 | 157 | 162 | 103 | % | |||||||||||||||||||||
| Acquisition and other transaction costs | 135 | 167 | (32) | (19) | % | |||||||||||||||||||||
| Adjusted EBITDA (Loss) | (1) | $ | 16,861 | $ | (16,788) | $ | 33,649 | (200) | % | |||||||||||||||||
| Adjusted EBITDA (Loss) Margin | (1) | 16 | % | (15) | % | |||||||||||||||||||||
______________________________________
(1)Adjusted EBITDA (Loss) and Adjusted EBITDA (Loss) Margin are non-GAAP measures. See Non-GAAP Financial Measures section for definitions.
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Revenue. Total consolidated revenue including the Reciprocal decreased by $10.7 million, or 9%, from $115.4 million in the three months ended March 31, 2024, to $104.7 million in the three months ended March 31, 2025. The decrease in revenue was primarily a result of higher reinsurance ceding under the 2024 reinsurance program that began on April 1, 2024. Revenue related to the Porch Shareholder Interest was $84.5 million in the three months ended March 31, 2025, as detailed in the following table.
Cost of revenue. Total consolidated cost of revenue including the Reciprocal decreased by $39.1 million, or 50%, from $78.4 million in the three months ended March 31, 2024, to $39.3 million in the three months ended March 31, 2025. The decrease was primarily the result of higher reinsurance ceding under the 2024 reinsurance program and a reduction in weather related claims. As a percentage of revenue, cost of revenue represented 38% of revenue in the three months ended March 31, 2025, compared with 68% in the three months ended March 31, 2024. Cost of revenue typically exhibits seasonal trends, with lower costs in the first and fourth quarters and higher costs in the second and third quarters, primarily due to increased frequency and severity of weather-related events and timing of insurance-related expenses. However, there were weather events in the first quarter of 2024 that were inconsistent wit historical seasonal trends. Cost of revenue related to Porch Shareholder Interest was $15.5 million in the three months ended March 31, 2025, as detailed in the table below. Porch Shareholder Interest Cost of Revenue is a non-GAAP measure. See Non-GAAP Financial Measures section for definition.
Selling and marketing. Total consolidated selling and marketing expenses including the Reciprocal decreased by $4.4 million, or 13%, from $33.9 million in the three months ended March 31, 2024, to $29.5 million in the three months ended March 31, 2025. The decrease is primarily driven by a reduction in the amortization of deferred policy acquisition costs, reflecting a shift away from policies written under historically higher commission rates. As a percentage of revenue, selling and marketing expenses represented 28% of revenue in the three months ended March 31, 2025 compared with 29% in the three months ended March 31, 2024. Selling and marketing expense related to Porch Shareholder Interest was $32.9 million in the three months ended March 31, 2025, as detailed in the table below. Porch Shareholder Interest Selling and Marketing is a non-GAAP measure. See Non-GAAP Financial Measures section for definition
General and administrative. Total consolidated general and administrative expenses including the Reciprocal decreased by $1.5 million, or 6%, from $25.5 million in three months ended March 31, 2024, to $24.0 million in the three months ended March 31, 2025, primarily due to a $1.1 million non-cash loss on revaluation of contingent considerations during the three months ended March 31, 2024. General and administrative expenses related to Porch Shareholder Interest were $22.9 million in the three months ended March 31, 2025, as detailed in the table below. Porch Shareholder Interest General and Administrative is a non-GAAP measure. See Non-GAAP Financial Measures section for definition
Change in fair value of derivatives. The fair value of the derivative liability increased more in the three months ended March 31, 2025, compared to the three months ended March 31, 2024. The value is driven by various factors, including the fair value of the underlying debt, stock price, and assumptions regarding timing of possible repurchase events. See Note 6 in the unaudited Notes to Condensed Consolidated Financial Statements. The change in fair value of derivatives related entirely to Porch Shareholder Interest.
Gain on extinguishment of debt. In connection with the repurchase of a portion of the 2026 Notes, we recognized a $4.9 million gain on extinguishment of debt during the three months ended March 31, 2024. There was no corresponding debt extinguishment during the three months ended March 31, 2025. See Note 9 in the notes to the unaudited condensed consolidated financial statements. The gain on extinguishment of debt related entirely to Porch Shareholder Interest.
Other income, net. Total consolidated other income, net, including the Reciprocal decreased by $14.3 million from $22.7 million in the three months ended March 31, 2024, to $8.4 million in the three months ended March 31, 2025. The decrease is primarily driven by a $14.9 million gain on settlement of contingent consideration and $5.2 million loss on sale of our EIG business, both of which occurred during the three months ended March 31, 2024, with no comparable events during the three months ended March 31, 2025. Additionally, recoveries on reinsurance contracts were approximately $4.5 million lower in the three months ended March 31, 2025 compared to the three months ended March 31, 2024. Other income, net, related to Porch Shareholder Interest was $7.2 million in the three months ended March 31, 2025, as detailed table below. Porch Shareholder Interest Other Income is a non-GAAP measure. See Non-GAAP Financial Measures section for definition
Adjusted EBITDA (Loss). Adjusted EBITDA (Loss) for the three months ended March 31, 2025, was $16.9 million, a $33.6 million improvement from Adjusted EBITDA (Loss) of $(16.8) million for the same period in 2024. The improvement in Adjusted EBITDA (Loss) for the first quarter of 2025 was primarily driven by the shift in the business model from carrier to the manager of the Reciprocal, producing higher margin management fees and a reduction in weather-related claims. Our Insurance Services segment benefited from the receipt of management fees from the Reciprocal Segment which began in January 2025 and an increase in interest income from the surplus note due from the Reciprocal Segment. Corporate costs also declined due to less reliance on third party consultants, centralizing administrative functions, and shifting hiring to target lower-cost locations.. Adjusted EBITDA (Loss) is a non-GAAP measure. See Non-GAAP Financial Measures section for definition.
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The following tables summarize operating results of our four segments as well as corporate expenses and eliminations.
| Three Months Ended March 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Insurance Services | Software & Data | Consumer Services | Corporate | Eliminations (1) | Porch Shareholder Interest Subtotal (2) | Reciprocal Segment | Eliminations Related to Reciprocal Segment (3) | Consolidated | ||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue | $ | 49,806 | $ | 21,999 | $ | 14,721 | $ | — | $ | (1,980) | $ | 84,546 | $ | 39,938 | $ | (19,739) | $ | 104,745 | ||||||||||||||||||||||||||||||||||||||
| Cost of revenue | 7,481 | 5,506 | 2,490 | — | (5) | 15,472 | 26,249 | (2,424) | 39,297 | |||||||||||||||||||||||||||||||||||||||||||||||
| Gross Profit | 42,325 | 16,493 | 12,231 | — | (1,975) | 69,074 | 13,689 | (17,315) | 65,448 | |||||||||||||||||||||||||||||||||||||||||||||||
| Gross Margin | 85 | % | 75 | % | 83 | % | — | % | 100 | % | 82 | % | 34 | % | 88 | % | 62 | % | ||||||||||||||||||||||||||||||||||||||
| Less: Operating expenses: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Selling and marketing | 15,527 | 9,169 | 9,798 | 408 | (1,975) | 32,927 | 7,411 | (10,822) | 29,516 | |||||||||||||||||||||||||||||||||||||||||||||||
| Product and technology | 2,451 | 4,288 | 1,131 | 4,196 | — | 12,066 | 1,135 | — | 13,201 | |||||||||||||||||||||||||||||||||||||||||||||||
| General and administrative | 4,377 | 2,508 | 3,301 | 12,701 | — | 22,887 | 7,603 | (6,493) | 23,997 | |||||||||||||||||||||||||||||||||||||||||||||||
| Operating income (loss) | (17,305) | — | 1,194 | (2,460) | — | (1,266) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other expense (income) | (4,994) | (9) | (93) | (2,119) | — | (7,215) | 1,310 | — | (5,905) | |||||||||||||||||||||||||||||||||||||||||||||||
| Income (loss) before income taxes | (15,186) | — | 8,409 | (3,770) | — | 4,639 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Income tax benefit (provision) | (14) | — | (14) | (889) | — | (903) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | $ | (15,200) | $ | — | $ | 8,395 | $ | (4,659) | $ | — | 3,736 | |||||||||||||||||||||||||||||||||||||||||||||
| Less: Net loss attributable to the Reciprocal | (4,659) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income attributable to Porch | $ | 8,395 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted EBITDA (Loss) Reconciliation: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | $ | (15,200) | $ | 8,395 | $ | 3,736 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Less Reconciling items: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss attributable to the Reciprocal | — | (4,659) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | (91) | (3,479) | (885) | (569) | — | (5,024) | (5,024) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | (679) | (556) | (388) | (3,287) | — | (4,910) | (4,910) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Interest expense | — | (2) | — | (11,193) | — | (11,195) | (11,195) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Income tax provision | — | — | — | (14) | — | (14) | (14) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Mark-to-market gains (losses) | — | — | 28 | 5,941 | — | 5,969 | 5,969 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Recoveries of Losses on Reinsurance Contracts | — | — | — | 7,100 | — | 7,100 | 7,100 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Other gains and losses | (75) | 3 | 9 | (329) | — | (392) | (392) | |||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted EBITDA (Loss) (4) | $ | 25,809 | $ | 4,571 | $ | (670) | $ | (12,849) | $ | 16,861 | $ | 16,861 | ||||||||||||||||||||||||||||||||||||||||||||
______________________________________
(1)The “Eliminations” column represents eliminations of transactions between the Insurance Services segment, Software & Data segment, Consumer Services segment, and Corporate column.
(2)The “Porch Shareholder Interest Subtotal” column includes non-GAAP measures that are used by management to evaluate performance. Porch Shareholder Interest includes the Insurance Services, Software & Data, and Consumer Services segments as well as Corporate expenses and applicable intercompany eliminations. See Non-GAAP Financial Measures section.
(3)The “Eliminations Related to Reciprocal Segment” column represents eliminations of transactions between the Reciprocal Segment and other segments or Corporate.
(4)Adjusted EBITDA (Loss) is a non-GAAP measure. See Non-GAAP Financial Measures section for definition.
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| Three Months Ended March 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Insurance Services | Software & Data | Consumer Services | Corporate | Eliminations (1) | Subtotal | Reciprocal Segment | Eliminations Related to Reciprocal Segment (2) | Consolidated | ||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue | $ | 47,359 | $ | 21,134 | $ | 16,186 | $ | — | $ | (263) | $ | 84,416 | $ | 47,495 | $ | (16,468) | $ | 115,443 | ||||||||||||||||||||||||||||||||||||||
| Cost of revenue | 25,409 | 5,654 | 3,533 | — | (18) | 34,578 | 46,607 | (2,819) | 78,366 | |||||||||||||||||||||||||||||||||||||||||||||||
| Gross Profit | 21,950 | 15,480 | 12,653 | — | (245) | 49,838 | 888 | (13,649) | 37,077 | |||||||||||||||||||||||||||||||||||||||||||||||
| Gross Margin | 46 | % | 73 | % | 78 | % | — | % | 93 | % | 59 | % | 2 | % | 83 | % | 32 | % | ||||||||||||||||||||||||||||||||||||||
| Less: Operating expenses: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Selling and marketing | 16,018 | 10,002 | 8,377 | 647 | (245) | 34,799 | 12,798 | (13,649) | 33,948 | |||||||||||||||||||||||||||||||||||||||||||||||
| Product and technology | 362 | 4,215 | 927 | 5,320 | — | 10,824 | 1,468 | — | 12,292 | |||||||||||||||||||||||||||||||||||||||||||||||
| General and administrative | 1,643 | 4,538 | 3,599 | 13,470 | — | 23,250 | 2,255 | — | 25,505 | |||||||||||||||||||||||||||||||||||||||||||||||
| Operating income (loss) | (19,437) | — | (19,035) | (15,633) | — | (34,668) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other expense (income) | (10,313) | (14,917) | (160) | 4,795 | — | (20,595) | (889) | — | (21,484) | |||||||||||||||||||||||||||||||||||||||||||||||
| Income (loss) before income taxes | (24,232) | — | 1,560 | (14,744) | — | (13,184) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Income tax benefit (provision) | (178) | — | (178) | — | — | (178) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | $ | (24,410) | $ | — | $ | 1,382 | $ | (14,744) | $ | — | $ | (13,362) | ||||||||||||||||||||||||||||||||||||||||||||
| Adjusted EBITDA (Loss) Reconciliation: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | $ | (24,410) | $ | 1,382 | $ | (13,362) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Less: Reconciling items: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | (993) | (3,792) | (1,091) | (434) | — | (6,310) | (7) | — | (6,317) | |||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | (343) | (1,072) | (500) | (3,453) | — | (5,368) | — | — | (5,368) | |||||||||||||||||||||||||||||||||||||||||||||||
| Gain (loss) on extinguishment of debt | — | — | — | 4,891 | — | 4,891 | — | — | 4,891 | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest expense | — | (8) | (11) | (10,573) | — | (10,592) | (2,035) | 1,840 | (10,787) | |||||||||||||||||||||||||||||||||||||||||||||||
| Income tax provision | — | — | — | (178) | — | (178) | — | — | (178) | |||||||||||||||||||||||||||||||||||||||||||||||
| Mark-to-market gains (losses) | — | (909) | (142) | 1,058 | — | 7 | — | — | 7 | |||||||||||||||||||||||||||||||||||||||||||||||
| Recoveries of Losses on Reinsurance Contracts | 8,664 | — | — | 2,981 | — | 11,645 | — | — | 11,645 | |||||||||||||||||||||||||||||||||||||||||||||||
| Other gains and losses | (3) | 14,869 | 171 | (3,675) | — | 11,362 | 11 | (1,840) | 9,533 | |||||||||||||||||||||||||||||||||||||||||||||||
Adjusted EBITDA (Loss) (3) | $ | 6,915 | $ | 2,554 | $ | 1,483 | $ | (15,027) | $ | (4,075) | $ | (16,788) | ||||||||||||||||||||||||||||||||||||||||||||
______________________________________
(1)The “Eliminations” column represents eliminations of transactions between the Insurance Services segment, Software & Data segment, Consumer Services segment, and Corporate column.
(2)The “Eliminations Related to Reciprocal Segment” column represents eliminations of transactions between the Reciprocal Segment and other segments or Corporate.
(3)Adjusted EBITDA (Loss) is a non-GAAP measure. See Non-GAAP Financial Measures section for definition.
41
Porch Shareholder Interest Results (Non-GAAP)
Effective January 1, 2025, Porch Group Inc. shareholders own three segments: Insurance Services, Software & Data, and Consumer Services. Together, these segments—offset by corporate expenses—comprise what we refer to as the “Porch Shareholder Interest.” These segments contribute to Net Income Attributable to Porch and are what is expected to generate cash for Porch shareholders. Comparative period amounts in the following table include only the Insurance Services, Software & Data, and Consumer Services segments as well as corporate expenses. Certain amounts presented in the following table are non-GAAP measures and are reconciled to the nearest GAAP measure in the earlier “Consolidated Results” section.
| Three Months Ended March 31, | ||||||||||||||||||||
| 2025 | 2024 | Change | ||||||||||||||||||
| Porch Shareholder Interest Revenue | (1) | $ | 84,546 | $ | 84,416 | $ | 130 | |||||||||||||
| Porch Shareholder Interest Gross Profit | (1) | 69,074 | 49,838 | 19,236 | ||||||||||||||||
| Porch Shareholder Interest Adjusted EBITDA (Loss) | (1) | 16,861 | (4,075) | 20,936 | ||||||||||||||||
______________________________________
(1)Porch Shareholder Interest Revenue, Gross Profit, and Adjusted EBITDA (Loss) are non-GAAP measures. For the three months ended March 31, 2025, Porch Shareholder Interest Adjusted EBITDA (Loss) is equivalent to total Adjusted EBITDA (Loss) for consolidated Porch, as Porch Group no longer owns HOA following its sale to the Reciprocal on January 1, 2025. See Non-GAAP Financial Measures section.
For the three months ended March 31, 2025, revenue for Porch Shareholder Interest increased $0.1 million when compared to the same segments in the prior year period. The increase was primarily due to the launch of the Reciprocal on January 1, 2025, and the associated revenue streams as Porch acts as its manager. This increase was partially offset by an increase in the average coverage period of our warranty products, resulting in revenue being recognized over a longer timeframe, and strategic shift to lower revenue, higher profit services in our moving businesses.
Porch Shareholder Interest Gross Profit improved by $19.2 million for the three months ended March 31, 2025, when compared to the prior year period. This improvement is primarily due to the increase in revenue and a reduction in weather-related claims. Porch Shareholder Interest Gross Profit is a non-GAAP measure. See Non-GAAP Financial Measures section for definition.
Porch Shareholder Interest Adjusted EBITDA (Loss) improved by $20.9 million for the three months ended March 31, 2025, compared to the prior year period. The improvement was primarily driven by the shift in the business model from carrier to the manager of the Reciprocal, producing higher margin management fees and a reduction in weather-related claims. Our Insurance Services segment benefited from the receipt of management fees from the Reciprocal Segment which began in January 2025 and an increase in interest income from the surplus note due from the Reciprocal Segment. Corporate costs also declined due to lower professional fees, reduced reliance on third-party consultants, and strong cost control. Porch Shareholder Interest Adjusted EBITDA (Loss) is a non-GAAP measure. See Non-GAAP Financial Measures section for definition.
INSURANCE SERVICES
| Three Months Ended March 31, | ||||||||||||||||||||
| 2025 | 2024 | Change | ||||||||||||||||||
| Revenue | $ | 49,806 | $ | 47,359 | $ | 2,447 | ||||||||||||||
| Adjusted EBITDA | (1) | $ | 25,809 | $ | 6,915 | $ | 18,894 | |||||||||||||
| Reciprocal Written Premium (in millions) | (2) | $ | 96.9 | $ | — | N/A | ||||||||||||||
| Reciprocal Policies Written (in thousands) | (2) | 36.1 | — | N/A | ||||||||||||||||
| Reciprocal Written Premium per Policy (unrounded) | (2) | $ | 2,683 | $ | — | N/A | ||||||||||||||
______________________________________
(1)Insurance Services Adjusted EBITDA (Loss) is a non-GAAP measure. See Non-GAAP Financial Measures section.
(2)See Key Performance Measures and Operating Metrics for definitions of metrics.
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For the three months ended March 31, 2025, Insurance Services segment revenue was $49.8 million. For the three months ended March 31, 2024, Insurance Services segment revenue was $47.4 million. The 5% increase in Insurance Services segment revenue was primarily driven by the launch of the Reciprocal on January 1, 2025, and the associated revenue streams as Porch acts as its manager.
Our Insurance Services segment generates economics in several ways: management fees based on a percentage of Reciprocal Written Premium, policy fees based on the number of Reciprocal Policies Written, non-catastrophic weather quota share reinsurance to improve capital efficiency for the Reciprocal, lead fees from third-party insurance agencies, and interest from the surplus note due from the Reciprocal.
Insurance Services Adjusted EBITDA (Loss) was $25.8 million in the first quarter of 2025, which improved compared to prior year due to the various commissions and fees beginning January 1, 2025, including interest income from the surplus note due from the Reciprocal Segment.
SOFTWARE & DATA
| Three Months Ended March 31, | ||||||||||||||||||||
| 2025 | 2024 | Change | ||||||||||||||||||
| Revenue | $ | 21,999 | $ | 21,134 | $ | 865 | ||||||||||||||
| Adjusted EBITDA | (1) | $ | 4,571 | $ | 2,554 | $ | 2,017 | |||||||||||||
| Average Number of Companies (in thousands) | (2) | 24.1 | ||||||||||||||||||
| Annualized Average Revenue per Company (unrounded) | (2) | $ | 3,644 | |||||||||||||||||
______________________________________
(1)Software & Data Adjusted EBITDA (Loss) is a non-GAAP measure. See Non-GAAP Financial Measures section.
(2)See Key Performance Measures and Operating Metrics for definitions of metrics. In 2025, metrics are presented on a segment-level basis.
For the three months ended March 31, 2025, Software & Data segment revenue was $22.0 million. For the three months ended March 31, 2024, Software & Data segment revenue was $21.1 million. Revenue was impacted by an increase in transaction volume of our Home Factors product and price increases of our title insurance software. These increase were partially offset by a decline in existing homes sales in the industry.
Software & Data Adjusted EBITDA (Loss) was $4.6 million in the first quarter of 2025, which improved compared to prior year due to strong cost control, including a reduction in workforce, lower professional fees, and lower rent expense from an expired lease.
CONSUMER SERVICES
| Three Months Ended March 31, | ||||||||||||||||||||
| 2025 | 2024 | Change | ||||||||||||||||||
| Revenue | $ | 14,721 | $ | 16,186 | $ | (1,465) | ||||||||||||||
| Adjusted EBITDA (Loss) | (1) | $ | (670) | $ | 1,483 | $ | (2,153) | |||||||||||||
| Monetized Services (in thousands) | (2) | 71.0 | ||||||||||||||||||
| Average Revenue per Monetized Service (unrounded) | (2) | $ | 207 | |||||||||||||||||
______________________________________
(1)Consumer Services Adjusted EBITDA (Loss) is a non-GAAP measure. See Non-GAAP Financial Measures section.
(2)See Key Performance Measures and Operating Metrics for definitions of metrics. In 2025, metrics are presented on a segment-level basis.
For the three months ended March 31, 2025, Consumer Services segment revenue was $14.7 million. For the three months ended March 31, 2024, Consumer Services segment revenue was $16.2 million. The decrease in revenue was primarily driven by an increase in the average coverage period of our warranty products, resulting in revenue being recognized over a longer timeframe. The decrease in revenue was also driven by a strategic shift to lower revenue higher profit services in our moving businesses. This dynamic is demonstrated by the decrease in Average Revenue per Monetized Service.
43
Consumer Services Adjusted EBITDA (Loss) was $(0.7) million in the first quarter of 2025, which decreased compared to prior year’s positive results primarily driven by the decrease in monthly revenue resulting from a longer warranty coverage period. The new longer warranty is priced higher but results in a lower monthly rate. An increase in direct mail marketing expense for new warranty products also contributed to the change from prior year.
CORPORATE
| Three Months Ended March 31, | ||||||||||||||||||||
| 2025 | 2024 | Change | ||||||||||||||||||
| Selling and marketing | $ | 408 | $ | 647 | $ | (239) | ||||||||||||||
| Product and technology | 4,196 | 5,320 | (1,124) | |||||||||||||||||
| General and administrative | 12,701 | 13,470 | (769) | |||||||||||||||||
| Other | (4,456) | (4,410) | (46) | |||||||||||||||||
| Adjusted EBITDA Loss | (1) | $ | 12,849 | $ | 15,027 | (2,178) | ||||||||||||||
______________________________________
(1)Adjusted EBITDA (Loss) is a non-GAAP measure. See Non-GAAP Financial Measures section for definition.
Corporate expenses decreased for the three months ended March 31, 2025, compared to the the same period for 2024. The decrease was driven primarily by lower professional fees and reduced reliance on third-party consultants as well as strong cost control across the business. Our cost control measures included centralizing administrative functions and shifting hiring to target lower-cost locations.
Key Performance Measures and Operating Metrics
In the management of these businesses, we identify, measure and evaluate various operating metrics. The key performance measures and operating metrics used in managing the businesses are discussed below. These key performance measures and operating metrics are not prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and may not be comparable to or calculated in the same way as other similarly titled measures and metrics used by other companies.
Insurance Services
Reciprocal Written Premium — We define Reciprocal Written Premium as the total premium written by the Reciprocal for the face value of one year’s premium gross of cancellations and before deductions for reinsurance and ceding commissions in the period.
Reciprocal Policies Written — We define Reciprocal Policies Written as the number of new and renewal insurance policies written during the period by the Reciprocal Segment.
Reciprocal Written Premium per Policy Written — We define Reciprocal Written Premium per Policy Written as the Reciprocal Written Premium in the period divided by the Reciprocal Policies Written in the period.
Software & Data
Average Number of Companies — We define Average Number of Companies as the straight-line average of the number of companies as of the end of period compared with the beginning of period across all of our Software & Data segment. This only includes the number of companies in our Software & Data segment and no longer includes moving services companies nor insurance agencies which are included in Consumer Services and Insurance Services segments respectively.
Annualized Average Revenue per Company — We define Annualized Average Revenue per Company as the revenue generated across the Software & Data segment in the period over the Average Number of Companies in the period, which is then annualized (for example, for a given quarter, multiplied by 4).
44
Consumer Services
Monetized Services — We define Monetized Services as the total number of services from which we generated revenue, including, but not limited to, new and renewing warranty policies, completed moving jobs, sold security, TV/Internet or other home projects, measured over the period. This only includes services from Consumer Services segment and does not include insurance policies sold.
Average Revenue per Monetized Service — We define Average Revenue per Monetized Service as total Consumer Services segment revenue generated in the period over the number of Monetized Services.
Liquidity and Capital Resources
In our early years, we raised capital primarily through equity investments. As a publicly traded company, we have relied on convertible debt as our primary source of capital. As of March 31, 2025, we had $507.1 million of aggregate principal amount outstanding in convertible notes and promissory notes.
Based on our current operating and growth plan, management believes cash and cash equivalents and liquid investments at March 31, 2025, are sufficient to finance our operations, planned capital expenditures, working capital requirements, and debt service obligations for at least the next 12 months. As our operations evolve and we continue our growth strategy, including through acquisitions, we may elect or need to obtain alternative sources of capital, and we may finance additional liquidity needs in the future through one or more equity or debt financings. We may not be able to obtain equity or additional debt financing in the future when needed or, if available, the terms may not be satisfactory to us or could be dilutive to our stockholders.
We may, at any time and from time to time, seek to retire or purchase our outstanding debt or equity through cash purchases and/or exchanges for equity or debt, in open-market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will be upon such terms and at such prices as we may determine, and will depend on prevailing market conditions, liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.
We incurred net losses historically, resulting in an accumulated deficit of $636.5 million at March 31, 2025, and $754.9 million at December 31, 2024. Our results of operations during the three months ended March 31, 2025, were favorable and reduced the accumulated deficit since December 31, 2024.
Porch Group, Inc. is a holding company that transacts the majority of its business through operating subsidiaries, including subsidiaries that are involved in providing reinsurance and management services for the Reciprocal which is an insurance carrier. Consequently, our ability to pay dividends and expenses is largely dependent on dividends or other distributions from our subsidiaries. The insurance industry is highly regulated, and insurance businesses are restricted by statute as to the amount of dividends they may pay without the prior approval of regulatory authorities.
Liquidity and Capital Resources of Porch Shareholder Interest
The following table provides the components of cash and cash equivalents, restricted cash and cash equivalents, and investments of Porch Shareholder Interest.
| March 31, 2025 | December 31, 2024 | |||||||||||||
| Cash and cash equivalents of Porch Shareholder Interest | $ | 65,899 | $ | 46,526 | ||||||||||
| Short-term investments of Porch Shareholder Interest | 4,510 | 1,613 | ||||||||||||
| Long-term investments of Porch Shareholder Interest | 26,215 | 13,509 | ||||||||||||
Unrestricted cash, cash equivalents, and investments of Porch Shareholder Interest | 96,624 | 61,648 | ||||||||||||
| Restricted cash and cash equivalents of Porch Shareholder Interest | (1) | 17,213 | 28,244 | |||||||||||
All cash, cash equivalents, investments, and restricted cash and cash equivalents of Porch Shareholder Interest | $ | 113,837 | $ | 89,892 | ||||||||||
______________________________________
(1)Includes $9.2 million of treasury bills as of March 31, 2025, held as collateral for the benefit of the Reciprocal temporarily while in the process of converting to short-term investments. See Note 1 in the unaudited Notes to Condensed Consolidated Financial Statements for a description of the nature of restrictions.
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2026 Convertible Notes. As of March 31, 2025, outstanding principal was $173.8 million on our 0.75% Convertible Senior Notes due on September 15, 2026 (the “2026 Notes”). During 2024, we repurchased a total of $51.2 million aggregate principal amount of our 2026 Notes, including $8.0 million in the first quarter for $3.0 million, and $43.2 million through the rest of the year for $20.2 million, representing 45.3% of par value, in total. We recognized a total gain on extinguishment of debt in 2024 of $27.4 million, of which $4.9 million was recognized in the first quarter of 2024. We may redeem for cash all or any portion of the 2026 Notes, at our option if the last reported sale price of the common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide a notice of redemption, at a redemption price equal to 100% of the principal amount of the 2026 Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the 2026 Notes. The 2026 Notes are convertible at an initial conversion rate of 39.9956 shares of common stock per one thousand dollars principal amount of 2026 Notes, which is equivalent to an initial conversion price of approximately $25.00 per share of common stock (the “Conversion Rate”). The Conversion Rate is subject to customary adjustments for certain events as described in the indenture governing the 2026 Notes. We may settle the conversion option obligation with cash, shares of our common stock, or any combination of cash and shares of our common stock. Holders of the 2026 Notes may convert the 2026 Notes at their option (in whole or in part) on or after June 15, 2026, until the close of business on the second trading day immediately preceding the maturity date of September 15, 2026. In addition, holders of the 2026 Notes may convert the 2026 Notes at their option (in whole or in part) at any time prior to the close of business on the business day immediately preceding June 15, 2026, only under certain circumstances described in our Annual Report for the year ended December 31, 2024.
2028 Convertible Notes. As of March 31, 2025, outstanding principal was $333.3 million on our 6.75% Senior Secured Convertible Notes due in 2028 (the “2028 Notes”). The 2028 Notes are convertible into cash, shares of common stock, or a combination of cash and shares of common stock at our election at an initial conversion rate of 39.9956 shares of common stock per one thousand dollars principal amount of the 2028 Notes, which is equivalent to an initial conversion price of approximately $25.00 per share. The 2028 Notes will mature on October 1, 2028, unless earlier repurchased, redeemed or converted. Prior to the close of business on the business day immediately preceding July 1, 2028, the 2028 Notes will be convertible at the option of the holders only upon the satisfaction of certain conditions and during certain periods. Thereafter, until the close of business on the second scheduled trading day immediately preceding the maturity date, the 2028 Notes will be convertible at the option of the holders at any time regardless of these conditions. Additionally, if more than $30.0 million aggregate principal amount of 2026 Notes remain outstanding on June 14, 2026, the holders of the 2028 Notes have the right to require us to repurchase for cash on June 15, 2026, all or any portion of the 2028 Notes, in principal amounts of $1,000 or an integral multiple thereof, at a repurchase price equal to 106.5% of the principal amount of the 2028 Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the repurchase date.
Liquidity and Capital Resources of the Reciprocal (Consolidated VIE)
The following table provides the components of cash and cash equivalents, restricted cash and cash equivalents, and investments of the Reciprocal.
| March 31, 2025 | December 31, 2024 | |||||||||||||
| Cash and cash equivalents of the Reciprocal | $ | 81,890 | $ | 121,117 | ||||||||||
| Short-term investments of the Reciprocal | 681 | 22,485 | ||||||||||||
| Long-term investments of the Reciprocal | 170,243 | 145,144 | ||||||||||||
| 252,814 | 288,746 | |||||||||||||
| Restricted cash and cash equivalents of the Reciprocal | (1) | 1,005 | 895 | |||||||||||
| $ | 253,819 | $ | 289,641 | |||||||||||
______________________________________
(1)See Note 1 in the unaudited Notes to Condensed Consolidated Financial Statements for a description of the nature of restrictions.
Insurance companies in the United States are required by state law to maintain a minimum level of policyholder’s surplus. As of March 31, 2025, the Reciprocal’s total statutory surplus combined with non-admitted assets was $197.6 million. Insurance regulators in the states in which the Reciprocal operates have a risk-based capital standard designed to identify property and casualty insurers, or reinsurers, that may be inadequately capitalized based on inherent risks of the insurer’s assets and liabilities and its mix of net written premium. Insurers falling below a calculated threshold may be subject to
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varying degrees of regulatory action. See Note 12 in the unaudited Notes to Condensed Consolidated Financial Statements for a description of our reinsurance programs.
Cash Flow Information
The following table provides a summary of consolidated cash flow information for the three months ended March 31, 2025 and 2024:
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||
| Net cash provided by (used in) operating activities | $ | (11,178) | $ | 8,465 | $ | (19,643) | (232) | % | |||||||||||||||
| Net cash provided by (used in) investing activities | (19,368) | 12,697 | (32,065) | (253) | % | ||||||||||||||||||
| Net cash used in financing activities | (229) | (2,501) | 2,272 | (91) | % | ||||||||||||||||||
| Change in cash, cash equivalents and restricted cash and cash equivalents | $ | (30,775) | $ | 18,661 | $ | (49,436) | (265) | % | |||||||||||||||
Operating Cash Flows
Net cash provided by (used in) operating activities was $(11.2) million for the three months ended March 31, 2025. Net cash used in operating activities was primarily driven by timing of changes in working capital, particularly ceded insurance premiums payable as settlement terms with reinsurance partners changed from quarterly to monthly.
Net cash provided by (used in) operating activities was $8.5 million for the three months ended March 31, 2024. Net cash provided by (used in) operating activities consists of primarily of cash flow from the non-recurring cash receipt of $25 million related to the Aon agreement (see Note 12 in the notes to the unaudited condensed consolidated financial statements) partially offset by the net loss of $13.4 million during the three months ended March 31, 2024.
Investing Cash Flows
Net cash provided by (used in) investing activities was $19.4 million for the three months ended March 31, 2025. Net cash provided by (used in) investing activities is primarily related to proceeds from maturities and sales of investments of $24.9 million offset by purchases of investments of $40.9 million and investments in developing internal-use software of $3.3 million.
Net cash provided by (used in) investing activities was $12.7 million for the three months ended March 31, 2024. Net cash provided by (used in) investing activities is primarily related to proceeds from sale of EIG of $10.3 million and maturities and sales of investments of $4.7 million offset by investments in developing internal-use software of $2.3 million.
Financing Cash Flows
Net cash used in financing activities was $(0.2) million for the three months ended March 31, 2025. Net cash used in financing activities is primarily related to a payment of a promissory note of $0.2 million.
Net cash used in financing activities was $2.5 million for the three months ended March 31, 2024. Net cash used by financing activities is primarily related to the repurchase of the 2026 Notes of $3.0 million.
Supplemental Cash Flow Information
The following table provides further detail of cash flows of Porch Group and cash flows of the Reciprocal Segment for the three months ended March 31, 2025.
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| Consolidated | Reciprocal Segment | Eliminations | Porch Shareholder Interest (1) | |||||||||||||||||||||||
| Net cash provided by (used in) operating activities | $ | (11,178) | $ | (38,357) | $ | — | $ | 27,179 | ||||||||||||||||||
| Cash flows from investing activities: | ||||||||||||||||||||||||||
| Purchases of property and equipment and capitalized software development costs | (3,346) | (6) | — | (3,340) | ||||||||||||||||||||||
| Maturities, sales, (purchases) of investments, net | (16,022) | (754) | — | (15,268) | ||||||||||||||||||||||
| Issuance of surplus note to Reciprocal | — | — | 46,813 | (46,813) | ||||||||||||||||||||||
| Sale of HOA to the Reciprocal | — | (46,813) | — | 46,813 | ||||||||||||||||||||||
| Net cash provided by (used in) investing activities | (19,368) | (47,573) | 46,813 | (18,608) | ||||||||||||||||||||||
| Cash flows from financing activities: | ||||||||||||||||||||||||||
| Proceeds from surplus note with Porch | — | 46,813 | (46,813) | — | ||||||||||||||||||||||
| Repayments of principal | (150) | — | — | (150) | ||||||||||||||||||||||
| Other financing activities | (79) | — | — | (79) | ||||||||||||||||||||||
| Net cash provided by (used in) financing activities | (229) | 46,813 | (46,813) | (229) | ||||||||||||||||||||||
| Net change in cash and cash equivalents & restricted cash and cash equivalents | (30,775) | (39,117) | — | 8,342 | ||||||||||||||||||||||
| Cash and cash equivalents & restricted cash and cash equivalents, beginning of period | 196,782 | 122,012 | — | 74,770 | ||||||||||||||||||||||
| Cash and cash equivalents & restricted cash and cash equivalents, end of period | $ | 166,007 | $ | 82,895 | $ | — | $ | 83,112 | ||||||||||||||||||
______________________________________
(1)Porch Shareholder Interest net cash provided by or used in operating, investing, and financing activities are non-GAAP measures. See Non-GAAP Financial Measures section. This table reconciles these non-GAAP measures to the nearest GAAP measures in the “Consolidated” column.
Non-GAAP Financial Measures
This Quarterly Report includes non-GAAP financial measures, such as Adjusted EBITDA (Loss), Adjusted EBITDA (Loss) Margin, and certain amounts related to Porch Shareholder Interest.
Our management uses these non-GAAP financial measures as supplemental measures of our operating and financial performance, for internal budgeting and forecasting purposes, to evaluate financial and strategic planning matters, and to establish certain performance goals for incentive programs. We believe that the use of these non-GAAP financial measures provides investors with useful information to evaluate our operating and financial performance and trends and in comparing our financial results with competitors, other similar companies and companies across different industries, many of which present similar non-GAAP financial measures to investors. However, our definitions and methodology in calculating these non-GAAP measures may not be comparable to those used by other companies. In addition, we may modify the presentation of these non-GAAP financial measures in the future, and any such modification may be material.
You should not consider these non-GAAP financial measures in isolation, as a substitute to or superior to financial performance measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude specified income and expenses, some of which may be significant or material, that are required by GAAP to be recorded in our consolidated financial statements. We may also incur future income or expenses similar to those excluded from these non-GAAP financial measures, and the presentation of these measures should not be construed as an inference that future results will be unaffected by unusual or non-recurring items. In addition, these non-GAAP financial measures reflect the exercise of management judgment about which income and expense are included or excluded in determining these non-GAAP financial measures.
Adjusted EBITDA (Loss)
We define Adjusted EBITDA (Loss) as net income (loss) adjusted for net income (loss) attributable to the Reciprocal; interest expense; income taxes; depreciation and amortization; gain or loss on extinguishment of debt; other expense
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(income), net; impairments of intangible assets and goodwill; loss on reinsurance contract; impairments of property, equipment, and software; stock-based compensation expense; mark-to-market gains or losses recognized on changes in the value of contingent consideration arrangements, warrants, and derivatives; restructuring costs; acquisition and other transaction costs; and non-cash bonus expense. Adjusted EBITDA (Loss) Margin is defined as Adjusted EBITDA (Loss) divided by total revenue.
The following table reconciles Net income (loss) to Adjusted EBITDA (Loss) and Net income (loss) as a percentage of revenue to Adjusted EBITDA (Loss) Margin.
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Amount | Margin | Amount | Margin | ||||||||||||||||||||
| Net income (loss) | $ | 3,736 | 4% | $ | (13,362) | (12)% | |||||||||||||||||
| Net loss (income) attributable to the Reciprocal | 4,659 | 4% | — | —% | |||||||||||||||||||
| Interest expense | 11,195 | 11% | 10,787 | 9% | |||||||||||||||||||
| Income tax provision | 14 | —% | 178 | —% | |||||||||||||||||||
| Depreciation and amortization | 5,024 | 5% | 6,317 | 5% | |||||||||||||||||||
| Gain on extinguishment of debt | — | —% | (4,891) | (4)% | |||||||||||||||||||
| Other income, net | (7,162) | (7)% | (21,502) | (19)% | |||||||||||||||||||
| Stock-based compensation expense | 4,910 | 5% | 5,368 | 5% | |||||||||||||||||||
| Mark-to-market gains | (5,969) | (6)% | (7) | —% | |||||||||||||||||||
| Restructuring costs | 319 | —% | 157 | —% | |||||||||||||||||||
| Acquisition and other transaction costs | 135 | —% | 167 | —% | |||||||||||||||||||
| Adjusted EBITDA (Loss) | $ | 16,861 | 16% | $ | (16,788) | (15)% | |||||||||||||||||
| Revenue | $ | 104,745 | 100% | $ | 115,443 | 100% | |||||||||||||||||
Adjusted EBITDA (Loss) for each of our Insurance Services, Software & Data, and Consumer Services segments is a non-GAAP financial measure. The impact of corporate expenses on Adjusted EBITDA (Loss) is also a non-GAAP financial measure. Reconciliations of these non-GAAP financial measures to the nearest GAAP measure are included in the Consolidated Results section.
Porch Shareholder Interest
Certain amounts related to Porch Shareholder Interest are non-GAAP financial measures. We define Porch Shareholder Interest as the Insurance Services, Software & Data, and Consumer Services segments, together with corporate expenses.
The operating results of these segments comprise “Net income (loss) attributable to Porch” in our unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). Reconciliations of the following non-GAAP financial measures to the nearest GAAP measure are included in the Consolidated Results section:
•Porch Shareholder Interest Adjusted EBITDA (Loss)
•Porch Shareholder Interest Cost of Revenue
•Porch Shareholder Interest Depreciation and Amortization
•Porch Shareholder Interest General and Administrative
•Porch Shareholder Interest Gross Margin
•Porch Shareholder Interest Gross Profit
•Porch Shareholder Interest Income (Loss) Before Income Taxes
•Porch Shareholder Interest Income Tax Benefit (Provision)
•Porch Shareholder Interest Interest Expense
•Porch Shareholder Interest Mark-to-Market Losses (Gains)
49
•Porch Shareholder Interest Operating Income (Loss)
•Porch Shareholder Interest Other Expense (Income)
•Porch Shareholder Interest Other Gains and Losses
•Porch Shareholder Interest Product and Technology
•Porch Shareholder Interest Revenue
•Porch Shareholder Interest Selling and Marketing
•Porch Shareholder Interest Stock-based Compensation Expense
Reconciliations of the following non-GAAP financial measures to the nearest GAAP measure are included in the Liquidity and Capital Resources section:
•Porch Shareholder Interest net cash provided by (used in) financing activities
•Porch Shareholder Interest net cash provided by (used in) investing activities
•Porch Shareholder Interest net cash provided by (used in) operating activities
Critical Accounting Estimates
Our critical accounting policies, including the assumptions and judgements underlying them, are disclosed in the 2024 Annual Report, including those policies as discussed in Note 1 to the Notes to Consolidated Financial Statements included in the 2024 Annual Report. There have been no material changes to these policies during the three months ended March 31, 2025.
Off-Balance Sheet Arrangements
Since the date of incorporation, we have not engaged in any off-balance sheet arrangements, as defined in the rules and regulations of the Securities and Exchange Commission (the “SEC”).
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to a variety of market and other risks, including the effects of changes in interest rates, and inflation, as well as risks to the availability of funding sources, hazard events, and specific asset risks.
Interest Rate Risk
The market risk inherent in our financial instruments and financial position represents the potential loss arising from adverse changes in interest rates. As of March 31, 2025, and December 31, 2024, we have interest-bearing debt of $507.1 million and $507.3 million, respectively. Our 0.75% convertible senior notes due in September 2026 (the “2026 Notes”) have a principal balance of $173.8 million as of March 31, 2025, a fixed coupon rate of 0.75%, and an effective interest rate of 1.3%. Our 6.75% senior secured convertible notes due in October 2028 (the “2028 Notes”) have a principal balance of $333.3 million as of March 31, 2025, a fixed coupon rate of 6.75%, and an effective interest rate of 17.9%. Interest expense includes both contractual interest expense and amortization of debt issuance costs and discount. The following table details the interest expense recognized for both the 2026 and 2028 Notes:
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Contractual interest expense for 2026 Notes | $ | 326 | $ | 415 | |||||||||||||||||||
| Contractual interest expense for 2028 Notes | 5,625 | 5,625 | |||||||||||||||||||||
| Amortization of debt issuance costs and discount for 2026 Notes | 235 | 296 | |||||||||||||||||||||
| Amortization of debt issuance costs and discount for 2028 Notes | 5,137 | 4,322 | |||||||||||||||||||||
| $ | 11,323 | $ | 10,658 | ||||||||||||||||||||
Because the coupon rates are fixed, interest expense on the 2026 Notes and the 2028 Notes will not change if market interest rates increase.
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As of March 31, 2025, Porch has a $30.7 million portfolio of fixed income securities and an unrealized gain (loss) of $0.4 million while the Reciprocal has a $170.9 million portfolio of fixed income securities and an unrealized gain loss of $(3.1) million, as described in Note 5 in the notes to the unaudited condensed consolidated financial statements included in Part I, Item 1, of this Quarterly Report. In a rising interest rate environment, the portfolio would result in unrealized losses.
As of March 31, 2025, accounts receivable balances were $12.2 million and $6.2 million for Porch and the Reciprocal, respectively, and reinsurance balance due for the Reciprocal was $94.4 million. These are not interest-bearing assets, and are generally collected in less than 180 days. As such, we do not consider these assets to have material interest rate risk.
Inflation Risk
We believe our operations have been negatively affected by inflation and the change in the interest rate environment. General economic factors beyond our control and changes in the global economic environment, specifically fluctuations in inflation, including access to credit under favorable terms, could result in lower revenues, higher costs, and decreased margins and earnings in the foreseeable future. While we take action wherever possible to reduce the impact of the effects of inflation, in the case of sustained inflation across several of the markets in which we operate, it could become increasingly difficult to effectively mitigate the increases to costs. In addition, the effects of inflation on consumers’ budgets could result in the reduction of consumer spending habits, specifically in the move and post-move markets. If unable to take actions to effectively mitigate the effect of the resulting higher costs, our profitability and financial position could be materially and adversely impacted.
Foreign Currency Risk
There was no material foreign currency risk for the three months ended March 31, 2025. Our activities to date have been conducted primarily in the United States.
Other Risks
We are exposed to a variety of market and other risks, including risks to the availability of funding sources, reinsurance providers, weather and other catastrophic hazard events, and specific asset risks. As the AIF, our results of operations are tied to the growth and financial condition of the Reciprocal. If any events occur that impair the Reciprocal's ability to grow or sustain its financial condition, including but not limited to reduced financial strength ratings, disruption in the independent agency relationships, significant catastrophe losses, or products not meeting customer demands, the Reciprocal could find it more difficult to retain its existing business and attract new business. A decline in the business of the Reciprocal almost certainly could have as a consequence a decline in the total premiums paid and a correspondingly adverse effect on the amount of the management fees we receive. We also have an exposure to a concentration of credit risk related to the unsecured receivables due from the Reciprocal for net management fee and other reimbursements.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures to ensure that information required to be disclosed in reports we file or submit under the Exchange Act is (i) recorded, processed, summarized, evaluated and reported, as applicable, within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures were effective as of March 31, 2025.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on Effectiveness of Controls and Procedures
Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives. Our management recognizes that any control system, no matter how well designed and operated, is based upon certain judgments and assumptions and cannot provide absolute assurance that its objectives will be met.
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PART II — OTHER INFORMATION
Item 1. Legal Proceedings
See Note 16, Commitments and Contingencies, in the notes to the unaudited condensed consolidated financial statements included in Part I, Item 1, of this Quarterly Report, which is incorporated by reference into this Part II, Item 1, for a description of certain litigation and legal proceedings.
In addition, in the ordinary course of business, we and our subsidiaries are (or may become) parties to litigation involving property, personal injury, contract, intellectual property and other claims, stockholder derivative actions, class action lawsuits and other matters. The amounts that may be recovered in such matters may be subject to insurance coverage. Although the results of legal proceedings and claims cannot be predicted with certainty, neither we nor any of our subsidiaries are currently a party to any legal proceedings the outcome of which, we believe, if determined adversely to us, would individually or in the aggregate have a material adverse effect on the business, financial condition or results of operations.
Item 1A. Risk Factors
As of the date of this Quarterly Report on Form 10-Q, there have been no material changes from the risk factors disclosed in Part 1, Item 1A, of the Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on February 25, 2025.
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
No other director or officer (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934) adopted , terminated
52
Item 6. Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
| Exhibit No. | Description | ||||
| 2.1+ | |||||
| 3.1 | |||||
| 3.2 | |||||
| 10.1 | |||||
| 10.2# | |||||
| 10.3# | |||||
| 10.4#* | |||||
| 31.1* | |||||
| 31.2* | |||||
| 32.1** | |||||
| 32.2** | |||||
| 101.INS* | XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | ||||
| 101.SCH* | XBRL Taxonomy Extension Schema Document | ||||
| 101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | ||||
| 101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document | ||||
| 101.LAB* | XBRL Taxonomy Extension Label Linkbase Document | ||||
| 101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document | ||||
| 104* | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) | ||||
______________________________________
*Filed herewith.
**These certifications are furnished to the SEC pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.
#Indicates management contract or compensatory plan.
+Schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company will furnish supplementally a copy of any omitted schedule or exhibit to the SEC upon request. The Company may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act for any schedules or exhibits so furnished.
53
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, duly authorized.
Date: May 8, 2025 | ||||||||
| PORCH GROUP, INC. | ||||||||
| By: | /s/ Shawn Tabak | |||||||
| Name: | Shawn Tabak | |||||||
| Title: | Chief Financial Officer and Duly Authorized Officer | |||||||
| (Principal Financial Officer) | ||||||||
54
Exhibit 10.4
PORCH GROUP, INC.
2020 STOCK INCENTIVE PLAN
Unrestricted Stock Award Notice
[Name of Holder]
You have been awarded shares of unrestricted stock of Porch Group, Inc., a Delaware corporation (the “Company”), pursuant to the terms and conditions of the Porch Group, Inc. 2020 Stock Incentive Plan (the “Plan”) and the Unrestricted Stock Award Agreement (the “Award Agreement”). Copies of the Plan, Award Agreement and are attached hereto. Capitalized terms not defined herein shall have the meanings specified in the Plan, or the Award Agreement.
Unrestricted Stock: | You have been awarded an unrestricted stock award with respect to [ ] shares of Common Stock, par value $0.0001 per share, subject to adjustment as provided in Section 4.1(b) of the Award Agreement. | ||||
Grant Date: | [ , ] | ||||
Vesting Schedule: | The unrestricted shares of Common Stock granted hereunder are fully vested as of the Grant Date. | ||||
PORCH GROUP, INC.
By: Name:
Title:
Exhibit 10.4
PORCH GROUP, INC.
2020 STOCK INCENTIVE PLAN UNRESTRICTED STOCK AWARD AGREEMENT
Porch Group, Inc., a Delaware corporation (the “Company”), hereby grants to the individual (the “Holder”) named in the award notice attached hereto (the “Award Notice”) as of the date set forth in the Award Notice (the “Grant Date”), pursuant to the provisions of the Porch Group, Inc. 2020 Stock Incentive Plan (the “Plan”), an unrestricted stock award (the “Award”) with respect to the number of shares of the Company’s Common Stock, par value $0.0001 per share (“Stock”) set forth in the Award Notice, upon and subject to the restrictions, terms and conditions set forth in the Plan and this agreement (the “Agreement”). Capitalized terms not defined herein shall have the meanings specified in the Plan.
1. Rights as a Stockholder. The Holder shall have all rights as a holder of the Stock subject to the Award, including, without limitation, the right to vote those shares and the right to receive dividends thereon (as, and when declared by the Board of Directors) and other distributions thereon, and the right to participate in any capital adjustment applicable to all holders of Stock.
2. Delivery of Shares. The issuance or delivery of the shares of Stock subject to the Award shall, subject to Section 4.1 hereof, be in the name of the Holder and evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company.
3. Investment Representation.
3.1 Investment Representation. The Holder hereby represents and covenants that (a) any share of Stock acquired will be acquired for investment and not with a view to the distribution thereof within the meaning of the Securities Act of 1933, as amended (the “Securities Act”), unless such acquisition has been registered under the Securities Act and any applicable state securities laws; (b) any subsequent sale of any such shares shall be made either pursuant to an effective registration statement under the Securities Act and any applicable state securities laws, or pursuant to an exemption from registration under the Securities Act and such state securities laws; and (c) if requested by the Company, the Holder shall submit a written statement, in form satisfactory to the Company, to the effect that such representation (x) is true and correct as of the date hereof or (y) is true and correct as of the date of any sale of any such share, as applicable. As a further condition precedent to the delivery to the Holder of any shares of Stock subject to the Award, the Holder shall comply with all regulations and requirements of any regulatory authority having control of or supervision over the issuance or delivery of the shares and, in connection therewith, shall execute any documents which the Board shall in its sole discretion deem necessary or advisable.
3.2 Transferability. The shares of Stock will be free from any restrictions of
transferability.
4. Additional Terms and Conditions of Award.
4.1 Withholding Taxes.
(a) As a condition precedent to the delivery of the Stock, the Holder shall pay to the Company such amount as the Company may be required, under all applicable federal, state,
Exhibit 10.4
local or other laws or regulations, to withhold and pay over as income or other withholding taxes (the “Required Tax Payments”) with respect to the Award.
(b) The Holder may elect to satisfy his or her obligation to advance the Required Tax Payments by any of the following means: (1) if permitted by the Company, a cash payment to the Company; (2) if permitted by the Company, delivery to the Company (either actual delivery or by attestation procedures established by the Company) of previously owned whole shares of Stock having an aggregate Fair Market Value, determined as of the date on which such withholding obligation arises (the “Tax Date”), equal to the Required Tax Payments; (3) if permitted by the Company, authorizing the Company to withhold whole shares of Stock which would otherwise be delivered to the Holder having an aggregate Fair Market Value, determined as of the Tax Date, equal to the Required Tax Payments; (4) to the extent permitted by applicable law, a cash payment by a broker-dealer acceptable to the Company to whom the participant has submitted an irrevocable notice of same-day sale or (5) any combination of (1), (2), (3) and (4). Shares of Stock to be delivered or withheld may not have a Fair Market Value in excess of the minimum amount of the Required Tax Payments (or such higher withholding amount permitted by the Committee). Any fraction of a share of Stock which would be required to satisfy any such obligation shall be disregarded and the remaining amount due shall be paid in cash by the Holder. No share of Stock or certificate representing a share of Stock shall be delivered until the Required Tax Payments have been satisfied in full. Any determination by the Company with respect to the tendering or withholding of shares of Stock to satisfy the Required Tax Payments shall be made by the Committee if the Holder is subject to Section 16 of the Exchange Act.
4.2 Compliance with Applicable Law. The Award is subject to the condition that if the listing, registration or qualification of the shares of Stock subject to the Award upon any securities exchange or under any law, or the consent or approval of any governmental body, or the taking of any other action is necessary or desirable as a condition of, or in connection with, the delivery of shares hereunder, the shares of Stock subject to the Award shall not be delivered, in whole or in part, unless such listing, registration, qualification, consent, approval or other action shall have been effected or obtained, free of any conditions not acceptable to the Company. The Company agrees to use reasonable efforts to effect or obtain any such listing, registration, qualification, consent, approval or other action.
4.3 Delivery of Stock. Subject to Section 4.1, the Company shall deliver or cause to be delivered to the Holder the shares of Stock in accordance with Section 3. The Company shall pay all original issue or transfer taxes and all fees and expenses incident to such delivery, except as otherwise provided in Section 4.1.
4.4 Award Confers No Rights to Continued Employment. In no event shall the granting of the Award or its acceptance by the Holder, or any provision of the Agreement or the Plan, give or be deemed to give the Holder any right to continued employment by the Company, any Subsidiary or any affiliate of the Company or affect in any manner the right of the Company,
any Subsidiary or any affiliate of the Company to terminate the employment of any person at any time.
4.5 Decisions of Board or Committee. The Board or the Committee shall have the right to resolve all questions which may arise in connection with the Award. Any
Exhibit 10.4
interpretation, determination or other action made or taken by the Board or the Committee regarding the Plan or this Agreement shall be final, binding and conclusive.
4.6 Successors. This Agreement shall be binding upon and inure to the benefit of any successor or successors of the Company and any person or persons who shall, upon the death of the Holder, acquire any rights hereunder in accordance with this Agreement or the Plan.
4.7 Notices. All notices, requests or other communications provided for in this Agreement shall be made, if to the Company, to Porch Group, Inc., Attn: Stock Plan Administrator, 411 1st Avenue South, Suite 501, Seattle, Washington 98104; stock@porch.com, and if to the Holder, to the last known mailing address of the Holder contained in the records of the Company. All notices, requests or other communications provided for in this Agreement shall be made in writing either (a) by personal delivery, (b) by facsimile or electronic mail with confirmation of receipt, (c) by mailing in the United States mails or (d) by express courier service. The notice, request or other communication shall be deemed to be received upon personal delivery, upon confirmation of receipt of facsimile or electronic mail transmission or upon receipt by the party entitled thereto if by United States mail or express courier service; provided, however, that if a notice, request or other communication sent to the Company is not received during regular business hours, it shall be deemed to be received on the next succeeding business day of the Company.
4.8 Governing Law. This Agreement, the Award and all determinations made, and actions taken pursuant hereto and thereto, to the extent not governed by the laws of the United States, shall be governed by the laws of the State of Delaware and construed in accordance therewith without giving effect to principles of conflicts of laws.
4.9 Agreement Subject to the Plan. This Award Agreement is subject to the provisions of the Plan and shall be interpreted in accordance therewith. In the event that the provisions of this Award Agreement and the Plan conflict, the Plan shall control. The Holder hereby acknowledges receipt of a copy of the Plan.
4.10 Entire Agreement. This Agreement and the Plan constitute the entire agreement of the parties with respect to the shares of Stock subject to this Award and supersede in their entirety all prior undertakings and agreements of the Company and the Holder with respect to such shares of Stock and may not be modified adversely to the Holder’s interest except by means of a writing signed by the Company and the Holder.
4.11 Partial Invalidity. The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions hereof and this Agreement shall be construed in all respects as if such invalid or unenforceable provision was omitted.
4.12 Amendment and Waiver. The provisions of this Agreement may be amended or waived only by the written agreement of the Company and the Holder, and no course
of conduct or failure or delay in enforcing the provisions of this Agreement shall affect the validity, binding effect or enforceability of this Agreement.
4.13 Counterparts. The Award Notice may be executed in two counterparts, each of which shall be deemed an original and both of which together shall constitute one and the same instrument.
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Matthew Ehrlichman, certify that:
1.I have reviewed this Annual Report on Form 10-K of Porch Group, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 8, 2025 | ||||||||
| By: | /s/ Matthew Ehrlichman | |||||||
| Name: | Matthew Ehrlichman | |||||||
| Title: | Chief Executive Officer | |||||||
| (Principal Executive Officer) | ||||||||
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Shawn Tabak, certify that:
1.I have reviewed this Annual Report on Form 10-K of Porch Group, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 8, 2025 | ||||||||
| By: | /s/ Shawn Tabak | |||||||
| Name: | Shawn Tabak | |||||||
| Title: | Chief Financial Officer | |||||||
| (Principal Financial Officer) | ||||||||
Exhibit 32.1
Certification of CEO Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report of Porch Group, Inc. (the “Company”) on Form 10-K for the quarterly period ended March 31, 2025 (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, I, the undersigned, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:
(1)The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: May 8, 2025 | ||||||||
| By: | /s/ Matthew Ehrlichman | |||||||
| Name: | Matthew Ehrlichman | |||||||
| Title: | Chief Executive Officer | |||||||
| (Principal Executive Officer) | ||||||||
Exhibit 32.2
Certification of CFO Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report of Porch Group, Inc. (the “Company”) on Form 10-K for the quarterly period ended March 31, 2025 (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, I, the undersigned, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:
(1)The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: May 8, 2025 | ||||||||
| By: | /s/ Shawn Tabak | |||||||
| Name: | Shawn Tabak | |||||||
| Title: | Chief Financial Officer | |||||||
| (Principal Financial Officer) | ||||||||